Do you keep on hearing the word “investment” or do people keep telling you to “start investing” but you’re not so sure of how to go about it? Aside from insurances, there are a lot of different kinds of investment you can make if you want to take your money game higher. The most common is investing in real estate such as Residential Real Estate and Commercial Real Estate.
Obviously, there is a big difference between the two as one is rented for “home” purposes or short term stays while the other is for “business” purposes. And if you’re looking to invest for your future, Commercial Real Estate is one of the good options out there. If you’re thinking about it but you’re still unsure, read on. Here are 5 reasons why a Commercial Property is a good investment.
1. Regular Source of Income
The main point of investing in something is earning from it. Isn’t that we all need? Having a Commercial Real Estate means that you can have it as a regular source of income without putting in too much effort into it. Of course, there’s maintenance, the papers, and the works but aside from that, it’s a passive income.
The monthly fee should cover your expenses along with the maintenance and taxes plus you’ll properly gain more money because compared to residential properties, the rates to rent commercial properties are higher. Commercial Real Estate also tends to keep their tenants longer because obviously, your tenants have a stable source of income too. And if in case your tenant goes out of business, there’s always another one eying on the same spot.
2. High Appreciation
Commercial Properties tend to appreciate faster than other types of investments. You can also make cost effective improvements in your property to bring more value to your commercial space. Once you’ve made the proper improvements, it will make your property more appealing to tenants and when there is a high demand for your property, the value or rate to lease it also goes higher.
3. Intrinsic Value
Look for business hotspots and see if you can get a piece of that area. Once you’re able to secure a good location with good structure, your property will have more value to businesses and with that comes more business for you. Businesses or tenants will always seek out strategically placed establishments with reasonable structure because this would mean good business for them too. And if your property is within that category, your property now becomes one with a higher intrinsic value. And even if the business that rents you becomes unsuccessful, just the fact that you’re in a strategic location would still mean that there will always be another who’ll rent out your spot. Choose your commercial property well so you can make the most out of your investment.
4. Less Competition
Let’s be honest, if you own a property in a prime location, it probably didn’t come cheap. Chances are, you might have had to take a big step to own that property, which also means that there are less investors interested in doing the same thing. Most do not have the resources for this and not a lot of people are in the business of leasing commercial spaces.
The irony here is that the reason why the investment was a pretty big step in the first place is also the reason why a lot of businesses owners will sought out for your property too! The fact that you’re in a prime location will drive businesses your way and the best part is that now that you own the property, you can take charge. You get to decide how much, how long and the terms or conditions to the lease.
Using commercial properties as leverage is a great way to make your money grow. This is something businessmen do to invest in more properties by putting a debt onto a Commercial Real Estate property. One that is higher than the investment made so that they can purchase or develop another Commercial Real Estate property using other people’s money.