The Benefits of Purchasing Commercial Real Estate

Buying commercial real estate is usually opted for by investors since the value of property often appreciates well over time. Further, there is a ready market. For these and more other beneficial reasons, more and more people are investing in commercial real estate spaces. Here are a few of the advantages of buying commercial real estate.

Equity Upside

The advantage of making monthly loan payments for a debt you acquired to buy commercial real estate, is that it helps in building your equity. This is because a fraction of the amount you pay goes into paying for your principal loan amount. When you happen to refinance or sell your property eventually, you can obtain the difference between the prevailing market valuation of your property and the remaining debt amount as equity for your business.

Asset Appreciation

Asset appreciation is considered one of the most appealing advantages that drive investors into buying property. It represents the increased value of property over time. When you eventually happen to put your property up for sale, you are likely to earn capital returns equal to the difference in the prevailing market value and your initial purchase price.

Rental Potential

Businesses that purchase pieces of real estate usually occupy a little over 51% of the entire commercial space. They may opt to rent out the remaining space to tenants, such as retailers and restaurants. They are, therefore, able to earn extra income from the rent paid. If managing the rented spaces proves to be arduous, they can always opt to leave it in the care of property management companies.

Tax Benefits

Investors that choose to purchase real estate enjoy not having to pay interest expenses, non-mortgage related expenses, and depreciation expenses when making tax payments. In order to calculate the dollar tax savings made, multiply these expenses with the average corporate tax rate of 35%. It is worth noting that closing charges and origination fees that are mortgage-related expenses cannot be deducted due to taxation reasons.

Control Over Your Property

Buying commercial property simply gives you control and authority over it. You also have the peace of mind that lease property owners lack when their landlords negotiate yearly rental increases. You only have to deal with making fixed monthly loan repayments, which is completely separate from the commercial rental market.

By purchasing real estate property, you are likely to enjoy tax benefits, asset appreciation, develop equity and have control over your property. You should, therefore, put this into consideration when investing in commercial real estate.

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