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Commercial Real Estate as an Investment

Commercial Real Estate as an Investment

Home Is Where Is the Heart Is, But Is it Where the Investment Is?

By Graham Sadler, Cora Bett Thomas Realty

The term real estate naturally leads one to think of buying and selling homes or even renting out residential property. While there are many advantages to residential investments, commercial properties have even more financial gain.

The term commercial property refers to buildings such as: retail space, offices, warehouses, industrial buildings, land, and even multi-family housing (such as duplexes or apartment buildings). That ranges from a luxury hotel buildings, to your favorite coffee shop.

Owning real estate, in general, can increase your long-term wealth, but why add specifically commercial to your investment portfolio? There are several benefits: higher incomes, less competition, longer leases, professional relationships, and, of course, tax advantages.  

Advantages Commercial Real Estate as an Investment

Let’s start with the most distinct advantage: financial reward. Commercial real estate gives you a better return on your investment. It will allow you to avoid stock market volatility and bring in steadier returns.

The commercial field is also less competitive because it seems unattainable. Investing in a shopping center or a warehouse is a major endeavor and a big expense, thus many assume it is out of their purchasing power. The solution: competitive loan programs. This option is available for nearly all investors, and taking out a loan can be an even greater advantage due to the long term gain and relatively low interest rates.

Vacancy, maintenance, and management issues are a lot less common when it comes to commercial properties than residential. Commercial tenants have a vested interest in keeping up their space, because if they don’t, it could have a negative impact on their personal business. However when it comes to tenants renting out a home, the only thing at stake is the loss of a security deposit.

Commercial properties typically have much longer leases (some tenants sign on for multiple years) and most have more than one tenant, which means you benefit from consistent cash flow and multiple streams of income.

There are also tax advantages. With commercial real estate you can write off loan interest, property depreciation, and expenses related to operation of the building. The tax benefits differ from investor to investor.

As for me, I want investments that are close to home, and thankfully Savannah has a strong economy. The growth in our area has been steady, very few highs and lows in comparison to other markets, which means real estate values will appreciate. Thanks to tourism and industry, there’s also commercial investment money being brought in from outside of Savannah. And truly, there’s no place like home to start investing.

So if you’re looking to take the first step, think bigger than renting out a single family home. Diversify your investment portfolio to include commercial real estate, your potential for financial reward is that much greater and the hassle is that much smaller.

Graham Sadler, a commercial real estate market leader with over 18 years’ experience in the industry, is an Associate Broker at Cora Bett Thomas Commercial. He can be reached at 912-398-0932 or gsadler@cbtcommercial.com.

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