Commercial real estate is a polarizing investment option. Some people light up at the thought of leasing out properties, and others are nervous about the idea. It may seem intimidating or downright risky, but there are plenty of reasons to integrate commercial real estate into your portfolio.
Invest in stocks and bonds all you want, but the returns from commercial real estate can be staggering. “The NCREIF Index has reported an average annual return of 8.8% over the past 15 years, which is 200 basis points above the average performance of the S&P 500 for the same period,” says CrowdStreet. These returns are undeniable and may serve you greatly in the long-term. Although you may not see immediate returns, there is a large chance you’ll have a steady cash flow in the future.
Standard Work Hours
Typically, if you’re leasing to a company, your work hours will closely match theirs. Since you won’t have someone in your property 24/7, you’re more likely to have daytime issues, rather than the 1 a.m. problems you might face if you were a residential landlord. There may still be emergencies that require your attention, but on a daily basis, you should be on a fairly regular schedule.
Owning a commercial property has more intrinsic value than other assets, according to Real Crowd. You’ll own a physical property that can be leased out for longer amounts of time, and by choosing your properties wisely, your location can practically sell itself. It may not be easy to find the perfect property immediately, but if you stay patient and thoroughly research every property, you can find one that companies will fight over.
Visit any apartment-listing website and you’ll see the ridiculously high amount of residential competition. Compare that with commercial and you’ll find that there is a lot less competition. Particularly in small-to-medium sized cities, it is very common to own one of a handful of properties, rather than one of a hundred. This is advantageous in two ways: 1. You won’t have to fight to get your properties seen, and 2. Companies will have less options and may need to settle quickly. However, the caveat is that an extremely low-quality property will not attract businesses, no matter how little competition there is. It is still important to renovate your office spaces, and having the best-looking building out of ten is still better than having the best-looking building out of 100.
Commercial investing has many upsides when compared to other investment opportunities. Searching for the right property is key, but once you find a great location, you can easily make it work for you.