What is Commercial Property?

The simplest way to define commercial real estate is a property that has the potential to generate profit through capital gain or rental income. If you can make money from leasing it out or holding it and reselling it, it’s a commercial property.

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Commercial buildings include office buildings, restaurants, retail space, warehouses and multi-family buildings like apartment buildings.

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How does investing in commercial property compare to investing in residential property?

While commercial real estate often requires a larger upfront investment than a residential property, the potential rate of return is often higher as well. You can also take advantage of triple net leases, which place the financial responsibility for costs like real estate taxes, maintenance, and insurance in the hands of the leasing tenant.

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Unlike residential real estate, you usually can’t live in the property when you invest in most commercial real estate. But the upside is that you’re usually working with business owners (a B2B relationship) rather than directly with renters (a B2C relationship). And with income-producing businesses as property tenants, they’re more likely to stick to lease terms and pay rent reliably.