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Location is key. A valuable location, a strategically situated
piece of land or building, is at the mercy of a number of factors,
including the economy, public perception, zoning laws, neighborhood,
etc. A savvy investor will know the market and take advantage of
potentially lucrative opportunities. There are a sequence of steps
a commercial real estate investor may want to consider as they begin
to grow their investment knowledge.
Small Los Angeles Apartment Complex
For the first-time investor, after purchasing your own home, the
next step would be to consider a small apartment complex. You could
live in one of the units, purchase the property using owner financing,
decreasing the down payment amount. A small apartment complex also
affords you the opportunity to learn how to manage property.
Los Angeles Land
Raw, unimproved acreage such as farmland or a vacant city lot may
not be a lucrative short term investment as there is no immediate
cash flow return and if the land remains idle, there could be out-of-pocket
costs such as taxes, insurance and maintenance. However, as population
grows and cities expand, having a piece of land on what was once
the outskirts of the city could be an excellent long-term investment.
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Build-To-Suits
This is a land or property owner that offers to build or convert
his property to meet the unique requirements of a particular tenant.
This is done a couple of ways. One is for the tenant to supply his
plans and specifications to the landlord, who in turn has his or
her contractor give an estimate of the cost of construction. Alternatively,
the property owner can let the tenant build to his specifications
while the landlord finances the cost of construction.
Los Angeles Shopping Centers
There are two main types of shopping centers: Anchored and unanchored.
Anchor refers to the main tenant such as a supermarket or major
department store that occupies the largest area within the shopping
complex. It is the main draw that indirectly generates business
for other tenants in the shopping center. Anchored shopping centers
are relatively easy to manage because the responsibilities of the
landlord are limited to grounds and structural upkeep, management,
insurance and real estate taxes. The tenants themselves are responsible
for interior construction, upkeep and repairs.
Strip centers or malls are a series of retail stores usually located
on the perimeter of a densely populated neighborhood. They are located
on a heavily trafficked commercial street with good visibility and
easy access. They represent a smaller investment than an anchored
mall and there is no risk of the departure of a major draw tenant.
They are also easier to manage because of their smaller size. However,
a strip mall must be well located. Also, smaller tenants tend to
have shorter life spans causing a high vacancy rate. Make sure there
is a good mix of stores that complement each other.
Los Angeles Condominium Stores
These are retail spaces located on the street level of apartment
dwellings that service the building itself, but also draws street
traffic.
Los Angeles Office Buildings
These are similar to apartment buildings, but are more service intensive.
The owner pays for the building electricity, heating, ventilation
and air conditioning as well as internal repairs. Income from office
buildings increase with strong economic conditions with more demand
for office space, however in economic downtimes, vacancies and lower
rents mean lower income. Prices of office buildings fluctuate with
widely in relation to the condition of the economy. Investing in
an office building is a large undertaking, one usually better left
for experienced investor groups until one is more knowledgeable
about managing properties.
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