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Commercial real estate investing is becoming increasingly popular due to the amazing growth opportunities provided by current market trends not only within Madison County but throughout the surrounding areas. While the best reason to invest in commercial properties are the higher returns there are many factors to consider when you are building out your portfolio.
Commercial real estate investing can provide both a stable and high yield of return, with average annual returns of 6-12% of the purchase price. Comparably, single-family dwellings range from 1-4% on average. Understanding these factors, it is easy to understand why an investor would choose Commercial Properties.
Additional benefits of investing in Commercial Real Estate include: Portfolio diversification, tax advantages, income, and “forced” price appreciation. While there are great benefits, there are also risks, which include: public safety, cost, credit risk, and market risk.
At Dean Commercial Real Estate, our priority is to preserve our client’s capital, maximize their capital investment options and minimize the risk factors that can affect their return and growth potential.
There are many types of Commercial properties that afford investment opportunities. They include industrial buildings, office buildings, retail, hotels\hospitality, land, warehouses, multi-family, mixed-use, and Special Purpose. Mixed-use properties offer the advantage of combining residential, commercial, and even industrial in one facility.
Why does this matter? All Commercial Property investments should be valuated by a Professional Commercial Agent who understands the Key Factors that will not only determine the value of your property but also its’ earning potential. These factors range from Economic and Political factors, the properties location, age and condition, present curb appeal, interest rates, and renovation potential.
Dean Commercial Real Estate agents excel in identifying the best investment opportunities in the North Alabama Market. In each case, we perform data-driven market research which allows us to recognize current and future occupancy demand in the market, based on the specific assets of each property. With this approach, we will formulate a unique investment strategy to achieve our clients’ investment goals.
In doing that, we utilize proven commercial property investment strategies.
Core Investing: Considered the least risky, Core properties are the safest way to start building your Commercial Portfolio. Core properties are relatively stable assets, requiring little to no improvements. Typically, they are in major metropolitan areas and include high-rise office towers or apartment buildings. They are usually best-in-class properties with high, stable occupancy and an upward demand trajectory.
Core Plus Investing: Core-plus strategy assets occupy the next step in risk factor consideration. While they share many of the same characteristics of Core Assets, they typically have exceptions that may include the age or condition of the property, a dip in current tenant credit, or a less than stellar location.
Value-Added Approach: Value-added assets are a little more risk, which can translate into a greater opportunity for profit. These are usually properties in need of renovations or re-tenating to improve the asset’s financial benefit. Approaching this investment with a sound business plan to improve potential growth is a key factor in adding it to your portfolio.
Opportunistic Investing: Opportunistic assets carry the greatest level of risk as compared to the other strategies. These properties are generally extreme turnaround situations with major problems to overcome. Opportunistic properties are often referred to as Distressed Assets. Distressed Assets have issues that can include, major vacancy, structural issues, or financial distress. While they carry the highest risk factor and require professional expertise, they also offer the largest annualized leveraged returns of over 20%!
Here at Dean Commercial Real Estate, we are committed to providing you with the best investment strategies based on in-depth research, market knowledge, and qualified investment experience. We are committed to developing the best strategy to achieve your investment goals.
Call us today to schedule your appointment!