There are several commercial real estate investment benefits. But, a handful really stick out. In fact, multifamily housing is a great investment choice because it’s so different from other types of investments (even residential real estate). With the housing crash long behind us, many markets are not only rebounding big time but actually becoming too expensive for buyers. That means people seek affordable housing as an alternative.
Why Commercial Real Estate Investment Instead of Residential?
The fact is, there are many advantages to real estate over other investment vehicles. Stocks can plummet, precious metals are precarious at best, and futures are just a huge risk. But real estate is tangible. And, it’s track record is undeniably strong. But, why choose commercial real estate over residential as an investment? Well, there are a few good reasons. First and foremost is residential centers around a single tenant. (That’s cause for alarm because the rent relies on one individual.)
Many people start out investing in residential real estate simply because they’re more accustomed to buying homes, but commercial real estate can be a great way to balance your portfolio. You just need to bone up on the different rules and terms in the commercial market. —Entrepreneur.com
Second, financing residential real estate that’s not a primary residence is a nightmare. Because you must not only pledge collateral, you’re putting your own home at risk. Third, resale is actually less stressful. Simply put, multifamily attracts more buyers. But also, it attracts serious buyers. Plus, it’s larger so it’s inherently more valuable.
Commercial Real Estate Investment Benefits You should Know About
Now, there are more commercial real estate investment benefits and some also juxtapose residential properties. Here are three compelling reasons to take advantage of multifamily property investing:
- Larger income potential. When you own a residential property, you have one rental income. But, when you invest in commercial, multifamily housing, you have many tenants. Hense, you have a larger income streaming in, month after month. Sure, you’ll have some short-term vacancies here and there but there will still be others paying rent.
- Bigger equity gains. Of course, with a larger piece of property on a bigger land footprint, you’ll have a bigger equity gain. Every year that passes just adds to its value. What’s more, it also adds to the local micro-economy. What’s more, there are always more tenants which means a steady revenue stream, which causes principal pay down. That too, adds to equity.
- Hard, tangible assets. Investing in commercial means that you have hard assets in your portfolio. Which means you have increased leverage to use to acquire more properties or a stake in other commercial properties to add to your income.
If you’d like to learn more about commercial real estate investment benefits and more about the process, please contact me.