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Although there are many different types of commercial real estate, many savvy real estate investors focus on apartments and manufactured home parks, because that is where PEOPLE LIVE. In today’s topsy turvy economy and real estate market, I want to own the types of real estate that have the demand of something that remains relatively constant, that being “a place to live and sleep”. The demand for office, retail, industrial, warehouse space, etc. can and will go up and down. However, people always need a place to sleep. They also need a place to “put their stuff,” consequently many people also feel that “self-storage facilities” are a good investment too. I personally have not invested in this class of commercial real estate, however I know others that have done it successfully.
That being said there are definitely ways to buy commercial ‘residential’ real estate that can be profitable and provide a monthly cash-flow.
The key is to understand the income and expenses of a piece of Portland commercial real estate. These two factors determine the Net Operating Income, or “NOI”. NOI is merely the net cash-flow of the property after all expenses, as if you owned it free and clear. That’s right, free and clear. Then there is the consideration of Capitalization Rate, or “Cap Rate,” which is an industry standard term that measures the NOI as a percentage of a given purchase or sale price.