If you have thought of investing in income real estate property, you have probably thought of owning apartment buildings or complexes. You have probably thought of a large number of units producing lots of rental income month after month. While it is easy to get carried away with such an idea, you have to dream with your eyes open. You have to remember that you have to pay taxes on that income. Plus, your rental property is not going to stay in great shape for long since you are renting it out to people that won’t treat it as their own personal property.
It isn’t surprising to see major damage as the years go by. To guard against this, you have to invest in property maintenance and this can set your dream of large monthly profits back quite a bit. In the end, after you have factored in maintenance costs as well as taxes, you might be looking at very slim profits and, if you don’t manage to get enough tenants, possibly losses. Quite a different picture from your original idea, right?
The good news is that there is one type of rental property that can meet your initial idea of large amounts of rental income month after month-commercial rental property Read the guide below to get a good idea on why this type of property might be a better investment option than residential rental property.
Business Customers Versus Consumers
Simply put, if you own commercial rental property, you are dealing with a different class of renter-the business renter. This person is more serious than a residential renter because he has more skin in the game. Not only do commercial renters have to lay out more cash to rent a space in your commercial complex; this type of tenant is also dependent on the space to earn a living.
Compare this to a residential tenant whose income depends on somewhere else. The commercial renter isn’t going anywhere-you know where to find him. As a result, this type of renter’s mentality is different, and you’re more likely to get paid on time.
Collecting Is Easier
Due to the fact that most businesses need a certain level of money to get started and to get going, your chances of getting paid month after month is higher with a commercial tenant. Also, many tenants are corporations with pretty sizable capital outlays. Most commercial tenants generate revenue from their business activities, and rent is quite high on the totem pole when it comes to payables as the end of every month.
Business Customers Have Deeper Pockets
In addition to capital, business customers have deeper pockets if something goes wrong. If the tenant or the tenant’s customers cause damage to your property, you can go after the tenant’s general commercial liability insurance policy. The tenant is also more willing to pay and not cause a fuss because the continued operation of the tenant’s business depends on a smooth resolution of any and all claims-and this includes your claims.