Did you know that there’s over $6 trillion worth of commercial real estate in the United States? This type of real estate is broken down into five unique categories, which include retail, hotels, office buildings, apartment buildings, and industrial property.
Each year, the construction of commercial real estate contributes about 3 percent to the gross domestic product in America. If you’re looking for a unique and lucrative investment opportunity, then buying commercial real estate is a great option.
When you buy commercial property, the risk/reward quota in your investment portfolio will increase substantially. Investing in things like stocks may lead to significant losses due to increasing market volatility.
The best way to choose the right investments is by consulting with professionals in the commercial real estate industry. With their help, you can figure out what type of commercial real estate is the right fit for your investment strategy.
Read below to find out more about the benefits of investing in commercial real estate.
1. Buy Commercial Property For a Steady Income Stream
One of the biggest goals most investors have is finding a way to generate steady income. While this may sound relatively easy, it is anything but.
Investments like stocks or bonds will have to sit for a long time before they generate any return.
If you want to increase the number of steady income streams you have, then buying commercial real estate is a fantastic idea. Since the commercial properties you own will be secured with leases, you can rest assured your money will come in on a monthly basis.
Before you begin to rent or lease the commercial buildings you own, be sure to consult with a lawyer. These legal professionals will be able to help you develop iron-clad rental and lease agreements with ease.
2. The Value Appreciation Factor
Selecting the right types of investments will take a lot of hard work.
One of the main concerns you should have when choosing an investment is whether or not it will appreciate in value. Commercial real estate is known for providing excellent value appreciation over time.
The best thing about owning commercial buildings is that you can make upgrades over time. With the right upgrades, your property will be worth much more in the long run.
Allowing professionals to come in and perform a commercial appraisal on occasion can help you determine what your real estate investments are actually worth.
The more you read about the process of appraising commercial property, the easier you will find it to prepare for this experience.
3. Using Equity as Leverage to Buy More Property
The main thing most people want to know about investing in commercial real estate is how to create their own property empire.
One of the most used methods in regards to buying more than one piece of commercial real estates is the use of equity leverage.
Basically, this type of funding allows you to use the equity in your current commercial property as collateral on a new loan for a new building.
Often times, the amount you can receive for a new building will be far more than what your actual equity in a building is.
Using this form of funding will allow you to grow your real estate empire in no time. Finding a reputable and experienced lender is essential when trying to get low interest rates and favorable repayment terms.
Scheduling a few consultations with area lenders can help you make an educated decision regarding which one to use.
4. Commercial Real Estate is Nearly Inflation-Proof
When investing in the stock market, you will need to stay in the know regarding changes in the economy.
Failing to anticipate economic downturns can lead to you losing a lot of money in the stock market.
For most investors, buying commercial real estate is mostly about how inflation-proof it is. In many cases, a rise in inflation will only lead to commercial real estate owners making more money.
Often, increased inflation leads to apartment buildings and other multi-tenant housing options exploding in popularity.
This is great news for investors smart enough to put their money into commercial real estate purchases.
5. The Tax Benefits
For most investors and business owners, tax time is the most stressful part of their year. Having to deal with things like capital gains taxes can be a bit overwhelming. Luckily, the United States Tax code benefits real estate owners in a number of different ways.
One of the major tax benefits for property owners is being able to deduct things like mortgage interest and depreciation. With these deductions, you can reduce the amount of money you have to pay to the Internal Revenue Service each year.
Getting all of the deductions you are entitled to is easy with the help of a tax preparation professional. Failing to reach out for this type of professional help can lead to a number of mistakes being made.
6. The Demand For Quality Commercial Real Estate
Each year, thousands of people look for affordable apartments to move into. Also, business owners are always looking for quality commercial real estate to set up shop in. This means you will not have to worry about keeping your commercial properties rented or leased at all times.
The key to keeping tenants happy is properly maintaining the buildings you own. Working with a property management company can help you get this work done without having to lift a finger.
What Are You Waiting For?
Now that you know about why you need to buy commercial property, it’s time to act. Taking your time and finding the perfect piece of real estate to invest in will pay off in the long run.
Are you looking for more advice on how to build wealth? If so, check out our article on the best ways to save for retirement.