Posted on: 28 November 2023
Real estate is a significant investment, and many people have made a fortune through it. Mostly, when thinking of investing in real estate, residential properties come to mind, but there's more to it. Commercial real estate, unlike residential properties, includes buildings and land intended for profit through rental income or capital gain. This blog post highlights the benefits of investing in commercial real estate and why it's worth your consideration.
Consistent Income Stream
One of the main reasons to invest in commercial real estate is for the rental income. Commercial properties tend to generate much higher rental yields than residential properties. Whether you decide to lease or sell the property, commercial real estate offers more significant cash flow with long-term leases. With a commercial property, you can diversify your income stream and recuperate your investment within a few years.
Appreciation in Value
Commercial properties also appreciate in value over time. Unlike residential properties, appreciation value is based on the property's earning potential. If you have a property in a prime location with high tenant demand, you can expect the property's value to appreciate over time. Even if you decide to put the property up for sale, the price point tends to be higher than the original purchase price.
Investing in commercial property also offers several tax breaks. You can claim substantial tax deductions on mortgage interest, depreciation, and maintenance on your commercial property costs. Suppose you have made a capital gain from selling a property and want to evade capital gains tax; then, you can take advantage of a property exchange. This allows you to defer paying capital gains tax by reinvesting funds from selling property into the next investment.
Control Over Your Investment
Investing in commercial real estate offers more control over your investment. Unlike shares or stocks, where you rely on market fluctuations, owning a commercial property allows you to control the success of the property. You can take charge of the day-to-day operations like selecting tenants, collecting rent, setting lease terms, evicting tenants, and managing expenses. This gives you more control over the property's performance, and with good management, growth in property value is guaranteed.
Investing in commercial real estate offers many benefits beyond just a stable income stream. By taking advantage of the many tax breaks and options for controlling your investment, you can reap financial gains.
Contact a commercial real estate agent to learn more.Share