A residential or commercial property can be a good investment opportunity. However, residential properties do not offer more financial gains. Commercial property management offers more financial rewards, but has more risks.
It is important to know all the pros of investing in commercial properties if you are thinking of investing in real estate.
Institutional and private investors pursue real estate investments because they want to get good yields. The returns of real estate investing are attractive. The returns are not the same as the returns from bonds, stocks and other commodities like gold.
Most of the real estate investments are usually structured to deliver cash flow that is steady for the owners. Dividends are then distributed to the investors every month. They are also distributed quarterly or annually.
Investors can make a debt investment or an equity investment. Equity investment involves buying a minority and passive ownership stake in a hard asset like an office building. These properties have high occupancy, and the rent keeps rising, so the cash flow increases over time.
Debt investment refers to the investing in real estate loan. The loan is backed by a land or a building as collateral. Debt investments are structured to deliver fixed return.
As an investor, you have the opportunity to boost your overall return by cashing in on commercial property gain or a capital gain on the property once the property is sold.
The value of the property rises and falls during market cycles. You may reap the rewards of opportunistic buys, which allows you to buy, fix and flip a property in a short period.
Investing in commercial properties is the best way of diversifying your portfolios. The portfolios are backed by hard assets. Investing in real estate is not the same as buying shares in a company, which may not be here tomorrow.
Commercial properties are assets that you can touch and feel. Occupants may come and go, and there may be some problems during evaluations, but the property is not going to disappear.
Most commercial properties are not owned by individuals. The properties are operated as a business. Therefore, the landlord and the tenants have a business-to-business customer relationship. This helps to keep the interactions professional and courteous.
Most of the businesses usually close at night. Therefore, you will only work when these businesses are working. You don’t have to worry about receiving midnight calls because your tenant has lost a key or wants repairs.
Commercial properties have an alarm monitoring service so proper authorities are notified if something happens in the building.
These are the top reasons why you should invest in a commercial property. If you have never invested in real estate, you need to hire a real estate agent to help you find the right property. Hire an inspector to inspect the property you want to buy before buying it.