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Looking At The Logic of Commercial Real Estate Investing

 

There are countless ventures where investors can become involved today, each with different advantages and disadvantages. Commercial real estate continues to be a great option, for many reasons. The commercial real estate market does fluctuate like all other investments; however, commercial investing generally has a strong track record, making it a wise investment choice. For long-term investors looking for lower risk opportunities, investments in commercial real estate are a logical choice.

The Value of Commercial Real Estate

There is great value in commercial properties, often much more than what might appear obvious. Of course, there is value in the property itself; however, the greater value over time is in the income that commercial property brings in. As mortgages are paid down and rent or lease amounts go up, rental income grows, even after accounting for operating expenses. Net Operating Income (NOI), which is gross income less operating expenses, generally increases over time. This provides two main benefits of increased property value and increased income . Property value increases based on local property assessment and the local commercial real estate market, all of which again increases NOI. This cycle of gradually increasing income continues the longer an investor owns a property.

Financing Options for Commercial Real Estate

Commercial investing involves some creative financing methods, where investors can earn money on almost no down payment. This is something not many other investments can claim. To begin with, investors can become commercial property owners with as little as a 20 percent down payment, while lenders carry the rest of the mortgage on the building. Many investors can even cover their 20 percent down payment through private partners and other means of generating such money. Therefore, it is possible for a smart investor to put themselves in a moneymaking position without any cost. Skillfully managed buildings then continue to appreciate in value and generate income, while mortgage and investment debt is paid off. This eventually allows an investor to turn their income into down payments on additional investment properties.

Scale of Investment

In general, real estate is a safe investment that generates money over time. Yet commercial investments in particular are much more lucrative than investing in residential properties. Commercial investments provide greater returns for the investment dollar than residential investments and are much easier to manage. Apartment buildings, corporate office spaces, retail centers, and similar properties offer a much higher rate of return for the same management effort and percentage of initial outlay than residential properties. This makes commercial investments a wiser choice.

Considering these important advantages, investors looking for great options should take a closer look at commercial investments. The commercial real estate market is strong today, providing ample opportunities for those new to commercial real estate to invest in confidence and reap benefits that many other investments cannot offer. Investing in the commercial real estate market is a proven, logical way of investment that produces more money over time and stable, long-term income opportunities!

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