A frequent question among investors is “What are the benefits of investing in commercial real estate when weighed against other investment options?”
There are several platforms to invest your money in today. The stock market is obviously still an option; however, many investors are moving away from that venue due to the market’s volatility and low rate of return. Some investors are finding decent returns lending their money out because buyers are turning to private money sources due to standard commercial lending sources being so tight in the current economy. However, the platform that offers one of the greatest opportunities and highest rates of return in the current volatile economy is investing in commercial real estate.
Many of the same people who previously invested in residential real estate are moving into buying commercial properties because they see current market conditions as creating an opportune time to make this upward transition. So, what are the factors that lead commercial investments to stand out? Commercial property investments result in higher returns for a number of reasons:
The Benefits of Commercial Real Estate
Investing in commercial property enables you to generate money in several different ways. Here are just a few examples:
1. First, you can buy the property, build equity and then, according to your exit strategy, take your profit upon selling the property.
2. If you are looking for monthly income, you have the option to lease or rent the property to earn monthly cash flow.
3. If you are running your own business out of the property, you will be saving the expense of paying rent to a landlord while building your equity in the property at the same time.
4. If the commercial property you bought for your own business contains more space than you need for your operations, you can earn monthly income by renting out or leasing the portions of the building not in your personal use.
A Secure Investment
Investing in commercial properties is a secure investment for several reasons:
– The tenants’ rent payment covers the largest expense of the property, the mortgage.
– Most commercial leases increase with increases in the CPI (Consumer Price Index) so any increase you have in your expenses is covered by the increase in rent to the tenants.
– Most or all of the operating expenses are paid by the tenant through NN or NNN leases.
– Tenant improvements are paid by the tenant to a large extent.
Taking Advantage of the Opportunity
There is a wide range of commercial real estate properties available. Keep an open approach towards the different options and consider all the investment opportunities that seem worthwhile. Put in the extra effort to find the most suitable property for yourself, and it will definitely turn out to be a valuable investment.
Regardless of your current plans and strategies, it is highly advisable to consider investing in commercial real estate as one of your investment options.