The industrial real estate market includes a variety of structures that offer great returns on investment. Due to the nature of industrial real estate, the risk factors are typically lessened and stabilized as long as the proper research and due diligence is completed.
Falling under many categories, industrial real estate can range anywhere from warehouses and factories to storage facilities, and many in between.
Reliance on businesses is a compelling factor that makes industrial real estate such a profitable venture. For example as e-commerce grows rapidly, more and more places to store goods are required near dense rural areas to ensure products arrive quickly. Unlike commercial real estate, industrial properties can be redesigned, renovated and utilized to serve more than their original purpose. Their versatility is a great perk that can and should be capitalized upon to raise your return on investment as high as possible.
Another amazing benefit that industrial properties have is the lower maintenance costs.
When you think of an industrial property, and a warehouse comes to mind, what do you see? Tiled floors, wallpaper, stylish fixtures and drop ceilings are not typical furnishings for industrial properties. They are designed to be functional and reliable, therefore the fancy and high-end particulars are left out, reducing costs. As with any building, however, there will be utility bills, taxes, repairs and upgrades, which is why it is crucial to be diligent when planning your investment in the industrial sector.
One of the most important factors to consider is tenants.
Choosing the right tenant to occupy your space is pivotal to success. Ensure business plans are present, and read them thoroughly. Think of the area and surroundings your property either has or will have. Know who your consumer market is and determine if your tennant’s business plan will prove to be high-yielding. The process of finding the right tenant can be enduring, but the goal is long term occupancy. An empty space will not be profitable, however, flipping tenants often can be equally as unprofitable or worse. It is a balance that needs to be studied and planned. Once you find the right tenant, due to the large nature of industrial buildings, they usually intend to remain at one location for an extended period of time. Since they intend on staying for a while, they will commonly take better care of the facility.
The financial advantages of an industrial property are many.
The most obvious, as with any real estate, is appreciation. It is more than likely that your property will appreciate in value over time. How much is determined by multiple factors and will usually take quite a few years, but it is almost guaranteed that a property will appreciate. Tax write offs will play a huge part for finances as well. Knowing what can be a tax write-off can save thousands if not more. If all else fails, industrial properties are desired commodities and can be easily liquidated if needed.
