Reasons to Invest In Commercial Real Estate Now
Are you planning to invest in the commercial real estate? Whether you’re a seasoned real estate investor or a newbie in this market, the commercial real estate is a niche you should consider. For a long period, real estate has proven to be a great investment. When done right, commercial properties will reliably bring higher returns than many other investment options. Many investors are still on the fence about investing in the commercial real estate for fearing to risk. Well, every good investment has some risk involved. If you want to grow your portfolio as an investor, commercial real estate is one the best ways to go.
Here are six reasons to invest in commercial real estate now.
Commercial Real Estate Has Greater Cash Flow
The commercial real estate offers a regular stable cash flow. The yield on commercial properties is usually high, especially when using leases. If your property is in the right location, you can have an annual return of over six percent of the purchase price. The cash flow is stable because commercial leases are usually longer.
Commercial Real Estate Allows You to Diversify Risks
A commercial property allows you to lease to multiple tenants at a time. This reduces the likelihood of losing the whole rental income in any month. While it may be possible to lose one or two tenants in a month, the remaining tenants will still help you generate rental income. In other investments, you may have to spend a whole month without any rental income when you lose one or two tenants at a time.
Commercial Real Estate Has Less Competition
Most property markets have a lot of competition. You have to sign the contract within the shortest time possible or else another investor will get the deal. However, the commercial property market has fewer investors making it less competitive. Regardless of your investment experience, you can be sure to often get better deals in the commercial property market.
Commercial Properties Have Intrinsic Value
Unlike other investment options, the commercial real estate has intrinsic value. If you want to purchase a commercial property, choose one in the best location with a good structure. When your commercial property is in a proper location with a good structural condition, it will have value whether it has tenants or not. This makes the commercial real estate a more stable market than other markets like the stock market. The commercial property market is, therefore, less risky and has more returns.
Commercial Properties Appreciate Faster
According to past statistics, commercial properties appreciate faster than other investment options. To make this happen, you need to make cost-effective improvements to your property. Making regular improvements makes the property more appealing. This not only helps attract more potential tenants but also increases the value of your property. One of the things that give joy to an investor is to see a rise in the property value.
Leveraging Is Possible
Using leverage to grow your portfolio is one of the risky but lucrative ways to invest. The commercial real estate investment allows you to use leverage. With such, you can place debt on property that is of much higher value than the initial investment. Using other people’s money, you will be able to purchase more than you would.