Reasons why you might want to invest in commercial real estate
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There are plenty of ways to invest, and there are plenty of ways to invest in real estate. Real estate is popular with many investors because it is beginner-friendly and a profitable investment route. When investing in real estate, you can buy stocks, rent out properties, flip houses, REITs, ETFs, or even take part in crowdfunded deals. The opportunities are endless when it comes to investing in real estate in 2021!
A new option emerging in real estate investment is commercial real estate (or CRE). It’s a high-risk, high-reward asset class that allows investors to handle a whole new set of properties that haven’t been available until now. If you’re interested in trying something new with your investing or learning more about commercial real estate, you’ve come to the right place! Here’s everything you need to know to keep you up to date on the hottest new investing trend!
What is commercial real estate?
First things first, what is commercial real estate? Commercial real estate is any kind of property that is designed to make money. These include retail stores, office spaces, warehouses, and restaurants. Specialized properties or lots such as casinos, hotels, parking lots, and healthcare facilities also fall into this category. There is a lot of money to be made in commercial real estate, whether you’re a novice investor or have a long-standing career in real estate. Now that you’re up to speed, read on if you want to learn more about the benefits of investing in commercial real estate in 2021!
Plenty of opportunities
The beauty of investing in commercial real estate is that there are plenty of ways to go about it. You can start small and invest in a single storage unit or a convenience store. You can go big and invest in a full-sized mall or a high-rise office complex. You can make investments with the help of realtors, or try it out on your own. There is a common misconception that selling commercial property by owner is hard to do, especially if you’re new to the business. This is not true, as there are plenty of ways to invest in and sell CRE directly with buyers, without having to go through a realtor. Having this many opportunities means that anyone looking to get into CRE can do so easily and without fear!
High-income potential
The next obvious plus side of investing in commercial real estate is its high reward potential. Since commercial buildings come with higher initial price tags, and with that, comes the possibility of higher returns too. If you play your cards right, you can make a couple thousand a month instead of a couple hundred, when working with commercial real estate. CRE increases your margins which can look great on your portfolio or help your brand. If you’re looking to grow your business in the real estate industry and make a profit, then getting into commercial real estate might be the push you need.
More manageable and beneficial to the property
Don’t misunderstand, CRE is no walk in the park, but there are some aspects that are much easier to manage than with regular, residential real estate. Maintaining and improving your property, for example, is much easier with commercial real estate. This is because not all the property-related expenses fall on you. A majority of them, like taxes, utilities, and maintenance, fall on the tenants/business owner’s shoulders instead of yours. Most commercial tenants have their own ideas when it comes to running the place. Because they have customers to cater to, they’re more likely to keep things running and looking good, so you can rest easier. In fact, they might even make improvements to your property without you having to lift a finger!
Fewer problematic tenants
The biggest issue with getting into rental real estate for some is having to deal with all the unpleasant aspects that come with it. When working with residential tenants, there are plenty of things that can go wrong and complicate your investment. Unreliable tenants can leave the property in shambles, ruin it with pets and house parties, or simply not pay their rent. This can be a logistical and financial disaster. Typically, when working with CRE, business owners are much more reliable and easier to work with. They have a reputation and a business to uphold and bills to pay. They are much less likely to give you a hard time managing your property.
Great way to diversify
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If there’s anything to be learned from the past 2 years for investors, it’s that diversifying your portfolio is essential. As the pandemic has shown us, anything can happen, and you can lose all your hard work in the blink of an eye. As an investor, a great way to ensure that you’re more likely to survive whatever comes at you is to spread out your investments and diversify. It makes sure that if one of your investments falls through, you’ll be able to stay afloat and cover your losses with the unaffected ones. Diversifying is also a great way to learn new investing skills and to open doors for yourself to brand-new opportunities.
So there you have it! It’s no wonder why commercial real estate has been popular with investors and is on the rise in recent years. The first benefit of investing in commercial real estate is the many ways that you can go about it. There are plenty of opportunities from the type of property to the type of buyer you’re dealing with. Commercial real estate, although riskier than residential, offers you higher financial gain. You’ll have more legroom and control to do what you think is best and get more money out of it with CRE.
Investing in commercial real estate proves to be not only more profitable, but also easier to manage, maintain, and upkeep. Business owners as tenants make many of the difficulties of property management disappear. Business owners are both more reliable and reputable tenants. You can rest easier knowing your property is in good hands and your rent will not go missing. Since commercial real estate is a lucrative and easy investment to get into, it’s perfect for diversifying your portfolio, which is essential for any investor. Now that you’re up-to-date on what commercial real estate is and why investing in it is a great idea, you’re ready to take on the world!
