They say that the best way to prepare for the future is by investing your money today. Now, there are a lot of different investment vehicles out there that you can choose from. However, investing in commercial real estate is perhaps one of the best options that you shouldn’t pass out on. It’s already 2019 but a lot of people still have doubts and second thoughts about investing in real estate. Well, if you’re one of those guys then you need to take a close look at what we’re going to discuss in this article because this might just help change your mind about things.
One of the best ways to make your money grow is by using leverage and with the use of commercial properties, you can have the option to place debt onto the property that’s going to be way higher than the investment that you put into them. Through this, you’ll be able to purchase a whole lot more using other people’s money.
Income potential. The best reason to invest in commercial over residential rentals is the earning potential. Commercial properties generally have an annual return off the purchase price between 6% and 12%, depending on the area, which is a much higher range than typically exists for single family home properties (1% to 4% at best).
Professional relationships. Small business owners generally take pride in their businesses and want to protect their livelihood. Owners of commercial properties are usually not individuals, but LLCs, and operate the property as a business. As such, the landlord and tenant have more of a business-to- business customer relationship, which helps keep interactions professional and courteous.
Based on historical data, commercial real estate tends to appreciate faster in terms of value compared to other types of investments. This is particularly true if you can make improvements on your properties in a very cost-effective manner. By doing this, you can make your properties more appealing thus, increasing their value over time.
You can get a steady flow of income from commercial properties with the help of leases. What’s even better about this is the fact that commercial property leases go for a much higher rate compared to residential properties. In addition to that, commercial properties tend to keep their tenants for a much longer period of time and there are also lesser vacancies so competition won’t be that tough. This means that you’ll properly gain more money from your commercial investment compared to what you’ll earn from your stock investments.
Real estate properties possess intrinsic value, which isn’t the case for other investment classes. If you get to choose your commercial property well both in terms of location and structure you can be assured that it’s going to have value even if the tenant that uses it becomes unsuccessful. This is why most people look for property investment hotspots> where they can make the most out of their investment money.Because of this fact, commercial real estate is claimed to be way more stable compared to investments made in the stock market. This means that it’s a lot less risky and offers much higher rewards.
There are only a selected few investments out there that will offer you tax benefits and real estate properties are one of them.With real estate, you’ll have the benefit of mortgage interest deduction as well as depreciation deduction. Both of these tax benefits will help you offset your income stream and lower down your tax bill. However, always see to it that you seek professional advice so that you can make the most out of all your benefits while avoiding errors that might cost you a lot of money says John from Malta Sothebys Realty commercial division.
Compared to the residential market, the commercial real estate market has a lot less competition which is the reason why if you don’t act right away in the residential market someone else will surely end up getting the deal instead of you. This is not the case for commercial real estate because there’s a lot less investors here who are interested. Because of this, you have a really good chance of finding awesome deals.
Even though this isn’t something that’s going to have a direct effect on your ROI, the thought of having a good investment will surely be very satisfying. This is because your commercial property is going to have a huge effect on your community and its economy.