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7 benefits of investing in commercial property

On Behalf of | Nov 26, 2019 | Commercial Real Estate |

We discussed six tips for how to invest in commercial property in a previous blog. Now we will take a different angle on the concept by explaining why a commercial property can be a smart investment. Some may look at real estate as a brick and mortar concept in a digital world, which means they have forgotten how lucrative and reliable commercial property can be.

Why it makes sense

The value, desirability and opportunity will vary by properties and neighborhoods, but the real estate market here in Boston is one of the most competitive and expensive in the country. Nevertheless, there are still opportunities that sharp-eyed investors can spot. Seven reasons to do this are:

  1. Diversification: Those with an investment portfolio heavy on stocks or bonds like the diversity, because property values are rarely tied to the state of the stock market.
  2. Good for cash flow: Investors often appreciate the cash from rents, mainly when other parts of the portfolio are non-income generating assets.
  3. Inflation is good: While inflation can negatively affect some assets, real estate values go up because of inflation and provide less exposure to risk.
  4. It’s a hard asset: There is a certain allure to looking at cryptocurrency, but at the end of the day, the property is a tangible asset.
  5. Holds its value: Regardless of what happens with the economy, the Boston real estate market will hold steady – there is a finite amount of space.
  6. Unemployment is low: This means that people need places to work and live.
  7. Tax breaks: Owners are often in a position to claim deductions based on the depreciation of property, interest expense and other deductible items.

Building a good team

Whether experienced or new to commercial property investing, investors are wise to assemble a reliable team that includes trustworthy partners, dependable management and contractors, and smart realtors who understand the market. Simply put: good people will keep stress levels down. Attorneys also can provide several services, including drafting contracts for rental agreements and transactions, as well as protecting clients if there is a dispute.