What Are Commercial Real Estate Properties and What Is Included in Their Category?
Commercial real estate properties have been extremely popular for decades. Every real estate investor who wants to get rich fast and has the capital needed for a sizable investment will at some point consider switching from residential to commercial or even starting out with commercial real estate properties in the first place. However, as a beginning real estate investor, it’s important that you know as much as possible about these properties, including what they are and what types of properties they might represent.
Defining Commercial Properties
Commercial properties are also known as commercial real estate, as well as income properties or investment properties. That’s because, unlike in the case of residential properties, they can help tenants earn money, either by leasing them to tourists (as in the case of hotels) or leasing part of the property to various businesses and manufacturers who will then use it to create or sell products or provide services that bring in revenue. It’s also very important to note that some properties that would normally be considered residential can also be defined as commercial real estate. For instance, in many states within the US, a residential property with more than a certain number of units will qualify as a commercial real estate property, when taking into account tax and borrowing purposes.
Parties Involved and Types of Properties
Commercial leases are typically discussed between the owner and the tenant, both of whom are usually companies or shareholders in various large corporations. Of course, this doesn’t necessarily have to hold true for the owner, since you can still be a wealthy individual owning several commercial buildings. However, for transaction and tax purposes, it will usually be best to own a company, if you want to be the landlord or seller of a large commercial property. As for the types of properties involved, they can be extremely diverse. Farm land, multifamily housing buildings, warehouses, factories, retail centers, shops, hotels, office buildings, land and various miscellaneous buildings and properties such as medical and self-storage areas can also fall into the commercial real estate category.