Smart Investors: 5 Reasons to Invest in Commercial Real Estate

Smart Investors: 5 Reasons to Invest in Commercial Real Estate
  • Opening Intro -

    If you are looking for consistent returns over a period of several years or decades, it may be worth investing in commercial real estate.

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There are many different ways to gain exposure to this sector, which means that there is an opportunity to profit regardless of your investment style.

Your Tenants Do All the Work

While you own the property, your tenant is the one with his or her name on the storefront. Therefore, they want to do whatever it takes to keep the property in good condition. Furthermore, many commercial leases state that the tenant is responsible for maintenance and covering expenses like insurance and taxes.

Tenants Tend to Stay Awhile

When a company finds a space that meets their needs, they don’t want to leave for as long as possible. As a landlord, this is beneficial because you don’t have to worry about the costs of finding a new tenant. The promise of a long-term tenant could make it easier to obtain commercial property financing.

Commercial Real Estate Is Like a Dividend Stock

In some ways, investing in commercial real estate is a lot like investing in a dividend stock. The appreciation of the building over time is similar to the appreciation in value of a stock for however long you own it. The rent payment that your tenant makes each month is like your dividend, but you have more control over how much that dividend is.

Own REITs Instead of Physical Buildings

If you are looking for more liquidity in your investment, you can own real estate investment trusts (REITs) instead of an actual building. A REIT’s shares are traded on a stock exchange just like an ETF or any individual stock. On average, a REIT offers a return on par with the real estate industry as a whole.

Everyone Wants Land

In some cases, all you need is a plot of land to profit from a commercial real estate investment. As land is a finite resource, its value increases during times of growth. It is not uncommon to find investors who do nothing other than buy and sell plots of land or otherwise make it a large component of their investment strategy.

If you are looking for an effective way to diversify your portfolio, look at the commercial real estate sector. A financial adviser may be able to help you develop a strategy that minimizes risk and enhances the opportunity to make a profit.

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GUIDE: other investment-related topics
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Last update on 2019-06-06 / Affiliate links / Images from Amazon Product Advertising API

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Categories: Investments