Income Producing Properties
Have you thought about diversifying your portfolio and investing in commercial real estate income producing properties?
Investing in real estate is a great way to build wealth. Commercial real estate investing, in particular, is known to provide some of the highest income streams. It can be very rewarding, both personally and financially. For many, the objective of investing in commercial real estate is for future wealth and security; others utilize it for tax benefits and investment portfolio diversification. Walgreens, McDonald’s, and Dollar General are just a few examples of income producing properties that you can purchase with long term leases in place.
Investing in commercial real estate can take advantage of the following benefits:
Higher Income: The hallmark benefit of investing in commercial real estate is a higher potential income. Generally speaking, commercial properties have a better return on investment, an average of six to twelve percent, while single-family properties achieve between one and four percent.
Cash Flow: Commercial real estate has one very distinct advantage: A relatively consistent stream of income due to longer lease periods. In addition, commercial properties often have more units than residential properties, which means you can achieve economies of scale and multiply your income streams much more quickly. Known in the industry as a triple net lease, many commercial tenants also pay the building’s real estate taxes, property insurance, and maintenance costs, thus increasing your owner benefits.
Less Competition: Another advantage associated with commercial real estate is relatively less competition. Because of the perceived difficulty of commercial investing, the commercial space tends to be less saturated with other investors.
Longer Leases: Perhaps one of the biggest perks of commercial real estate is the attractive leasing contracts. Commercial buildings generally have longer lease agreements with tenants compared to residential properties, which, as previously stated, offer investors impressive returns and significant monthly cash flow. In many cases, lease agreements for commercial properties are signed for multiple years.
Business Relationships: The world of commercial real estate offers investors the unique opportunity to participate in business-to-business relationships. This can lead to more professional, neighborly interactions with your tenants when compared to residential real estate. In some cases, you may even be able to build relationships with the business owners renting in your building. This can be great for expanding your network and getting involved in the community you are investing in.
Limited Operational Hours: One of the lesser-known perks of operating commercial real estate is that, for the most part, you share working hours with your tenants. While business hours can vary slightly, commercial property owners typically won’t find themselves answering around-the-clock maintenance requests or other tenants’ communications. Residential real estate, on the other hand, can demand an on-call staff member to deal with issues 24/7. Many commercial investors who choose to manage their own properties enjoy this benefit, as it helps allow for a sense of separation between property ownership and regular life.
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