People who invest in traditional stocks and bonds often seek alternative investment options that are not influenced as much by market factors. With its consolidating appreciation and potential to generate stable returns even in times of economic turmoil, commercial real estate property offers the security and stability that investors look for. In addition, it also provides certain features and benefits that other investment assets do not have. This article will present five advantages investors can gain from owning commercial real estate property.
Cash Flow and Stable Income
Whether it’s an apartment complex, office space, shopping mall, or hotel establishment, a commercial property is never short of tenants. This gives it a potential to generate stable income in the form of monthly rent payments that can be more than the average yields on dividend stocks and bonds. For investors, having a stable income from owning a commercial real estate provides security against market volatility and access to spendable cash that can be used for other investments.
One of the major benefits of owning a commercial real estate property is the multiple tax breaks it brings. For instance, the interest payable on the Houston hotel financing loan for purchasing the property is deductible. This means that the interest payments that tallies over the course of the year from the loan can be deducted from the owner’s tax returns. Commercial properties such as hotels and restaurants depreciate over time, and need renovation and upgrade from time to time. The depreciation of the property can help to offset the owner’s tax liability as a compensation for expenses used on renovation and improvements. In addition to these, there are multiple other tax benefits enjoyed by a commercial real estate owner.
Commercial real estate has always been considered an inflation hedge as it is a physical asset and possesses an intrinsic value. For investors concerned about their portfolios affected by inflation, owning commercial real estate provides them a safe solution. Historically, the asset class has always performed well against inflation, and this is because there is always a demand for commercial spaces regardless of economic conditions. As inflation rises, so does the value of property and rent.
Another major benefit of owning commercial real estate property for an investor is that the property can be leveraged to find more investment opportunities. This can be done by placing debt on the property which can considerably increase the purchasing power of each value of equity, which further increases the total potential profit of the property.
Favorable Financing Rates
The most significant factor when purchasing any real estate property is the loan interest rate. Currently, interest rates for commercial real estate are at an all-time low, providing investors valuable opportunities to make investments on the asset class while saving sizable amounts as they pay off the loan. In addition there are plenty of financing options available for investors who have maintained excellent credit score and financial management.
Commercial real estate as an asset class provides multiple advantages that other investment assets do not offer. Besides being safe from market volatility and inflation, it has a potential to generate stable income and provide tax benefits.
If you’re interested in investing in a commercial real estate such as a hotel establishment, and looking for Houston hotel financing options, Proactive Lending Group offers a number of creative solutions for hotel financing. To learn more about their offers and services, visit their website.