When it comes to investing more and more investors are turning to commercial real estate opportunities. Investors believe that not only is it easier to get started with but that it’s a better investment option than residential real estate. This article will look at the most commonly cited reasons that commercial properties are a better investment than residential properties.
Made for Income
There are numerous properties that fall under the heading of commercial real estate including:
- Office buildings
- Retail spaces
- Warehouses
- Raw land
The thing that each of these property types have in common is that they are made with the intention of producing income. An office building would generate its’ income from tenants while a piece of land could just be bought and sold for land development to a real estate developer. This gives commercial real estate a huge and distinct advantage over residential properties and is one big reason why commercial investing is considered a safer option.
You Don’t Have to do it Alone
Getting into commercial real estate can be a tricky thing to do when you’re on your own which is why there are so many companies designed to help handle the hard parts for you. Property managers and LLC investment companies help handle issues like finding and vetting tenants, putting the lease together and the day-to-day operations. While these are all additional costs that you may have to pay for they are designed to make it easier for investors. Instead of dealing with all of the headaches investors can just focus on their returns on investment.
Easier to Invest in
When you invest in real estate you need a large sum of capital and in residential investing property investors can only obtain money from individual investors like hard or private money lenders. There are additional financing options but for the most part there aren’t many ways for investors to receive any amount of capital. On the other side of things, it’s much easier to secure a large sum of capital in commercial investing because there are many more financing options available. You can use traditional financing options, hedge funds, investment groups or even private equity firms.
Higher Returns on Investment
Commercial real estate offers investors much higher returns on average depending on the type of property. In general the average ROI for residential properties is only between 1-4% while commercial properties have ROI ranging between 6-12%. Commercial investors are able to make more money annually, which will improve your net worth as well. Investors also don’t have to worry about the numerous expenses that residential property investors face since tenants in commercial properties are typically responsible for paying the majority of expenses.
Forced Appreciation
In commercial real estate investing the value of the property is based off of the revenue and cash flow that they generate. If your commercial property has generated a lot of revenue then the property’s value itself will likely be higher as well. This means that properties can often force appreciation on their properties by finding more means to produce more revenue. The most popular methods include:
- Finding high quality tenants
- Raising the property’s rent
- Adding new amenities
Answering & Helping You Each Step of the Way
For over 30 years the experts at Landwin have helped investors find the right commercial investing opportunities for their experience and income levels. Whether you’re brand new to investing or looking to add to your portfolio our friendly and experienced staff is here to help. Landwin is an industry-leading LLC and we are committed to making it easier for you to find commercial real estate properties by taking care of all the hard work and research for you. The result is an investment that is more likely to succeed and produce positive ROIs for years to come.
Commercial real estate investing has become one of the most popular investments to make for a variety of reasons. With so many precautions and protections in place they represent a safer, more secure investment. Instead of looking to other riskier options please call Landwin today to speak with one of our advisors about your available options.