The key benefit of investing your money in Commercial real estate is its security.
When the economy declines, you will find Commercial real estate generally holds its own. And when the economy is moving ahead, Commercial real estate grows in value value and provides you with a steady income.
Here is a summary of the benefits of investing in Commercial real estate.
Benefit #1 – Strong Returns
Commercial Property provides you with strong and solid returns in the form of income and capital gains. Your aim is not to simply make a quick buck. Butt take advantage of a growing investment over time, where you can achieve a return consistently above inflation.
Benefit #2 – Stability of Income
An important point to make about Commercial real estate is that, not only are your returns higher, they are usually more secure. Unlike liver 6 to 12-month leases for residential property, Commercial tenants will generally lease for periods ranging from 3 to 10 years.
Benefit #3 – Lower Risk
Commercial property investment tends to carry less risk than residential property, or the stock market. And this comes about because of Benefits 1 & 2 above.
Benefit #4 – Exposure to Different Sectors of the Economy
Retail and Industrial properties probably have the most direct relationship to the economy – with Retail property dependent on consumer spending. An Industrial property following, about 6 months later.
Whereas, Office buildings tend to perform more based upon supply and demand of the available office space.
Benefit #5 – Tax Benefits
You will find that Commercial property provides you with generous tax benefits – far more than with residential property.
Depreciation allowances on plant equipment within the building (air conditioning, carpets, lighting, etc) are the major benefit. But most Commercial properties also enjoy significant building allowances as well.
Benefit #6 – Hedging against Inflation
Property overall has traditionally been viewed as a good hedge against inflation. But long-term surveys confirm Commercial property has given investors excellent returns – far outpacing inflation.
Benefit #7 – Investment Control
As an owner of Commercial property, you have a significant degree of control over your investment. Things like: renovations, upgrading, changing the use of the property, restructuring the terms of the lease, choosing the type of tenant you want, redevelopment and the ultimate disposal.
Benefit #8: – Ability to Add Value
Just a few ways for you to add value to a Commercial real estate include: renovating; upgrading; subdividing and enlarging; improving the external and internal appearance; and renegotiating the lease terms for your benefit.
Benefit #9 – Greater Borrowing
As you improve the property and it grows in value, you are able to further leverage your Commercial investments. That way, you could quickly be in a position to control several of properties – through borrowing more against your improved equity.
By Robert Holiday