Investing in real estate has always been one of the best and most secure investment decisions that you can make. However, commercial real estate investing is easily the best form of property investing in today’s current climate. In this article, we will be going over some of the reasons you should be making investments in commercial real estate right now.
Reasons To Invest In Commercial Property:
- Significant Returns
One of the main reasons a lot of big investors are choosing commercial real estate over the other forms of investment options available is because of the potential for high returns. The commercial real estate returns are greater than other investment opportunities including stocks and bonds. At the same time, if you are going to be getting into real estate investing, commercial is the way to go. After all, the yields on commercial real estate investing are much higher for commercial real estate investing than residential. Commercial properties have a significantly higher earning potential than residential which makes it one of the most attractive ways to invest your money.
- Predictable and Significant Cash Flow Potential
Another big reason a lot of investors are looking into commercial real estate is that it allows for maximum cash flow potential. Because the leases that you are able to get with commercial real estate are going to be much greater and longer term than residential, they provide much more predictable cash flow year over year which is going to allow for optimal cash flow potential. Being able to have steady and even rising cash flow year over year with this type of investment makes it very attractive for potential investors and it is one of the main reasons you should look into making the investment yourself.
- The Leverage Potential
Another significant reason you should consider getting into commercial investing is due to the ability to leverage. Being able to accumulate wealth is much easier when you are able to leverage cash that is not yours. Being able to leverage the debt on commercial property is key. This means that you will be able to purchase more and make investments with money that isn’t yours. This is one of the best ways to accumulate wealth.
- Diversify Your Portfolio
If you are currently investing in other things, you are going to be able to better diversify your portfolio by making investments in commercial property. Obviously, if you are not currently investing in commercial property, it is going to increase the diversification of your portfolio which is going to in turn reduce the risk that you are taking on. Commercial property investing is a great way to lower risk as it is a fairly low-risk investment as is due to it being a tangible asset.
- Predictability
When it comes to commercial investing, it is much more predictable than residential investing. Because you are going to be doing business with other businesses, there is much more stability when it comes to commercial leasing. This alone makes it a much more attractive option than residential leasing or investing because you will not be dealing with private individual leases or interactions.
- Gain Tax Advantages
Another significant reason you are going to want to at least consider investing in commercial real estate is due to the ability to leverage tax advantages that you would not be able to get with other investments. You will be able to gain tax advantages such as the ability to deduct depreciation, mortgage interest, and more. Being able to leverage these tax advantages can make your investments even more attractive and profitable year over year.
- Less Competition
Another big reason you want to get into commercial real estate investing would be due to the decreased competition that you will be competing with on the market. Because there are far fewer commercial owners on the market than residential, it is going to be a much easier market to navigate in because you won’t be dealing with all kinds of private residential investors. Instead, you will be able to compete in a much more attractive market with lower supply which is going to allow you to maximize the profits with your investments.
- Better Hours Than Residential Investing
If you are considering investing in property, you will absolutely want to consider the amount of work required for each. Residential is going to be much more difficult to keep up with because you have tenants that are going to be living in the residential housing full-time. This means that you will have to be on call 24/7 and you will likely have to deal with issues at all hours of the day and night. Instead, when you are dealing with commercial investing, you will be limited to handling issues during business hours. Commercial investing in much less demanding on your hours because businesses will not be operating 24/7 unless you are leasing to a 24/7 business. Thus, you will be able to handle the investment with a much more hands-off approach.
Overall, there are a lot of reasons you would want to consider commercial investing over other options. Commercial investing offers significant upside and a lot of tax advantages that make it a very attractive investment. Also, it offers the ability to help diversify your portfolio of investments with a tangible asset that you can use to minimize risk. Being able to diversify your portfolio is not a benefit to be overlooked. Lastly, it is going to be an investment that you can make that offers significant return potential and a good amount of steady and reliable cash-flow that you can count on that you would not be able to get from other investments. Because commercial investing deals with longer-term leases, you won’t have to worry about constantly finding tenants or dealing with vacant leases because you will be able to locked-down tenants for longer periods of time which gives you much more cash flow predictability which can help to reduce the risk associated with the investment as well.