A Client-Focused Approach to Business and Real Estate Law

All investors are not the same in commercial real estate

While an investor generally means someone who contributes money and resources to an entity in hopes of recovering more than what they put in, it is an umbrella term when it comes to commercial real estate in California. There are different ways that people can invest in commercial properties and thus their title of “investor” may hold vastly different meanings. 

There are investors that purchase commercial property, but decide to utilize the property themselves for a business or professional endeavor and are thus considered owners, as well as investors. These people are called owner-occupants and so long as their business resides in the building they have purchased, they will actively maintain this title. Conversely, there are those who invest in a property but have decided to screen tenants to occupy the space. Each month, they wait on a rent check which in turn classifies them as investor-owners. 

Situations where an investor owns the property and operates a business on the premises of that property, but decides to sell the company or it goes out of business, they still have the option to retain the initial investment. If they continue to own the commercial real estate and a new business moves in or their previous business is bought out, they are considered a private capital investor. An institutional capital investor utilizes money from other people and sources to buy and manage commercial real estate. This practice often requires strategy and careful planning as the pressure of investors to use other peoples money wisely is quite high. 

If people are interested in investing in commercial real estate, an attorney can provide helpful input on how to be successful without compromising the integrity of their investment. With adequate protective measures in place, investors may be able to realize a more successful output of their efforts. 

Source: Daily Bulletin, “Investors, investors, investors: Who owns your commercial real estate?” Allen Buchanan, Sept. 21, 2019