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Many investors see great returns on commercial properties like office buildings, hotels, restaurants, warehouses, and malls, just to name a few. Why is investing in commercial real estate a smart move?

    • Portfolio diversity
      As all investors know, diversification is one of the keys to success. Even if the stock market dips or a tenant vacates your rental home, you have another income source to draw from until the market recovers or you can find a new tenant.
    • Longer lease contracts
      A business can’t thrive if it keeps moving locations. That’s why commercial tenants often sign multi-year contracts to better establish their businesses in a given location. As a landlord, a long-term lessee is a dream client.
    • Easier maintenance
      Thanks to triple net leases, it’s the tenant’s responsibility to pay expenses such as real estate taxes, maintenance, repairs, and insurance premiums. All you have to pay is your mortgage. In residential properties, you’ll have to shoulder many of these additional costs.
    • Faster property appreciation
      In general, well-chosen real estate investments offer excellent rates of return. But even then, commercial properties historically appreciate faster than individual houses or multi-family residences. After all, there are always more homes than there are commercial buildings, so supply and demand is on your side.
    • Tax perks
      Commercial properties cost considerably more than residential properties, but buyers can deduct mortgage interest and depreciation from their tax bill. This helps offset the high upfront costs and can save you thousands of dollars over the years.
  • Tips for investing in commercial real estate

      • Work out your finances
        As with buying a house, be sure to crunch the numbers before signing on the dotted line. Consider factors such as total contract price, closing costs, maintenance, and insurance premiums when deciding on your budget.

     

      • Don’t forget about ROI
        Buy commercial properties with an eye towards return on investment; otherwise, all you’re doing is acquiring real estate. Determine how much revenue per square foot your property needs to generate in order to turn a profit.

     

      • Know your success metrics
        Three of the most important ones include net operating income (NOI), capitalization rate (cap rate), and cash on cash return. Understanding these metrics makes it easier to gauge profitability, and allows you to adjust your business strategy as needed.

     

      • Stick to what you know
        Risk is inherent in all investments, but you can mitigate it by choosing commercial properties that align with your experience and background. If you’re a veteran of the hospitality industry, for example, a restaurant or a boutique hotel might be excellent options.
      • Invest in one property as a time
        If you’re a first-time investor, buy one property at a time. You can always buy more once you’ve learned the ropes.

There are many excellent commercial real estate properties in the Winter Haven area, so don’t miss out on this golden investment opportunity! If you want to learn more about currently available properties, check out our listings and get in touch with us, Michael and Dee Norris, at 863.875.5583 or getrealestate(at)aol(dotted)com today.