Investment in Commercial Property: Potential Advantages
Did you now that Investment in Commercial Property offers huge advantages & potential benefits to investors?
Real estate investment are specifically known to ensure highest income streams. Investment in Commercial Property or Residential property can be a vital opportunity to increase your portfolio as well as maximize the Return on Investment (ROIs).
From the year 2017 till date, several commercial projects have been launched. Each of them are built upon some particular theme while offers a net array of amenities & features. In the twin cities, Investors are allured to Invest in Commercial Properties. As Commercial property is a significant asset that is considered as a way of spreading, or diversifying, risk in your investment portfolio.
Before discussing the benefits in commercial Real Estate Investment, firstly, let’s have a look that what is Commercial Property?
What is Commercial Property?
Commercial Property has various distinct features that makes it polar different from Residential Property.
Definition: According to Investopedia.com, commercial property refers to real estate property that is used for business activities. Commercial property usually refers to buildings that house businesses, but it can also refer to land that intends to generate a profit, as well as larger residential rental properties.
Example: It may include offices, shops, warehouses, showrooms vice versa.
Purpose: Usually commercial properties are acquired for business or doubling investment on monthly or leasing basis.
Benefits of Commercial Property Investment
Investment in Commercial Property is the most rewarding investment. For many, the objective of investing in commercial real estate is for future wealth & security; others utilize it for tax benefits & investment portfolio diversification.
It is hallmark of commercial property investment. It offers huge Return On Investment (ROI). According to one research, it offers 6% to 12% ROI annually. On the other hand for residential property, it only brings 4% to 6% ROI.
As its said that ‘with greater risk comes greater rewards’. Thus, although you need large finances to invest in it. However, the large space guarantees more tenants & ultimately more cash flow.
As said earlier, commercial units are used for business activities only. Thus, it involves qualified & well-versed tenants. For instance, if you rent out your commercial unit to a corporation. The tenant will take effort to maintain the property in order to make his or her office appear better placed to carry out business activities.
However, in residential properties, tenants never spend a penny to take care of the property. Very few tenants actually gives respects to landlord’s property.
Longer Leasing Period
Leasing periods for commercial property is comparatively much longer than that of residential property. The leasing period usually ranges from 5 to 10 years. Thus, it offer positive cash flow specifically for investors who are worried about marketing their properties every year.