Investing in commercial real estate can be a very rewarding and lucrative business venture. Not only do you own a valuable asset that will in all likelihood appreciate in value, but you also secure a steady flow of revenue from your tenants that, in some cases, may yield higher dividends than stock investments.
Here are some other key benefits to purchasing commercial property:
As a commercial property owner, there are many Federal tax codes that you may work in your favor. For instance, portions of your rental income may be offset through various deductions pertaining to improvements, depreciation on buildings and mortgage interest. Consult with your tax professional to find out what you are entitled to claim.
Increased Appreciation Opportunities
Traditionally, commercial real estate assets have shown to have great potential (and a historical track record) for exceptional appreciation. The reason for this is two-fold: 1) any improvement or upgrade made that increases the functionality or appeal of the property will boost its value, and 2) favorable factors outside of your control, such as a shortage of commercial inventory in your market, can also cause an increase in your property’s appreciation.
Pride In Ownership
Along with growing your own wealth, your commercial property will provide a place for tenants to build and operate their own businesses, which in turn grows the economy, and provides employment opportunities for the community.
Knowing that you are contributing to the financial strength and economic development of your community (and the national economy) will give you a sense of pride and purpose.
Leverage and Grow Equity
Owning commercial property allows you to leverage the equity you have in that property to finance the purchase of more assets with less money down. As time passes and your loans are paid off, your overall equity multiplies.
Choose Your Investment Property Wisely
Before embarking on any commercial property investment, have the potential asset valuated by an MAI-designated appraiser. The Appraisal Institute defines these valuators as having “the necessary commercial property valuation experience and knowledge to produce a valuation that instills confidence.”
Learn what you need to know about appraisal services as a private investor.