If you are passionate about real estate investments, you know that there are many ways of investing in real estate. You can purchase real estate-related stocks, rent out properties, flip houses, real investment trusts or even engage in crowdfunded deals. However, another great option is worth eyeing, and that is commercial real estate investments (CRE). It is a high reward asset class and also a highly risky one involving an entire slew of property types you have never thought of purchasing.
Commercial real estate is any property designed to make money. It includes retail stores, industrial warehouses, office buildings, restaurants, and specialized property such as storage spaces. With a real estate firm such as MarketSpace Capital guiding you, commercial real estate is a smart investment to make. Here is why it is worth it to consider commercial real estate for your real estate portfolio.
One of the reasons to invest in commercial real estate is the high-income potential. Commercial property comes with higher price tags and rents which means the income potential is also high. The key thing is choosing the right properties by having an experienced real estate firm as your guide. So, instead of making fewer profits on one rental home each month, you can invest in multiple commercial properties and continue growing your portfolio.
Commercial real estate investing comes with tax benefits. There is a depreciation that allows you to deduct an amount of your property’s value from your taxable income every year. This can significantly reduce your total tax burden. Again, you can avoid capital gains taxes when you sell your property, thanks to 1031 exchanges. However, you need to consult with your tax advisor before you use this method.
More investment options
With commercial real estate, you have plenty of investment opportunities. You can invest in high-rise office buildings, a full-scale mall, or you can keep it small by investing in a storage facility such as an industrial warehouse. In simple words, you have a lot more flexibility on what and where to invest.
More help in maintaining your property
When you invest in commercial properties, maintenance and overall upkeep don’t have to be on you entirely. That is why there are triple net leases. These relieve you the burden of the property-related expenses transferring them to the tenant, for example, utilities, insurance, taxes, and maintenance. Besides, since the tenants are in business, they will be more focused on keeping the property in good condition to attract clients. That also increases your property value over time.
Commercial real estate is less competitive than residential real estate. The highly competitive nature of residential real estate dramatically drives prices up, making it difficult to invest. On the other hand, it is more manageable to find commercial property than other market assets.
A diverse portfolio
Commercial real estate investing is a wise way to diversify your investment portfolio. In today’s world, you never know what will happen tomorrow. That is what the 2020 covid 19 pandemic has taught us. Therefore, it is wise to spread your investment across different assets.
Commercial real estate is a worthwhile investment that has produced some of the world’s most prominent real estate billionaires. Before you venture into commercial real estate, ensure you have a trustworthy and experienced commercial real estate agent to guide you.