You want to start building a nest egg that will give you a decent income when you retire. There are several options to invest your money – stocks, bonds, securities or real estate.
When it comes to wise investing, Paul Daneshrad, CEO of Starpoint Properties, LLC in Los Angeles, says there are many advantages to putting your money behind commercial real estate investment. It offers asymmetrical returns, where the potential gain is greater than the risk, he said.
Here are the main rewards that come with commercial real estate investing:
1. It’s Easy
Getting into commercial real estate is relatively easy. You don’t need to be a rocket scientist. You don’t even need a college degree. All you need is the interest and drive to learn more about what it takes to be successful.
2. There Are Many Opportunities
There are a variety of opportunities in commercial properties to invest in. You can spend your money on mini-malls and office buildings or apartment buildings and duplexes. The choice is yours.
3. You Don’t Need A Lot of Capital
You can use other people’s money to finance your investments. This is called leverage, and it allows you to borrow money from a lender to purchase an investment property. The amount you borrow is usually at an interest rate that is less than the return on the property.
4. You’ll Rake in the Returns
The returns can be significant. Commercial real estate investments usually bring in about 8-10 percent annual return. It’s also a much less volatile, less fluctuating investment than the stock market and securities.
5. It Appreciates
Commercial real estate investments appreciate over time. So the longer you hang onto the property, the more money you will put in the bank. Rental properties such as apartments and office buildings generate consistent income over the long-term.
6. Tax Benefits
There are tax benefits for commercial real estate investments. Depreciation of your property can reduce your taxes. You can deduct expenses related to the property. You can also defer paying taxes on the sale of the property through a 1031 Exchange, which allows you to avoid paying capital gains taxes when you sell an investment property so you can reinvest in similar properties.
The biggest plus of all with commercial real estate investment is that it helps you build wealth as the equity grows over time. So you can retire relaxing on the beach while your assets continue to bring in income.
Interesting related article: “What is an investment?”