Four Great Reasons to Invest in Commercial Real Estate
When looking for a sound investment, many people simply don’t know where to place their money. Stocks rise and fall and in order to make a profit, it is necessary to follow the market almost daily. You need to know when to buy and when to sell. In fact, there is such a huge amount of risk in most investments that making the wrong choice could cost you your life’s savings. Have you considered investing in property – not just any property, but commercial real estate? If you haven’t, here are four great reasons to invest in commercial real estate.
1) The Expectation of Capital Growth
Perhaps the most important reason to invest in commercial real estate is that there is every expectation that the property will continue to grow in value. That’s capital growth in a nutshell. Of course, there are times when the market takes a hit, but real estate is amongst the quickest investments to get back on track. There is only so much land on this planet and owning a chunk of it may not always be possible.
2) The Potential for Ongoing Income
Furthermore, with commercial real estate, you don’t need to sit back and wait for it to increase in value. Usually, investors get into real estate for the enormous potential it carries to provide an ongoing source of income. Your tenants are going to be business men and women who know the importance of paying rent regularly and on time. If they didn’t, they would soon be doing business from the street! Whether you have an office building with 100 suites or a block of commercial warehouses to let out, you can expect income in the form of rent.
3) Real Estate Can Be Insured
There are a number of investments out there that just can’t be insured. Real estate can most definitely be insured and you can get cover for anything from theft to fire to floods and even acts of nature. Having the ability to get an adequate cover on the property mitigates your risk, which can be quite steep when referring to a large industrial complex or another piece of the commercial real estate.
4) Commercial Real Estate and Tax Incentives
Paying taxes is often a nightmare, especially on capital gains. Real estate, however, comes with a number of tax incentives that make the commercial real estate a sound investment. A few of the tax breaks you can look forward to are for:
- Interest on the mortgage/loan
- Depreciation on structures
- Employees and Contractors
- Repairs on structures and grounds
These are just some of the itemized deductions you can expect to take on your taxes and a good accountant can probably help you find much more. Such things as office supplies and other equipment bought for the upkeep of your property may also be allowable deductions.
Whilst real estate is currently in what is called a ‘flat market,’ unless you are planning to flip the property the moment you buy it, that should not concern you. The income and tax incentives you can expect from the commercial property will provide the gains you need until it’s time to sell. It just might be that you may never want to sell. With a good and steady income, is there any reason to? It’s highly doubtful.