Are you investing – or thinking about investing – in commercial real estate? Commercial real estate provides an excellent risk/reward profile in an economy where stock markets are becoming increasingly volatile. Investing in commercial real estate is an excellent way to grow your money, be it for financial security, paying for college tuition, or saving for retirement.

Here are three reasons why investing in commercial real estate is an excellent way to grow your wealth:

Reason #1: Appreciation of Asset Value and Cash Flow

Historically, commercial real estate appreciates faster than other investments, due to external factors such as supply and demand imbalances. What’s more, by making cost effective improvements to the property that improve usability and desirability, you can increase the appreciation of the asset. This is in stark contrast to the stock market, where you are at the mercy of the market itself and all of its fluctuations that are often out of our control. Additionally, historically the commercial real estate market does not fluctuate with the same volatility of the stock market.

Making improvements to the property also allow you to demand market rents, thereby increasing your cash flow. And, if you have been wise in the selection of your asset and its location, you have the potential to earn income regardless of what happens with the tenants.  

Reason #2: Tangible Asset

Stocks are an intangible investment…there is nothing material that secures them. One day a company you invest in could go out of business, or their shares could decrease in value due to reasons out of your control, and you’ll be left with a loss.

While there are ups and downs in the valuation of property, it is material, and will always be there, barring unforeseen circumstances. You can actually drive by and SEE your investment.

Reason #3: Earning potential & Leverage, Depreciation

Commercial real estate investments are often secured by leases which provide a regular income stream that are typically significantly higher than stock dividend yields. Additionally, you have the ability to place debt on the asset that is several times its original equity, enabling you to buy more assets with less money. In turn, that equity is magnified as your loans are paid down. What’s more, you can write off any depreciation of the property on your tax returns.

And finally, an added bonus of investing in commercial property is the pride of ownership. This is an intangible benefit that is hard to quantify, but there is something satisfying about owning something of value.

If you are thinking about growing your money by investing in commercial real estate, please contact me. I will work with you to find the perfect property to begin or continue your journey of owning a piece of commercial real estate!