With a population of over 3.2 million, Orange County CA is a hot place for real estate investors to start buying. Still, knowing when to invest can be challenging if you don’t know current market trends. That’s why it’s important to do your research and get informed.

You’ve come to the right place! Read on to learn the ins and outs of Orange County real estate market trends so you can make a lucrative commercial property investment.

High Demand, Low Inventory

The US unemployment level is currently at its lowest in 54 years. It’s currently at only 3.6%, which means that the majority of the population that can work is doing so.

Workplaces are also expanding. Per the current Fortune 500 list, the 500 biggest companies in America made a collective $13.7 trillion. That’s about 2/3 of our nationwide economy.

Naturally, this leads to an increased demand for commercial property rentals. People need a place to work whether they go into an office each day or work in a warehouse or manufacturing plant.

However, the high population of Orange County means that there isn’t enough real estate for everyone who wants to purchase. This makes them somewhat expensive.

It’s important to know that you will have competition. You may need to pay more money upfront than you would have in previous years.

A High Economy

Luckily, with the Orange County economy at an all-time high, investing in commercial real estate is still possible.

Employment has risen by over 215,000 jobs since the end of 2022. This puts about 6.33 million people in the current workforce. This growth is about 4.8% of the growth across the US.

Long Beach, Los Angeles, and Anaheim are doing economically better than a lot of the country.

Naturally, a booming economy should lead to higher buyer confidence levels. Unfortunately, this isn’t always the case when it comes to commercial real estate. List prices are high because demand is high, so people question whether or not it’s the right time to make an investment.

Generally, though, now is a good time to buy. You just need to be willing to take the leap and make that high upfront purchase.

So, When Is the Right Time to Invest in Orange County Real Estate?

Generally, buying commercial real estate is best during times of economic growth. That’s when the market is at its strongest. When more people are looking to buy, more people are also looking to rent.

That definitely describes the current situation in Orange County!

Spring and Summer

It’s also important to note that like residential sales, the best time to buy commercial real estate generally follows a seasonal pattern. March through August tend to be the best times to get good deals on the market. A spring or summer purchase is a great idea.

While there are no weather conditions in SoCal to prevent a smooth winter move, the US trend is important everywhere. People’s leases often expire in the summertime. Out-of-state businesses looking to expand will want new properties then. You’ll have an easier time finding a renter.

The Right Space Is Available

You can’t just invest in any property and expect to turn a high ROI. It’s extremely important that you find the right one.

You don’t want a dilapidated property that will require a lot of initial upfront maintenance. This will cost more even if the property is listed at a lower price. Since you won’t start collecting rent until the renovations are complete, you’ll lose a lot of money for a long period of time.

You also want to make sure that you can find a property in a desirable area.

Businesses don’t want to operate in bad parts of town. Retail shops especially want places with high foot traffic. You’ll have a hard time finding renters if you’re not cognizant of this.

Finally, make sure that the appropriate type of property is available for you. Owning and maintaining an office building is much different than a retail storefront. Industrial and warehouse buildings are even more different.

You want to take on the perfect project for your individual needs.

Why Commercial Investments?

There are tons of awesome reasons to invest in commercial properties. The main downside is the upfront list price, but there are ways to make it easier on yourself. Banks and credit unions offer loans specifically for new commercial property investors, and they often have reduced interest rates and APR financing.

You’re also going to get a really high ROI from commercial properties. While a residential investment can only be let out to one family at a time, commercial properties can usually be leased to multiple companies. Office buildings have several floors, and warehouse spaces can store goods from multiple businesses.

Plus, since commercial renters have more money allocated for rent than individuals, you can get away with charging more.

Leases are also longer on commercial properties than on residential ones. Individuals and families usually request yearly leases. Commercial renters can sign leases for 5-10 years at a time.

This locks people into a longer commitment, giving you a steady and stress-free source of passive income in Orange County.

Start Investing With Expert Real Estate Brokers

Now that you know whether it’s the right time to buy Orange County real estate, it’s time to begin looking for properties that you can rent out. Our experts are committed to helping you find the perfect location for your next investment so you can get the highest return.

We offer retail, industrial, office, and warehouse building options, so you have several different possibilities to choose from. Contact us and call (877) 775-9625 to start looking for top-notch real estate today.

In 2022, over $1.1 trillion was spent on commercial real estate transactions. This includes properties like office buildings, warehouses, etc. Investing in commercial Orange County real estate can be an amazing way to generate exponential returns. However, there are certain nuances of the commercial real estate market you need to understand before you get involved.

This will prevent you from dealing with obstacles you may have otherwise encountered.

Let’s explore some of the most notable things you should know.

1. Determine Your Needs

One of the most important steps to take before investing in commercial real estate is assessing your needs. This includes figuring out your desired annual return, what type of property you’re capable of managing, etc. For example, someone might want a substantial annual return on their commercial investment.

However, they might not be able to deal with the nuances associated with managing a property this large. The same can be said about managing a large number of properties. It might make more sense for someone to purchase a warehouse instead of multiple apartment buildings in a case like this.

As long as you take time to plan, you’ll narrow down your potential options.

2. Location Is Everything

Similar to residential real estate, location is one of the most important attributes of the commercial real estate market to consider.

No matter how nice a commercial property is, you likely won’t be able to get the most out of it if it’s located in the wrong area. To clarify, let’s assume that you purchase a brand-new office building that’s already outfitted with plenty of amenities.

Let’s also assume this building is located in an area that is both difficult to access and has a high level of crime. There’s a good chance you won’t be able to easily find tenants, leaving you with enormous ongoing expenses that you have to pay out of pocket. In contrast, a less impressive building in a prime location will perform much better.

It’s not uncommon for there to be a large amount of competition among commercial property renters if the location is ideal. In situations like this, renters are also more likely to overlook the property’s shortcomings. Be sure to consider this when moving forward.

3. Understand Trends

Starting market trends can help you gain insight into the future potential of the property. The city might have a massive boom in commercial real estate development, for instance.

With a sharp increase in overall property volume, the average property value will likely decrease. Trends can be influenced by non-real estate factors, as well. One of the best examples is the mass exodus of residents from certain states during the COVID-19 outbreak.

Thousands of people left places like New York and California in favor of states like Texas and Florida. This subsequently caused the commercial real estate prices in the destination states to rise.

Another factor to consider is government regulations. A common scenario would be a state government passing a law that limits the development of new commercial real estate in certain areas.

This would inherently make existing commercial real estate more valuable, meaning it would be in a buyer’s best interest to purchase property before this law is passed.

The best way to stay on top of market trends is to study them each day. Many people choose to read commercial real estate news in the morning before work or at night before they go to bed.

4. Have a Plan For Financing

You won’t get very far if you don’t have a solid plan to secure financing. Unfortunately, obtaining approval for a commercial property loan is more difficult than obtaining one for real estate.

This is simply due to the fact that commercial properties are typically worth exponentially more than residential properties. They can also take longer to obtain approval for commercial loans.

So, it’s highly recommended that you secure financing as soon as possible. The last thing you want is to find yourself in a situation where you find the perfect property but aren’t able to purchase it. Your prospective lender will tell you everything you need to provide to give yourself the best chance of approval.

5. When to Hire a Broker

Put simply, you should hire a broker unless you have extensive knowledge of commercial real estate investing.

Those who have never handled this process will likely make mistakes that they could have avoided. A broker has all of the required knowledge and resources to help you find the ideal property.

They also have access to a list of available properties they can match you with, allowing you to save a substantial amount of time. When searching for a broker to work with, consider their past reputation. Only choose brokers that have overwhelmingly positive feedback from previous clients.

You should also consider how communicative they are. If they aren’t easy to get in touch with, you’ll find yourself stressed during the transaction process.

Finally, assess if they are interested in helping you meet your needs. When speaking with them, they should go out of their way to answer your questions and concerns.

Invest in the Commercial Real Estate Market

As previously mentioned, the commercial real estate market is an amazing investment opportunity. As long as you consider the above information, you’ll be sure to give yourself the greatest chance of success.

Reach out to us today at (877)-775-9625 to learn more about how we can help. Our team of experts is ready to connect you with the ideal property for your needs.

E-commerce currently accounts for only 20% of all retail sales, giving the industry lots of room for growth. With the growth in this industry comes the need for more industrial warehouse spaces.

Industry continues to show growth in nearly all sectors coming out of the pandemic, and the demand for all types of industrial buildings is high.

Are you looking to buy or sell an industrial building in Orange County? Take a look at the different industrial buildings in demand in this market. Read on to learn more about the industrial real estate market.

Types of Warehouses

Many industrial building types fall under the category of warehouse. Yet, a warehouse has many different functions, depending on what they’re housing.

Let’s take a closer look at some of the types of warehouses you’ll find here in Orange County.

General Warehouse

A general warehouse is, as the name suggests, a warehouse for storage. These buildings often act as just storage for inventory or manufactured goods.

A business might have a manufacturing facility (more on this type of industrial building shortly) and then also have an on-site warehouse.

The square footage and how the warehouse is equipped will depend significantly on the product it’s housing.

Distribution Warehouse

A distribution warehouse goes beyond the function of a general warehouse. This warehouse type is used to ship goods and products from it.

Because it’s a shipping hub, location is a critical factor in a distribution warehouse. Access to airports and other shipping hubs is critical for efficiency in moving products.

If a company distributes, then easy access to major roadways is key for this type of property.

Specialized Warehouse

A specialized warehouse handles out-of-the-ordinary product storage. In some cases, the warehouse holds unusual products. In other cases, the specialized warehouse might be a rental facility for people with unique storage needs.

A specialized warehouse might hold barrels and cases of wine that need to age before distribution. This type of facility might hold antique and vintage cars or art.

Hazardous Material Warehouses

Hazardous material warehouses are much different because of the things stored in them.

There are many considerations for this type of warehouse. It must be secure to ensure the materials don’t get into the wrong hands. The warehouse must also have the right storage inside to ensure materials don’t mix or combust.

Workers’ safety in these facilities is also important because the materials are likely flammable, corrosive, or otherwise dangerous.

Cold Storage Warehouse

Another type of warehouse is one that stores items that must be kept cool or refrigerated.

A cold storage warehouse might store food, flowers, or medications that need to be kept cool.

Inside the warehouse, you’re likely to find huge refrigeration units that are big enough to manage the storage, too.

Heavy Industrial Buildings

Another industrial space you might need is for heavy industry. These are typically huge locations with ample space for heavy equipment to move and function.

This type of facility will have big storage areas to hold all the materials needed for manufacturing. They will also house abundant heavy equipment used while manufacturing and after.

It is likely to be retrofitted with the exact needs of the occupant for things like user-specific drainage, ductwork, ventilation systems, and chemical lines.

Light Manufacturing Buildings

Another form of industrial real estate is a facility used for light manufacturing. This type of building is typically smaller than one used for heavy industry.

It may have fewer needs to make the facility functional in the manufacturing process.

Data Centers

One newer type of industrial facility is one used as a data center. Companies with many computer servers and equipment might use this type of building off-site from their main location to hold the computer equipment.

Often computers, servers, and other telecommunications equipment must be in a cool environment, so a temperature-controlled warehouse is key for this use.

Research and Development Facilities

It might surprise you how many industrial sites are actually used by companies for research and development.

An industrial location is good for R&D because it has plenty of space to set up research and then use it to develop products or prototypes.

Showrooms

Another type of commercial real estate is a showroom. A business with products or materials that need display but might not function well in a traditional storefront will often use more industrial, commercial spaces to showcase a product.

Sometimes these showrooms are attached to a light industrial location or a warehouse that displays the materials.

A business that wants a commercial showroom will want to consider a location that gets more traffic in an effort to bring in the customer.

Truck Terminal

A business that works in the distribution of products or a company that handles its own trucking might also need a trucking terminal for its fleet of trucks.

A truck terminal should include:

• Parking spaces for trucks
• Service bays for maintenance
• Repair areas and tool storage
• Fueling stations

These facilities may partner with other industrial buildings and include places to load and unload cargo.

Know Your Options With These Types of Industrial Buildings

Now that you know about the different types of industrial buildings, you can decide what best meets your industry’s needs. There’s a host of available industrial real estate waiting for you in Orange County.

Let us help you find the right property for you. If you’re in the market to sell, we’ll help you get the best buyer. Call us today at (877) 775-9625 or contact us through our website and see available properties.

Investing in commercial real estate has a 9.5% ROI, so it’s a good move for anyone looking to diversify their portfolio. Whether you need a space to conduct business or want to lease it out to commercial tenants, you’re making a great choice.

Here, we’re going to talk about some top benefits of real estate investing in Orange County. Read on to learn how you can make the most of your next financial move.

Diverse Opportunities

“Commercial real estate” isn’t just a single type of property. It includes:

• Retail store venues where businesses can set up shop
• Office spaces for SMBs to conduct business
• Industrial facilities for manufacturing plants
• Warehousing venues for distribution

You’re not locked into a single type of property when you consider a commercial real estate investment. You can lease out multiple types of spaces and broaden your reach over time.

Portfolio Diversification

Investors need to diversify their assets to mitigate the risk of financial loss. If you put all your eggs in one basket and only invest in stocks, for example, you’re going to lose all your money when the stock market dips. However, if you have more assets like bonds and real estate, you’ll have income from multiple sources and won’t lose all your money because of a single financial event.

Real estate is a safe investment because it’s tangible. You can access the property, involve yourself in maintenance, and even use it for business if the need arises. People are also constantly looking for places to rent out for business, industrial, and distribution purposes.

This means that your commercial property will still generate income for you regardless of your other investments. You’ll still be getting passive income even if you make poor stock market investments or try your hand at buying new virtual assets.

Passive Income Potential

“Passive income” is money that comes from a source besides an employer. Renting out a space and collecting money from tenants is one of the most common passive income sources.

You don’t need to do anything but prepare the paperwork, sign a lease, and maintain the property when necessary. In exchange for this low-effort job, you can collect thousands of dollars each month in rent.

Commercial properties are a great way to get a lot of passive income since you can lease out to multiple tenants. You can give multiple companies office space on different floors of your building to collect from each business individually. You can rent out warehouse space or storage facilities to many different commercial companies.

Plenty of Financing Options

Commercial Orange County investing has more passive earning potential than residential alternatives. You’ll be glad to know that there are also more financing options available for those looking for commercial investments.

Banks and credit unions have loan programs made specifically for commercial investments. Third-party lenders are also often willing to give out commercial loans because they’ll be paid back with interest.

In a lot of cases, these loans have lower interest rates than residential property loans or personal loans. They also usually have better payback terms than those that residential mortgage brokers might offer. You’ll have a wider variety of funding to choose from.

Tax Deductions

Those who invest in commercial properties also can get a lot of tax benefits. Some benefits include:

• Depreciation deductions for income taxes
• Deductions for property repairs, management and operating expenses, and maintenance fees
• Tax deductions for interest expenses
• Reduced tax burdens for your beneficiaries/heirs
• Deductions for Qualified Business Income (QBI)

These tax breaks make real estate a profitable investment. You don’t need to worry about high taxation on your commercial property. You will also be able to funnel more money back into the property and increase its overall value for future rentals and leasing opportunities.

Value Appreciation

Commercial properties will also naturally accrue more value over time. This is true even when you don’t consider the changes, renovations, and improvements you’ll make.

The real estate market is a steadily growing one, especially in some areas of California. The population has increased a lot over the past decade. There are more jobs than ever before.

This means that Orange County investors stand to get a lot of money as a result of this natural growth. The demand for commercial rentals will go up while the supply remains stagnant. You’ll be able to collect more rent and sell it for more money in the future when you choose to move on.

A Long-Term Investment

Residential properties are often fairly short-term investments. You only have a few tenants and they won’t require too much maintenance. This is, of course, assuming that you keep the property in top shape to begin with, but it will be less effort than a commercial building.

Commercial investments require more care and maintenance, but this is actually a good thing. You will have the chance to make improvements and turn your profitable property into something extremely lucrative.

Over time, you’ll be able to perform major renovations that greatly increase the property’s value. You can charge more rent and get greater benefits. Commercial real estate is an investment that never stops giving.

Start Investing in Commercial Real Estate Today

Now that you know the top benefits of investing in commercial real estate, it’s time to get started. Our experts are dedicated to helping people in Orange County find commercial properties to buy or lease.

We will help you access retail, industrial, office, and warehouse facilities so that your business can be as profitable as possible. Call (877) 775-9625 to begin searching for property to invest in.

The average American landlord makes about $73,406 annually. In Orange County CA, this number is even higher at around $75,141. If you’re looking to make an investment with a high return, you can’t go wrong with real estate.

The Orange County commercial real estate market is one of the best in the nation for property owners to collect rent in. Read on for an overview of this market and some trends to keep an eye out for.

Averages and Statistics

The first thing that you may wonder is whether purchasing Orange County real estate is worth the return. The answer to this question is a resounding ‘yes.’

Los Angeles is about one hour north of Orange County, but its market is similar for several reasons. Both are high-end communities in Southern California. Both have excellent real estate markets, wealthier homeowners, and good weather and living conditions.

In Los Angeles, the average commercial property sells for $484 per square foot. Most business landlords ask for about $46 per square foot of commercial space monthly.

This amounts to $552 per square foot every 12 months. After leasing a building out for 1 year, the average LA property owner turns a 14% profit. In 

That’s not bad, especially considering that you’ll be leasing it out over several years! Plus, when tenants remain in the building longer, you’ll have the opportunity to increase their rent and make more money.

Would Residential Renting Be Better?

Short answer: no.

Residential property costs less to purchase up front, but the average California landlord only gets $3-4 per square foot of rental space. Property values will obviously vary – a well-maintained home may be a better investment than a dilapidated office building. But these are exceptions to the standard, not the norm.

Commercial properties are also a superior investment because they’re long-term. They require more care and maintenance than residential buildings, but this is a blessing in disguise. You’ll have a lot of chances to raise the property value and turn an already-lucrative investment into something extremely profitable.

Not only that, but commercial property landlords also get a lot of tax benefits. Maintenance comes with deductions, but so do interest expenses and depreciation deductions. There also will be deductions for Qualified Business Income, so you’ll get a lot of tax breaks.

Bouncing Back

The pandemic hit the Orange County real estate market hard. Leases had 12% vacancy rates in 2021 at the heart of the COVID-19 crisis.

However, they’re now coming down and have reached about 11%. This is still higher than the 2016-2022 10% vacancy rates, but it’s a step in the right direction. 

In both commercial and residential real estate markets, rent also did not grow during the pandemic. In 2021, the average rent for all property types decreased by about 5%. However, it’s bouncing back and is at about -0.8%.

Landlords in Orange County can expect future growth, though. California’s real estate market is currently characterized by high demand, growing businesses, and varying supply chain needs. Each of these factors makes the state a top-notch place to purchase and lease out property.

The Orange County Office Market

Commercial property sales in Orange County are lower than the national average. They make about 350 trades when compared with the national average of 400.

It’s important to note, though, that the value of property sales is higher than most. The overall $2.7 billion value means that the market is likely to make a pretty good comeback in the coming years.

More Financing Options

If you were to purchase a residential property to rent out, your financing options would be severely limited. You’d need to take out personal loans or specialized mortgage loans for residential properties.

However, commercial real estate has far more financing options. Banks offer specific loan programs for those looking to make commercial property investments. There are also third-party lenders looking to give people commercial loans to buy property.

Many of these loans also have lower APRs than residential property loans. They certainly have lower interest rates than normal personal loans. You’ll be able to choose from more funding options that give you better bang for your buck.

Many Types of Commercial Buildings

It’s also important to note that there are several types of lucrative commercial investments. Orange County commercial real estate encompasses office buildings, retail venues, industrial facilities, manufacturing plants, and warehouses. You’ll be able to determine what type of property you want to maintain and rent out.

To determine the best option for you, consider:

• The condition of the specific properties you’re looking at
• The location of the property you’re looking to lease
• Which facilities require more maintenance
• How much the current rent is (so you know how much you’ll make)
• The square footage of the property (so you can accurately calculate ROI)
• The distance between the property and others you’re looking to buy in the future

Note that you aren’t committing to only leasing out a single type of property. Once you have an in with the commercial real estate investing market, you’ll have access to all these property types. You can expand your reach over time to be even more lucrative.

Beyond the Orange County Real Estate Market

Now that you know the basics of the Orange County commercial real estate market, it’s time to begin investing in high-ROI properties. Our team is committed to helping you locate a property to manage so that you can collect rent and earn passive income.

We offer office spaces, retail venues, and more, so you’ll have a diverse selection to choose from based on your specific needs. Call (877) 775-9625 to learn more about leasing or buying property.

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.