They can be multifamily (typically having four or more attached dwellings), retail spaces or offices, industrial or warehouse properties, or even developable land.
Since commercial properties are larger scale, they allow you to build your portfolio more quickly than buying individual dwellings. And of course, any real estate investment has the unique advantage of allowing you to leverage, or mortgage, your investment.
There are several factors you must take into account when evaluating commercial property. From the numbers you use to assess the property.
to the tax benefits and capital improvements you could make. And lastly, the business plan for the asset โ are you growing organically or hoping to invest passively?
If youโre planning to take the investing plunge into commercial real estate, youโll need to find the right inspection and financial report for your deal, and determine if youโre serious about increasing your portfolio.
Before digging in, itโs important to understand the different commercial real estate classification systems. Here are the top five, covering asset classes to help you distinguish between what you might be investing in and whatโs a multimillion dollar behemoth.
Assets & Classes

Call it classification arbitrage, or just classification snobbery to be tough on yourself. Whatever it is, itโs a great way to gaze disdainfully upon other people who invest in commercial real estate โ or any other asset class for that matter.
On the surface, classifications can seem like more genuine differentiation. For example, investing in mobile homes versus apartment buildings can make for more appealing mobility or lifestyle. Or investing in industrial spaces versus retail presents newer options to buyers.
But these distinctions arenโt nearly as meaningful as what classes look like to investors. For example, investors will be able to determine how much additional tax theyโll be paying versus someone who solely buys single family or multifamily properties.
Classification systems vary across different markets. Take Kansas City for example. Realtycodes.com divides the building types (mobile vs. multifamily) and the tax valuation accordingly.
But beyond the specific tax classification system, there are other considerations when investing in commercial real estate. Letโs take a closer look at what factors contribute to a better value.
How Commercial Real Estate Investors can maximize returns

There are several ways to play the investment game. But most of us will probably be minimizing risk with some or all of these investment strategies. When investing in commercial real estate, youโll need to do the same.
Here are five strategies that maximize returns, allowing you to make more money than youโre putting in.
1. Buy more than you can sell
Itโs the saying that a dollar today is worth more than a dollar tomorrow. And itโs true for commercial real estate as well.
You donโt sell a building unless you can offer a clear value suggestion to a potential buyer at its current level. If you canโt do this, either drop the price or raise the sales price. The only way you can take your returns higher is by rehabbing the property.
To how to analyze the contracts. And of course, there’s the part of the whole that involves buying a property and managing that property.
How to Evaluate a Commercial Real Estate Deal?

What exactly are the parameters that determine if a property qualifies as commercial?.
The two main criteria are dependability and revenue. The potential use of the land and building the space will obviously determine if a property qualifies as commercial.
If not, then you could pursue an FHA loan, but that’s a detailed post all unto itself (much like as a primary home).
Refinancing on commercial real estate is also different from a residential or a commercial multifamily property.
How Commercial Real Estate Works
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Essentially, you’re selling the pieces of the project (the building, land, inventory) on a piecemeal basis.