Commercial real estate is one of the most stable and attractive investments which has a lot of advantages even with fluctuating market cycles. Some of the top reasons to invest in commercial real estate are:
1. Cash Flow: The main reason why investors love to invest in commercial real estate is the attractive cash flow. Industrial properties are mostly structured to produce steady cash-flow with dividends which are normally distributed to investors monthly, quarterly, semi-annually or annually.
2. Tangible Asset: Commercial properties are tangible assets and investing in one is different from buying shares in a company. Shares can be here today and gone tomorrow but a commercial real estate is a hard asset that you can touch and feel and it is not going to just disappear.
3. High Appreciation Rate: It has been historically proven that commercial real estates have faster appreciation rates compared to other investments. This is true and if you make some cost effective improvements that will make your property more appealing, the value of the asset will increase.
4. It offers a unique security advantage: Commercial real estate is one of the very few investment-classes with intrinsic value. Both the structure and the land have values. And if an investor chooses the right property location, they are guaranteed security benefit of owning an asset that has potential to earn them income despite what happens to existing tenants.
5. Tax Benefits: It is one of the few investments which offers tax benefits such as depreciation deduction and mortgage interest-deduction. These two deductions can help you to be able to off-set your income stream and reduce your tax bill.
6. Relationships with tenants are more predictable: The relationship between the landlord and the tenant in commercial real estate is between two businesses and not just two people. Relationships with tenants are mostly predictable because interactions are usually done professionally. It’s like a business to business relationship.
7. It helps to diversify risk: If you have a commercial property, you can lease it multiple tenants hence reducing the risk of losing your whole rental income at any given time. You might lose a couple of tenants, but you will still remain with other tenants who will help you to generate income.