office buildings

There are a lot of different options for people who want to get involved in real estate investing. Residential real estate is what commonly comes to mind, but that’s not all you can invest in. There are also opportunities in raw land, industrial real estate, and commercial real estate. While more difficult to break into than residential real estate, there are some benefits to getting into commercial real estate.

Greater Return

Commercial real estate has the potential to net its investors much greater returns than other types of real estate. Commercial properties are usually bigger than residential properties. Coupled with the tendency for commercial properties to be divided into different segments that can be rented to multiple entities, thus diversifying your risk, the amount of income generated is usually greater. What you can charge to rent your property will depend in part on the property value. This will have an impact on your rate of return, though there are other things you can do to boost your returns.

Additional Financing Options

One of the most common barriers to breaking into commercial real estate is how much more expensive the properties are to purchase. Fortunately for those getting into it, additional financing options are available that wouldn’t be options for residential investments. Commercial properties qualify for SBA loans, including 504 and 7a loans. In order for borrowers to qualify for SBA loans, they must meet requirements based on a few factors. These include the size of their business, the type of business, their credit background, and the business’s financial situation. Additionally, you’ll need to have some form of collateral, a 10% down payment, and a personal guarantee from anyone who owns at least 20% of the business.

Greater Income Stability

Income stability can be a major concern for real estate investors. After all, if you don’t have tenants paying rent, you still have to pay your mortgage and other expenses. Fortunately for commercial real estate investors, this type of real estate investing tends to offer greater income stability. More tenants in your property means that you are less impacted by losing one. Make sure you do your part to find the right tenants for your property to further increase your income stability.

Commercial real estate offers multiple benefits to investors. It offers the potential for greater returns, additional financing options, and greater income stability. If you have the resources and capital to get started in this type of real estate investing, it’s definitely worth your consideration.

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Lower Interest Rates

Because of the pandemic and the current recession, commercial real estate properties have a lower interest rate than normal. The interest rate has reached incredibly low proportions, meaning that you don’t have to worry about paying a lot of money in interest overtime for your properties. You can buy many properties, most likely more than you otherwise would have, though you should still be wise with your purchasing power. While you will still need to keep an eye on making the numbers work during the pandemic, the lower interest rate could prove to be incredibly beneficial to buying commercial real estate.

More Supply

With many businesses permanently closing, commercial real estate there are deals to be had. These closures have left a supply in commercial real estate. With reopening delays and shifting customer demand, many businesses will not be able to last if they don’t make the right moves — resulting in vacancies and those properties becoming available for purchase. A high number of businesses are likely to close their doors forever because of the pandemic, meaning that there is a surplus of commercial real estate buildings. You can purchase these buildings now to make a profit later when more people are looking to buy commercial properties again.

Affordable

Because of the low interest rates and the increased supply of commercial real estate properties, these properties have become more affordable than they have in a long time. Because of their affordability, now is the perfect time to invest in commercial real estate. If you have the means to do so, you can buy up properties for cheaper prices than they would have been pre-COVID-19. Buying now could be incredibly beneficial in your future if the demand for business properties once again increases.

While you may not think now is the best time to look into commercial real estate properties due to the pandemic, it is actually a great time to look into commercial real estate properties because of their affordability, the increased supply, and the low interest rates.

Ready to make a move on commercial real estate? Find your next property investment in our listings!

What Are the Benefits of Commercial Real Estate?