Commercial real estate is defined as a property which has the potential to generate profit through capital gain or rental income. But there are several different types of properties which fit that description and can be purchased with commercial real estate loans.
When most people think of commercial real estate loans they are only considering the purchase of an office building or a warehouse which could be used to house their business and maybe even a few other businesses which could lease space in on the property. But there are a few other types of property that meet the definition of a commercial property and as a group there are really three main categories that cover any property that you might consider financing with commercial real estate loans.
The most common vision of a commercial property is the office building. Everyone is familiar with this type of structure and has frequented many of them. They can house medical offices, small businesses and major corporations. And the only subcategory for this type of structure deals with the buildings location. Office buildings are regarded as urban or suburban office space. The urban office building is most often a high rise and it makes very efficient use of a small footprint due to the limited space available. Though small in terms of the land coverage, these buildings will offer millions of square feet because of the expanse of the floors. Suburban office space is more often found to exist as office parks containing mid to low rise buildings and considerably more ground floor square footage.
Multifamily homes is another type of commercial property. It might sound counterintuitive but because it generates rental income it is a commercial property and can be purchased via commercial real estate loans. There are a wide variety of structures that are considered multifamily homes. The can include high rise apartments, mid-rise apartment buildings, garden apartments which are normally found in a more suburban setting, manufactured home communities and special purpose housing to meet the needs of students, the elderly or even special needs consumers.
Retail Space to Generate Income
The final type of commercial property is retail space. This is a very broad category that encompasses everything from the largest shopping mall to a small independent market or store. The buildings can be high rise, single story or anything in between. And the location can vary as much as the size of the building does. The key reason for the qualification as a commercial property is that it is generating income for the owner.
The Common Denominator
Unlike residential property where it is just a home for a single family or person, commercial real estate has several different categories. But the common factor for all of the properties is that it must have the potential to generate some type of income for the owner. It doesn’t need to be generating income but it must have the potential to be doing so and then it can be purchased with a commercial real estate loan.
Level 4 Funding LLC Private Hard Money Lender
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.