Commercial real estate, simply put, is any non-residential land or property intended to generate income or earn a profit. Some examples of commercial real estate include industrial parks, hotels, office buildings, shopping centers, condominiums, parking lots and warehouses. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay While investment strategies for commercial real estate are fairly simple, many investors don't fully understand how commercial real estate works as an investment vehicle. Commercial investors typically earn money in three ways: one, by purchasing or leasing the property and charging tenants rent in exchange for use of the property, two by appreciating the value of the property held over time, and three by brokering or negotiating an agreement between a buyer and seller of commercial real estate. In this article, we look a little more closely at the second of these commercial investment strategies: The opportunity for potential returns from a commercial real estate investment can come from appreciation over the time the investor holds it and improvements in terms of added value. Unfortunately, this is not always the case and even the best investors can still lose money despite their best efforts and most creative strategies. If demand increases for your property, or in the area around your property, there is a good chance that tenants will be willing to pay a higher rent and potential buyers will be willing to pay a higher price than they originally paid to take it out of your hands. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay Appreciation based on supply and demand is not the only way a property's value can increase. Many investors take an active “value-add” approach to commercial real estate, making improvements to the property to increase its essential value or its ability to generate income. An example of this would be updating amenities and improving aesthetic details of a multifamily apartment building. Upgrades like these can allow a landlord to charge higher rent for nicer apartments. Methods other than improving the property might include rezoning an adjacent parcel of land, such as from residential to multifamily, so that more apartments can be built. Any money spent on renovating a building can potentially increase the selling price of the building in the future.