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Are You Aware of These Realities of Investing in Commercial Real Estate Property?

Are You Aware of These Realities of Investing in Commercial Real Estate Property?

A lot of people limit their scope of investment when they do not venture beyond residential properties. That is why they tend to miss out on potential income opportunities that are far better than residential property investments. Yes, we are talking about the advantages of commercial real estate investments.

Before we begin, it would be wise to define that commercial real estate properties refer to those properties that are particularly meant for business or multifamily needs, and it is supposed to offer workspace, storage, retail, medical, or living space. Today, commercial real estate property investments are made by many people because the returns are higher compared to their counterparts. In recent times, people are investing in commercial properties by leasing them to tenants so that they can conduct business. The lease duration can vary from a minimum of 6 months to a maximum of 30 years or more. It actually depends on what the tenant and the landlord agree upon. A lease can include clauses of increasing the rent annually; according to the lease agreement. Such commercial real estate generally includes office spaces, shops in shopping malls, restaurants, hotels and others.

Advantages of Commercial Real Estate Investments

  • Attractive Leasing Rates
    The main benefit of commercial real estate is the tempting lease rates. In regions where land or law limits new construction amounts, commercial property owners can still enjoy substantial returns as well as considerable monthly cash flows.
  • Cash Flow Stability
    Owners of commercial real estate enjoy more profit because of the extended lease contracts with the tenants, something which does not happen in residential real estate. As a result of the long lease length, the property holders enjoy a steady cash flow in a stable and continuous manner, given that the tenants occupy the building.
  • Exceptional Capital Appreciation
    Besides providing a stable source of income, commercial properties also maintain the potential for capital appreciation, given the property is taken care of and kept up-to-date.
  • Less Risk
    The amount of risk is much less in commercial real estate, especially when it comes to multiple-occupancy buildings. Risk of income loss is less because other occupants will be still contributing to cover their operational expenses. It is something that is not possible in single residential properties which could result in a hundred percent income loss.
  • Security advantage
    Compared to bonds, stocks and other kinds of investments, commercial properties ensure value in both land and building improvements. In other words, its value increases with time. Moreover, building additional structures increases the value of the property to a great extent.

Now, if you are wondering about taxes, then we should be thankful that the Internal Revenue Service offers tax incentives for these kinds of properties. Since the maintenance cost of these properties is not cheap, tax incentives act as a relief to the owners.

For more information regarding commercial real estate investments, contact Wealth BCI today.


Disclaimer

This Property Summary has been prepared solely for, and is being delivered on a confidential basis to, persons considering a possible business relationship with the Company (defined in the offering package). This Presentation is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instrument of the Company. No offer of securities shall be made except by means of a private placement memorandum meeting the requirements of the Securities Act of 1933, as amended, and applicable regulations of jurisdiction in which such an offer may be made. Any reproduction of this Property Summary, in whole or in part, or the disclosure of its contents, without the prior written consent of the Company, is prohibited. WealthBCI makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Certain information presented or relied upon in this presentation has been obtained from third party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented. These materials are not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice. Actual transactions described herein are for illustrative purposes only, are presented as of underwriting and are not indicative of actual performance, and were selected based on objective, non-performance factors such as asset-type, geography or transaction date, among others. Before making an investment decision with respect to any investment, investors are advised to carefully read the related final documentation and offering memorandum documents. No offer of securities shall be made except by means of a private placement memorandum meeting the requirements of the Securities Act of 1933, as amended, and applicable regulations of jurisdiction in which such an offer may be made. Any reproduction of this Property Summary, in whole or in part, or the disclosure of its contents, without the prior written consent of the Company, is prohibited.