Mention commercial real estate and investors immediately start thinking about office buildings, retail space, industrial properties, etc. Unfortunately, too few consider other types of properties that, while not talked about as much, still tend to generate healthy returns. If healthy returns are what commercial real estate investing is all about, it doesn’t make sense to ignore these other property types.
Below are three such property types. Each one brings something unique to the commercial property investment table. Each one also offers a ton of potential. If you are a commercial property investor, you would be wise to look at each of them. You might even discover an opportunity you cannot refuse.
If you’re looking for a bridge loan to make your real estate investment goals come to life, Salt Lake City’s Actium Partners can help you.
Mobile Home Parks
Although the modern mobile home owner prefers to call their dwelling a manufactured home, investors still refer to the parks that house these structures as mobile home parks. Semantics aside, a mobile home park established as a land lease property can generate a ton of revenue over many years of ownership.
Note that a land lease structure stipulates that an investor owns the park and leases individual lots to homeowners. Land lease arrangements are legal in all fifty states. They are especially popular in warm-weather states where retirees tend to look for cheaper housing.
Land lease properties can be extremely profitable. Tenants handle upkeep on the lots they lease. That leaves landowners to cover common areas and buildings, infrastructure, and amenities. Still, the potential is impressive. Imagine a 400-lot property with a monthly rental of $800 per lot. It generates $320,000 every month, year after year.
Self-storage has become increasingly popular over the last several decades. It is a necessary option for apartment dwellers who often do not have enough storage space inside their units. Self-storage is also attractive to tiny home owners, people looking to declutter, and small business owners who operate out of their homes.
What makes self-storage property so attractive as an investment is its potential to generate increasing profits over time. An investor might spend the first few years recouping their initial investment. After that, they only spend on property maintenance. The rest of their monthly revenues go right into their pocket.
Last on the list are technology properties. These are things like data centers and cell towers. They are often ignored by commercial real estate investors because there are very few ‘mom-and-pop’ players. Take cell towers, for example. They tend to be owned by large corporations. Data centers work pretty much the same way. But that does not mean property investors cannot get in on the deal.
It is possible to invest in tech sector properties by putting money into real estate investment trusts (REITs). These are funds that invest exclusively in commercial real estate opportunities. More than one cell tower project and data center have been funded through an REIT.
The strength of this sort of investment is lower risk. REITs accept investments from thousands of investors. The more investors involved, the less risk each one assumes. Jumping in would give you the opportunity to help finance the development of a tech property without having to assume a majority of the risk.
There are still other types of commercial properties that do not get the attention they deserve. They run the gamut from senior housing to special use properties. But just because financial experts do not talk about them does not mean they are not worth investing in. The least talked about opportunities can sometimes be the most worthwhile. Therefore, it pays to go beyond the expert advice to evaluate lesser-known investments.