Benefits of Investing in Commercial Real Estate

 

Milestone Building Ventures pic
Milestone Building Ventures
Image: buildingmilestones.com

Alex Getelman is the founder of Milestone Building Ventures, a project management and consulting firm based in New York City. Possessing several years of field experience, Alex Getelman is knowledgeable about such topics as real estate investing and commercial real estate.

Commercial real estate includes everything from retail and office buildings to industrial buildings and apartments. This variety makes commercial properties very attractive to investors. Below are a few benefits of investing in commercial real estate:

1. Higher returns. Commercial real estate is known for having attractive returns. Most commercial properties generate annual returns between 6 and 12 percent of the purchase price. This rate is significantly higher than returns on single-family homes. Further, commercial properties may see fair returns even as the markets fluctuate.

2. Shared goals. Both owners and tenants share a common interest in keeping a commercial building well maintained. This is particularly true of tenants maintaining storefronts. A bad storefront pushes away customers, so tenants are more likely to take care of the buildings they are renting. In doing so, they help increase the value of the property for property investors.

3. Simplified valuation. Potential investors can request an income statement from a commercial property owner to get a good idea of how much the property is worth. This simplifies the valuation process by largely removing the emotional pricing that frequently affects residential properties.

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