Real estate is, and always has been, a good, safe investment. Although property values can rise and fall over time, the value of real estate generally increases, making it a worthwhile investment. Commercial real estate investment can be even more lucrative with the help of established commercial property realtors. For those seeking the highest possible return on real estate investments, commercial realtors suggest this type of business property can provide a good ROI as well as many other benefits.
1. Income Potential and ROI
Commercial property generates greater income than most residential properties. Regardless of whether the property is an office building, a storefront, or an apartment building, property owners have the potential to earn more with business property than residential leasing. It also provides a faster return on investment. Where the ROI on most home mortgages for rental property is two to four percent per year, office space tends to yield an ROI of between six and twelve percent per year.
2. More Secure Than Stocks
Commercial real estate serves a working purpose, whether providing a place for a corporate business, a retail storefront, or a residential area. There is always a need for these type of spaces. This is why commercial property realtors advise that this is a wise investment and will most likely continue to be income producing even when the economy is not good. On the other hand, stocks or funds may be fueled by the purchase of luxury or non-essentials items, as well as construction and other area that are frequently affected by a bad economy.
3. Property Appreciation
Commercial property quickly rises in value when there is high demand for commercial leases. It is also easier to measure a commercial property’s worth, in comparison to other properties in the same market. As rents climb in business areas, so does the value of those properties. The more rent an owner can charge for their space, the more valuable the property becomes. While there is always the risk that the opposite could happen, commercial realty generally regains its value quickly over time - even after markets have been down.
4. Leverage Through Lending
One of the most incredible things about investing in commercial real estate is the possibility to earn high returns through mortgage leveraging. Since lenders consider commercial loans to be less risky because of higher property valuation, investors can buy with as little as twenty percent down, even on very expensive property. Within a few years when rents and property value have increased, selling the property through commercial realtors for a higher amount can provide an instant profit.
5. Low Maintenance Costs
In the best commercial leasing situations, tenants assume the cost of maintaining their leased space. A triple net lease situation is often common when a leasing company wants to maintain a certain look or quality and will hire their own maintenance professionals. Leasing arrangements may also include the payment of property taxes as well. When property owners can lease under these circumstances, which is common with retail and some office spaces, their only expense can be the mortgage payment.
These are only a few of the many reasons why commercial real estate is one of the best investments now available. Since the founding of this country, commercial real estate has historically been a lucrative source of income for wise investors. To find the best properties for sale, always work with experienced commercial property realtors who know the current local market leasing and re-sale trends. Commercial realtors can help investors make wise purchasing decisions about commercial property in their area!