According to CNN, the best way to generate wealth is by investing your money regularly and developing multiple streams of income. Real estate is a long-term investment option that has serious potential for impressive returns. While personal and residential real estate carries high costs and risk of inflation, commercial property is a great alternative to secure long-term revenue streams.

Commercial real estate includes multi-family residences, office suites, retail spaces, industrial properties, and hospitality venues, like hotels or event spaces. Each of these categories is further broken down into categories based on condition: 

Class A: Newer, high-quality buildings with luxury construction.

Class B: Older, high-quality buildings in need of cosmetic restoration.

Class C: Older, low-quality buildings in need of consistent maintenance, located in less desirable areas.

The differences between commercial real estate property types

When considering commercial real estate investments, each property type and condition will come with its own pros and cons. For example, purchasing a Class A property will require less maintenance and renovation, but will cost significantly more up front. Determining the commercial investment that works best for you will come down to identifying your goals and accurately assessing your investment power. Consider asking yourself these questions to get started:

1. How do I define a successful return? What is the minimum profit margin that would make this investment worthwhile for me?
2. What resources do I have at my disposal to adequately manage this property? Where I am lacking resources, do I have the means necessary to fill this gap?
3. What are my short- and long-term goals for the property?

Once you’ve outlined your goals and expectations, it’s time to explore the market. Commercial realty comes in many shapes and forms, ranging from land and property development to rental units. Here are some of your options:

• Land investment: Purchasing land can be a great way to get started in commercial real estate; not only is it a safe investment to store assets, but it also holds future potential for development or resale. 
• Fix & flips: A fix & flip property holds huge profit potential, but usually comes with high initial costs and lots of work. If you have the resources to flip properties for resale, this could be the route for you.
• Rental properties: Rental properties can be residential, office, or retail in nature and provide a consistent revenue stream through tenants. This is great option for investors looking for owner-occupied options and can promise a rewarding pay off. However, the success of rental properties is very dependent on location and property condition and will require consistent maintenance and property management to maintain profitability.

What kind of returns can you expect from your commercial property?

Typically, commercial property returns anywhere from 6% – 12% annually, two to three times that of personal residential properties. Additionally, fixed rate loans and abundant tax incentives serve to emphasize the appeal of commercial property investment. Likewise, the accessibility of future commercial real estate opportunities increases as you acquire new properties, allowing you to continue growing your investment and building your portfolio throughout your lifetime. 

Although buying commercial property is far from easy, it will pay off in the long run. As with all investments, due diligence will play a crucial role in your future success. Consider your investing power, your needs and wants, market availability in your area, accessible resources, and your capacity for risk. Finally, always seek the expertise of qualified professionals, from expert realtors to seasoned contractors, to guide you through the process.