Pros and cons for investing in commerical properties... - GoFuckYourself.com

Sami · 03-10-2006, 07:28 PM

What are the pros and cons on investing in commercial properties?

For example buying a 900 sqft office unit in a high rise in the downtown area?

I have noticed the value of commercial buildings have not gone up nearly as much as residential.

Any comments?

tony286 · 03-10-2006, 07:31 PM

wrong board lol

bringer · 03-10-2006, 07:32 PM

a pro would be people arent living in it as they would in a traditional home rental and often keep it presentable so damages when they leave are minimal

modF · 03-10-2006, 07:59 PM

Quote:

Originally Posted by bringer

a pro would be people arent living in it as they would in a traditional home rental and often keep it presentable so damages when they leave are minimal

Not to mention nightly cleaning services.

Are there a lot of vacant properties surrounding it?

John Marco · 03-10-2006, 08:41 PM

Pro's:

In most markets commercial values are a derivative of their operating income instead of small investor driven speculation
Decent commercial properties usually yield about a 10% cash on cash return with 20% down, not counting mortgage pay down and appreciation
Boring, predictable appreciation
Easy to finance if leased to stable tenants

Con's:

Values are interest rate sensitive, because the higher the interest rate, the more money required to cash flow, and thus the lower the value
Office properties are sensitive to the economy. It is hard to find tenants in bad times. Apartments are less sensitive but more management is required

WiredGuy · 03-10-2006, 09:08 PM

Make sure you can trust your property manager (if you're getting one). The one we (formerly) used is about to get charged once we piece together what happened to our cash account.
WG

GTS Mark · 03-10-2006, 10:09 PM

Pros
-------

Tenants usually sign multi-year leases (in our case all 5 years)
Stable income and usually less of a headache than residential tennants
Tenants pay part of taxes and upkeep of building

Cons
------

Usually need 25% down (where I live) to acquire a commercial property
High property taxes
With some tenants they want rennovations done (sometimes at your cost)
Multi-year leases (sometimes hard to break)

I am a big fan of commercial properties personally and own several of them. They are much less of headaches than some of our residential apartment buildings.

DH

03-10-2006, 07:28 PM	#1
Sami Confirmed User Join Date: Mar 2004 Posts: 2,047	Pros and cons for investing in commerical properties... What are the pros and cons on investing in commercial properties? For example buying a 900 sqft office unit in a high rise in the downtown area? I have noticed the value of commercial buildings have not gone up nearly as much as residential. Any comments? __________________ ServerProvider.com ICQ#: 311-848-143

03-10-2006, 07:32 PM	#3
bringer i have man boobies Join Date: Jul 2003 Location: van down by the river Posts: 13,082	a pro would be people arent living in it as they would in a traditional home rental and often keep it presentable so damages when they leave are minimal __________________ 333-765-551

03-10-2006, 08:41 PM	#5
John Marco Confirmed User Join Date: May 2005 Posts: 912	Pro's: In most markets commercial values are a derivative of their operating income instead of small investor driven speculation Decent commercial properties usually yield about a 10% cash on cash return with 20% down, not counting mortgage pay down and appreciation Boring, predictable appreciation Easy to finance if leased to stable tenants Con's: Values are interest rate sensitive, because the higher the interest rate, the more money required to cash flow, and thus the lower the value Office properties are sensitive to the economy. It is hard to find tenants in bad times. Apartments are less sensitive but more management is required __________________ WEBCAMS.COM $42+ PPS or revshare ICQ: 476-111 Google Talk: Webcams.com

03-10-2006, 09:08 PM	#6
WiredGuy Pounding Googlebot Industry Role: Join Date: Aug 2002 Location: Canada Posts: 34,482	Make sure you can trust your property manager (if you're getting one). The one we (formerly) used is about to get charged once we piece together what happened to our cash account. WG __________________ I play with Google.

03-10-2006, 07:31 PM	#2
tony286 lurker Industry Role: Join Date: Aug 2002 Location: atlanta Posts: 57,021	wrong board lol

03-10-2006, 10:09 PM	#7
GTS Mark Vrume Mark Industry Role: Join Date: Jan 2001 Location: Toronto, Canada Posts: 20,912	Pros ------- Tenants usually sign multi-year leases (in our case all 5 years) Stable income and usually less of a headache than residential tennants Tenants pay part of taxes and upkeep of building Cons ------ Usually need 25% down (where I live) to acquire a commercial property High property taxes With some tenants they want rennovations done (sometimes at your cost) Multi-year leases (sometimes hard to break) I am a big fan of commercial properties personally and own several of them. They are much less of headaches than some of our residential apartment buildings. DH