There are many pros and cons to buying commercial real estate like diversification or high risk. Today we will cover the top 3 reasons why you should buy commercial real estate.
Cash Flow
Commercial real estate properties often have higher income potential than residential rental properties. This is mainly because of the higher price tag and having businesses as tenants rather than individuals, which leads to higher rent. Another bonus is that commercial real estate leases are typically for much longer terms than residential real estate. This means less turnover and stable cash flow for you.
Depreciation
Commercial real estate investors can deduct the property’s depreciation on their taxes which will reduce their taxable income. Commercial real estate also often has the choice of accelerating the depreciation declared. When it comes time to sell the property, the investor can postpone the profits by doing a 1031 tax-deferred exchange.
Appreciation
With commercial real estate you have the ability to increase rents to keep pace with inflation and higher expenses. As you increase rents, you inherently increase the value of the property. Additionally, you can acquire a value-add project. Meaning, you will acquire the property and invest additional capital in upgrading the property. Upgrading the property will allow you to charge higher rents, again increasing your cash flow and the value of the asset.
How To Get Started?
The residential housing market is extremely competitive at the moment whereas the commercial real estate market is not. Right now there are so many investment options to choose from like industrial warehouses, office buildings, storage facilities, or strip malls.
Simple Commercial Capital is here to help you navigate all of the options available. Look through the loan programs found at the top of our page. Each program has a brief description and loan parameters. If one of the loan programs fits your needs click the Apply Now button to start the application process or call us at 1-866-554-1120 to discuss your options in more detail. Our goal is to make this process as simple as possible for you.