With so many residential real estate options out there, why would you want to start investing in commercial real estate? Here are some reasons why investing in commercial real estate is better than residential.
Greater Income Potential
By investing in just one commercial real estate deal you have much greater income potential than one residential deal. Whether you invest in an apartment building, strip mall, office building, or multi-purpose commercial building, you have more rent coming in from more people in one location. Commercial properties can make between 6 and 12% ROI as opposed to 1 to 4% for residential properties.
Better Financing Potential
Those with money to invest like to pool their money together to invest in bigger deals on which they can make more money. Even smaller firms will pool their money together to invest in bigger deals. As you seek to invest in commercial real estate, this gives you access to more money and more options for financing.
Business to Business Relationships
If you invest in commercial properties that lease to businesses, they have a vested interest in their business succeeding and keeping their storefront looking good to the public. Because of this they will take better care of your property and be more likely to pay rent on time to keep their business going strong.
Greater Potential for Appreciation
Because some of a commercial property’s value is based on its income generating potential, increasing the incoming of your commercial property can force appreciation. This is not possible with residential properties.
Learning how to invest in commercial real estate takes work, as does anything worth doing, and the potential rewards are numerous. For more information on investing in commercial real estate, contact us at Express Capital Financing. We’re here to guide you in all your real estate financing needs.