7 reasons why you should invest in commercial real estate

Commercial real estate, or real estate that’s intended to be used for business purposes, comes with a number of benefits if you’re considering investing in it. While it has risks associated with it, commercial real estate offers higher returns than other kinds of investment vehicles, such as stocks and bonds. Here are seven reasons why you should invest in commercial real estate right away.

1) Diversification

Investing in a variety of assets is the best way to hedge against risk. Investing in Commercial Real Estate alongside stocks and bonds ensures that your portfolio will stay well-diversified and help mitigate potential downside. Diversifying can also provide tax advantages since there are different tax implications for each type of investment. The higher return typically offered by commercial property can offset taxes owed on other types of investments, like stocks and bonds, because capital gains rates are usually lower than income rates.

Finally, investors might be able to take advantage of some form of depreciation which may allow them to claim more deductions on their taxes than if they invested solely in other types of investments.

2) Capital appreciation

Commercial property prices tend to increase over time, meaning that if you hold onto your investment for long enough, it will likely be worth more than when you first bought it. In some cases, the value of a property can double or even triple in ten years’ time.

3) Appreciation potential

Investing in commercial real estates is a wise decision for the following 7 reasons:

1. Property appreciation potential- Commercial property has the potential to appreciate, which means that it will not lose value over time. This is different from residential properties that are more likely to depreciate over time. 2. Reduced risk- Commercial properties typically have lower rates of vacancy and higher lease rates than residential properties, so they are less risky investments. 3.

4) Passive income

One of the many benefits of investing in commercial real estate is the possibility for passive income. With rental properties, tenants are responsible for paying their rent. This means that as long as your property is rented, you will earn money from it. As a result, you'll be able to keep up with the mortgage payments and other expenses associated with owning a property. You might also make a profit depending on how much the tenant pays in rent. You can also get another form of passive income by taking out loans against the value of your property. If the value increases over time, then you can use those funds to buy more properties or make renovations on existing ones!

5) Long-term returns

Commercial property is an excellent investment because of the long-term returns. The average annual return on a commercial property is 7% which is higher than other investments like gold, stocks, and bonds. The rate of return for residential properties varies from city to city, but it's usually around 4%. Commercial property can also be a good choice if you are looking for a steady income stream.

6) Longer holding period

Commercial properties are a great investment because they typically have a longer holding period. This is because, unlike residential properties that can be flipped for a quick profit, most commercial properties need to be rented out for at least one year before an investor can reap the benefits. And with rental rates still on the rise, it's likely that these lower-yield investments will pay off for investors in the long run.

7) Control

-Commercial properties are less volatile than residential properties.

-The rental income from a commercial property is tax exempt.

-You can depreciate the building over 27 years.

-There is no limit on how much you can borrow for commercial real estate.

-Commercial Real Estate has a lower default rate and lower foreclosure rates than residential property.

Learn the what, how, and why of commercial real estate investing