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3 common commercial real estate questions

Choosing to invest in commercial real estate can be a good decision. You have the potential to have an immediate income with renters, and you have the potential for long-term gains thanks to the real estate values increasing.

There are questions you may have, though. For instance, how do you know it's the right time to invest? What kind of property would be right for you? Here's more that you can think about.

When should you invest in commercial real estate?

You need to get to know your market, first. Commercial real estate can be a major benefit to your portfolio, but you don't want to start buying when prices are high or the market is about to burst. The goal would be to invest when there are plenty of commercial properties on the market at fair market values. You should look for a commercial property that could serve multiple purposes, too, so there are alternatives if one renter or another falls through.

What kind of commercial property is best for a first-time purchase?

That all depends on what you'd like to see happen. Some people purchase commercial buildings for businesses to rent. This can create great long-term income if the building is in a good location and the rental rates are appropriate. Others opt to invest in factory space, which can be rented to industrial giants and retailers. Both tend to sign yearslong leases, giving you a longer term of income security.

When you buy a commercial property, the most important things to consider are the locations you have as options, the size of the properties, the properties' conditions and the cost per month to you, as well as the potential rental rates for businesses or renters. You always want to find a property with good foot traffic, too, especially if you plan to purchase retail space.

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