People often think of residential properties when they think about investing in real estate. Buying a house or duplex and renting it out is a popular form of passive income. And there are many benefits to doing this. It’s stable. It’s reliable. And it’s profitable.
However, this is not the only form of investment that can be made in the real estate market. In fact, there’s a much larger market that can provide much higher returns.
Nashville office space is currently experiencing a wide expansion. More companies are moving to Nashville, which means more construction is being done to accommodate them. They are moving to Nashville because of a healthy economy, a large workforce, and ample space. And once they decide they are going to move operations here, they are going to need to find a place in which to work.
This is where investing in office space becomes profitable. But since people are often unaware that it is an option, they don’t know much about it. So here’s what you need to know about investing in Nashville office space.
How Can I Invest in Nashville’s Commercial Real Estate?
There are multiple ways for a person to get into the world of investing in Office Space and Commercial Real Estate. Each method will afford its own benefits as well as risks. Knowing your options will give you the best chance at finding the option that best suits your situation.
How do I Invest in Stock Market & Commercial Listings?
The stock market is a well-known way to make investments. This is the most indirect way to invest in office space, but that affords you more layers of security. In fact, you can scale the amount of money you would like to invest from as little as a singular share up to as much as you would like.
There are multiple publicly-traded trusts that offer great benefits. For example, Real Estate Investment Trusts are required to pay out 90% of their taxable income to their investors. This has a good chance of providing high yields.
Should I Buy My Own Building for Office Space?
This is the most direct way to invest in Nashville office space. Those who have the means of doing so can find a building that suits their situation and purchase it. After that, they can collect rent from their tenants much like those who invest in residential real estate.
This option is great if you can afford it, but it requires a lot of upfront capital that just isn’t possible for many people.
Can I Crowdfund For Commercial Real Estate?
This involves a large group of people pooling their money into a singular project. It provides the potential for high rewards, although it comes with a certain level of risk. These ventures are often the result of a developer purchasing a building that needs some work.
The loan from the bank and their personal contributions aren’t enough to cover the scope of the project. Investors come in to cover the remaining cost of the project with hopes that it will become much more profitable upon completion.
What Are the Benefits in Commercial Real Estate?
Office space provides a variety of benefits when compared to investing in residential real estate. The properties themselves come with a much higher price tag. This is balanced out with the potential for larger payoffs. More square footage means higher rents will need to be paid by the tenants. And once a building is filled, that’s multiple, large streams of income.
Residential contracts are frequently renewed or ended after a single year. Office space, however, has a tendency to feature longer leases. Businesses don’t want to pack up everything they have and move to a new location. This is a hassle not only because of the amount of materials to move, but because changing a business address is more difficult than changing a home address.
And much like homes, office space appreciates in value over time. Larger investments can see larger rewards when property values go up by percentage points. So not only will the office space provide returns through profitable and long-lasting leases with your tenants, they can also offer a payout on the backend.
What Do You Need To Know in Commercial Real Estate?
Whether or not to invest in Nashville office space is a big decision. There are a lot of factors that go into it and they should all be considered.
For instance, you should analyze the surrounding market. Is there direct competition? Is the neighborhood easily accessible by potential occupants? Does the area show growth potential?
You should also consider the possible uses for the space. Some buildings are more specialized to the types of industries they can support. Others are more generalized and can be used by a wide variety of businesses.
How does the building look? This might seem superficial in the grand scheme of considerations, but it’s important. Employees aren’t going to enjoy working in a place that doesn’t provide a pleasant work environment.
And finally, an analysis of potential income should be performed. What are comparable office buildings charging for rent? What kind of returns could the building potentially provide?