If you’re thinking of new investment opportunities, commercial real estate is something you might consider getting into. It’s also an ideal venture for first-time investors.
With commercial real estate, you’ll be able to capitalize on advantages you won’t get with traditional investments. Here’s a list of things you can expect when investing in commercial real estate:
Commercial real estate is a tangible asset
Commercial real estate is something that you have physical ownership of. Unlike stocks, shares, and bonds, owning commercial property means you have something other than documents to show for your investment.
Having a tangible asset opens the door to plenty of opportunities. You can grow your investment by improving the property. Increase their value through renovations and remodels. Also, if the structure is damaged in some way, you can always rebuild or undertake major repairs to make it look good as new.
Commercial real estate provides steady cash flow
Commercial real estate has tremendous potential for generating steady cash flow. This type of real estate is a great choice for those who want a long-term investment.
Lease contracts for commercial property typically run longer compared to residential rentals. If the commercial property is a building, then it will have more units, which will allow investors maximize their income stream. You can expect a more consistent cash flow as well because companies are always on the lookout for storage space, satellite offices, or a warehouse facility.
Commercial real estate appreciates in value
Real estate properties usually appreciate in value over time. The increase in value depends on local market activity. For example, Pacific Heights real estate market growth rates are different from Noe Valley real estate.
Local development projects affect commercial property values as well. It comes as no surprise that commercial properties located within business districts or in the downtown area will grow in value faster than if the property were located in a more remote area. Look into planned development projects to determine how they are likely to impact property values in the future.
Commercial real estate presents diverse investment opportunities
Investors can choose from a range of commercial real estate. Your finances and business goals will dictate the type of commercial property you eventually end up with.
Among them are:
- Retail parks
- Mixed-use buildings
- Office buildings
- Industrial buildings
- Apartment buildings
- Shopping centers
- Medical facilities
- Warehouses
- Vacant commercial land
If you want to maximize your investment’s earning capacity, a mixed-use development is the best way to go. The combination of retail stores, office space, and residential units makes it especially attractive to a broader set of tenants who will value the convenience of a live-work-play environment.
Commercial real estate has innate value
You can’t assign a value of zero to commercial real estate, unlike stocks, shares, and bonds. When markets are spooked and the stock market plunges, real estate investors are in a better place.
For one thing, real estate has an innate value because of the structure and the land itself. Value might increase or decrease depending on market trends, but the land and the building will always be worth something. Owning real estate also helps you build equity, which you can leverage to grow your commercial real estate investment.
Commercial real estate has better tax benefits
Owning stock and shares doesn’t yield the same tax exemptions as owning real estate. One of the most prominent tax benefits is the 1031 exchange which lets investors roll their capital gains tax when selling their commercial property.
Ready to buy your own commercial property investment? Get in touch with me, Amir Hardy, today by calling 415.602.0570 or send a message to amir(dotted)hardy(at)compass(dotted)com Let me help you explore your San Francisco real estate options!