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The Benefits of Investing in Commercial Real Estate

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There’s pros and cons to many different types of investing. At the moment, I’m not sure whether I’ll pursue residential real estate or commercial real estate. There’s benefits to both and ideally in the long term I would like to have a diverse property portfolio that incorporates both residential and commercial estates.

My hometown, Christchurch, had a severe earthquake in 2011 that destroyed much of the city centre and many homes across the city. Now would be a fantastic time to get into real estate here in Christchurch, but unfortunately I’m not yet in the financial position to do so, but I’m heading that way.

I’ve been spending a lot of time researching the benefits of investing in commercial real estate and thought I’d condense them into a post on here. I firmly believe educating yourself on the different types of investing you can do is a great way to mentally prepare yourself for it in future. If you own a physical business, you might be unsure of the benefits of investing in commercial real estate versus leasing commercial real estate.

Here are the main benefits I’ve found about investing in commercial real estate:

1) Regular cash flow
If you choose to rent out your commercial property, then you’ll get regular cash flow. This is almost a passive income as there’s not much you have to do to maintain the property, meaning if you don’t show up to work you’d still get paid. My goal is to build up a number of different passive income streams over the next few years so that I don’t have to work. A monthly income from a rented commercial property would be a great way to boost that income.

2) Longer term client
Because commercial real estate tends to be rented to businesses, it’s likely that they’ll want to stay there longer than a person would rent a home or apartment for. This means less hassle, less time and money wasted on finding clients and hopefully less stress.

3) Lower your operating costs
If you own a business you might find it substantially cheaper in the long term to invest in commercial real estate to house your company rather than renting. Obviously this is something you’ll have to sit down and work out, but in the long run it’s often much cheaper to buy. You’ll also be able to get some pretty impressive tax benefits that will help you get rid of the mortgage quickly.

4) Asset appreciation
In time, it’s likely that your commercial property will increase in value, just like a traditional home. This will mean you’ll probably make money on your property if you ever want to sell it. Of course, this depends so much on the area the property is in and the condition of the property itself, but the general rule is if you make a good investment you can expect some asset appreciation over time.

There’s probably a bunch of other benefits I haven’t yet realised, but commercial real estate investment certainly seems appealing to me.

Have any of you invested in commercial real estate before? I’d love to hear what you invested in