As someone looking to invest in real estate, you're wondering if you should invest in commercial real estate or residential. There are benefits to both. On one hand, you're working with individuals, families and communities. On the other, you're working with big businesses and retailers.
Commercial real estate definitely has its place in your investment portfolio, but choosing the right investment is the key to success. Real estate can have a high cash yield, good equity build-up over time, can be good for leverage and is considered a hard asset. It also has tax advantages other kinds of investments don't.
Why should you invest in commercial real estate? Here are three main reasons.
1. There's a potential for immediate cash flow and income
One benefit of a commercial real estate investment is that you may have immediate cash flow from renters and will also see more income than would be likely with stock dividends (in most cases).
2. The property is likely to appreciate
Even if the asset doesn't initially appreciate by much, it will over time in the majority of cases. It may even appreciate in excess of other investments, making it the best investment for the money.
3. Tax benefits make commercial real estate a popular choice
The US Tax code allows for mortgage interest and depreciation deductions, which helps shield your income and save you more money every year.
These are three benefits of investing in commercial real estate. The right choice could be a financial benefit to you now and in the future when you need it.