After years of rebounding, commercial real estate continues to rise. Though rates were at an all-time low several years ago, the stability of investing in commercial real estate is stronger than ever. A solid, growing economy is driving consumer confidence. All the more reason to secure your place in the commercial real estate market as an investor.
Let’s talk a little about how investing in commercial real estate is beneficial and why now is a great time to jump in.
If you’ve invested before, you know that commercial real estate as an investment is a great way to add to an existing portfolio. This is especially true if you already have some type of commercial real estate. For example, if you already own a day spa, what if you invested in the space next door for a salon? Sister communities like these can help expand your property management opportunities and enhance your portfolio.
Unlike residential property, commercial real estate has a higher rate of return. Typically there is an annual return off the purchase price between 6 – 12 percent. As well, evaluation of commercial real estate is a lot easier than for residential properties. It is not based on comps in the area. Instead, evaluations are based off of income statements of the owner.
When moving towards commercial real estate as an investment, we recommend several things. First, understand that this will be a long-term investment. Most investments can expect to last ten years or more. While there are more risks than a residential property, the payoff can be greater. The more commercial real estate you add to your portfolio, the process becomes easier over time. Additionally, technology and the popularity of crowdsourcing is making owning real estate more attainable than before. With crowdsourcing, venture capitalists help raise money for real estate companies. This gives investors the ability to earn and receive cash flow from their invested assets, reducing initial risk.
At the Menlo Group, our experience coupled with our solid service to clients can help you add to your existing portfolio. Whether you’re interested in medical, retail or office buildings, we can help guide you through the process. We offer a wide-range of services, from property searches and contracts to number-crunching and negotiation. If you want to get into commercial real estate investment, now is the time! Contact us today and we’ll help you along the way.