Benefits of Owning Commercial Properties
Commercial Real Estate Investments have historically provided excellent appreciation in value that meet and exceed other investment types. These types of properties generally can go up in value from internal factors such as proactive management – making cost-effective improvements to the property that improve the usability and desirability of the asset, and external factors such as supply and demand imbalances.
According to some reports, commercial real estate investments had the highest correlation to inflation when compared to other asset classes. It is important to recognize the benefits of owning commercial real estate as a hedge against inflation. When inflation occurs, the price of real estate, particularly multi-tenant assets that have a high ratio of labor and replacement costs, will also rise.
- Favorable financing rates
- Equity appreciation
- Cash flow opportunities
- Tax advantages/ Depreciation tax shelter
- Higher income potential
- Lower vacancy risk/ Expenses paid by tenants
- Less competition
- More flexible sellers
Many great things come with investing in commercial real estate. You can make money from this type of investments in many different ways. If you have the ability to purchase the property, you will gain equity and then turn around and profit on the sale. You can also lease the property to obtain and sustain a monthly rental income. Commercial real estate benefits from comparably longer lease contracts with its tenants than residential real estate. There are many benefits to getting into commercial real estate. It is important to consider this type of investment even if it is not part of your current plan. Like with any type of investing, it is very important to gain as much knowledge as you can before be making those tough decisions about what to invest in.
Use A Commercial Real Estate Agent
Due Diligence Is Critical
Commercial real estate property owners are, generally, more knowledgeable and sophisticated than residential owners. The commercial real estate due diligence process is longer than residential due diligence. It begins when you initially contact the seller or the seller’s agent or broker. During the contract negotiation phase, the due diligence process is well underway. Commercial properties are much more complicated than residential properties. With commercial properties you need to know the same things as you do with residential properties, but figuring out the investment numbers is much more difficult. Using a high skilled professional commercial real estate agent who primarily deals with commercial real estate will be a smart move since that these types of properties are way different from residential properties and a highly experienced real estate agent can help a lot.