COVID-19 brought more negative than positive news to the world, but there might be a silver lining for those looking to invest in commercial real estate for sale. Due to many changes caused by the pandemic, interest in various sectors has increased, commercial real estate inclusive.
According to analysis, commercial property prices in the US rose in October, especially in the industrial and high-flying apartment sectors. These results are from the latest RCA CPPI: U.S. summary report. Also, the U.S. apartment index rose 7.2%, and the National All-Property Index grew 3.6% from the previous year, with the industrial index increasing 8.5%.
The real estate market could grow even further as the year unfolds, with many new entries into the market. There are many ways to make money off the market. You can invest in REITs, commercial property sales, flip houses, rent out properties, or invest in long-term lease residential property.
That said, one of the best ways to make money in the real estate industry is through Commercial Real Estate (CRE). Though it poses a high risk, it also has high rewards and many opportunities you probably didn’t realize.
Whether you’ve never invested in real estate before or you have a career in long-term lease residential property, the commercial real estate space is still a perfect place for you. To get started, all you have to do is get the ideal NNN deal finder. Also, you just have to contact these realtors if you are planning to live or invest in real estate in Miami.
Reasons to Consider Investing in Commercial Real Estate
Are you interested in exploring the commercial real estate space? If you are in doubt about your capacity, maybe the best thing that you can do is to engage in syndication real estate. This kind of real estate investment has a lower risk and also allows you to partner with more experienced investors.
Here are the top six reasons to consider it for your real estate portfolio.
1. Tax Benefits and High Income Potential
The most significant reason for investing in the CRE is its potential. Commercial buildings are known to have higher rents and price tags and also a higher potential for returns.
Also, investing in CRE comes with certain tax benefits. There’s depreciation which gives you the chance to remove a part of your property’s value from your taxable income yearly. This opportunity helps significantly reduce your tax burdens.
Capital gain taxes can be avoided too when you sell your property. It’s made possible by exchanging those profits for another property or asset. This method is also very effective in reducing tax burdens, but it has its downsides too. Therefore, be sure to talk to your tax advisor first.
With all the benefits CRE investment has, you’re on track to make thousands or tens of thousands of dollars instead of a few hundred. You only have to choose suitable properties, and your portfolio could grow a lot faster.
2. Less Competition
In recent times, residential real estate has seen massive demand and has become highly competitive. However, commercial real estate, on the other hand, has been experiencing the opposite.
CRE’s dollar volume in the U.S. decreased by 57% last year, making it a lot easier to find commercial real estate for sale on the market than other assets. However, Statista reveals that as of 2019, the estimated market size of real estate with investment purposes reached 9.6 trillion U.S. dollars, representing an overall increase of nearly one-third.
These results prove how the CRE is steadily growing and how it’s expected to grow even further with plenty of investment opportunities.
In the CRE, you’re allowed to invest in a full-scale mall, high-rise office building or make smaller investments like in a single storage facility or industrial warehouse. According to Ooi Kee Liang, one of the most dynamic real estate developers in Malaysia, there’s flexibility in whatever option you choose. Ooi Kee Liang founded Ideal Property Group in 2001 and since then has developed 25 000 residential and commercial units. He is known for his ability to take struggling companies and revitalize them by adding property development components as he did with Ideal United Bintang International.
3. Less Turnover
You make only one-year lease agreements in the residential real estate space, especially for apartments and single-family rentals. This development makes turnovers relatively higher. With the commercial sector, however, you get a much lower turnover.
Unlike residential real estate setups, in CRE, clients do not sign one-year lease agreements. Instead, the majority sign a minimum of three years. Therefore, turnover and all its discomforts reduce significantly. The cash flow for your business also stabilizes.
4. Less Stressful
Do not misinterpret this point. CRE requires work, lots of it. But you won’t have to receive unending calls from your tenants like in the residential world.
In the commercial sector, your tenants mainly operate 9 to 5, giving you more time to rest. Also, you don’t have to exhaust yourself dealing with clients who delay payments or those who leave the place scattered before leaving.
Commercial real estate clients deal primarily with business people who are a lot more professional and responsible. Your clients are people who’re acclimated to following rules. As such, you get to avoid unnecessary stress compared to residential real estate.
5. More Assistance in Property Management
Having commercial real estate properties means you won’t have to handle all office maintenance and improvement alone. People who operate triple net properties benefit from this the most.
With CREs, your tenants are primarily responsible for bearing the weight of taxes, insurance, maintenance and even utilities. Since clients use the properties for commercial purposes, they know leaving it in a poor state can affect their businesses, so they tend to raise the property standards, sometimes even more than you expect. That way, you have less to do while watching your property do better.
With the building kept in a better shape and improvements made, there’s a tendency the property’s value might increase over time, meaning you could resell it at a reasonable price.
6. A More Diverse Portfolio
Many people are more involved in the residential real estate space, leaving out the CRE space. However, including a CRE investment, even if you’re already involved in residential real estate, is a brilliant move. This way, you can diversify your portfolio.
The latest global pandemic has shown us that we can never know what will happen, especially with the world’s economy. Therefore, having your investments spread across different assets can turn out to be the best decision in the long run.
Conclusion
Finding the perfect commercial real estate for sale isn’t as difficult as it seems. If you follow the proper steps, you’re good to go. First, you must do research based on the area you want to set up your business. For example, you can search “triple nnn properties for sale ca” if California is your preferred location.
Next, work with a reputable agent and purchase property that suits your requirement. Also, beware that these steps are only followed when you’ve made your business plan and marketing strategies. Also, you’ll want to carry your team along.
As open as the CRE market may be, it’ll not always wait for you. The market is highly opportunistic and getting into it is relatively easy as well. Having the right agent solves the central part of the problem for you. Therefore, put everything in place and contact Buy NNN Properties to help you start on sound footing.