Being a provider of commercial mortgage solutions, we have seen an increase in the number of investors buying smaller commercial properties lately. While we have always worked closely with small business owners in helping them obtain commercial financing to buy their own buildings, we have definitely seen more investors looking to capitalize on the steady returns afforded by commercial real estate.
So why are more investors flocking to commercial real estate?
Timing is right in the economic cycle.
Commercial real estate has entered into a steady period of growth. The aftereffects of the recession are long gone and almost every property type is experiencing moderate to steady growth. Furthermore, since the market is on the front end of the real estate cycle, prices have not risen to overinflated levels meaning there are still some great deals available, especially when it comes to smaller assets under $5,000,000.
Increased capital earning potential commercial properties offer.
Compared to other types of investment vehicles, returns are typically higher with commercial properties. While returns vary from property to property, returns typically average between 8 and 10 percent. In comparison to the stock market, a good property can yield higher returns over time. With the right commercial mortgage in place, investors can experience even higher returns.
Commercial property owners benefit from several tax cuts. Some examples include mortgage interest deduction and depreciation deductions. These advantages along with the right financing in place can help further improve returns.
Improved income streams.
All over the nation, occupancy and rental rates are rising. The latest market reports show continued improvement in rental rates in the office, retail, industrial, multifamily and hotel sectors. Rents are back to pre-recession levels and are forecasted to keep growing. This is causing net operating incomes to rise. This is incredibly attractive to investors especially those that own multi-tenant properties. In fact, some investors are enjoying such steady income streams that they have no desire to sell and are content with the growing income they are achieving annually.
Better security than other investment vehicles.
This is especially true for investors who are looking to own for the long term. These investors are able to ride the ups and downs of the real estate cycle and ultimately achieve a nice return on their investment. Additionally, even if a property is vacant, building and land values typically hold their value and often grow depending upon the location and condition.
Looking to finance your commercial property? Either for purchasing, refinancing, property improvements, working capital, or debt consolidation, I can help. My services and consultations are free until I get your commercial property financed. Learn how I can help >