Why Commercial Real Estate Attracts Investors

Commercial real estate includes properties other than single-family homes. Apartment buildings, office spaces, retail centers, mini-storage facilities, industrial sites, and other property that is not constructed for the purpose of individual use is regarded (at least for purposes of this article) as commercial.
Likewise, a real estate investor is one that purchases commercial property in order to rent space to tenants who in turn pay the investor to occupy the space. And in this case, the investor can be an individual, large partnership, worth millions, or maybe just thousands. Real estate investors are not classified by size or monetary worth; they are the ones who invest for the sole purpose of making a return on their investment.
Okay, so why does commercial real estate attract investors? Investing is certainly not without risk. In many cases, it could even mean the risk of losing some equity in your personal residence Wholesale Real Estate Basics when the home is refinanced to pay for the investment. Or perhaps jeopardize your retirement nest egg, child’s education, or daughter’s wedding when you draw the funds from a savings account.
This is a fair question. Nonetheless, even with the risks, there are still those who do invest, and in this article, we will discuss why the interest along with some things you can do to protect yourself if you are new to real estate investing and considering to become an investor.
The Benefits of Investing
1) To invest in real estate means the opportunity to make a large sum of money. Think about this way: Whereas you may be getting a 2% rate of return on the money you have sitting in the bank, you might Purchasing A Home In Virginia get a 10% or greater rate of return on investment. In other words, instead of settling for a $1,000 return on a $50,000 bank deposit, you could collect $5,000 or more on an investment property.
2) Another reason for the popularity of commercial property investment is the ability to generate additional cash flow. When a rental property is purchased and managed correctly, you can receive an additional stream of income.
3) You can build equity with property. Again, if purchased and managed correctly, commercial properties can appreciate and thereby boost your equity in the property. For example, what you buy for $200,000 today might be worth substantially more tomorrow, thereby increasing your equity in the property and suggesting that you will get you more money and more of a return on your original investment when you sell the property.
4) You also get the benefit of tax shelter. As an investor and owner of an apartment building, for instance, you can write off costs for property depreciation, and loan interest and points against your ordinary income.
5) People also invest in the commercial property for the pride of ownership and control. As the owner of the building, you can drive friends and relatives by the property and point to it as the owner. Moreover, if the building is for your business use, it’s at your disposal to do what with as you wish without concern about another owner’s rules, regulations, and restrictions.
What You Must Do Before You Invest
The most important thing you must do before you start investing is to make sure that the investment opportunity is profitable and meets your business objectives, especially when compared to other opportunities. Bear in mind that real estate investing requires a careful and well-informed decision to achieve success.
To do this, collect accurate income and expense data for each commercial property you are considering and crunch the numbers. It’s not that difficult. Simply use a good real estate investor software program like that shown in the resource box below to run the numbers for you. It’s affordable, and certainly a benefit you don’t want to ignore if you plan to invest in real estate.

READ  Invest in Real Estate and IRA Assets