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A Comparison Of Commercial Real Estate Sectors
Let me enlighten you self storage investment by presenting hard facts about the other sectors in commercial real estate. Office buildings and other such buildings such as malls, and even retail stores (at 53%), have a very high bank loan failure rate at 63%. This is why if you want to invest in office buildings, there’s a great chance that you’re loan won’t be approved. Plus, office buildings have high development and overhead costs. Imagine the electricity bill that you’ll receive with all the lights that are turned on, not to mention the elevator, even when the building is not filled with tenants! Added to this is the high labor cost: administration, cleaning maintenance and security. It will really take a lot of money for you to manage this type of investment, with a 63% chance that you’ll fail! Now let’s take a look at apartment buildings. It also has a high bank loan failure rate at 58%! The development and maintenance costs are equally high as you would always need to fix leaky roofs, toilets, and even deal with unruly tenants! What’s worse is that some tenants just up and leave in the middle of the night without paying several months’ worth of rent! If you’re thinking about investing in apartment complexes, I implore you to think twice before diving in! The stress of dealing with the tenants might be much more than you can handle, not to mention the high maintenance and development costs! Plus, to break-even you would need 80-90% occupancy rate! The same goes for office buildings! Having laid out some statistics on these sectors of commercial real estate, you can see how buying commercial investments is not that simple. There are a lot you need to research in order to minimize the risk you’re taking. Now let’s go on to a more positive sector. Self storage investment—yes as in the place where you put all the junk that you can’t bear to throw away—is one sector that banks love! How so? Because it has the lowest bank failure rate at only 8%! This way, you can rely on banks to help you finance your very own self storage facility! What’s more, you only need 67% occupancy rate to break even! And there are very low development and operating costs! All you need is one site manager OR just an automated kiosk and you’re open for business! Plus there are a lot of profit centers you can put up like a sort of self storage convenient store where they can buy locks, boxes, and other stuff they would need, but forgot to bring! Added to this is the fact that you don’t have to worry about tenants and rent loss! When they don’t pay, you can simply auction off their stuff and even earn a bigger profit! And what about the demand? Well, self storage has a skyrocketing demand because even if the economy is good or bad, people need a place to store their stuff! Article Directory: http://www.articledashboard.com You see, buying commercial investments pays off when you know the right sector to invest in. And the best part is that you don’t even need to empty your savings account to invest! Because banks love self storage, you’re sure to have your loan approved. This is definitely the best way to beat the recession! |
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