WHY COMMERCIAL ESTATE? REASONS TO INVEST

Real estate can be purchased in a number of ways. You may flip houses, rent out properties, invest in real estate-related stocks, REITs, and ETFs, and even participate in crowdfunded real estate ventures.

What is commercial real estate?
To begin, what precisely is commercial real estate? It is, at its most basic level, any property that is intended to generate income. It can comprise everything from retail stores to office buildings to industrial warehouses to restaurants, as well as more specialized properties like storage units, hotels, casinos, and even healthcare services.

Why invest in commercial real estate?
Whether you've worked in residential real estate for a long time or have never invested in real estate before, Commercial Real Estate can be a good place to put your money. But what's the point of investing in commercial property? Here are 11 reasons why you should think about including it in your real estate portfolio.

1.  High-income potential
The potential of commercial real estate is the most tempting reason to invest. Commercial buildings have higher rentals and prices, as well as a higher potential for profit. If you choose the correct properties, instead of making a few hundred dollars a month on a rental home, you could make thousands, tens of thousands, or even more.

2.  Tax Benefits
There are also tax advantages to investing in commercial real estate. First, there's depreciation, which lets you deduct a percentage of the value of your property from your taxed income each year. For many investors, this dramatically reduces their total tax burden.

3.  Less Competition
Residential real estate is extremely competitive, particularly right now, which has pushed prices upward for quite some time. The trend in commercial real estate, on the other hand, is the polar opposite. In the third quarter of 2020, the dollar volume of commercial real estate in the United States was 57 percent lower than the previous year. As a result, finding a business property should be easier right now — especially when compared to other assets on the market.

4.  Plenty of Investment Opportunities
Commercial real estate investment options are diverse: you can invest in a full-scale mall or a high-rise office building, or you can keep it simple by investing in a single storage facility, an industrial warehouse, or a single condominium community. You have a lot of options when it comes to what you can invest in and where you can do it.

5.  Less turnover
You work in residential real estate, this will most likely excite you. Commercial real estate, unlike apartments and single-family rentals, does not usually have one-year lease agreements. Instead, the majority of tenants sign three-year leases. This lowers turnover (and the inconvenience and cost that comes with it) while also ensuring a steady income flow for your company.

6.  More help maintaining (and improving) your property
Maintenance, upkeep, and improvements aren't always your responsibility with commercial buildings. For one thing, many companies use triple net leases. The tenants are responsible for the majority of property-related costs, such as taxes, insurance, upkeep, and even utilities.

7.  Fewer problematic tenants
Since you're dealing with business owners, who have a reputation to uphold and money on the line, they're usually more cautious when it comes to working with landlords and obeying the rules. This saves the investor/property owner a lot of time and effort.

8.  More off-hours
Commercial Real Estate requires a significant amount of effort. However, how many hours do you spend getting calls from tenants or going up to the property? They have far fewer options than in the residential environment.
The majority of your renters in the commercial sector work a traditional 9-to-5 schedule. It usually entails extra "time off," or the ability to be away from your phone and not on call for long periods of time during the day.

9.  A more diverse portfolio
Commercial Real Estate might be a good method to diversify your portfolio if you're already heavily involved in residential real estate. As the year 2020 shows, you never know what will happen in the economy or in the world. As a result, diversifying your investments across multiple assets is one of the best long-term investments you can make.

10.  Good deals may be on the horizon
Although COVID-19 did not provide much good news to the world, there may be a silver lining for future Commercial Real Estate investors. Interest in various commercial real estate sectors dropped in 2020 as a result of greater work-from-home arrangements and the overall economic downturn.
Commercial Real Estate values have fallen slightly as a result of the downturn, at least in some areas. According to the RCA CPPI: U.S. summary report from October 2020, commercial real estate prices in the United States increased at a 1.4 percent annual rate from September 2019 to 2020, a significant decrease from the mid-single-digit growth rate seen in 2018 and 2019. While prices for residential and industrial buildings increased year over year (by 6.7 percent and 7.4 percent, respectively), prices for retail and office premises decreased (5.3 percent and 1.5%). Prices in weaker sectors could fall much lower depending on how long the pandemic continues.

11.  It is proven
Finally, commercial real estate is a tried-and-true investment. Consider billionaires such as Warren Buffett, Stephen Ross, Donald Bren, and, of course, Donald Trump. Commercial real estate has made and continues to make fortunes for a slew of ultra-wealthy investors.