Commercial real estate remains a good investment – despite COVID-19
The COVID-19 Pandemic has had far-reaching effects on many things. Indeed, you would be forgiven for thinking that as most of the population is working from home, investing in commercial real estate (CRE) may not be the best option. However, as is the case in so many forms of investing, a longer-term view suggests that commercial real estate does indeed have the potential to remain an excellent investment, despite the pandemic. Read on to find out why.
The CRE has market fallen, but not crashed
While the residential real estate market is in crisis, the CRE market has only fallen somewhat since the start of the COVD-19 pandemic. In particular, retail and office building sectors have seen dips of 5.3 to 1.5% respectively.
However, the market has not crashed completely, demonstrating that it is still robust. Also, a dip in the prices that sellers are charging for commercial properties is no bad thing for the investor. Indeed, a low purchase price means a potentially much higher return in the long run.
CRE remains a potentially high return investment
Bildet er tatt av fredericomeyer fra Pixabay
CRE remains a good investment also because of the increased margins involved. After all, there is only so much that you can make per month on a residential property. However, if you pick the right CRE you could expand your monthly income to $1000s!
One of the biggest advantages of this is that your returns are larger than in residential property by a significant order of magnitude. Therefore, you will be able to build up enough capital to reinvest and start managing a whole portfolio of properties even faster.
CRE investment can be easier than residential
No one considers the effort involved with CRE investment, compared to residential, but it is an important aspect to think about. For example, in residential investing it is all too easy to come across problem tenants that damage your property which eats into your returns.
However, in CRE investment, the typical setup is that tenants are responsible for the upkeep of the building, and they are more motivated to do this as well. After all, they will want their business premises to make a good impression on their own clients.
Also, most of the additional building costs such as insurance, maintenance, taxes, and utilities are the tenants’ responsibility in CRE. This means the operational costs that come into play when you have bought the property are much lower.
Credit: Pixabay
A wealth of choice
Another reason that CRE is still such a good investment choice is that there are a great variety of options to consider. From single stores to entire office buildings and malls there are plenty of choices to match most budgets.
Of course, getting your hands on the right one can be something of a challenge, especially when, as Jacob Kupp, CRE expert explains, properties are displayed all over the internet to a wide range of potential buyers. He suggests that making connections with those that have access to the latest CRE to come on the market is the best approach here if you want to grab a bargain.
Slower turnover
Finally, CRE remains a potentially good investment because tenants have a much lower turnover than in the residential sector. Indeed, leases tend to be around 3 years. Music to the ears of any property investor that is familiar with the pain of lost income that occurs when swapping tenants out and evidence that CRE retains potential as a good investment choice.
