Commercial Real Estate Requires Patience

A commercial real estate investment refers to the class of real estate that is primarily meant for investing money for profits later on. Examples of such properties include:

• Restaurants (this includes franchises)
• Retail Stores
• Office buildings
• Medical Buildings
• Health and Fitness Centers
• Self-storage (Mini-storage) and industrial
• Strip malls
• Hotels (also called "hospitality")
• Multi-family / apartment buildings

Why invest in commercial property?

Unlike residential real estate, Commercial real estate investments are evaluated, bought, and sold based purely on numbers - on a set of factors that describe what kind of return on investment you can expect with the property. Most Commercial real estate investments are expected to make a return for you on an on-going (monthly) basis. With the retail boom and increasing return on investment in the commercial real estate market, the value of commercial real estate has grown by leaps and bounds, particularly, in the commercial areas, where the local retail shops and shopping complexes have been replaced by huge and swanky malls.

What to expect?

Remember though! Commercial real estate investments are a long term opportunity, do not expect to increase you net worth over night. No one is going to profit all of the time. Real estate investors have to suffer through times of little to no cash flow - it is part of the game.

This may cause panic but if you can stick with it for the long term, cash flow will increase. Investing, especially in real estate is not for the weak of mind or body. It can be frustrating, and stressful. But for successful investors the rewards are priceless.

Commercial Real Estate Requires Patience

Investing in commercial real estate requites an investor to be patient. If you make a good choice on your property purchase the profits will come but it may take some time.

A few years back I purchased an empty warehouse that I intended to divide into smaller sections and rent. The warehouse was converted into six separate rentable areas. Shortly after renovation, three of the areas rented but, no one seemed to be interested in the remaining units. It was nice to have three units rented but, the rent I was receiving wasn’t covering my expenses.

I knew that with commercial real estate I had to be patient and wait for the right opportunity. Finally, after almost 2 years I found a renter for one of the units. A local business man was looking to start a small home town health and fitness center and felt my location was ideal. He signed a one year lease for one of the units and soon opened for business.

His business started off slow and it seemed that he may close his doors at the end of his one year contract. However, just before his one year anniversary his health club membership began to quickly grow and he decided to extend his lease for an additional year.

The second year proved to be magical; in fact he was doing so well that he needed to expand his space. Fortunately for both of us I still had two units available. He rented the remaining two units and began his expansion project. Besides offering the typical fitness center amenities such as weights, treadmills, stair climbers and other various excise equipment, he began to add staff and product. He hired a few fitness trainers and began selling different workout supplements for his members. His business exploded, which was a benefit to both of us.

By the end of the second year things were going so well that my tenant signed a 10 year lease for all three of the units he was renting. Now, my commercial investment has transformed from a liability into an asset.  The property is making a great profit each month and will continue to do so at least for the next 10 years or so, all it took was a good investment and patience.