Often times, commercial real estate leasing contracts are longer than those of residential. Residential real estate leases are usually short, whereas the commercial properties typically have lease agreements from 5-10 years in duration. Assuming the tenant(s) do not vacate or go out of business, this long term provides for stability in the investor’s portfolio. Advertising and marketing costs are much lower in commercial real estate properties as well due to the lower turnover rate. People often switch apartments within 1-3 years, however, businesses do not move as frequently.
Another advantage of commercial real estate is there is typically less maintenance responsibilities for the property. Triple net lease agreements provide for all maintenance of the property be the responsibility of the tenant. In residential real estate, it is usually the investor’s responsibility to take care of the property and any associated maintenance and/or repair work.
Commercial real estate investing is a profitable endeavor if you have the time and patience to put into it. On the other hand, it can also be a very risky business if you have not done the proper research or sought the advice and assistance of a commercial real estate professional.
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