Commercial real estate is property that is utilized solely for business purposes. Examples of commercial real estate consist of malls, office parks, restaurants, gas stations, convenience stores and office towers. Commercial real estate is one of the three primary kinds of real estate. The other types are residential real estate, which is used for living purposes; and industrial real estate, which is used for production and manufacturing. The businesses that occupy commercial real estate normally lease the space. An investor usually owns the building and accumulates rent from each business that operates there.
There are four primary types of commercial real estate leases, each demanding different levels of responsibility from the property owner and the tenant. In addition to rent, a single net lease makes the tenant accountable for paying property taxes; a double-net (NN) lease makes the tenant responsible for paying property levy and insurance; and a triple-net (NNN) lease makes the tenant responsible for paying property taxes, insurance and upkeep. Under a overall lease, the tenant pays only rent; the property owner pays for the building's property taxes, insurance and maintenance.
Investing in commercial real estate often calls for a considerable amount of start-up capital and substantial knowledge of the legal, financial and legal aspects of owning this type of property. Investors who don't want to deal with these complications directly can gain exposure to commercial real estate by using real estate investment trusts (REITs).
The size and scale of the Commercial real estate market makes it an appealing and lucrative industry for many investors. Investors can invest directly in actual real estate or choose to invest indirectly through managed funds. Investing directly in real estate requires purchasing the commercial property to use as an income-producing property or for reselling at a future time. Indirect ways to invest in the real estate market incorporate investing in real estate investment trusts, real estate exchange listed funds, commingled real estate funds and infrastructure funds. Due to the higher exchangeability available in the market, the lower transaction costs and lower capital specifications, average investors choose to indirectly invest in commercial real estate.
A realtor is a real estate expert who is a member of the National Association of Realtors, a professional association. Realtors include agents that work as non-commercial and commercial real estate brokers, salespeople, property managers, appraisers, consultants and other real estate professionals. More than 1 million real estate brokers are realtors, and the term is a registered trademark. Realtors must belong to both a local association or board and a state association.
Realtors are required to be experts in their field and must follow the NAR's code of ethics, which requires agents to maintain specific duties to clients and customers, to the public and to other realtors. Among its many demands, the code of ethics says that realtors "shall avoid exaggeration, misrepresentation, or concealing of relevant facts relating to the property or the transaction;" "shall be honest and truthful in their real estate communications and shall provide a true picture in their advertising, marketing and other representations;" and shall "pledge themselves to defend and promote the needs of their client" while treating all parties to the transaction honestly.