Real estate is often termed as the safest investment avenue. In fact, real estate investments done with proper evaluation of the property (and its true value), can lead to good profits. This is one reason why some people pursue real estate investment as their full time job. The talks of real estate are generally focussed towards residential real estate; commercial real estate seems to take a back seat. However, commercial real estate too is a good option for investing in real estate.

Commercial real estate includes a lot of different kinds of properties. Most people relate commercial real estate with only office complexes or factories/ industrial units. However, that is not all of commercial real estate. There is more to commercial real estate. Health care centers, retail structures and warehouse are all good examples of commercial real estate. Even residential properties like apartments (or any property that consists of more than four residential units) are considered commercial real estate. In fact, such commercial real estate is much in demand.

So, is commercial real estate really profitable? Well, if it were not profitable I would not have been writing about commercial real estate at all. So, commercial real estate is profitable for sure. The only thing with commercial real estate is that recognising the opportunity is a bit difficult as compared to residential real estate. But commercial real estate profits can be real big (in fact, much bigger than you would expect from residential real estate of the same proportion). You could take up commercial real estate for either reselling after appreciation or for renting out to, say, retailers. The commercial real estate development is in fact treated as the first sign for growth of residential real estate. Once you know of the possibility of significant commercial growth in the region (either due to tax breaks or whatever), you should start evaluating the potential for appreciation in the prices of commercial real estate and then go for it quickly (as soon as you find a good deal). And you must really work towards getting a good deal. If you find that commercial real estate, e.g. land, is available in big chunks which are too expensive for you to buy, you could look at forming a small investor group (with your friends) and buy it together (and split the profits later). In some cases e.g. when a retail boom is expected in a region, you might find it profitable to buy a property that you can convert into a warehouse for the purpose of renting to small businesses.

So commercial real estate presents a whole plethora of investing opportunities, you just need to grab it.

Speculating in Commercially zoned property can be a little bit of a challenge. Buying up such property is a smart investment especially during a down economy as things will go up eventually and well there you will have an instant rise in valuations as supply and demand tilt the tables once again in the never ending decade bantering real estate cycles.

How can you pay for a piece of property or commercial real estate lot until you are ready to sell it? Perhaps you need to put some buildings on the property? But what types? Well the simpler the better and indeed something that will pay for the property payments also.

One strategy is to put up a Self Storage block facility on a well-laid foundation and parking lot. Later on this block or tilt-up structure can be easily removed to build to suit or the new buyer can scrape it and build his McDonalds, Shopping Center, Starbucks or Home Depot Store. Owning major intersection corners with lots of acreage is a smart choice as the city grows into the rural areas, as eventually that property will be worth its weight in gold.

Buying a piece of commercially zoned real estate and setting up a simple business, which will pay for the property is an excellent strategy and there are many of these types of businesses available such as coin-op car washes, self-storage or even RV storage lots. Perhaps you will consider all this in 2006.

"Lance Winslow" - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/. Lance is a guest writer for Ou

India’s property markets are frenzy and are being driven largely by the rapid expansion of its information technology industry and the simultaneous growth of its middle class.

Boom is being witnessed by the commercial property sector. Properties are being transacted at unbelievable prices. The land prices currently prevailing in IT spaces have shot up three to four times of what it was two-three years ago. Currently the country’s commercial and residential real estate market is valued at about $50 billion now, and is expected to grow 25% annually.

Whether from investors point, buyers or price everything is gearing up to steep heights. According to a research there are thousands of commercial projects springing up across the country with the total Commercial activity index jumping to 60 in June from 58.3 in May with the sharp acceleration of commercial property in June & positive signals for the third quarter. Such a sharp acceleration is visible from the fact that 18 million square feet of commercial buildings were erected in 2004 & year 23 million sq. ft. of will pave this year & by 2009 the toll will touch 50 million.

The areas where major investments are being generated are Bangalore, Mumbai, Hyderabad, Chennai, and Gurgaon, a suburb of New Delhi & further extending its proximity to second-tier cities such as Pune in the west, Jaipur and Chandigarh in the north, and Kolkata in the east. All these are making MNC’s & foreign investors India as a keen target to invest. & the country is being considered as the “the next big thing” for investment. Under this many Israeli Companies have not far in the race lined up for major investments giving neck to neck competition to powers like China.

So also the various joint ventures inflowing by different players like Big Shopping Centers (2004) Ltd who recently mounted up an Indian subsidiary with a local partner owing 60% in the venture & plans to build commercial centre making an investment of USD 40 million. All these are universal to the fact that there is a real hunger for new construction to keep tempo with India’s robust 7% economic growth.

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What commercial property types should you buy? You should consider the pros & cons of each property type, as well as, have a good understanding of your investment objectives and your experience. These factors will help lead you to your ideal commercial property.

Listed below are the most common commercial property types.

Apartments/Multi-family
Apartments or multi-family buildings are usually the first choice for new commercial investors. Apartment management and financing is very similar to residential, and so new investors feel more comfortable with them. The main disadvantage with apartments, is that they are management intensive.

In order for an apartment to be considered commercial property, it must have 5 or more units. There are numerous sub-types of apartments:

Low-Rise Garden Apartments

Mid-Rise Apartments

High-Rise Apartments

Student Housing

Military Housing

Townhouse Style

Co-op

When you are looking at properties to purchase, pay close attention to the location and general market for that area. You will want to avoid properties that are located in economically depressed or seasonal areas. Also, the property should have acceptable aesthetic qualities to be competitive with market standards and have a minimum occupancy of at least 85%.

What if the property you are evaluating has inferior physical characteristics or is in an economically depressed area?

You may have a higher interest rate, higher reserves and tighter underwriting constraints.

Mobile Home Parks

Mobile homes can be a wonderful investment, especially if you own the land and sell off the mobile home. You're just renting dirt at that point! If you're not familiar with mobile home investing, you need to read "Deals On Wheels: How To Buy, Sell And Finance Used Mobile Homes For Big Profit And Cash Flow" by Lonnie Scruggs. This book is a gem! Lonnie explains how to buy and sell mobile homes on a note. His presentation is very basic and understandable.

Now back to mobile home parks. Mobile Home parks are rated as 1 Star, 2 Star, 3 Star, 4 Star, and 5 Star. The Star ranking is based on the conditions and amenities of the park.

A 3 Star park usually has a mix of single and double wide homes that are in good condition. The park is attractive and offers some amenities.

A 4 Star mobile home park usually only has double wide homes that are skirted and in good condition. The homes will have concrete patios or raised porches.

A 5 Star mobile home park can be characterized as having deluxe accommodations, with a wide range of amenities and services. The homes are usually set back from the curb with paved streets, sidewalks, street lights and signs. The park is located in a desirable neighborhood and accessible to retail and community services. The homes are late model doublewides and modular homes in excellent condition.

The mobile home park should have at least 85% occupancy and be located in desirable areas. Also, be cautious if the park has too many homes for sale (more than 20% of total pads) or more than 20% of total pads are rented homes owned by the park.

Retail
Retail properties are properties that are occupied by one or more tenants and the property is utilized for retail purposes.

A free standing retail, strip center with an anchor tenant is a well known commercial retail business such as a national chain store or regional department store strategically placed in a shopping center so as to generate the most amount of customers for all of the stores located in the shopping center. An Unanchored retail center is a center which is occupied by multiple tenants of which none are anchor tenants.

Single tenant investment grade retail properties are properties that are net leased to one investment grade tenant (BBB- rating or higher).

Office
The different categories of offices include:

Suburban Garden Office

Suburban High Rise Office

Medical Office

Central Business District (CBD) Office

Potential office buildings should have a minimum of 85% occupancy and is located on or near a main thoroughfare and easily accessible. Properties that have more than 20% of total revenue from owner occupied or owner affiliated tenants, will usually have a higher interest rate on any loans.

Mixed-Use
These properties will be a combination of any of the above property types. A real estate development of mixed use properties, should be complementary to each other.

Healthcare
These property types are nursing homes, congregate care and assisted living centers. Properties should be close to retail and community services. Be cautious of properties in economically depressed or seasonal areas. Also, be sure that the property complies with ADA requirements.

Hotel
Hotels are characterized as either Full Service or Limited Service.

Full Service Hotels can be further divided into Luxury, Upscale, Mid-scale, and Extended Stay hotels.

Limited Service Hotels can be further divided into Mid-scale, Economy, Budget and Extended Stay. When considering hotel properties, the property should have a stable operational history. A property with a history of four or less years should be scrutinized. The minimum acceptable occupancy is usually 60%. Lenders also prefer franchise affiliated hotels with franchise agreements extending beyond the term of the proposed loan.

Industrial
These property types will have usage for industrial purposes only. Such as

Warehouse-single tenant

Warehouse-multi tenant

Manufacturing

Research & Development

Flex Space

Light Industrial

Heavy Industrial

Self Storage
Also is called Mini-Storage, it is used for personal storage for lease by consumers.

Other Specialty
These property types are unique and the financing them can be difficult. They include gas stations, oil change facilities, etc.

Visit http://www.all-about-commercial-mortgages.com/commercial-property-types.html to learn more about commercial properties and commercial financing. Educate yourself before buying that commercial property!

Patti Porter is a Commercial Mortgage Broker specializing in income producing properties.

Today everyone is looking for the easiest way to learn for how to buy commercial properties. Most people keep asking as what they should do, so that they can buy their commercial property. Well the answer to all such questions could be that: you should be aware of all the rules and regulations of the game. By becoming a commercial mortgage broker, you can solve a lot of your problem while buying a commercial property for yourself.

Now the question may arises that what will I gain if I become a commercial mortgage broker?

Unless you have a lot of money, you will need to borrow money in order to buy commercial properties. Well if you are a commercial mortgage broker then you will certainly have good working relationship with a lender. This will help you in having a better chance for you loan approval. And also you are not breaking any rule for this special treatment. It is only because you have worked with the lender. You will be aware of what are the property types they lend loan on and what are the applicable conditions. You will also be aware of what are the criteria you need to satisfy. Remember the clients may have different needs from yours you are required to know different programs for the same. Your knowledge about the different programs should be up to date as the programs differ with different needs. Also if you are working with a borrower, you will know what are the properties you should own and which type of properties can benefit you.

Now that you are a commercial mortgage broker you will be able to have contacts in the commercial appraisal industry, also with commercial realtors and with commercial property managers too. This can help tremendously. It helps you in judging the properties as which one are good and which one is bad. And these contacts are not only restricted to your place you can develop a network across the country. So you can increase the number of options for yourself.

Obviously if you are working as a commercial mortgage broker and you are providing a good service to clients by getting the best financing for their projects then you are paid handsomely for it. Commercial mortgage broker’s fee generally depends on the complexity of the loan and the level of the services you are providing. He/ She can earn anywhere from 0.5 to 3 points.

There are different points that can help you buy a commercial property if you are a commercial broker yourself as you will be able to know all the facts and the ground reality for the property you are looking for. It would be easier for you to manage the loan, as you will be having different contacts. And as you are working in the same field and earning handsomely funds are no problem. So if you are looking for a commercial property be in the same field to be aware of all the facts.

Alan Taylor is editor of http://www.realbighome.com and http://www.hotelmotel.in

Why commercial property?

Compared to residential property investments, commercial property offers some key advantages:

Long-term secure cashflow -- Commercial lets normally have long lease contracts, with periods of 10 years and more not being uncommon. In addition to this, commercial property tenants are less likely to default on payments and even if the tenant goes into liquidation, the liquidator may continue paying the rent in order to stop the lease being forfeited.

Maintenance -- Commercial tenants are generally liable for the maintenance and upkeep of the property, contrasting with residential leasing, where the onus tends to be on the landlord.

Income yield -- Commercial property tends to deliver a relatively high income yield throughout the rental period. In comparison residential property investors rely on the capital value of the house increasing to generate a good return. This is fine during periods of rising property prices, but less beneficial during property slumps.

Commercial property investments have also performed well in terms of growth and stability, compared to equities and gilts over recent years.

Commercial property for the personal investor

Few personal investors will have sufficient funds to invest directly in a commercial property, however there are opportunities for indirect investment.

For the small investor, only looking to invest a couple of thousand pounds, the choices are limited to a small number of unit trusts and life funds that invest in property or buying shares in property companies, such as British Land and Slough Estates (though these are often more linked to the equities market, rather than property market performance).

Larger investors have a greater range of options available, with a number of products offering a chance to invest in geared property investments through a limited partnership structure. Often these products will require a minimum investment in the region of £25,000 to £50,000, which is invested in a single property.

A few investors will be able to buy a complete property directly, however the cost of the property is likely to be 10 or 20 times the size of a residential buy-to-let, making direct investment prohibitive to most.

Commercial property risks

In line with all investments, commercial property investment comes with its own risks:

Poor liquidity -- Compared to equities and bonds, property has poor liquidity, both in the time spent finding a buyer and making the transaction. This can be further emphasised in poor market conditions when the ability to find a buyer offering the right price will become very difficult.

Poor diversification -- The more diverse an investment portfolio, the less susceptible it will be to tough market conditions. Investing in a single property can be a risky challenge.

Market performance -- The property market is prone to cycles, as yields grow and decline depending on the level of supply and demand for commercial property. Current rental rates could decline in the future.

Sector performance -- A decline in the sector that your property services could affect your investment. For example a period of poor sales performance and market withdrawal in the retail sector could lead to the demand for small store, supermarket, department store and warehouse property to decline sharply.

What to look for when buying commercial property

Location -- the location of the property is very important and will be a major factor in determining the value of property and rental income. Easy access to transport networks is an obvious plus factor for most tenants, but consideration should also be given to future developments in the area. For example, the development of a new supermarket, might depreciate the value of small shops.

Type of building -- The requirements of tenants can change over time, with implications on the type of building they need. For example the move to open plan office space, could make older buildings with their rigid enclosed spaces redundant. Many companies also look for facilities like air conditioning and the ability to connect computer terminals through under floor wiring.

Tenant quality -- Properties whose tenants are reliable, present a low credit risk and hold a long-term lease will hold a premium value.

Market factors -- Try to identify which sectors and sub-sectors of the market will perform well in the future. The same can be said for geographic regions, which might receive future government or multi-national investment.

Don Suter is Managing Editor of the UK Property Portal (http://www.ukpropertyportal.co.uk), an online directory and magazine for UK property sales, rental, surveyors, mortgages, conveyancing, property insurance, removals, news, investment and development