After finally saving up enough money to use as a down payment, I decided that it was time to hit the market. I met with a lender, got pre-approved for a loan, and then started visiting different properties. However, I quickly realized that I didn't know as much about real estate as I would have hoped. I wanted to find a great neighborhood and know what to ask the professionals, but I could tell that I needed a little help. To point me in the right direction, I started working with a great real estate agent who was familiar with the area. This blog is all about educating the general public on real estate matters.
As a first-time real estate investor, commercial real estate is a good place to begin. Initially, investing in commercial real estate (CRE) was a reserve for the ultra-wealthy mainly because it cost tens of millions to purchase properties.
However, because of real estate crowdfunding, you don't need to be an institutional investor to participate in commercial property real estate investments.
The minimum amount required to be a direct participant in CRE investments has been lowered to accommodate more investors. Here are four reasons you should invest in commercial real estate.
High Income Potential
More people are investing in commercial property real estate because it has high income potential. Since commercial buildings come with a higher rental income than residential buildings, you'll have a higher potential for returns.
Rather than earning a few thousand dollars on rental homes, you can earn much more if you choose the right commercial properties to invest in. Moreover, you can use your current investments to invest in more commercial properties and diversify your portfolio.
Steady Cash Flow
Investing directly in CRE allows you to enjoy steady cash from your rental income. There's also potential for greater returns in the future due to value appreciation.
As an equity investment that earns returns through rental income, CRE provides financial stability. It also experiences less volatility than stocks whose value relies on the promise of long-term appreciation.
Unlike CRE, residential real estate (RRE) is very competitive. For this reason, venturing into RRE is much more costly than investing in CRE.
Due to less competition in commercial property real estate, its dollar volume keeps getting lower each year, allowing more investors to try their hand at it. Moreover, it is easy to find a profitable commercial property to invest in as compared to other assets in the real estate market.
Since commercial property real estate behaves differently from other investments, you can use it to diversify your investment portfolio. It has maintained low correspondence with the stock market for years. For this reason, fluctuations in the global equity markets will not impact your CRE investments.
Additionally, you can also diversify your portfolio within CRE by leveraging the different demand drivers for your commercial properties, to mitigate risks within the CRE investments.
You should consider investing in commercial property real estate because it's highly profitable and guarantees steady cash flow. Consult a real estate professional to learn more about investing in commercial real estate and how to go about it.Share