Commercial Real Estate - The Types Of Property To Invest In

If you want to earn money by investing in commercial real estate

, then the best way to do so is to reduce the risks involved with it. In order to achieve all those goals, you will have to forget all

that you know of conventional real estate investment methods. In commercial real estate, there are many great deals that can be made with very little investment at all, but you have to know what kind of property you are working with and then choose the appropriate strategy for it.

First, lets examine the strategies you have and then determine when they will work best. One commercial real estate strategy is the Joint Venture Facilitation (JVF). This method requires that you, the land owner, and a developer form a partnership in a developement. You will personally become a part owner in the development as a return for putting together the deals. The other strategy is known as the Master Lease Option (MLO), which is suitable for when you lease a commercial property. Basically all you have to do is lease the property from the owner as the master tenant for a set rate and then increase the net operating income (NOI) by increasing income and decreasing expenses. You pocket all additional income above the master lease rate. This is how you make a profit. For a bigger return, you can even add a purchasing option to the agreement.

The JVF strategy is best suited for land investment as you (the buyer) have a stake in the development. When it comes to the JVF strategy, you have to keep in mind that there is a variety of land to choose from. This includes a variety of zonings, stages of entitlement and in some cases even development. There are four common zonings in commercial real estate and the order of ascending value, or value per square feet or square acre, is: Agriculture, residential, multi-family and commercial.

When investing in income commercial real estate, then MLO is the strategy to implement. One important thing to keep in mind, though, is that the main objective of this investment is to take a poorly performing asset and turn it into a profit making one. This means that you should focus on properties that have long time tenants who have short to midterm leases. Properties with long term leases should be avoided because you cannot raise rents that existing tenants have

to pay and if you do have a vacancy, it will hit you harder in the long run.

See more by going to http://www.makemoneyincommercial.com.

by: JGilbert

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