Commercial Real Estate refers to any property owned to produce income and it is used as an investment in any form of property which is used for business purposes. Here are some examples of Commercial Real Estate:
- Any type of office
- Any form of medical, retail, industrial, hospitality, and other commercial space that can be leased for business purposes.
- Retail complexes like malls, shops, business centres, restaurants etc.
- Grocery stores, chemist stores, super markets, warehouses etc.
- High rise buildings, hotels, casinos etc.
The amount that anyone spends on the purchase of the Commercial Real Estate is dependent on several factors. Some of these are:
- Market conditions: If the market situation is sluggish then can buy the property at a lower cost. However, in case of boom the customers have to pay a high price.
- Location of the property: The better and more suitable the location the more value can the property fetch. For example buying a house in an urban area would cost much more than buying a house in sub urban area. Similarly even the rents for these will vary in the same way.
It must be noted that in various types of commercial real estate leases there will always exist a landlord and the tenant relationship. It might require the tenant to only pay the rent. However in some other cases the landlord might also request the tenant to bear the cost of maintaining the property. The other charges such as property tax etc. are always borne by the landlord.
Commercial real estate requires a huge amount of capital. It is also suggested that the buyer has a good knowledge of the market as well as legal, financial and regulatory aspects of the purchase of the property. Investors who don’t have much knowledge hire brokers who take care of all these aspects thereby, leading to a safe purchase of their client i.e. the buyer.
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