What Is a Good Percentage Return on Commercial Property in Baton Rouge?

The return on commercial investment property in Baton Rouge can vary, and your goals determine whether or not the percentage return is good or not.

Many people who own investment properties are using their returns as retirement income, supplemental or otherwise. For these people, a more secure deal is desirable over a high risk deal where they may lose some money. Many will opt for properties that offer tenants a long-term lease, and they generally want these tenants to be credit-worthy and reliable. In this scenario, a 7% or 8% rate of return is considered a good one.

In other cases, people have a higher tolerance for risk, buying commercial real estate that comes with additional factors and hoping for a higher return. For instance, this could mean that the property is in an area that is less desirable with factors such as a high crime rate. In this case, a smaller return isn’t entirely favorable because the property comes with more risk factors and volatility. But the returns may be closer to 12%, making the risk worth it.

Since the term “good” is relative, it’s important to do your research and analyze your investment goals. Are you looking for a steady rate of return? Are you ok with ups and downs in the market if it will ultimately lead to higher returns? Are you willing to take a smaller rate of return in exchange for stability? Answering these questions will get you closer to deciding on a good rate of return for you and help you take the steps to get there.

Mathew Laborde, CCIM
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