December 10, 2019
Investing in Commercial Real Estate is one of the best ways to generate income. But you have to wonder, should you lease a single-tenant or a multi-tenant property? Both options come with their pros and cons, so it’s incredibly important to figure out how you can tackle this issue and manage it at the highest level.
Better assurance and higher value
One thing to consider when it comes to Commercial Real Estate lending is that single-tenant properties are rented by corporate backed tenants. They tend to have a strong credit and the best option you would want as a tenant. There are little to no risks involved, not to mention the investment is recession-proof.
Another thing to note about these tenants is they tend to pay their own taxes, common area maintenance and insurance. They also maintain the property very well and they handle capital expenditures. When you think about acquisitions without any major involvement from your side, this is definitely the right one to focus on. Sure, you still need to check on them from time to time, but the reality is that you get a much better return on investment and the value itself is staggering. So yes, you will be very happy with the results if you use the single-tenant approach.
On top of that, Commercial Real Estate lending to a single tenant means that you can have a steady income in the long run. The return and cap rates are anywhere from 5-7% and they remain stable. Plus, you don’t have to worry about any of the tenants going away and dealing with vacancy levels. You are less involved, yet still obtain a very good ROI.
You can also increase the rental prices due to inflation and other factors. If you invest in Commercial Real Estate, you can easily have a prime location and that’s easy to lease to someone else when the current contract is over. In addition, you can get a high credit corporate lease guarantee which is very appealing. This is one of the best passive investments that you can make, and you can easily enjoy your life without having to worry about constantly nagging your tenant. After all, since you’re dealing with a single tenant, the experience is easier and you can run a background check just to be safe.
If you’re looking to invest in Commercial Real Estate, a single-tenant lease is the best option. As you can see above, it comes with some amazing benefits, the return on investment is amazing and you will be impressed with how adaptable this entire process really is. Granted, you still need to pay attention to how you invest and what tenant you choose, but the risks are way lower. That on its own just makes this entire process a lot better and the risks are lower. You certainly want that, so keep it in mind, give it a shot and you will find this is a great way to invest your money especially in the long run!