If you’ve been looking for a sure-fire way to earn big bucks, you may have heard about the supposed benefits of investing in real estate. Unlike purchasing company stocks, real estate investment allows for more ways to realize a superior ROI.
Still, there’s a lot more to real estate investment than at face value. Investopedia contributor Andrew Beattie writes that the field is pretty varied, but the most common has to do with residential real estate (i.e. condos, townhouses). However, he also claims that the biggest earners in the field cash in on commercial properties.
Unlike residential real estate, commercial properties offer business or industrial space, rather than living spaces. Examples of commercial properties include retail buildings, office buildings, warehouses, industrial buildings, and the like.
Why, then, is it advisable to focus on the likes of local Anchorage commercial real estate, rather than residential? Here are a few reasons.
Favorable financing rates – People who look into real estate investment (despite concerns about financing) can rest easier with commercial properties. Nowadays, it’s not rare to find low mortgage interest rates that may even make it more practical to choose a property that’s already built rather than one that has yet to built from the ground up.
Real estate is hard asset – Unlike stocks or cash, real estate in general is a “Hard Asset”—meaning both the structure and the land where it stands have meaningful intrinsic value. If well-chosen, such a property retains its value even when it doesn’t reach its full potential.
Excellent appreciation of value – If a tenant opts to undertake various improvements to the property to increase its usability and desirability, such improvements can factor into the value of the entire property.
Potential inflation hedge – Commercial real estate typically features a high degree of correlation to inflation. For instance, the price of real estate (specifically multi-tenant assets with a high ratio of labor) generally increases along with inflation. In other words, commercial real estate is an inflation armor.
Higher income potential – Last but not least, commercial real estate simply brings in more money than any other investment. This is especially true for properties that garner higher rental rates or lease payments per square foot.
Convinced yet? You might want to call or visit a nearby Anchorage, AK multifamily investments firm like Graham Commercial Real Estate for inquiries.
(Source: Find Fortune in Commercial Real Estate, Investopedia)