Top Reasons to Buy Commercial Real Estate
Real estate is still one of the best ways to invest your money. That’s because the prices always surge to give you a decent profit, if you stay invested for long.
Nowadays, there’re several ways to invest in real estate. You could buy a lot or a house, office or store premises and lots more.
And if you don’t have as much money, it’s possible to invest in real estate too. There’re plenty of Real Estate Investment Trusts (REITs), Mutual Funds and Exchange Traded Funds that invest in stocks or real estate companies.
Or you could also crowdfund a real estate project and get some returns.
Nowadays, most investors that have money look at buying commercial real estate. Not because they need to real estate.
Instead, they buy commercial properties because it gives them fat profits. Additionally, there’re several more reasons to buy commercial real estate too.
Therefore, let’s start by understanding the exact definition of commercial real estate.
What is Commercial Real Estate?
Basically, commercial real estate means any place from where business or industrial activity can be done.
These include stores premises, malls, lots in commercial or business districts, industrial warehouses and workshop premises, office buildings or office premises, storage areas, hotel buildings, hospital and clinic premises and in some cases, casinos or even farms.
The reason these places are known as commercial real estate is that the owner can get a license only for using the place for their business.
Generally, these areas aren’t useful as residential areas due to various reasons such as pollution hazards, among others.
Obviously, nobody would love to build a house in between stores and workshops.
Now let’s look at some of the top reasons to buy commercial real estate, if you wish to invest in properties.
Top Reasons to Buy Commercial Real Estate
If you’re genuinely willing to buy commercial real estate, here’re some strong reasons to do so right now.
In fact, commercial real estates are a better deal than residential ones for several reasons. Therefore, let’s look at these reasons why you should buy commercial real estate.
Higher Returns from Commercial Real Estate
Regardless of whether you’re selling commercial real estate or leasing it out, the returns are always far higher than what you would make from residential real estate.
That’s because commercial real estate isn’t all that common, unlike residential properties.
Therefore, there’s a huge demand for commercial real estate and buyers and tenants are willing to pay the price, as long as it’s in sync with the prevailing market rates.
There’re some tax benefits that you can get from your income from commercial real estate. For example, you can claim value depreciation of the commercial property while filing Income Tax returns.
And you would also have to pay lower Capital Gains taxes when you sell a commercial property as compared to residential real estate.
That’s also one of the reasons why many investors prefer to put their money on commercial properties instead of residential ones.
Actually, there’s lower competition among owners of commercial real estate than residential real estate when it comes to finding tenants and buyers.
That’s because fewer people own commercial properties, compared to residential ones.
Also, there’s a huge market demand for commercial real estate because it’s very difficult to find a good office, warehouse, shopping area premises.
Therefore, you can also demand the prices you want, instead of lowering them to match those of others, which is common in the residential real estate trade.
Wider Choices of Commercial Real Estate
You have much more choices when it comes to buying commercial real estate. Because, commercial real estate can be anything from office space to a large warehouse, store premises, workshop, hotel and restaurant premises or even industrial premises, among others.
Therefore, you can select which kind of commercial real estate you wish to invest in, unlike residential properties where the choice is limited only to housing.
Long Term Leases
Generally, individuals and organizations that lease a commercial property will take it for a longer period of time.
In stark contrast, contracts for residential properties are of maximum 12-month duration and you need to renew them every year.
On the other hand, anyone that takes your commercial real estate on rent will sign a contract for at least five years.
This means, you’re assured of a steady income for that period and can avoid the hassles of finding new tenants to take the place if the need arises, every year.
Upkeep by Tenants
Generally, an organization that takes your commercial property on lease will be responsible to a great extent for its maintenance and upkeep.
This itself is a huge relief for any commercial real estate owner. You won’t have to attend to all sorts of calls because something isn’t working or needs urgent attention such as plumbing or power supply.
Tenants of commercial properties are equipped to handle such problems themselves. They also maintain your property well because the organization would be getting a lot of visitors to the commercial property and would like to maintain it in superb condition so that it speaks well about the company.
The Post Covid-19 Phenomenon
If you’re thinking of buying commercial real estate, this could prove to be good news for you.
As an increasing number of organizations offering work from home facilities to their employees, the demand for office space and other commercial properties has ebbed a bit.
Therefore, you might be able to get some superb bargains right now if you wish to buy commercial properties.
At the same time, this phenomenon of lower prices isn’t expected to last much longer. That’s because real estate prices in general, always rebound and soar to much higher levels when the economy of a country recovers.
You can safely buy commercial real estate and make a lot of money by leasing it out or outright sale when the prices are right.
Therefore, you can consider investing in commercial properties either alone or in partnership with others such as relatives and friends.
Commercial real estate always makes good investments anytime.