Published by Entrepreneur | October 1, 2024
Commercial real estate offers passive income, tax advantages and steady cash flow, making it a valuable investment option.
Real estate is one of the biggest industries in today’s world. From buying property as an investment to buying your own home, real estate impacts every person’s life in one way or another. Although it’s a beast of an industry, you do not necessarily have to work in real estate to invest in it. In fact, many people buy properties simply to make a passive income with no intention of making it their full-time job.
Here are some reasons why commercial real estate could be a great investment for you.
Passive income
By investing in a property, you are going to be able to make a passive income — a check you don’t have to actively work for. Depending on the property you buy, you can rent out the space to tenants and get paid each month that they occupy the building. In turn, the income can be recycled to pay for the property and its expenses or be used to invest in other properties without having to touch other funds. This is great because this is monthly income that you do not have to actively work for.
Tax advantages
By investing in real estate, there are many deductions and breaks that can actually help when it comes to paying your taxes. Also, any money you make on the sale of the property will be seen as capital gains and not an income, therefore lowering the amount of taxes you would have to pay on that money.
Cash flow
As you rent out the property and the tenants pay their rent, you will create a steady cash flow for yourself and increase your own income. As the mortgage gets paid, this will also help build your equity, which can help you invest in more properties and build up overall wealth.
Diversification
When investing money, it is always good to invest in different types of assets to ensure you have stable and reliable returns. Commercial real estate can diversify a portfolio — and in case of a market crash, properties remain unaffected, whereas stocks and bonds plummet. It’s also a tangible asset that you can touch and feel, unlike other forms of investments. Tangible assets can help minimize the total risk in investments and help you build a profitable portfolio.
