If you’re preparing to invest in commercial real estate in Wilmington, NC, you first need to think about the different types of properties available and decide which ones you want to purchase. With residential properties, there aren’t as many choices, which means there aren’t as many factors involved. With commercial properties, however, each type has a number of factors that can impact your profit margin. Let’s take a look at some of the most popular types of commercial real estate.

Warehouses and Offices

Investing in office buildings or warehouses offers you a number of advantages over residential properties. While you still have tenants who pay you rent, these tenants also typically sign what are called NNN or triple net leases. That means they pay the net costs of the property taxes, the insurance, and all of the repairs and maintenance for the space they are leasing. While that sounds great, there is a risk: typically, these leases are five years or more. While some rent increases are built into the lease, you cannot drastically change the terms. For example, if the property is located in an area that experiences sudden growth, you can’t increase the rent to capitalize on that growth.

Apartment Buildings

Investing in apartment buildings can be a major profit generator if you’re willing to pay to maintain the properties. Many investors choose to retain the services of a commercial property management company to handle the actual day-to-day tasks. While this is another cost to you, in the end, you don’t have to do any additional work. You simply collect the rent minus the management service company’s fee and any other expenses incurred. It’s often easy to find apartment complexes for sale, and banks tend to see them as a secure investment for loans.

Shopping Centers

Shopping centers are similar to offices and warehouses in that they are often leased long-term under triple net leases. With multiple tenants, you continue to generate revenue even if one or two decide to not renew their lease.

Hotels

While you may not want to start out your investment career with a hotel, it can be a good investment for those with some experience and an understanding of the local market. It is a riskier investment because, unlike apartments, your “tenants” are only there for a short time. You constantly have to market to potential customers and bring them in. However, you can always bring in a management company to handle the daily operations of your hotel.

Each of these types of commercial real estate in Wilmington, NC, does come with its own risks and rewards, of course, and the location and local economy will play a part in your decision. Do your research before you decide what to invest in.

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