Commercial real estate markets escalated in 2021. In fact, transaction volumes rose 64% year-over-year, compared to a 12% increase in 2019. Commercial real estate investing could provide you with the diverse, reliable opportunities you’re searching for.
Not sure if you want to invest in commercial real estate? Here are five reasons to give commercial property serious thought this year. After reading this guide, you can make a more informed decision with your portfolio in mind.
1. Income Potential
Commercial real estate investing can provide you with strong and stable cash flow. These investments are structured to deliver regular dividends, and the return is often greater than stock distributions.
Compared to residential properties, commercial buildings allow you to set higher price tags and rents. You’ll have a higher potential for returns as a result. If you select the right properties, you could make thousands or tens of thousands each month.
Increased margins could help you grow your portfolio faster as well.
2. Tax Benefits
Choosing to invest in commercial real estate can also offer tax benefits.
Depreciation will allow you to deduct a portion of the property’s value from your annual taxable income. This could reduce your total tax burden as an investor.
With 1031 exchanges, you can avoid capital gains taxes when you sell the property. Instead, you can exchange profits for another asset or property.
Make sure to work with an experienced real estate agent or tax advisor to assess your particular situation.
3. Various Opportunities
Choosing to invest in commercial real estate has a number of opportunities. For example, you might consider investing in a class A office building. Perhaps you’d prefer to focus on a condo community, storage facility, or a retail center.
You might decide to have tenants sign a long-term net lease which can reduce turnover, hassle, and costs.
You’re no longer limited to the concept of traditional centralized offices, either. In fact, there are now 22,000 coworking spaces worldwide, serving about two million workers. You could choose to reimagine the idea of the urban office and offer short-term leases to small businesses.
Either way, you have the flexibility to decide what you want to invest in and how you want to market your property.
4. Tangible Assets
Real estate is a tangible asset. Stocks can gain and lose their value within hours. On the other hand, your commercial real estate will always maintain intrinsic value.
Your investment will likely never lose its total worth.
Worthy Assets: Five Amazing Reasons to Invest in Commercial Real Estate
Investing in commercial property can diversify your portfolio, help you generate more capital, and realize tax incentives. The decision to invest in commercial real estate could set your year up for success. Consider making this sound investment today.
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