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The Two Major Aspects of Commercial Real Estate Investing – Why and When to Invest

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When most people discuss real estate investment, they are primarily discussing single family residential investments while almost completely ignoring commercial real estate investments.  Commercial property investment accounts for a huge percentage of the industry and represents huge profit potentials for those who know what they are doing.  Residential investment can be profitable, don’t get me wrong, but it is time intensive and does not offer the same flexibility that commercial real estate does.

Reality TV and endless stories about the quick money made in flipping houses has brought residential property investment to the forefront of the public’s attention.  But if you’re ready to avoid the amateur masses and make the leap to the “pros” then you need to step up to the plate and join the ranks of commercial real estate investors.

Commercial property is so broad that it encompasses a wide range of property types and increases your portfolio’s diversity.  Office, retail, industrial, multifamily and mixed-use properties are all categories of commercial investment.  Properties like retirement homes, hotels, motels and even storage facilities are also considered commercial real estate.  Thus, you can see how the possibilities are virtually endless when it comes to what kind of property you can own in the commercial investment industry.  Given the nature of many of these kinds of properties, commercial real estate investors are able to spread their risk around through many tenants.

Commercial property investors also make out better than residential ones because of how commercial property is valued.  Unlike residential where comparable sales are used to determine your house’s worth commercial real estate is valued at the income it provides.  The monthly net cash flow determines how much your property is worth.  Thus, all you have to do is increase income or decrease costs and you will automatically increase your property’s value.

Investing in property in general is a great way to make a living.  If you buy right and set up a good system you can sit back check the mail for your checks.  Specifically, though commercial property investment offers many advantages over residential.

Now that you know why it is important and good for you to invest in commercial real estate, its time that you read on and know when to invest.

Commercial real estate investors have the opportunity to weather the storm of economic woes quite nicely. The economic storm that seemed to catch the globe by surprise over the past few years is still lingering like a cold, dark cloud that won’t go away. Whereas this economic storm has added stress to various sectors of our society it has actually created a great atmosphere for commercial real estate investors. The economic situation has created certain conditions that play in the favor of investors. Let’s explore some of those conditions that are bearing the fruit of opportunity for so many.

First of all, the bad economy has led to a decline in commercial property values. The prices are low and the opportunities to invest are numerous. Of course, any time you are investing in real estate, you are subject to certain risks, but it is all part of the process. Eventually the price of buildings will shoot up again. It is going to happen… the question is just when. Therefore, those commercial property investors who have the cash in hand to pursue investments today will have a better opportunity of reaping the rewards tomorrow when the market recovers.

The second condition that provides opportunity for commercial investors is the falling currency. The decline in the value of the currency is not positive for everyone, but it can benefit the people who already hold property. The reason for this is simple. When the currency takes a plunge, it opens the door for foreign currency to purchase extra services and goods, including real estate. This enhances the opportunities for investors looking for financial avenues towards investment.

The third condition that favors the commercial real estate investor is the knowledge that inflation will eventually rise. Rising inflation helps because the supplies it takes to build commercial property will be a lot higher a decade from now. Therefore, it is better to buy that commercial real estate today and the value will rise with the inflation.

Commercial real estate investors are in the prime position to weather the economic storm and come out smelling like a rose after fresh morning dew. Interest rates are stable right now but that won’t continue to be the case forever. As inflation rises, so will interest rates. This economic storm has the potential to be a ray of sunshine for investors ready to buy property, but the time to act is now because eventually this storm will pass taking with it the opportunities that exist under this conditional umbrella.

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