When it comes to commercial real estate, it is a challenging field that can be just as taxing as it can be rewarding. No great tasks come easy, and no money falls out of the sky into our hands. Not everyone can get into commercial real estate investment, but there are some types of people that may do very well in the field. Some get into it because they are born business people and entrepreneurs, while others are interesting in making money and building their portfolio, and some just for the sheer enjoyment of it.
No matter if you’ve never invested before, this type of investment can be used to make you more money, build security, get tax benefits or just have a more diverse range of investments making up their portfolio. A bit of money in everything is the same as that old saying ‘don’t place all of your eggs in one basket’. Read on to find out more about the benefits of investing in commercial real estate
Higher Profits and Income
One of the big benefits of investing in commercial real estate is its potential to bring you greater profits and income from your investment. This is because commercial properties are known for having a much higher R.O.I. (return on investment) than other types of real estate. So that big business building may get you a 6-12% R.O.I. while a single family home would get you up to 4% R.O.I. for your money.
Since there is a lower vacancy risk with commercial real estate and they have longer leases, you may find yourself with higher net profits from this type of investment than with others. If you can handle the challenges of commercial real estate, you may find it more rewarding financially in the end than residential by quite a fair amount.
One of the great benefits to commercial real estate is the consistency of its income. And typically longer leases mean that these properties will be providing income that is reliable for months and even years to come. Since each space in a building means income, you will have many sources of consistent income once leased and that is always good in real estate. Triple net leases may also mean that maintenance costs, property insurance and their share of the property taxes will be covered on top of their monthly rent, meaning less cost to you.
The real estate market is flooded with competition, but commercial offers less competition. That’s not because it’s a less desirable area, but more because investing in commercial real estate can be a huge undertaking, whereas a simple home may be all that a lot of real estate investors are willing to handle. For many, commercial is just too far a leap and it takes some getting out of their comfort zone– something many people don’t want to do, which means more opportunities for those who do decide to get into the business.
This type of real estate isn’t for everyone; however, commercial investment offers huge rewards to those who are willing to take risks. Not every investment is a home run, but that’s why it pays to do your research and ultimately go with your gut. Thanks for reading, and good luck on your investment journey!