There are many investment options available, and each one has its pros and cons. Investing in commercial real estate has many advantages over other options. For example, it still performs well in poor economic climates. Here are other advantages of this investment:
- Strong and Reliable Income
Commercial real estate leases usually go for more than three years. Returns from this property are also much higher in comparison to those of residential property. Historically, commercial real estate has proven to appreciate consistently and significantly, meaning you will always get returns that cover inflation.
- Tax Benefits
Owning commercial real estate can help lower your taxes significantly. If you work full time in real estate and also own property, you can even get more tax benefits. Generally, property investors are allowed to write off repairs, mortgage interest and depreciation. Being a real estate investor can also lower the taxes you pay on your regular salary. Your actual tax savings will be determined by the investment method you choose to go with. The model can be personal, under a company, through an ISA, or through a SIPP.
- Ability to Increase Your Equity Using Leverage
Owning property gives you positive leverage, meaning you will be able to access loans with very low interest rates. This gives you the opportunity to invest some extra money in other ventures and diversify your portfolio.
- Triple Net Lease
Triple net leases are only available to owners of commercial property. In these leases, the tenant agrees to pay the expenses on the property, including maintenance and taxes. This is in addition to the standard rent and utilities a regular tenant would have to pay. In such agreements, you only have to pay your mortgage as all other costs are handled by the tenants. Triple net leases are usually done with large or medium sized businesses. It is worth noting that the rent in such leases can be very low.
- Fewer Laws
Unlike residential property, commercial real estate is not governed by many consumer protection laws. This gives you more flexibility in the terms and conditions of your leases.
- Lower Risk
Commercial real estate carries a lower risk compared to residential property and other investments. First, real estate does not fluctuate as much as the stock market and similar options. The structure and the land will both have value, meaning you will still make money regardless of what happens to your tenants.
Investing in commercial real estate can guarantee you steady and reliable returns, and you also get to enjoy tax benefits. Even though the risks are much lower, you will still make almost as much as you would in equities. As an owner of property, you will also be able to access funds for other investment at a much lower rate. For these reasons, you should consider investing in commercial real estate.