I have been thinking of investing in the real estate market for a while. It seems like commercial properties can have cap rates of up to 10% and not have as much trouble or maintenance work as when dealing with reaidential tenants. Of course these kind of real estate investments are also more susceptible to economic downturns or shifts towards a more online based market. However these are risks I am considering taking. Another reason for researching this particular investment opportunity is to diversify a bit, despite the stock market having given me fantastic returns over the last few years. An 8% long-term (depending on the lease length) return is very appealing to me.
Now on to my questions to those that have either already considered or followed such an investment strategy. What are some of the hassles and risks I might be overlooking, despite the obvious ones like finding new tenants if the current tenant's business goes under or dealing with continuous maintenance requests?
Is it worth going the triple N route in order to avoid dealing with tenants or are returns *significantly* lower? What about using a rental mgmt company instead of going the NNN route like you would for a residential property?
Is proximity to the property as important as with a residential property or is the owner generally not bugged too often (assuming he doesn't do a NNN lease)?
I'd love to get a solid conversation started around this topic. Hopefully there are enough interested business-savvy (and liquid?) forum members to do so.
Now on to my questions to those that have either already considered or followed such an investment strategy. What are some of the hassles and risks I might be overlooking, despite the obvious ones like finding new tenants if the current tenant's business goes under or dealing with continuous maintenance requests?
Is it worth going the triple N route in order to avoid dealing with tenants or are returns *significantly* lower? What about using a rental mgmt company instead of going the NNN route like you would for a residential property?
Is proximity to the property as important as with a residential property or is the owner generally not bugged too often (assuming he doesn't do a NNN lease)?
I'd love to get a solid conversation started around this topic. Hopefully there are enough interested business-savvy (and liquid?) forum members to do so.