Investing in commercial properties the world many of the secrets of success for the wealthy real estate investors. There are’ There’s no reason you can’t even build mass, passive cash flow; Spread your investment risk To take advantage of and use effectively; And build enough equity.
Whether you’ Office buildings, retail stores, or industrial complexes are investing in commercial property are many genuine advantages.
No. 1. High income potential
Commercial real estate States residential singe family more than real estate or apartment rental or lease payment, garners per square foot, and therefore, the investor has a better chance of earning more income.
No. 2. Low-risk space
By its very nature, commercial real estate because it is comprised of two or more units, have the advantage of less space exposure. Such as a single family home, unlike a single tenant investment, commercial properties with space exposure is spread in many units.
For example, 20 out of an empty office just 5 percent vacant. Commercial real estate, it’s 5 percent less painful financially the same family home is sitting and In which case investors 100 percent of your monthly rental income loss is painful and expensive experiences.
No. 3 less competition
There is less investor in commercial real estate competition because some investors this kind of office buildings, shopping centers, or big industrial complexes are not comfortable in investing.But remember: even though many of these kinds of big investment others out of Comfort zone, they Don’T need to be out of its reach.
No. 4. More flexible sellers
Perhaps this fact is less a direct result of investors see that commercial real estate owners usually when selling their properties are more flexible. Passionate people as their homes as, they are not Sales is just a business decision. And because they Are trading in a frame of mind, vendors and understand and agree to a buyer likely & rsquo is 100% seller financing request; Such as a second mortgage take back financing, partial vendor; Or an institutional lender first second behind trust & rsquo did lien. Note: in Canada, the seller to take back financing as referred to.
No. 5. Depreciation tax shelter
Holding onto you and invest in commercial real estate construction and improvement through devaluation of provides a significant tax shelter. Depreciation allowed by the IRS to write, and in most States, your new passive income shelters.
No. 6. Expenses paid by tenants
Another advantage: many commercial properties pay the operating expenses of all the building tenants & rsquo. This triple net leases, which are common in the commercial industry is especially true in. S expenses, real estate taxes, property insurance, and maintenance, in addition to the monthly lease payment basis, the lessee pay all their or its pre-rata portion & rsquo property pays. Sales– Additionally, most retail leases a provision indicating that the landlord receives a percentage of the retail installation includes & rsquo; Or” Percentage rent & rdquo; Bonus. For example, the tenant pays a monthly lease payment and if more than a certain number sale landlord gets a bonus.
No. 7. Equity build-up
Tenants’ Pay cash to pay the mortgage, which over time will result in a good growth with equity, leases provide you, boss.
No. 8. Economic value
Another advantage of commercial real estate property owners is that you spend less time in the same neighborhood, a stable cash flowing property you can afford than it costs to build the exact same commercial building is new. Most existing commercial properties or their replacement cost new construction compared to be purchased for less, because they provide a tangible economic value. Commercial real estate investing economics their historical documents are based on net operating income or NOI. NET operating income adjusted gross income only real [is scheduled to hire and ndash; vacancies], minus operating expenses, debt service of commercial property, except real. [Don’t” accept the proforma financial property, years-this article du diligence section to understand what you need to get the last three get real real NOI!]
No. 9. Heavy leverage
Commercial real estate, you long term, fixed rate combined with partial vendor financing institutional financing, combined with financial leverage to get.
No. 10 long-term capital appreciation
Over the long term multi unit or commercial property holding on, the capital increase and will provide you with increased cash flow with high rental rates as a result. Increase cash flow with the frosting on the cake as admiration, for the long term to large-scale, passive income