If you’re looking for a new investment in 2021 and haven’t dipped your feet into the world of commercial real estate, it might be time to start looking in that direction. If done correctly, investing and renting out commercial properties can bring in higher annual returns than many other investments.
Commercial real estate has a long history of being an attractive investment during both up and down market cycles. Take a look at some of the other reasons investing in commercial real estate could pay off in the new year.
Commercial properties, especially multi-unit structures, offer a steady stream of income thanks to leases. These contracts are usually longer than residential leases, which makes it easier to calculate your annual cash flow and helps limit unexpected vacancies. The more tenants you have, the more income you can generate.
If you do your research and choose your investment wisely, your property’s location and structure will have value even if a tenant is unsuccessful and can’t pay. If you lease to multiple tenants, the chance of losing your entire rental income in any given month is much lower. While you may lose a few tenants at a time, you’ll still have others helping you generate income.
Commercial real estate also has a history of appreciating faster than other investments. And if you have the ability to make improvements without breaking the bank, this can add even more value to your property.
Purchasing real estate is also one of the very few investments that offers tax benefits. Those benefits include the mortgage interest deduction and the depreciation deduction. Deductions related to depreciation and interest expense can shelter or defer taxes on cash distributions.
Owning and maintaining a commercial property can add value to your community. By doing business with your tenants — whether they’re renting an apartment or office space — you’re helping both those individuals and your local economy.
Are you a real estate professional looking for representation in commercial transactions? Caiaccio Law Firm’s clientele includes commercial and residential developers, sponsors, investors and lenders. Our firm’s experience in commercial real estate transactions covers property types, including multifamily, single-family, retail, hotel, and office properties. We have a specific concentration in representing multifamily operators, property management firms, and commercial developers.