Renting property has always been a reliable source of income, even in the economic recession. Investing in property for renting requires significant costs but it pays off in the future. Property is something people will always need so it’s a secure investment.

No matter how you are going to build your business, as a landlord or an agency with a full staff of specialists, it’s important to know what are the most profitable and secure directions of work in rental property in the US. Let’s observe them.

The Advantages and Disadvantages of Rental Business

Advantages of the rental business:

• Minimal time and effort;
• Passive income;
• The ability to increase income through active actions (hourly or daily rent);
• Reliability and security of investments;
• The relative stability of earnings.

Disadvantages of the rental business:

• High threshold of entry into the rental business. Buying real estate requires a fairly tangible investment. Especially when it comes to investing in commercial real estate.
• The real estate rental market is not always favorable. Periodic downturns in the economy can lead to a decrease in demand and the number of tenants which in turn entails downtime of real estate for nothing and the presence of maintenance costs. Commercial real estate is particularly susceptible to these economic factors.
• Low profitability and long payback period. This is the reverse side of the reliability and security of investments. Lower risk pays with lower profitability.
• Low real estate liquidity. Selling property quickly at a good price is quite difficult, especially during periods of economic crisis.

How Can You Start a Rental Business?

In order to make money by renting real estate, you must be able to dispose of the property. However, it is not always necessary to be the owner of the building or premises.

There are several ways to start a rental business:

• Buy real estate for the purpose of leasing (either in the secondary market or in the primary);
• Buy a ready-made rental business. Real estate with existing tenants and well-established processes is sometimes found in advertisements for the sale of a business. This option is good because the buyer of the business immediately begins to receive income.
• Get property by inheritance. If it is not needed for personal use, then why not use it for passive income?
• Rent your own property and sublet it. Hourly or daily rent brings more income than long-term rent. You can build a whole business on the sublease of real estate with minimal investment.
• Start a real estate management company. A fairly significant number of investors do not particularly like (or do not have time for this) to deal with the search for tenants, the technical maintenance and provision of real estate, as well as the process of renting real estate. An entrepreneur or company that can offer such services to investors and property owners can make good money on this.

Types of Commercial Real Estate for Rent

Commercial real estate is distinguished by its use as a tool for making a profit. The most common way to make money from buildings, premises, and land is to rent out commercial real estate.

If we talk about buildings and premises, then one of the most common types of classification is the division into certain categories. These categories depend on a combination of factors and elements of real estate, depending on the comfort and class of the object. This includes location, type of building, year of construction, layout, quality of finishes, availability of auxiliary systems and air conditioning, parking, elevators, security, etc.

In addition, there is a division of commercial premises depending on the way they are used.

Office buildings and premises

Almost any business activity requires an office in one form or another. Therefore, it is not surprising that buildings and premises that can be used as an office are so popular. Renting office real estate is relevant at all times and its delivery can bring a stable income to investors.

At the same time, the formats of office space must meet the most diverse business requirements. Office real estate, as a rule, provides for such options as proximity to business districts, convenient parking, comfortable workplaces, Internet connection, and the presence of developed infrastructure nearby. Both small premises, even the same apartments transferred to the non-residential fund, and entire business centers that are built specifically for such purposes, can be rented out as an office.

Commercial property

Buildings and premises that may be used for the sale of retail goods, the provision of services or entertainment activities are commonly referred to as retail properties.

This segment of commercial real estate is one of the most popular and dynamic in the market. In addition to a large number of already existing shopping and entertainment centers, new shopping areas are built every year. But retail real estate is not only a mall. Shops and commercial premises located on the ground floors of residential buildings and office buildings on the main streets and in crowded places are very popular.

One of the most important parameters of commercial real estate is the location, which is able to generate a lot of human traffic. Since this traffic can be converted into buyers. Renting out commercial property can be a very profitable business for its owner if the premises are located in a busy area.

Warehouses

The increase in turnover requires more and more storage facilities for its temporary storage and redistribution. Warehouse and logistics complexes remain in high demand while saturation in this segment of the market is not observed, especially when it comes to modern and well-equipped warehouses.

And although the rental rate for warehouse and logistics real estate is much lower than retail or office real estate, due to large areas and a certain shortage of high-quality complexes, this is a rather interesting segment for investors to earn money. Renting warehouse real estate remains an urgent need for entrepreneurs. And for investors, this is a good way to make money on investments in real estate.

The key requirements for warehouses and logistics centers are the availability of convenient auto and/or railway entrances, modern storage conditions for goods, automation of processes, and, of course, the safety of goods.

Rental property for catering (HoReCa)

To some extent, commercial real estate, which is used for bars, restaurants, and hotel businesses, can be classified as retail. But each of these business areas has its own specifics, which, among other things, is reflected in the requirements for commercial real estate.

So, for example, bars, restaurants, and fast foods require the mandatory presence of powerful air conditioning and fire safety systems. And the specifics of running a hotel business, for example, in the form of a hostel, set certain requirements for the size of rooms and bathrooms.

However, there is a demand for rental property for catering. And the owners of commercial real estate of this format do not remain without tenants.

Real estate for the service sector

The service sector itself is very extensive and covers a large number of types of business activities. Beauty salons, hairdressers, pawnshops, sewing shops, and other types of businesses need to rent commercial real estate for their needs.

In some cases, office or retail premises may be suitable for them. And some will have special requirements. As, for example, in pawnshops and other financial companies, where there are legally established requirements for the equipment and security of premises.

On the other hand, companies that are associated with the provision of services often value location. Because their income and customer loyalty depend on the constancy of their location. Therefore, by renting out commercial real estate for the service sector, investors can count on a permanent and long-term passive income.