Commercial real estate investments can provide lucrative personal and financial perks. For instance, some people seek long-term financial stability and wealth, while others explore earning potential and portfolio diversification. Specifically, commercial real estate can increase income potential, augment diversification, and help you develop a business network. Regardless of your specific objectives, investing in commercial real estate can help you reach your financial goals.
The Genau Group offers professional lease and sales brokerage services to assist you with numerous real estate needs. Indeed, our team has extensive industry experience and familiarity with the real estate market in Arlington, VA. Our broad network includes agents, architects, legal licensees, and more who can guide you through the commercial real estate investment process and ensure you achieve your desired results. Let us help you upgrade your business space or secure the best real estate for other goals: visit our website or call (202) 735-5382.
Below, we discuss several perks that come with investing in commercial real estate:
A significant advantage of commercial real estate investments is the potential for higher income. Compared to residential prospects, commercial properties offer a higher return on investment. After 10 years, residential real estate yields an average ROI of 15.14%, while investments in industrial property yield a 23.4% return.
Commercial properties also have more available units, so the financial risk of each vacancy is lower on average. And since the leases are longer for commercial properties than residential ones, tenant turnover is comparatively lower.
Businesses occupy commercial properties, while individuals and families use residential real estate. Commercial tenants are likely to maintain and even improve upon a property, whereas individuals renting residential properties may cause damage. Ultimately, the quality of tenants in commercial real estate is higher than in residential, making the former a more secure investment.
Commercial properties also receive a more objective price valuation than residential real estate due to the methods involved. The valuation of surrounding properties significantly affects residential values, while owner income largely determines commercial values. Moreover, capitalization rates influence a commercial property’s asking price depending on the property type—office, industrial, or retail.
Furthermore, real estate investors can effectively diversify their financial portfolios by investing in commercial real estate because it provides a hedge against inflation and ensures consistent money growth. Historically, returns on commercial real estate tend to exceed the inflation rate.
A diverse portfolio with commercial real estate investments can also create the opportunity for tax deductions concerning interest expense or depreciation, which can reduce income taxes over time.
Longer Lease Terms
Long lease periods for commercial real estate provide a steady stream of income. Achieving economies of scale and multiplying this stream is more convenient because commercial properties tend to have more units than residential ones.
In many instances, commercial leases can be signed for multiple years, strengthening the financial security and reliability of the investment. Each commercial tenant also pays a portion of the real estate taxes, maintenance costs, and property insurance. Plus, the owner benefits from a triple-net lease arrangement.
Finally, Investors in the commercial real estate market can build B2B relationships with tenants and develop a broad network of connections. Investors and tenants may have frequent professional interactions and integrate into communities and partnerships, which can lead to further professional opportunities and networking.
Expert Advice in Commercial Real Estate Investing in Arlington, VA
By understanding the benefits, responsibilities, and risks of commercial real estate investing, you can make an informed decision about the properties and lease agreements that best suit your needs. The Genau Group team acknowledges the complexity of this process and offers guidance every step of the way. With our assistance, you can develop commercial property investment plans that provide the best possible value for your business. For help with your next investment, call (202) 735-5382.