Four Essential Benefits of Commercial Real Estate…

cre-1.jpg

Investing in commercial real estate may seem like a daunting task… But it’s one of the most rewarding…

Over the last 10 years – in fact -- stocks returned a 6.17% average annual gain, as compared to about 300% on my portfolio of commercial properties over almost ten years of proud ownership.

That works out to around 30% gain per year, far outpacing most other investments.

To achieve a return such as that, we need to make sure at least four important benefits can be realized from the initial investment.

The first is appreciation…

All investors want to make sure their property grows in value. For example, it’s part of the reason why foreign investors have been flocking to New York City, betting the property is worth far more in the future than their current purchase price.

It’s also part of the reason why the city is likely to see $70 billion in property sales by the end of this year – an all-time historic year for the city’s commercial real estate market. That’s a 12.5% increase over 2007 with the $2 billion acquisition of Waldorf Astoria leading the way.

The second is cash flow…

One of the biggest advantages of owning commercial real estate is that tenants pay you rent. You pull monthly cash flow from the investment. For office space -- for example – the average rent is $29.62 per square foot, according to The Wall Street Journal.

The third benefit is leverage…

As I noted in my book, “If you can finance 50 percent of the purchase price of a commercial property, you own substantially more real estate for fifty cents on the dollar. You use other people’s money to achieve appreciation and cash flow.”

If you leverage well, and properly you stand to become wealthy.

Over-leverage, and you stand to lose just about everything. Be smart with your investment dollars.

And, finally, there’s depreciation…

Taxes are one of life’s two certainties…

But it doesn’t have to be a painful ordeal…

It’s not unusual for investors to leave thousands – if not millions -- of tax dollars on the table every year.

Without a good CPA, they’re overlooking simple deductions or paying far too much in taxes… But here’s something to know up front.

With real estate, you can depreciate a commercial property’s value over a 39-year period and deduct in from taxes the same way you deduct expenses.