When considering a new commercial real estate investment, it’s common to encounter fierce competition for key properties. However, you’ll want to put several lesser-known opportunities on your radar. These niche investments can help diversify your portfolio, offer competitive entry points, and tap into otherwise ignored markets.
1. Mobile Home Parks
You’ve likely passed by hundreds of mobile home parks without even giving them a second thought, but not anymore. Mobile home parks can be an affordable, long-term investment requiring little maintenance costs and offering high margins. Generally, these properties boast good, long-term occupancy rates, established infrastructure, and clear rental agreements. Some occupants own their mobile homes, while others rent them from the park. In both scenarios, renters pay rent, which may or may not include utilities.
The lack of a “for sale” sign outside of a mobile home park need not be a deterrent. Park owners may not have selling on their radar, or they may worry that listing the property could cause renters to be concerned. However, the right business proposition, made at the right time, can open up a winning opportunity. Some sellers may entertain creative deals, even financing the deal for you.
When it comes to investing in mobile home parks, Lifestyle Investing expert Justin Donald says, “The fantastic part about mobile home parks will always remain — you can adjust rents with very little trouble in more challenging times. No other investment has that benefit.” With high occupancy rates, little tenant turnover, and control over rent, investing in mobile home parks is a standout opportunity.
With rising inflation, mobile home parks offer tenants affordable housing despite economic conditions. Parks throughout the country are enjoyed as primary residences and even as retirement getaways. In retirement hotbeds, mobile home parks can have a resort-like feel, and the right owner can make them especially attractive.
2. Storage Units
The unassuming block of storage units in nearly every community is a cash-flow dream. With minimal monitoring, straightforward infrastructure, and unlimited clientele, storage units are a sleeper investment. Square footage is at a premium in homes and businesses, and storage units represent a way to maximize storage. These businesses can be purchased from owner-operators but can often be found on city tax lien listings or sheriff’s sales.
For a reasonable monthly rate, homeowners can declutter without tossing their treasures. Seasonal decor can be organized and accessed when needed instead of monopolizing precious closet space. Businesses can benefit from secure storage, putting aside furniture during a renovation, or downsizing their footprint. Storage units offering temperature-controlled spaces, a range of unit sizes, and good security can attract an even wider clientele.
Look for existing, individually owned units where you can make improvements. A standalone storage unit operation needs better marketing, improved security, or modern billing technology. Choose a unit that provides an angle that can reach an untapped market. An operation located near a college could offer summer storage deals, making move-outs less stressful for families. Get creative when positioning this high-potential investment, and watch the money roll in.
3. Agricultural Land
Real estate is all about the location, but it can also be about what’s underneath. Longtime landowners are transferring property outside the bloodline more than ever, thanks to big-time offers and dwindling family farming. Operating a farm is expensive, and fewer people can stomach the cost of a big-time operation. However, agricultural land can be a valuable buy-and-hold investment that can bring a life-changing deal later.
Go outside the currently turning over agricultural land and strive to envision future population sprawl. Research economic development deals for where new businesses are going in, which can offer new places to work. Comb through public bids, analyze headlines, and plot your next move. Then, find land that is attainable for your investment and can be rented out while its value appreciates.
Small farm operations can rent your land for their niche buyers, while large producers may want to plant new experimental strains. Look for properties with varied topography and features like water sources, trees, and roadway access. These variants add visual interest for potential developers and can even result in property tax advantages for forests. Wide open spaces are just as advantageous, as warehouse and distribution centers demand enough acreage for buildings, parking, and drainage. An investment in agricultural land may break even initially, but if you have the right site, these can really pay off.
4. Food Halls
The old bus garage that’s sat empty near your town’s city center can have a new life with a strategic investment. As workers seek to trim down commutes, they look to downtown areas for living spaces, even with young children. That’s why investing in commercial spaces that enhance the quality of life alongside residential spaces is smart. Look for properties with historic elements to add a wow factor, unlock grant funding, and gain public interest.
Think back to the bustling food courts of malls of days gone by. Many vendors offered a range of cuisine for hungry shoppers willing to pay a premium. Today, this concept has been reimagined as a standalone food hall, giving diners multicultural options and a lively gathering space. Stalls are framed out with basic utilities, but restaurants bring equipment specific to their cuisine. This cuts back on the investor’s costs and ensures wide marketability for these types of rental space.
The wide-open nature of these spaces makes them ideal for private rentals, corporate events, or as a hub for nightlife. If you’re an early investor, your space could spark additional investments nearby, increasing the value of your commercial real estate. Lockdown parking for your space, too, as inaccessibility can deter patrons. Invest in parking technology for your lot, making it easy for visitors to park, pay, and enjoy your space.
Alternative Commercial Investments Diversify Portfolios
Standard commercial spaces have their place in an investment portfolio, but digging into the depths of commercial opportunities has benefits. Challenge yourself to think differently than other investors, putting yourself in the position of those who may rent commercial spaces. Consider their needs and if their current options lack availability, quality, or service. Aim to target commercial investments where your expertise elevates the offering while managing capital costs. When you’re willing to think outside the box, your returns can surpass traditional commercial investments.
