So, it’s time to expand your investment portfolio? Or maybe you never got around to having one and you’re finally taking the plunge. Either way, you’re going to run into the issue of what to invest in, and with so many options on the market, it can be hard to work out where to spend your hard-earned cash. While it’s always worth seeking professional guidance that’s specifically tailored to your situation, commercial real estate is a sound investment consideration. Below you will find five reasons why investing in commercial real estate can be particularly beneficial.
When compared to residential investment properties, commercial real estate consistently offers higher yields. Unlike housing where rental prices are often calculated based on size, business spaces mostly vary based on demand, so if you can get an office or co-working space in a prime position, expect nice paydays for the foreseeable future. If you’re not sure how to maximise your return on investment, consider speaking with a Melbourne based commercial real estate. It is one of the world’s most liveable cities, after all.
Any investment comes with risk and commercial real estate isn’t the exception that proves the rule. It is, however, a far more reliable source of income thanks to longer lease terms and investments made by tenants in your property. Commercial real estate also tends to stand up to financial crashes better than its residential counterparts and in many cases, affords your better flexibility than owning a rental house.
While the equipment within your investment (if you have it) will depreciate at a faster rate than household appliances, for example, the property itself will often increase in value rather than decline. This is because a business dwelling’s worth is indexed with inflation each year. That means higher rent from your tenants and a better profit margin should you choose to sell your new investment in the future.
Residential properties will generally be damaged more often than their commercial counterparts. This isn’t to say that private tenants are bad or that they don’t care about the properties they lease, but when it comes down to it, houses are for living in and living means mess and maintenance. Commercial tenants, however, are more likely to employ their own cleaners and possibly even maintenance staff, saving you time and money both during and after their lease.
If you’ve ever been outbid (on anything, but especially a house), then you know how big of a set back it can be when someone snatches your dream out from under you. You’re not guaranteed to get exactly what you want every time you look to invest in commercial real estate, but you are far more likely to than you would be in the housing market. Less competition also often comes with the added bonus of a lower purchase price.
There are many benefits to investing in commercial real estate and this list is far from exhaustive, but hopefully it has given you enough insight to pique your interest and set you on the path of making an informed decision. Everyone’s portfolio is going to differ due to factors such budgets, interests, and goals, but at the end of the day, we’re all in it to make a profit, that’s why it’s called an ‘investment’. Even if you’re not completely sure a commercial property should definitely rate on your inquiry list, your financial adviser will help you figure out if it’s right for you and how you can best reap the many rewards the market has to offer.