Investment experts agree that a healthy portfolio is a diverse one. By including many different types of investments, there is greater overall portfolio stability and a greater chance for investment success. Commercial real estate investments are one of the best investment opportunities to add to any portfolio for a number of very valid reasons. For a well-rounded portfolio, consider the advantages in commercial real estate as shown here.
Income and Appreciation
Commercial real estate investments are a relatively easy investment that produces income in multiple ways. From the start, investors can usually borrow as much as 80 percent of the price of a property, yet begin having income immediately from their 20 percent cash investment. This income gradually increases the amount of actual cash investment in the property as mortgages are paid off, making these properties more lucrative each month. Income can also fund down payments on additional investment property. Appreciation also increases the value of these investments. With commercial real estate investment opportunities, it is possible to grow money even using someone else’s cash. This is one of the most favorable reasons to invest in these properties.
Another important benefit in commercial real estate investments is that they are physical assets that can be touched and seen, rather than an investment on paper only. Buildings, and the land they sit on, are valuable. They appreciate, produce income, and can also be sold directly for cash. For many people, these type of investments are more comfortable investment opportunities in comparison to others.
Safe Protected Investment
Historically, real estate is one of the safest types of investment available, with commercial real estate at the top of the list. Even in the worst markets, property holds a certain value and will rebound over time to resume its actual worth. Because there is a constant demand for commercial properties in an active market where other investments are failing, commercial realty prospers. This is true even considering inflation, when many other investments may falter as inflation increases. Inflation brings with it an increase in cost of goods, services, and doing business in general, which allows for an acceptable increase in rent. While other types of spending typically decrease due to inflation, commercial investments are usually unaffected.
Investing in real estate also provides many different tax benefits, which can help protect against other portfolio gains and help fund additional investments. Traditionally, real estate investment opportunities have always been favored for the many ways in which investors can deduct things such as depreciation, maintenance and operating costs, mortgage interest, etc. This gives investors more money in their pockets to use in other ways, rather than paying it out in taxes.
Although these are only a few of the many ways that commercial real estate can help diversify any investment portfolio, they are substantial. Diversification with both short and safer long-term investments is a key to a great investment portfolio. With this in mind, commercial realty investment opportunities are something smart investors will definitely want to take a look at!