Cape Cod Investments
The Cape is an excellent place to consider for investing in real estate. Even though the area isn't as highly developed as Boston or communities around Route 128, there are a lot of properties available for investments. If you're new to investing or don't have a big budget, a lot of the real estate is more accessible than properties in Boston. The Lower Cape has a lot of business and retail property available in the small communities, and the Upper Cape is an ideal income source for the hospitality and tourism sectors.
Various types of commercial properties make excellent investments and include:
- Industrial
- Office
- Retail
- Warehouse
Another lucrative commercial investment is a "mixed-use" property that can consist of offices, apartments or condos, and retail spaces.
Positive Aspects of Commercial Investments
Commercial properties on the Cape have a lot of advantages for savvy investors who are interested in branching out from residential properties or looking for investments other than condos or townhouses. Here are some reasons to consider investing in commercial property on Cape Cod.
Income Potential
Investing in commercial properties is an excellent way to increase your income. There are many residential properties that are affordable. However, the return on residential homes and condos is approximately one to four percent of what the property was purchased for. If you invest in commercial real estate, the annual return will be between six and twelve percent of the purchaser's price.
Commercial Versus Residential Leases
Another of the advantages of investing in commercial properties is that the terms of the lease are better than a lease on a residential property. The lease on a home, condo, or townhouse is usually renewable on a yearly basis. However, the leases on commercial properties are much more flexible. Commercial properties don't have as many restrictions and have fewer consumer protection laws applied to them. Leases on commercial real estate are usually extended for several years.
Time Commitment
One of the biggest differences between managing residential real estate and investing in commercial properties is that you usually have to spend fewer hours each week managing commercial property. Managers of residential real estate routinely get calls from tenants when there's a problem with their home, even late at night.
When you're managing commercial properties, problems may still arise but aren't as likely since they keep standard business hours and are closed at night. Most commercial investors have security systems installed at their businesses so if there's a problem at night, the company that monitors the system is called so the appropriate authorities can be notified.
Relationships Between Business Owners and Investors
Most often the owners of small businesses are LLC's rather than individuals. The owners and investors both want the property kept in excellent condition and make improvements as necessary to preserve the value of the building. Since both parties have an interest in making a profit, the relationship is between two businesses and is courteous and professional.
Square Footage of Commercial Real Estate On Cape Cod
You should know how to calculate the square footage of any Cape property you're interested in investing in to make a comparison between it and other properties in the neighborhood. The agent listing the property should be able to tell you the square footage. If you can access the property, take the measurements of each room by measuring the length and width and multiplying it by two to get the dimensions. Make sure to add all hallways and closets to your calculations. Decide on a price for the property or find the price in the listing and divide the price by the square footage to get the price pee square foot.
Research Similar Properties
Get listings from the real estate agent for comparable commercial properties from the previous six months and compare them to the listings in the town in which the investment property is located. By calculating the square footage of similar properties, you can determine if the asking price for your investment property is fair.
Learn From the Experts
A good rule to remember when you're considering investing in commercial properties on Cape Cod, take the time to learn about the process of investing in commercial properties and take advice from experts with experience to guide you through the process. You'll have to learn to identify prime prospects. If the building you consider needs a lot of upgrades, it could severely cut into the profits from your investment.
Take the advice of a building inspector, especially if the property needs a great deal or work before it's profitable. An important factor is to be open-minded to a variety of possible investments. The property you might not initially consider could turn out to be the most lucrative investment.