Investing in Commercial Real Estate

Finding the right property, on the right terms, can be crucial to the success of any business or non-profit organization. Choosing to lease or purchase appropriate space is one of the most important decisions leaders must make. In light of the current stock market volatility and low interest rates, many independent investors are re-examining the attractiveness of commercial real estate as an important consideration in their investment portfolio.

Whether you’re an owner-occupant or looking for an investment, there are many benefits to owning commercial real estate.

Financial benefits include:

  1. Equity buildup. You increase your equity with every mortgage payment made on underlying debt. Lease payments, on the other hand, go to build your landlord’s equity.
  2. Appreciation. When you own offices or retail space, the value of your investment tends to grow over time. While there is no guarantee of appreciation, commercial real estate experts use an appreciation factor of 4 percent per year as a general guide.
  3. Leverage. With a down payment of 20 or 30 percent, you can control a much larger asset. As the asset increases in value, your equity increases at an exponential rate.
  4. Control over costs. Owning your space protects you from rent increases from landlords who, after all, own buildings as an investment.
  5. Tax advantages. Interest payments on your loan are tax-deductible. In addition, you can write off the expense of repairs and depreciate the cost of buildings and improvements over 39 years.
  6. Subletting. If you have excess space, you may be able to lease out a portion of the building.

Non-monetary benefits of owning your business space include:

  1. You can build a space uniquely suited to your organization that reflects your values and tastes.
  2. You can make any changes you want to the property, and any improvements remain your property.
  3. You choose your hours of operation, level of security and building maintenance crews.
  4. You are free to stay in the same location as long as you wish.

With more than a decade of experience in commercial real estate development, ConTrak has guided dozens of building owners and investors through the process of developing topquality commercial real estate. Call us to discuss your project today!

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