Did you know that The commercial real estate industry is projected to grow by more than $250 billion over the next five years?
This means it’s a better time than ever to consider buying commercial property. However, not everybody understands the key benefits of real estate investing when it comes to commercial buildings.
We’ve put together a quick guide that outlines the key information you need to know before you get involved in the Orange County, CA market. Let’s take a closer look.
1. Higher Earning Potential
As you might guess, commercial real estate has the potential to earn you much higher returns than residential investments.
This is because business owners are willing to pay more for a location that is conducive to their operations, and those prices can be substantially higher than those of a single-family home. Additionally, commercial properties can also generate more income through rent payments from tenants and other sources. These often include retail or office spaces.
2. Tax Benefits
Another great benefit of investing in commercial real estate is the sizable tax deductions it can provide.
These deductions vary depending on the type of property and your filing status. They can include write-offs for depreciation, repairs and maintenance, and insurance premiums.
They can also include interest expenses and taxes paid to local governments.
3. Lending Options
When it comes to commercial real estate, there are many more financing options available than when it comes to buying a residential property. For example, lenders such as banks and private money lenders offer loan programs specifically designed for commercial investments.
These loans often have better terms and lower interest rates than those offered by traditional lenders like mortgage brokers.
4. Long-Term Investment Opportunities
Unlike residential properties, commercial real estate is a long-term investment and requires more of your attention.
You may have to put in extra time and effort to maintain the building. You may also need to hire contractors to do repairs or make improvements, pay taxes, and keep up with tenant issues. As you do so, you can often increase the value of your property and maximize your returns.
5. More Tenants Equates to Less Risk
The more tenants your commercial property has, the less risk you are likely to have in terms of vacancy and income. Businesses tend to stay in one location for a longer period of time than individuals do, making them more reliable sources of income.
Additionally, if you own multiple properties with different tenants, you can spread out your risk even further.
6. High Appreciation
Commercial properties don’t just generate income — they can also appreciate in value over time. This is especially true when you invest in properties located in areas that experience high growth.
For example, Orange County, CA, has seen tremendous population and job growth over the past decade. This makes it an excellent place to invest in commercial real estate.
How Do I Know What Type of Commercial Building to Invest In?
The type of commercial property you should invest in depends on your own personal goals, financial situation, and risk tolerance. Generally speaking, it’s good to research different types of investments so that you can make the best decision for your individual needs.
For example, if you’re looking for a more passive investment with the potential for long-term appreciation, you may want to consider investing in an office building. Ultimately it’s important to do your research and find an investment that is right for you.
What Are Common Mistakes That Investors Make?
Common mistakes that investors make when it comes to commercial real estate involve purchasing a property without researching the area. People also don’t take into account all the potential costs associated with owning and managing a property.
Of course, not having enough capital for upkeep and repairs and failing to properly vet potential tenants are also issues.
Some investors also fail to do their due diligence in terms of researching the local market, zoning laws, and taxes. It’s important to avoid these mistakes and do your research before investing in any type of real estate property.
What Should I Look For in a Professional?
Not every firm will be able to meet your requirements. Researching your available options is something you cannot overlook.
The past reputation of the company will play a large role in the results you get. Checking past feedback will go a long way.
You should only work with companies that have overwhelmingly positive reviews. Afterward, consider how experienced they are in the industry.
They should be able to easily convey their capabilities. Booking a consultation is a great way to get started. If you aren’t part of their target demographic, they likely will not be able to help you.
Hiring the wrong firm can come with many consequences. Before you move forward, look at how they have established their billing structure.
The last thing you want is to deal with unexpected costs. If you find yourself uncomfortable communicating with them, you should research other options.
They should also go out of their way to learn more about your project.
Investing in Commercial Real Estate Doesn’t Have to Be Difficult
Although it might seem complicated at first, choosing the right commercial real estate state is much easier than it seems. As long as you keep the above information in mind, you’ll be sure to meet your needs.
Looking for more information about what we can do? Get in touch with us today at (877)-775-9625 to see how we can help.