Why should you Invest in Commercial Real Estate (CRE)?
Investing in commercial real estate has numerous advantages and potential benefits. Also, CRE offers many asset types giving Investors an option to invest based on their interest and financial ability.
Popular Asset types in CRE are:
- Retail Properties
- Multi-Family
- Industrial
- Office
- Special Purpose
Some of the benefits of investing CRE are:
- Consistent Cashflow
- Long term Leases
- Better ROI compared to other investments*
- Leverage financing to build more equity
- Less volatile market when compared to other investment categories
- Potential tax benefits
- Depreciation on real estate shelters income
- Tangible hard asset
- Can make capital improvements and increase property value*
- And many more
When analyzing the deals, we usually do not include the appreciation of the asset, and this is one of the most important factors investors flock to invest in commercial real estate. Historically these investments provided excellent appreciation in value when comparing to other investment categories.
One of the best-known advantages, when you buy cash-flowing properties, is to pay off the debt on the asset which is several times the equity.
Many investors consider CRE hedges against inflation over the long term. Investors will have the ability to adjust rents over time which is one of the benefits to get better cash flow to hedge against inflation. Also, strong economic growth will rise demand for space which in turn will result in stronger rent growth.
Conclusion: Is Commercial Real Estate for everyone, maybe not. But the benefits of investing in CRE are many compared to other investments.
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