Houston Commercial Property
Investors who want to see their money grow often recognize the incomparable advantages of investing in real estate. Unlike investing in such things as stocks or any other “paper investment”, real estate has the potential to create significant cash flow in the first year. Any comparison between real estate investing and other investment vehicles is really not possible. However, these are the reasons often sited when putting money in the tangible assets of real estate.
- It is easy to recognize value by studying comparable sales.
- Maximum leverage can be as much as 95% of purchase price.
- A 15-20% return on investment (ROI) is pretty common (not guaranteed).
- With tenants, the cash flow pays down your leveraged investment.
- You can inspect real estate to determine risks.
- Opportunities show up offering the ability to buy well under market value.
- You can improve a distressed or functionally obsolescent property to bring it up to market ready.
- Tax advantages and value appreciation.
- Your investment goes beyond ROI when you serve basic needs of your community.
Residential and Multifamily
The need for housing is eternal. It is a basic human need. Since homeownership is not chosen by a large portion of the population, being a landlord is a great investment vehicle for many. Single family homes can be purchased in distressed or functionally obsolescent condition and ‘flipped’ to gain immediate profit. Other investors prefer to purchase homes, perhaps in better condition, with the goal of holding the properties to be rented. The result of purchasing and holding is the potential for significant equity growth while the tenants provide cash flow to pay down any purchase loans.
Raw Land and Industrial
For trend-spotters, they may prefer to invest in future economic growth of the Houston area. A quick study of land values reveals a rapid increase in prices among properties in growth areas. Because this type investment does not carry the level of holding expenses as residential properties, many will be held for a longer term. Explosive economic growth can yield investors many multiples of their investment in a matter of a few years.
Retail, Office and Special Purpose
As business continues to grow in the Houston area, the need for retail and office space follows. Many commercial property owners use a triple net commercial lease structured to remediate any risk of increasing taxes, insurance, utilities and maintenance costs.
Of course, not all commercial properties are purchased by investors. Many businesses and organizations recognize the value of owning property for their own commercial purposes.