One of the biggest advantages of commercial real estate is attractive lease rates. In areas where the amount of new construction is limited by land or law, commercial real estate can have impressive yields and substantial monthly cash flows.
They also benefit from comparably longer leases with tenants than residential real estate. This long lease term gives the owner of commercial real estate a considerable amount of cash flow stability, as long as long-term tenants occupy the building.
In addition to offering a rich and stable source of income, they offer the potential for capital appreciation, provided the property is well maintained and upgraded. And, like all forms of real estate, it is a distinct asset class that can provide an effective diversification option for a balanced portfolio.
ADVANTAGES
Given the good health enjoyed by this type of assets and the optimism of experts for 2023, we offer you four essential reasons why to invest in commercial premises:
Attractive returns. One of the reasons why professional and institutional investors land in this type of investment is, as we have already mentioned, because of its attractive returns. Commercial properties generally have a higher profitability than housing and other types of assets.
Continuous cash flows. The main characteristic of investments in commercial premises is that they distribute periodic profits. These profits come from the rental income of the property. The rental income obtains periodic income and profitability that amortizes the initial investment.
Real asset to reduce risks. Like all real estate, it falls into the category of tangible assets. They can be touched and felt. Financial assets generally behave differently from real assets. So combinations of the two in an investor’s portfolio allow diversification. And therefore, they will reduce the overall risk of the investment portfolio.
Longer and more flexible leases. These types of properties generally have protected rents with longer leases. This generates greater visibility and predictability in the generation of rents, which translates into visibility of the future benefits of the project. Also, the legislation for operating these rents is more flexible than that for residential rentals. This makes it easier to rethink the exit strategy of the investment or sale of the property, giving the manager the possibility of taking advantage of rising markets.
Investment in commercial real estate presents itself as a real investment alternative for those seeking to have a balanced investment portfolio.
Commercial properties are a highly valued real estate investment product, where, depending on the area and its pedestrian traffic, you can find excellent spaces below market price. And, if in addition a reform is carried out to improve or transform the property, an incredible revaluation can be obtained in its subsequent sale.
However, in order to reduce risks and obtain a profitable real estate investment, it is advisable to bet on premises located in prime or central districts in the cities, to guarantee the passage of a good flow of public and a good demand of people interested in buying and/or renting them.
To do so, you must rely on advice that assures you of experience and research.
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