Commercial Real Estate- Pros of Investing in Such Properties
When it comes to investing in real estate, you often think about renting out properties, purchasing real estate-related stocks, buying real estate investment trusts, and more. But very few people consider investing in commercial real estate.
Any type of commercial property can prove to be a great investment option. Although commercial properties are high-risk, they are also high-reward asset class. Investing your funds in them can typically offer greater financial rewards than residential properties.
In this article, we will look at the many benefits of investing in commercial real estate properties. With meticulous real estate planning, these may turn out to be highly lucrative business undertakings.
What Are Commercial Real Estate Properties?
In general, any property designed to make money can be listed as a commercial property. Some of the most common ones include:
- Retail buildings
- Offices
- Hotels and restaurants
- Industrial warehouses
- Storage spaces
- Healthcare buildings
- Apartment buildings and more.
Now, let us look at the many reasons for investing in such properties.
Benefits of Investing in Commercial Real Estate
1. Immense Income Potential
This is perhaps the greatest reason to make commercial purchases. These properties come with higher price tags and rents, and thus, greater potential for returns. So instead of investing in residential properties, you can earn thousands of dollars by choosing the right commercial properties.
You can opt for professional commercial real estate services from good agents to identify some of the most lucrative properties in your area.
2. Tax Benefits
Commercial properties come with many tax benefits. For instance, there is depreciation that allows you to subtract a portion of your property’s value from your taxable income each year. This brings down the total tax amount by a considerable margin.
Moving on, with commercial property, you can avoid capital gains taxes when you ultimately decide to sell off the property. All you need to do is park your profits into another property or assets to avoid taxes. Talking to a good real estate agent can help you understand the tax profile in depth.
3. Less Competition
If you are looking to make profits, residential real estate offers fewer margins as it is highly competitive. Commercial real estate, on the other hand, is witnessing a reverse trend. Because of less competition, these properties have a bigger profitability value.
Also, it is easier to find commercial properties as compared to other assets on the market.
4. Multiple Investment Opportunities
If you have decided to invest in a commercial property, you will have diverse options. From investing in a high-rise office building to a single storey warehouse or even a full-scale mall, you can look for many opportunities.
Many good property agents offer reliable commercial real estate services in the US that help you identify the best investment options.
5. Triple Net Leases
Although there are variations to triple net leases, the basic concept remains the same, i.e. the property owner does not have to pay expenses on the property. According to this type of lease structure, the tenant has to pay a base rental amount along with all the associated costs, such as taxes, maintenance, and utilities.
This is a great benefit of investing in commercial real estate as it decreases the management liabilities of the owner and leads to a passive income stream.
6. Limited Hours of Operation
It is true that commercial properties take a lot of work. However, the number of hours that you might get a call from your tenant regarding any issue is much more limited than in the residential world.
Talking about the commercial sector industry, a majority of the tenants work during the typical office hours, i.e. 9 to 5. This means that after 5 PM, you are much less likely to get work calls from your tenants. Thus, you can enjoy more off-hours and focus on other aspects of your life.
Wrapping Up
This is our quick roundup of the top benefits of investing in commercial real estate. If you ever choose to diversify your portfolio and park your funds in commercial purchases, make sure to have a good attorney by your side. He will help you with your real estate planning and make sure you deal in the most feasible and practical commercial property.