Many people are familiar with and choose to invest in residential real estate (i.e., single-family homes and vacation rental properties), but there are fewer people who choose to invest in commercial real estate. Commercial real estate refers to office buildings, shopping centers, industrial buildings, storage facilities— pretty much anything that isn’t considered residential property. However, apartment buildings and hotels are also considered commercial property because they house a large number of people. Still, many people have invested in both commercial and residential real estate, and have seen several benefits associated with both. Here are some reasons to consider investing in commercial properties.
1. Prices are Lower Than Usual
Because the COVID-19 pandemic had (and still has) a lot of people working from home, not many people have been looking for commercial property to invest in. This means that since the demand for commercial real estate has decreased, the price of commercial property decreased as well. Of course, prices tend to fluctuate when it comes to the real estate market in general, so if you’re considering investing in either commercial or residential real estate, it’s important to watch the market closely.
There’s also a variety of different types of properties you can invest in. You can choose to invest in an entire mall or a smaller shopping center. You can also invest in office buildings since more and more people are choosing to go back to work in-person. The type of building you choose to invest in will also depend on how much you’re willing to invest and how much of an ROI (return on investment) you predict to see.
2. Possibly More Profitable than Residential Real Estate
Of course, this benefit depends on where you live and what the economy is like there, but a lot of the time commercial properties are more profitable than residential properties. Even though there are several benefits to owning residential property, there’s less competition when it comes to commercial real estate because investors are typically more focused on gaining residential properties. You’re also less likely to see high turnover rates from tenants with commercial properties than you would with residential properties. This is because commercial tenants sign longer leases than residential tenants. You’ll also be working with business professionals who are more likely to follow the rules.
There’s also the fact that you won’t have to worry as much about maintaining the property on your own or hiring a property manager to help you manage. Because commercial properties have more than one tenant and the tenants care deeply about their business, they’re more likely to keep the property in good condition. This will also lead to you having more time off from having to deal with property issues.
3. Commercial Real Estate Diversifies Your Investment Portfolio
If you’re already a seasoned investor, investing in commercial real estate will definitely diversify your investment portfolio. When your investments are put into different assets, you’re more protected from the uncertainties that the economy may bring.
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The COVID-19 pandemic has shown us that life can be unpredictable, so if you’re ready to invest in commercial properties, now is the time to do so. This is one of the easiest ways for you to start (or continue) earning passive income, building both your wealth and investment portfolio in the process.
Keep in mind that both first-time investors and seasoned investors should still seek financial advice when investing in a commercial property for the first time. Even if you’ve owned residential real estate in the past or currently own, commercial real estate is still different from residential. You should always do your research on the type of commercial property you want to invest in, as well as the area where the property is located. It’s important to make sure that the property is viable enough to be able to make a profit.
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