Commercial

BC Commercial property, or real estate, investment property or income property, is real estate (buildings or land) intended to generate a profit, either from capital gains or rental income. These types of properties includes office buildings, medical centres, hotels, malls, retail stores, multifamily housing buildings, farm land, warehouses, and garages.

BC Commercial buildings are buildings that are used for commercial purposes, and include office buildings, warehouses, and retail buildings (e.g. convenience stores, ‘big box’ stores, and shopping malls). Cities maintain strict regulations on commercial zoning, and have the authority to designate any zoned area as such; a business must be located in a commercial area or area zoned at least partially for commerce.

The basic elements of an investment are cash inflows, outflows, timing of cash flows, and risk. Your ability to analyze these elements is key in being a successful investor in real estate.

Cash inflows are the moneys put into the property over the entire life of the investment, including the original purchase cost and:

• Rent
• Operating expense recoveries
• Fees: Parking, vending, services, etc.
• Proceeds from sale
• Tax Benefits
• Depreciation
• Tax credits

Cash outflows are the moneys received from the property, again, over the entire life of the investment, including the sale revenue and:

• Initial investment (down payment)
• All operating expenses and taxes
• Debt service (mortgage payment)
• Capital expenses and tenant leasing costs
• Costs upon Sale

Risk is dependent on market conditions, current tenants, and the likelihood that they will renew their leases year-over-year. It is important to be able to predict the probability that the cash inflows and outflows.