If you’ve never investigated the ownership of commercial real estate, you might be in the dark about why people wish to take on a loan commitment in addition to residential property. For some, the answer is very straightforward – it’s their primary source of income/how they own a business! For others, though, it may not be so cut and dried. Contrary to popular belief, you don’t have to be a hard-core entrepreneur or established business owner to buy commercial property and have it work for you financially. In fact, you don’t have to know much about business at all! You do need some sound financial advisement if this is your first foray into commercial real estate, but the real estate agent you work with should be able to suggest reputable professionals to you that can help. Check out some of the reasons that people decide to invest in commercial real estate.
Three Amazing Reasons To Invest In Commercial Real Estate
- Regular income
- Tax benefits
- High Appreciation Value
Who doesn’t want to know they have a regular stream of income, pretty much no matter what? If you use your commercial income to create leases through renting and tenants, you are guaranteed to have income. Commercial property in general leases at higher rent that residential property and keeps tenants for longer periods of time, and also is less likely to have long periods of substantial vacancies. Naturally there are a lot of obligations that come with this perk, but your stream of income may be quite impressive – enough that you could hire a property manager and have very little day to day worries to deal with. It all depends on what you purchase and the location of what you purchase, as well as your management skills. The sky is the limit!
Tax benefits are a phrase that everyone loves, and when it comes to commercial real estate, they really are true! Most investments don’t offer many tax benefits, but real estate in any form is one of the exceptions. You need to work with a tax specialist to get the most bang for your buck, but two areas that really shine when it comes to taxes are depreciation deduction and mortgage interest deduction. These can actually offset your income and greatly lower your tax bill. Be sure to file taxes accurately and in a timely fashion, as mistakes can be costly, no matter what type of taxes you are dealing with.
Commercial real estate has a high appreciate value, even more than residential real estate (and that’s fairly high, assuming you keep the property in good condition!) Your ability to make upgrades and additions to your commercial real estate will only enhance your commercial property’s worth. If your commercial business becomes locally popular/well known as being the best of the best, you could easily sell for quite a bit more than you paid for it. It really depends on how much time and effort you wish to invest!
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