Making a decision to invest in commercial properties is a huge decision for any investor but even more so for those who are new to investing. There are pros and cons that apply to this.
The Pros of Investing in Commercial Property
Any time that a person or company is going to invest, they need to know what potentially is in it for them. So what are the advantages of investing in commercial properties?
- ROI: there can be a strong return on investment when it comes to the commercial property by way of capital gains as well as the income that can be generated from this.
- Stability: Overall it is shown that in most cases commercial tenants are far more stable compared to residential tenants.
- Lower Risk: Every investment comes with a certain amount of risk, but commercial property tends to be lower compared to other types of properties.
- Options: Within the commercial property offerings there are more options. Buyers can decide if they want to invest in retail or office, for example.
- Potential tax benefits: There may be better tax benefits when it comes to commercial investments.
The Negative Aspects
If would be foolish for any investor not to consider what the negative aspects are that can come with commercial property investment. These can include:
- Less information: There may not be as much comparison information available to the commercial investor as there is for those who are going to invest in residential property.
- Less Liquidity: In many cases, it is much easier to sell a residential property compared to the commercial property because of there being more potential buyers in the residential sector.
Keep in mind though that there are some additional options for being able to scale up the value of the commercial property. This is beneficial from a renting standpoint as well as for when one wants to sell the property.