6 Benefits of Investing in Commercial Real Estate
Anyone with an entrepreneurial mind knows the importance of building financial freedom and long-term stability. Commercial real estate has long been an effective way to do this. One of the challenges you would face in this arena is the ever-changing market and economic instability. However, if you are wise, work hard and understand the keys to success, you can enjoy some fantastic benefits of working in this industry. Many real estate professionals have found professional satisfaction investing in commercial properties.
Increase in Value
Some investments are riskier than others. When it comes to growth and appreciation, commercial real estate has some advantages that you won’t find in other areas. When compared to residential real estate, the commercial arena can result in higher gains, even when market conditions aren’t ideal.
Residual Income Stream
There are many reasons entrepreneurs like yourself decide to enter the commercial real estate business. One of the most appealing factors is the prospect of generating a consistent income stream. For example, if you purchase a commercial building, you can collect monthly rent from tenants for the long-term future. You’ve done the hard work; now, you can sit back and enjoy the rewards.
Tenants Stay Longer
If you’ve worked in the residential market, you know that tenants typically lease the property for a year or two and then move on. The constant turnover can lead to longer gaps in vacancies as well as inconsistent income. However, most commercial tenants will sing multiyear leases, so you can count on the same people to occupy your property for the foreseeable future. This locks you into a healthy income stream for years to come.
Lower Costs to Maintain
You might initially think that maintaining a commercial property would bring more costs and responsibility. However, it’s important to note that many tenants take care of items such as taxes, maintenance costs and other fees.
When it’s time to file your taxes, you can reap the benefits of some tax breaks you won’t find with other types of investments. Like residential real estate, commercial real estate allows you to deduct mortgage insurance. In addition, you can deduct depreciation, which can come in handy when tax time comes.
Equity for Future Purchases
If you’re like most real estate investors, you plan on buying other properties in the future. As you build equity in your first property, you’ll be in a better position to capitalize on the next commercial opportunity that comes along.
It’s easy to see how commercial real estate can develop into a gratifying, successful career. Consider these positive aspects as you purchase your first property.