Unlike residential real estate, industrial investments in Massachusetts usually consist of purchasing properties that are to be used solely for business purposes. They are often leased to smaller businesses as the investor collects rents. These properties can include retail, office, industrial and apartment buildings, warehouses, or mixed-use buildings.
Whether you are investing in industrial real estate for future wealth and security, tax benefits or increased diversity on investments, it offers a wide range of benefits for the new and experienced investor. Understanding the benefits of industrial real estate investing is the first step in the overall investment process.
An industrial real estate developer in Manhattan can expect the following benefits:
- Higher Income
- Cash Flow
- Less Competition
- Longer Leases
Steps to Getting Started in Industrial Real Estate Investment
Getting started in industrial real estate investing in Massachusetts is simple if you follow some important steps that we are going to share with you here. If done correctly, you can become a successful real estate investor with a growing portfolio.
The first step is to do your research. Understanding your investments will save you time and money later and could help you avoid some common investor mistakes.
Understand the Differences Between Industrial and Residential Properties
Understanding that investing in industrial real estate is very different from investing in residential properties is the key to making successful investment deals and taking advantage of a good deal when it comes along. Industrial real estate is valued differently than residential properties because income from industrial real estate is directly related to usable square footage. Industrial property leases are also much longer than residential leases and offer greater cash flow.
Next, you want to analyze comparables in the area. Otherwise known as “comps,” these assets refer to prices paid for recently sold homes that are similar in location, size and style. Analyzing these factors will help you determine the current market value of a specific property.
Understand the Metrics
Finally, you need to understand the common key metric used to assess real estate. Some common formulas you should know include Net Operating Income, Cap Rate and Cash on Cash.
Now that you know the basics to investing in industrial real estate in Massachusetts, you can create an investment strategy that suits your needs, your goal and your budget.
To learn more about the Massachusetts industrial property market, contact Sovereign Realty Advisors today.
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