Despite our many years of investing experience, it has taken us a long time to understand what commercial property is and isn’t.
There’s no point in investing your hard-earned money if you don’t really “get” how it works and how you can make money from it.
So let’s dive right in so you can really appreciate what we love so much about this investment vehicle.
What is it
Commercial property can be defined as any property that is zoned or used solely for business purposes. It includes shopping centres, strip malls, hotels, retail stores, warehouses, restaurants, industrial spaces, farms, office buildings, childcare centres, service stations, data centres, even vacant lots that have been designated as commercial by the local government.
They are the buildings you see every day as you walk around your neighbourhood. Just as everyone needs a place to live, most of us need a place to work.
You can’t build a business on a residential property or a home on a commercial property. This is because owners or builders of commercial properties must meet certain standards when constructing a business, from the style and specifications of the building to the number of parking spaces provided. Councils also have different zoning and regulations that must be adhered to. They also might have different tax rates compared with other types of properties.
Commercial properties can be divided into categories. There are hundreds of different options available, and choosing the right property and then the right tenant is often the most difficult part of starting your investing journey.