In real estate

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Answered by: Justin, An Expert in the Business Real Estate - General Category
Business Real Estate

In real estate, there are different types of properties. There is residential real estate and business real estate also known as commercial real estate. This is buildings and properties that are used for profit making ventures. There are different types of business real estate which include leisure which includes hotels, eateries, sports facilities and other entertainment facilities, retail which is inclusive of stores, malls and shops, healthcare which are hospitals, medical centers and other like medical facilities, office buildings, industrial properties and multifamily housing buildings.

Commercial buildings and business properties tend to have longer leases as compared to residential real estate. Most leases for commercial real estate are normally in terms of years with the least typically being a lease of three years and they can go up to as many years as the tenant and landlord agree. In most cases of commercial leases, banks tend to guarantee for the tenant should the tenant default on the rent. You will also find that the rent in this type of property is dependent on square foot rather than a set amount so depending on the space you want to lease, the rent will be calculated based on the price per square foot. So depending on what you want and agree with the landlord, you can get a smaller or a larger space depending on the number of square feet you want or negotiate for.

In real estate, business real estate is more lucrative as compared to residential real estate because the rent charged tends to be higher, there are less costs of running the building as most tenants take care of the minor repairs themselves and the returns steadily increase; rarely does the value of the building or property decline. However, these types of real estate ventures are expensive to buy or build and you will find the lending requirements are much more stringent as opposed to when you are seeking for a loan to buy or build a residential property.

Business real estate costs a lot of money to build, run and lease as they are large buildings with plenty of space. In most cases you will need to hire a property management firm to take care of the buildings and the day to day running of the property such as rent collection, advertising for new tenants, evicting or taking legal action against tenants who have defaulted on rent and other tasks that may be needed to be carried out.

In real estate, commercial and business tenants take care of minor repairs as opposed to informing the landlord to take care of them. Commercial buildings and business properties will have the rents steadily increase over a period of time. The value of commercial properties will steadily increase if they are well taken care of and maintained. You will also find that it is not possible to convert a commercial lease to a residential one and vice versa. This is because there are designated zones for commercial properties and those for residential ones.

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