Commercial real estate is an attractive investment opportunity for both seasoned and first-time investors. If you’re considering expanding your portfolio, here are three reasons to invest in commercial real estate.
Many investors strive to diversify their portfolios across stocks, bonds, mutual funds, EFTs and even cryptocurrencies. Commercial real estate investments further diversify your portfolio and protect you against losses in a market downturn. Commercial real estate is less volatile than other markets and isn’t usually affected by changes in the stock market.
You can further diversify by investing in different types of commercial properties, such as office, retail, industrial or multi-family properties. You can also choose to invest in properties in different classes or locations.
Steady cash flow
Commercial real estate typically has stable rents that you can use to cover the cost of your loan payment and any building repairs, while still increasing your income. Commercial leases are normally longer than residential leases, and you can expect to see rent increases throughout the duration of the lease.
Commercial real estate is generally viewed as an inflation hedge, as property values tend to increase as new development slows. Landlords can also often raise rents as other prices go up.
Property usually appreciates in value over time. You can use this equity as leverage to reach your business and financial goals. You can also sell your asset for a profit at a time when the market has favorable conditions. Partially- or fully-leased properties tend to bring home the most funds for property sellers.