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For most Americans who want to invest, the stock market is their favorite destination. Indeed, over 50 percent of all American households own stocks.
If you’ve got some money you need to invest, why not dare to be different and invest in real estate? Although the real estate market suffered after the Financial Crisis of 2008, it has since recovered and is recording steady growth.
So, should you invest in residential or commercial real estate?
Both have their benefits, but in this article, our focus is on why you should invest in commercial real estate. Keep reading.
With high volatility comes the potential for high reward, but also the risk of loss is equally high.
Unlike other investments, such as stocks and currencies, which are usually high volatile, commercial real estate is low volatile. This means you don’t have to worry about making major losses.
While a stock market crash, for instance, can wipe out your entire capital within a short time, a real estate market crash won’t have a similar effect. Property values will go down, yes, but your land and buildings will stay intact. Give them a couple of years and their values will shake off the dust of the crash and start rising again.
As long as you buy commercial properties in the right locations, you’re assured of a steady income. The demand for commercial space is always there, so you won’t worry about tenant vacancy.
With a steady income or cash flow, it’s easier to budget your finances and make more investments.
You Get Tangible/Hard Assets
When you invest in commercial real estate, you’re getting tangible assets.
Perhaps you are wondering, “How does a physical asset benefit me?” Well, you can use the property as collateral in case you want to secure a loan, or you can take out an equity line of credit.
On that note, you can get a loan here, regardless of whether you want money to invest in a certain commercial property or want to secure one against one of your existing properties.
Potential Tax Benefits
Tax is a major consideration for all investors. You certainly don’t want to make investments that will face heavy taxation, right?
Well, in commercial real estate you have the potential to make significant tax savings. For instance, if you purchase a commercial property via a mortgage, you can deduct the interest payments from your business’ taxes. Other items you can deduct include depreciation expenses, repair, maintenance, and upgrade costs, and capital gains.
These tax benefits can add up and significantly boost your income (or minimize your losses).
If you don’t fancy the idea of owning physical assets and the management hassle they bring along, don’t give up on real estate yet. You have the option of investing in commercial real estate investments trusts (REITs.)
REITs are companies that own lots of commercial, profit-generating real assets. All you have to do is find a REIT that pleases you and invest your money in it. Think buying shares in a company!
This way, you would have invested in commercial real estate without the worry of tenant complaints!
It’s Time to Invest in Commercial Real Estate!
If you’ve been debating whether or not to invest in commercial real estate, it’s time to close the debate. We’ve fleshed out the top reasons why this market is worth your time and money, so what remains is for you to take action.
Good luck and keep reading our blog for more investing tips.