Did you know that the commercial real estate industry is expected to increase by over $250 billion by 2027? This means it’s a better time than ever before to invest money in commercial properties.

However, not everybody understands how much money they need to have for investing in commercial real estate. Let’s take a closer look at what you need to know before getting involved in the commercial real estate industry in Orange County, CA.

What Are the Different Types of Commercial Properties?

As you might guess, office buildings, retail stores, and industrial sites are all considered commercial properties.

Interestingly, though, many people overlook the fact that apartment buildings with five or more units are also considered commercial properties. This means there is plenty of opportunity in the area to find a great investment property.

Be sure to take your time when searching, though. This will allow you to find the best option for your needs.

How Much Money Do I Need to Invest in Commercial Real Estate?

The amount of money that you need for investing in commercial properties is highly dependent on the type of property that you choose. For example, an apartment complex may require a large down payment and more capital over time than an office building will. Additionally, the size of the property that you choose will affect your investment budget.

In general, buyers need to have a down payment of approximately 20% in order to secure financing. Otherwise, they may not be able to find a lender that is willing to work with them.

Additionally, it’s recommended that buyers have a cash reserve that is equal to six months of mortgage payments in order to cover any expenses or vacancies that may occur.

Where Do I Look for Properties?

Commercial real estate in Orange County is available through local realtors who specialize in the area.

Additionally, there are many online resources available that can help you find properties in the area. It’s important to do your research, though, as many of these sites may not have real-time pricing or accurate data on the availability of properties.

Are There Any Tax Benefits?

Investing in commercial real estate can offer many tax benefits for those who are willing to take the time to understand the laws. For example, depreciation of the property can be used as a deduction on taxes.

Additionally, investors may be able to qualify for 1031 exchanges which allow them to defer capital gains taxes when trading in one investment property for another.

What Financing Options Are Available?

There are several different types of financing options available for commercial real estate investments, including traditional bank loans, private money loans, and bridge loans.

Depending on your financial situation and credit score, you’ll want to look at all of these options to see what best fits your needs. Your loan history will also play a large role. If you had issues repaying commercial loans in the past, it will be more difficult to secure financing.

What Other Costs Should I Consider?

When investing in commercial real estate, it’s important to factor in all of the associated costs that come along with owning a property. These can include property taxes, insurance, maintenance, and repair costs.

You should also consider utilities and legal fees. It’s important to go over each of these costs with your financial advisor before making any decisions. This will help you avoid complications in the future. P

What Type of Return Can I Expect?

The returns that you can expect from investing in commercial real estate are highly dependent on the location, type of property, and other factors.

Generally speaking, though, it’s not uncommon to see an annual return of 6-7% on your investment. This is contingent upon multiple factors like the local market, the condition of the property, and how well you manage the rental income.

What Are the Different Ways I Can Invest in Commercial Real Estate?

One of the most common ways to invest in commercial real estate is by purchasing a property outright and renting it out.

Alternatively, you could invest in a real estate investment trust (REIT), which allows you to own shares of multiple properties while still being able to benefit from the rental income.

There are also syndications that allow multiple investors to pool their money together and purchase larger properties. This is great for those who don’t have a ton of capital to work with.

Many people find they benefit the most when they have more control over their investments. So, take this into consideration. Group-based investments might not always be the best choice.

What Should I Do When I’m Ready to Invest?

Working with the right commercial real estate brokerage is essential when it comes to finding the property that is best for you. When searching for one, make sure to look for an experienced team in the Orange County, CA area.

They will be able to guide you through the process, helping you to find the right property and obtain the financing that you need. Keep this in mind when looking for Orange County properties.

Investing in Commercial Real Estate Doesn’t Have to Be Overwhelming

Initially, investing in commercial real estate may seem daunting. The good news is that the guide above has everything you need to know to make the process simple.

Looking for more information about what we can do? Reach out to us today to see how we can help.

There are 2,432,860 commercial real estate businesses in the US, many of which must recognize the many tax benefits of owning it. 

There are a plethora of tax benefits to owning commercial real estate. Many people buy commercial real estate because it’s a different kind of investment than, say, stocks. What they quickly realize are the benefits of commercial real estate investments. 

You might wonder if putting your money into real estate is a smart move and what benefits you get from it. Read on to learn more about the tax benefits of buying commercial real estate. 

Tax Deductions on Interest Expenses

One of the many tax benefits of buying commercial real estate is the many tax write-offs. If you have a mortgage on a commercial property, you can use the mortgage interest as a deduction. 

So, let’s look at an example. Let’s say you hold a mortgage on a commercial property and pay $12,000 per month. You can’t write off the entire $12,000. But you can write off the interest part of it. 

So, of that amount, $2,500 of it might be an interest payment. That’s a $30,000 deduction you can use when it comes time to file your taxes. 

Depreciation Deductions

Another great tax benefit for commercial real estate is the depreciation advantage. The IRS assumes that over time a commercial property will depreciate in value. 

They allow you to deduct that depreciation at a certain percentage each year. Currently, you can deduct a percentage of the depreciation over a 39-year period for commercial real estate. 

So, let’s say you own an Orange County commercial property worth around $10,000,000. Each year you can deduct about $256,000 in depreciation deductions. 

It’s also important to remember you can do this over a 39-year period for commercial real estate. 

Other Non-Mortgage Related Tax Deductions

Aside from interest and depreciation, there are other commercial real estate investment tax benefits. It wouldn’t be realistic to assume you won’t have other related real estate expenses for your investment. 

Another benefit to commercial real estate investing is that you can also write off other expenses. These write-offs might include:

• Repairs
• Maintenance costs
• Property management expenses
• Operating expenses

The IRS even allows investors to write off travel expenses when they visit the rental property, including hotels and a percentage of food expenses. 

It’s worth noting that improvements might not be a write-off but can later be written off when depreciating.

Commercial Real Estate Losses

The reality is that most people invest in real estate to make money. But occasionally, properties are sold at a loss. 

When this happens, you can still use it to your tax advantage. You can take a few routes to get a tax benefit on a real estate loss. 

If a commercial real estate investor has a loss and makes less than $100,000 in income, they can write off the loss. So, for example, let’s say the investor’s income is 98,000. 

They sold a property and lost $32,000 on the investment. This means the investor can lower their annual taxable income to $66,000. 

If your income is more than $100,000 but not more than $150,000, you still can write off a portion of the losses. If your income exceeds $150,000, you cannot write off losses. 

There is a caveat to the $150,000 rule. You can write off as much as needed if you make more than $150,000 if you work in the commercial real estate industry. This would include working as a broker, agent, investor, or property manager.

To qualify for this benefit, the IRS requires you to work in the commercial real estate arena for at least 750 hours per year. 

Beneficiary Tax Benefits

As an investor, you can also consider the long-term benefits for your heirs. 

Let’s say you pass away, and the property has grown in value from $5 million to $7 million. Your heirs only pay taxes on the capital gains of $2 million. 

So, they only pay taxes on the appreciated amount, not the whole amount. 

Commercial Real Estate Vs. IRAs

Many investors consider IRAs for investments like they might commercial real estate. So, let’s compare how they stack up for tax purposes. 

When investors buy into an IRA (not a Roth IRA) and later cash it out, they pay taxes on their personal income rate. 

When an investor buys commercial real estate, then sells it later, they only pay the taxes on the capital gains part of the income, not the entire sale amount. Of course, this is also after having other tax benefits while owning the property.

1031 Exchanges

1031 exchanges is an IRS tax program that many commercial property investors use to grow their real estate portfolio. 

In simple terms, a 1031 exchange allows a real estate investor to buy and then sell a property. If the property increases in value, the investor can take the capital gains and invest the profit into another like-kind property. 

The capital gains taxes on the properties bought and sold generally aren’t paid until the final property is sold. Often real estate investors will keep exchanging properties for ones higher in value. 

Then they wait to sell the property when they’re in a lower tax bracket later in life, saving them on capital gains taxes. 

This is a big opportunity to save on capital gains taxes. 1031 exchanges come with a long list of regulations and must be done precisely right to actually get the benefit. If you’re interested, consult a tax specialist to ensure you follow the process correctly.

Take Advantage of the Many Benefits When You Buy Commercial Real Estate

Many tax advantages are available when you buy commercial real estate. The opportunity to make money from the properties while you own them and a profit once you sell are worth consideration.

If you’re interested in Orange County real estate, we can help. Let’s work together to find the right property for your commercial real estate investing goals.

The availability of commercial property in California is declining. In Orange County, industrial space vacancy is 1.3%, and only 2.4% of the property is available for sale. Office space vacancies are at 2%, and there is no data on retail space.

Seeking property to use for your Orange County business requires working with a trustworthy, experienced commercial real estate broker. You need someone who is a good listener, can understand your needs, and is willing to answer all your questions.

The key to hiring a commercial real estate broker is asking the right questions. The eight questions below will help you decide if a broker is the proper person to help you find commercial property for your business.

1. What Areas Are You Familiar With?

You need a real estate broker with in-depth knowledge of the local markets when seeking commercial property. This allows them to advise you on the best location for your needs.

Whether selling or buying property, you want the professional handling your real estate transaction to understand what kind of clientele frequents the area, whether it is a good location for retail traffic or has easy accessibility for manufacturing and shipping.

2. What Is Your Experience in This Field?

Just like you wouldn’t go to a heart surgeon for a problem with your foot, you don’t want a real estate broker with plenty of residential experience but none with commercial property. Ask about past clients, office sizes, industries they handle, and anything else pertinent to your search.

Another factor is the broker’s number of closed deals, not the number of years in business. A broker may have been in the industry for 20 years but only working part-time with very few closed deals. Another broker may have been only in the business for five years but spent it putting in extra hours and closing hundreds of sales.

Ask about their credentials, including education, licensing, and any other qualifications they have. In California, to become a real estate broker, the applicant must pass a written examination, have at least two years of full-time licensed experience or the equivalent, or have a four-year degree in real estate.

3. What Hurdles Have You Encountered?

Commercial real estate brokers have likely encountered a few challenges when dealing with clients. This can be anything from meeting specific needs, excessive demands, tough negotiations, etc.

You can also ask about what problems they see with the current market. As real estate trends go up and down, so does your power as a buyer or seller.

Your broker can provide data and analysis to help you understand what direction prices are moving. This allows you to decide whether it is better to buy or sell now or whether it may be more financially beneficial to wait a few weeks or months.

4. Do They Offer the Services You Need?

Real Estate companies offer a variety of services. You want to ensure the real estate broker you hire provides the service you need. Specialized areas include:

• Buying and selling commercial property
• Buying and selling residential property
• Commercial property leasing
• Commercial property management
• Residential property management
• Investment consulting

If you are interested in real estate investing, seek a broker familiar with the particulars of the industry you will focus on. Some real estate brokers concentrate on a specific type of commercial property. This may be an industrial, warehouse, retail, or a building that houses all new offices.

When interviewing a broker, if they sound unsure about the service you require, find a commercial real estate agent comfortable meeting your needs.

5. Are You Familiar With Tenant Improvement Allowances?

If you are interested in leasing, rather than purchasing, commercial property, find out if your commercial real estate broker has experience obtaining improvement allowances during lease negotiations.

If you are interested in leasing property, find out if your commercial real estate broker has experience obtaining improvement allowances. This is important if you are anticipating a buildout in your office space.

A Tenant Improvement Allowance (TIA) helps new tenants with the build-out of their new lease space. Build-outs are improvements the new tenant makes to the area, making it usable for their business.

The cost of a TIA is generally built into the base rent. Make sure you and your broker have a solid understanding of the necessary improvements and their estimated cost.

6. What Will Your Services Cost Me?

Generally, broker compensation is funneled through the property or landlord. There are exceptions where a broker may charge for a project, like reviewing a lease. If you have any concerns about whether you will be paying fees, find out before you have the broker begin work.

Make sure you understand whether the buyer or seller pays the broker’s fees. Verify whether the broker will be acting on behalf of the buyer or seller.

In some instances, the broker may work on behalf of the seller. Their role is to get the best sale price for the property.

A buyer’s agent works on behalf of the buyer. Their goal is to look out for the buyer’s best interests, negotiating the best purchase price.

Whether buying or selling, ensure you understand what role the real estate broker plays and how involved they will be in finalizing the deal.

Commercial brokers only receive payment once the deal is complete. Dealing with a financially stable company means the broker is less likely to rush proceedings or negotiations to close the deal quickly.

7. Have You Ever Worked With a Company in My Industry?

Each company and industry has specific needs. Finding a broker that can draw on experience in the same industry allows them to pull from that experience.

If the broker has never worked with a company of your type, are they capable of adapting and learning about your specific needs? A broker’s enthusiasm for helping you find the perfect property can supersede the need for prior experience.

8. Why Did You Decide to Sell Commercial Real Estate?

Why a person is selling commercial real estate provides insight into how they will likely perform their job. Someone who feels stuck in their position because they couldn’t find anything better will not put forth anything beyond the minimum effort.

Someone with compassion for helping others, who enjoys their position and has a strong desire to help people find the perfect commercial property, will approach their work enthusiastically. They are the broker that will go the extra mile to find you the ideal location.

Finding the Best Commercial Real Estate Broker

When looking for the best commercial real estate broker, select one who listens and desires to fulfill your needs. They need to understand commercial leases and the market.  You will narrow down the field and make the correct choice by asking the right questions.

Get started selling or buying commercial property by contacting Commercial Orange County. We are a full-service commercial real estate broker.

Browse our selection of commercial property for sale or lease, then call (877) 775-9625 to find the perfect commercial property for your business.

Did you know that The commercial real estate industry is projected to grow by more than $250 billion over the next five years?

This means it’s a better time than ever to consider buying commercial property. However, not everybody understands the key benefits of real estate investing when it comes to commercial buildings.

We’ve put together a quick guide that outlines the key information you need to know before you get involved in the Orange County, CA market. Let’s take a closer look.

1. Higher Earning Potential

As you might guess, commercial real estate has the potential to earn you much higher returns than residential investments.

This is because business owners are willing to pay more for a location that is conducive to their operations, and those prices can be substantially higher than those of a single-family home. Additionally, commercial properties can also generate more income through rent payments from tenants and other sources. These often include retail or office spaces.

2. Tax Benefits

Another great benefit of investing in commercial real estate is the sizable tax deductions it can provide.

These deductions vary depending on the type of property and your filing status. They can include write-offs for depreciation, repairs and maintenance, and insurance premiums.

They can also include interest expenses and taxes paid to local governments.

3. Lending Options

When it comes to commercial real estate, there are many more financing options available than when it comes to buying a residential property. For example, lenders such as banks and private money lenders offer loan programs specifically designed for commercial investments.

These loans often have better terms and lower interest rates than those offered by traditional lenders like mortgage brokers.

4. Long-Term Investment Opportunities

Unlike residential properties, commercial real estate is a long-term investment and requires more of your attention.

You may have to put in extra time and effort to maintain the building. You may also need to hire contractors to do repairs or make improvements, pay taxes, and keep up with tenant issues. As you do so, you can often increase the value of your property and maximize your returns.

5. More Tenants Equates to Less Risk

The more tenants your commercial property has, the less risk you are likely to have in terms of vacancy and income. Businesses tend to stay in one location for a longer period of time than individuals do, making them more reliable sources of income.

Additionally, if you own multiple properties with different tenants, you can spread out your risk even further.

6. High Appreciation

Commercial properties don’t just generate income — they can also appreciate in value over time. This is especially true when you invest in properties located in areas that experience high growth.

For example, Orange County, CA, has seen tremendous population and job growth over the past decade. This makes it an excellent place to invest in commercial real estate.

How Do I Know What Type of Commercial Building to Invest In?

The type of commercial property you should invest in depends on your own personal goals, financial situation, and risk tolerance. Generally speaking, it’s good to research different types of investments so that you can make the best decision for your individual needs.

For example, if you’re looking for a more passive investment with the potential for long-term appreciation, you may want to consider investing in an office building. Ultimately it’s important to do your research and find an investment that is right for you.

What Are Common Mistakes That Investors Make?

Common mistakes that investors make when it comes to commercial real estate involve purchasing a property without researching the area. People also don’t take into account all the potential costs associated with owning and managing a property.

Of course, not having enough capital for upkeep and repairs and failing to properly vet potential tenants are also issues.

Some investors also fail to do their due diligence in terms of researching the local market, zoning laws, and taxes. It’s important to avoid these mistakes and do your research before investing in any type of real estate property.

What Should I Look For in a Professional?

Not every firm will be able to meet your requirements. Researching your available options is something you cannot overlook.

The past reputation of the company will play a large role in the results you get. Checking past feedback will go a long way.

You should only work with companies that have overwhelmingly positive reviews. Afterward, consider how experienced they are in the industry.

They should be able to easily convey their capabilities. Booking a consultation is a great way to get started. If you aren’t part of their target demographic, they likely will not be able to help you.

Hiring the wrong firm can come with many consequences. Before you move forward, look at how they have established their billing structure.

The last thing you want is to deal with unexpected costs. If you find yourself uncomfortable communicating with them, you should research other options.

They should also go out of their way to learn more about your project.

Investing in Commercial Real Estate Doesn’t Have to Be Difficult

Although it might seem complicated at first, choosing the right commercial real estate state is much easier than it seems. As long as you keep the above information in mind, you’ll be sure to meet your needs.

Looking for more information about what we can do? Get in touch with us today at (877)-775-9625 to see how we can help.

It’s easy to realize you need a warehouse but do you know they come in various types? Before contacting commercial real estate to help you search, consider the types of warehouses available and what you’re storing.

Warehouses are not the cold, dark buildings you see on TV crime shows, accessible for criminals to commit crimes. Modern warehouses are bright, clean, and thriving, with the activity necessary to keep your business moving forward.

You need to consider the type of product you will be storing, the difference between a warehouse and a distribution center, and more. Keep reading to learn more about storage facilities, so your warehouse investment meets your needs now and in the future.

Bonded or Customs Warehouse

This is a building where goods arriving from other countries may be stored or used in manufacturing. These facilities can avoid paying duty for up to five years following the arrival of a shipment.

Bonded warehouses allow the importer to sell the products first, then pay duty using proceeds from the sale.

Climate Controlled Warehouse

Climate control maintains a specific temperature. It protects perishable products from extreme temperature variation or moisture.

Dehumidifiers, insulation, thermostats, and HVAC systems maintain airflow, moisture levels, and temperature. Items you may find pharmaceuticals, artwork, meat, and produce inside.

Cold Storage

According to the United States Department of Agriculture, California has 107 refrigerated warehouses.

This warehouse is the equivalent of stepping into a refrigerator. Its purpose is to keep temperature-sensitive items cold to sustain their usability longer.

A surprising number of items use cold storage, including medicine, perishable food, cosmetics, artwork, plants, and candles. To maintain proper cold storage, products arrive and depart the warehouse in refrigerated shipping containers.

Contract Warehouse

This is very similar to the public warehouse option shown below. Instead of operating on a first-come, first-served basis, you have a guarantee of a specific amount of storage space. On-demand warehousing connects a business needing storage with a warehouse with space available.

Cooperative Warehouse

Natural food stores, wineries, farmers, and co-op organizations often use cooperative warehouses. The different groups using the warehouse pool their resources. Each gets warehouse benefits at a lower cost than if they were to lease or purchase a warehouse independently.

Cross-Docking Warehouse

This is a warehouse where goods arrive into the warehouse en route from one location before moving to their final destination. Products arriving on inbound trucks are off-loaded and sorted. They then load onto an outbound truck traveling to the last delivery location.

This type of warehousing reduces waste by providing a consolidation service. It gets all merchandise from various locations onto one truck to a specific place.

This reduces costs by preventing several trucks from traveling to the destination. The trucking company and the consumer save shipping costs.

Distribution Center

Many people believe a warehouse and distribution center are the same. The purpose of each warehouse is different.

A warehouse stores products for a lengthy time. A distribution center holds products for a short time. It has a higher in-warehouse turnover of products.

Large retailers often have centrally located distribution centers. This allows the business to quickly and easily restock its store inventory.

A distribution center is customer-centric. This means its general position is close to where the store is for quick delivery of products.

Distribution centers contain advanced technology to assist workers. Depending on the type of business, a distribution center may have pick and pack services, cross docking, product mixing, or packaging. The distribution center usually has more services taking place within its walls.

Hazmat Warehouse

The building structure is similar to a temperature-controlled warehouse. It stores hazardous materials needing specific storage conditions. This type of warehouse is generally in remote areas because of the danger in the event of a disaster.

Hazmat storage is mandatory for biological and radioactive materials, gasses, and chemicals. It is also necessary for storing weapons, ammunition, and explosives.

Depending on the location and items in storage, it may need climate control and enough space to prevent contact between products. Other requirements may include hazmat-trained staff and 24-hour security.

On-Demand Storage

This is an up-and-coming area of the warehouse business. The connection is with companies that need warehouse space temporarily.

This may be due to seasonal demands, storage of items during a business relocation, or more.

Pick, Pack, and Ship Warehouse

This warehouse is set up to handle on-demand shipping. This happens when a consumer places an order for a product.

When an order comes into the business, the warehouse receives a message called a pick list. The pick list instructs workers what items to pull and pack for shipping. They then attach a label and ship it to the consumer. 

Private/Proprietary Warehouse

The company owning the warehouse manufactures the product inside. This gives the organization a high level of control in handling and storing its goods. When you own the buildings on all levels of your business, you have more control over the product flow, storage, inventory, and shipping.

Public Warehouses

Another term for a public warehouse is a third-party logistics warehouse. This means it is owned and operated by a company that leases the space to other commercial operations. The location will receive, hold, store, and ship products from another company.

Typical warehouse management is on a pallet-in/pallet-out basis. The company cost for a product in the warehouse is calculated using the number of pallets or square footage the product takes in the warehouse.

Public warehouses are ideal for small businesses or seasonal retailers. The cost is less than having a private warehouse.

If you are seeking a warehouse for lease, consider this option. Keep in mind that available space is on a first-come-first-serve basis.

Reverse Logistics Warehouse

This is a warehouse for backward shipments (product returns). Depending on the reason for the return, the product may be repackaged and returned for sale. It may be repaired, recycled, destroyed, or refurbished in other situations.

Some companies maintain a separate reverse logistics warehouse that strictly handles product returns. Other businesses conduct shipping and returns at the same warehouse facility.

Smart Warehouse

This is the warehouse of the future. It uses automation systems and related technology to increase efficiency.

Automation increases production and prevents mistakes. It also reduces the number of workers necessary to run the warehouse.

Technology helps with product receiving, storing, picking, and shipping. The software maintains an ongoing inventory of all products in-house.

Selecting From the Types of Warehouses

If your head is spinning and you aren’t sure what to look for in a warehouse for sale, consider a few key factors.

Consider the storage needs of your product. Is it small or large and bulky? Does the warehouse have the software and hardware configurations necessary for your business?

Providing quick delivery is necessary for customer satisfaction. Consider the warehouse’s proximity to your customer base. If not close to customers, consider its accessibility to transportation facilities.

Consider the security level of your warehouse. Is it a safe location? Do you have security staff and cameras? You need protection from vandalism or theft.

How to Find a Warehouse

With so many types of warehouses, you may be wondering how you can ensure that what you purchase or lease meets your needs.

Commercial Orange County is a full-service commercial real estate brokerage firm. Call us at (877) 775-9625 to discuss your requirements. We will help you find the proper warehouse for your business.

Did you know that real estate investments can provide investors with an average return of 10 percent? This means that if you put $100,000 into a real estate investment, in just five years, you could earn $50,000 – in ten years, you could double your money. But before you dive into your first real estate investment, it’s important to learn about the pitfalls you could hit. 

As with any investment, real estate investing comes with risk, but smart investors can avoid some of these downfalls. Read on to discover common commercial real estate investment mistakes and learn how to make smarter investments.

Choosing the Wrong Property

When you’re first investing in commercial real estate, one of the biggest mistakes you can make is choosing the wrong type of property to put your money into. There are four primary types of commercial real estate: office, industrial, retail, and multifamily housing. You can also invest in storage facilities, special- or mixed-use properties, or even undeveloped land.

Which type of property you invest in depends on your priorities and goals. For instance, multifamily housing investments tend to have higher returns, but they also require a lot more management and maintenance. You need to make sure to pick an investment that suits both your time needs and your financial goals. 

Not Doing Your Homework

As you’re trying to decide which property to invest in, it’s a good idea to do some research and learn about your local real estate market. You need to know about how much properties in that area go for, what direction the market is moving, and how many properties are available. This will help you recognize a good deal when one comes up and make education decisions about when it’s time to dive in with a property.

In Orange County, the median price per square foot for real estate is about $600 as of this writing. Right now, properties are selling for a little under list price in an average of two months. It is strongly a seller’s market, meaning there are more people looking for properties than there are properties available.

Not Planning for Taxes

Although commercial real estate investment is a type of passive income, it does still count as income and is taxed as such. When you’re planning your investment, it can be easy to get caught up in the profit you’re making and forget about those taxes. And unlike your other income, taxes may not be automatically deducted from these profits before you get them.

Work with a financial professional or tax advisor and figure out what percentage of your profits you can expect to pay in taxes. Then make sure you account for any potential tax liabilities you may face, including rising property taxes. And in the long-term life of your investment, you need to prepare for capital gains tax if you eventually sell your investment for more than you bought it for. 

Overreaching

When you start looking at your potential return from an investment in Orange County real estate, it can be easy to get swept up in the profits. You might be tempted to put as much money as you can afford into this investment – after all, the more you spend, the more you earn. But while real estate can be very lucrative, it also comes with its fair share of risks.

You want to avoid going into too much debt for your business investment – in fact, if possible, it’s best to avoid going into debt at all. Instead, start investing with the money you have saved, and don’t immediately dump all of that into one real estate investment. Remember that real estate investing is a long game, and give your money time to grow before you start pouring funds into the major investment properties. 

Forgetting Renovation Costs

Oftentimes, the best deal you can get on real estate is on properties that may need a little love before they’re ready to go on the market. Buying properties that need some work can be a great way to get into real estate investing if your budget is limited and to make your money work for you. But you need to make sure to account for those renovation costs when you’re budgeting for your investment. 

Ideally, you shouldn’t go into any debt to finance the renovations for your new property. You also need to build a buffer into your renovation budget to cover any unexpected costs. It’s almost guaranteed that you’ll find something you weren’t planning on, a job will be more expensive than you expected, or you’ll have to call in a professional to help you finish a job on time.

Flying Solo

The phrase “two heads are better than one” is an important lesson for any commercial real estate investor to learn. The truth of the matter is that, no matter how much research you do, you aren’t going to have all the answers about how to manage your property. An unexpected situation will come up, and you don’t want to try to flounder on your own for answers. 

Instead, reach out to investment professionals, trusted colleagues, and a network of fellow investors for advice. There is no situation you’ll come up against that someone in the investing world hasn’t already faced. Learn from their experience, and don’t be too proud to ask for advice when you’re in over your head. 

Learn More About Commercial Real Estate Investment

Commercial real estate can be an incredible investment, but it’s not without its risks. There are a number of common mistakes new investors make, but with the right precautions, you can avoid these and make smarter investments. Always do as much research as you can, choose a property that fits your priorities, and be sure to live yourself some wiggle room in your financial plan. 

If you’d like to learn more about commercial real estate investment, check out the rest of our site at Commercial Orange County. We are a full-service commercial real estate brokerage proudly serving Orange County. Give us a call today and find the hottest listings in Orange County.

Are you thinking about starting a new business in Orange County, CA? Or, do you plan to expand your current operations into a new location around this area?

If so, it’s important to know what kind of buildings are available. From small storefronts to large-scale warehouses, there are many different options to consider. 

Today, we’re taking a closer look at the types of commercial real estate you’re most likely to find in Orange County, and how we can help you find the exact space you need. 

Retail Properties

Let’s start with retail. 

A retail property is a type of commercial property that’s specifically zoned to be one of three entities:

• A service business
• A store
• A shopping center

If you’re a retail business owner looking to open a storefront in Orange County, your space must be zoned for retail use. This means that the local government has established an ordinance that dictates the building can only be used for that purpose.

In some of the more populated areas of our region, you’ll often find mixed-use zoning. This means that both residential and commercial properties can exist in the same location. In this case, the government instates zoning overlaps to allow joint use to occur. 

What happens if you fall in love with a space, only to find that it’s strictly zoned for residential use? In that case, you can submit a request asking for the government to rezone the property into a retail property. After the relevant agencies review your application, they can decide whether or not to grant your request. 

While this can lead to a positive outcome, most requests are not successful. That’s why it’s so important to work with a commercial real estate agent while exploring different properties. Our team can show you properties that are already zoned for retail use, so there’s no legal legwork to contend with. 

Where to Find Retail Properties

There are retail properties all around Orange County. However, certain areas tend to attract specific types of businesses. For instance, if your store sells convenience goods, then you’ll likely start your search in a heavily-traveled area that’s zoned for multiple retail properties. 

Then, there are niche-style businesses that are more strategically located based on the clientele they want to attract. For instance, beauty salons are often located near residential areas, so they have access to a wide range of nearby customers. Similarly, you’ll find technology companies and insurance companies in designated business parks, which are less accessible to the public. 

As you begin your search, think about where your clients will be, and how they’ll interact with your business. Then, choose a retail property that allows you to cater to them as naturally as possible. 

Industrial Properties

Industrial properties are very wide-ranging and nuanced. There isn’t one type of property that will appeal to every single manufacturer or business owner. The type that you need will depend on a range of factors, including the type of industry that you’re in, the size of your team, and more.

Some managers lease an industrial property because they want direct access to it. They want to rent it for their own business and plan to move their operations to that location. Other times, they’ll purchase it outright as a short-term or long-term investment.

Let’s take a look at the different types of real estate that fall into this sector.

Heavy Manufacturing

Buildings zoned for heavy manufacturing use are usually very big, with machinery and special features designed specifically for large-scale manufacturers. These locations are customized to fit the needs of each manufacturer, and new tenants often perform extensive renovations any time they move into a different space. 

Light Assembly

While heavy manufacturing buildings are large and complex, light assembly buildings are much simpler and smaller. This means they’re also easier to reconfigure if you need to change something about the previous tenant’s layout.

Business owners can use a light assembly space to:

• Assemble products
• Store goods
• Set up office spaces

Bulk Warehouses

As its name implies, a bulk warehouse is very large. Most contain between 50,000 and 1 million square feet and are designed to be easy for trucks to enter and leave. Due to this requirement, they’re often located close to major highway systems. 

Bulk warehouses are ideal for companies that perform regional distribution activities and require space for large amounts of product and team activity. 

Flex Warehouses

Flex warehouses are smaller than their bulk counterparts. These buildings pull double-duty, combining industrial spaces with office spaces.

Like light assembly spaces, they’re simple and relatively easy to convert. You can arrange them to fit the needs of your company without major modifications. 

Office Spaces

If you need a light manufacturing area plus office space, then a flex warehouse might be just what you need. However, some individuals are interested solely in offices when investigating Orange County commercial real estate.

If that’s you, then let’s talk briefly about office building classifications. 

Class A Properties

Class A office buildings feature excellent construction. They’re also located in highly desirable locations, which makes them especially popular with real estate investors. 

Class B Properties

Class B office buildings are also well-constructed and designed to meet the highest possible industry standards. However, the one drawback is that their location isn’t as ideal as a Class A property. 

Class C Properties

Class C office buildings are ones that do not fall into either of the above two categories. While these won’t have as desirable construction or location, they can be suitable for many businesses, especially those operating on a strict budget. 

Browse Our Available Types of Commercial Real Estate

As you can see, there are many different types of commercial real estate located in and around Orange County, CA. Do any of these sound good for your business?

If so, we’d love to help you find the building of your dreams. We’re a full-service commercial real estate company with a great history and reputation in this community. Whether you want to buy or lease your next property, our experienced agents are here to help.

Browse our available properties to learn more about what’s out there, and contact us to connect today!