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Expanding Your Investment Portfolio? Consider Commerical Real Estate Notes

Retail store for rent

Are you considering making an investment in mortgage, or real estate notes? Since the 2006 foreclosure crisis, there continue to be real estate notes for sale, and some experts believe that this can be a potentially sound investment.

Perhaps you have invested in residential real estate notes in the past and are planning to branch out to include commercial real estate notes. If this is the case, while searching for commercial real estate notes for sale, you may be interested to know more about the different types of commercial buildings that may be available:

    Office buildings
    Retail space
    Warehouses
    Lodging

If you are planning to add to your investment portfolio with commercial real estate, the Moody’s/REAL Commercial Property Price indices show that United States commercial-property values have increased 42% since 2009. In 2015, for example, there was an estimated 48 billion square feet of commercial building space transacted, according to REALTORS (R).

At present, the multifamily and industrial sectors of the commercial real estate market are the strongest. In 2012, for example, 125,000 rental units were absorbed. This was considerably higher than the pre-recession average of 45,000 rental units per year. Furthermore, the United States’ apartment vacancy rate is now around 4.8%.

It is also important to note that there is an increased need for additional industrial space. Commercial real estate companies can attest to this growing demand.

When considering the type of commercial real estate building to purchase, there are basically two types: small and large buildings. Small buildings tend to be located at shopping centers and strip malls. These smaller buildings may also be individual office spaces and stand-alone retail spaces for various types of products.

These smaller commercial properties tend to be valued below $2.5 million, and in some cases, they may be valued somewhat below that figure. Approximately 70% of these buildings have up to 10,000 square feet of available space.

The larger commercial buildings tend to be valued over $2.5 million, on average. These tend to consist of multi-story office buildings, office parks, and warehouses or storage facilities. Buildings of this size will, of course, exceed 10,000 square feet of available space.

As you give more thought as to how you want to expand your investment portfolio, consider adding commercial real estate notes.

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