Investing in real estate is a choice. On the residential side, it’s a choice when you decide to finally stop renting and buy your first home. On the commercial side it’s a choice when you decide to purchase retail space for your business instead of continuing to rent. While these are only a couple of scenarios, you get the gist. People aren’t forced into real estate investing; they do so because they see it makes financial sense.
While sometimes risky, investing in real estate can be a very lucrative investment that pays off over the near and long-term. If you are looking into purchasing a real estate investment and are trying to decide between residential or commercial we are here to help. In this post we explore the benefits of investing in commercial real estate.
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Benefits of Commercial Real Estate Investment
Length of Lease
One thing commercial leases have that residential leases don’t is long lease terms. The longer the length of a lease the longer a regular income stream is generated. Typical residential leases are for one year, while commercial leases can be for lengths as little as 5 years up to 20+ years. We don’t know about you, but we would rather find one good tenant and lock them in for as long as we can. With commercial real estate assets you can do that, saving yourself time while increasing your returns.
We don’t mean the amount of time spent managing your assets, we mean the actual time you manage them. Most commercial real estate assets are connected to businesses, which means one thing…business hours. When owning commercial properties most issues you deal with, excluding emergency situations, will be handled Monday through Friday 7 am to 7 pm as opposed to residential properties where you know your tenant will be blowing up your phone at 1 am if their roof springs a leak. Which do you prefer?
While it’s no secret purchasing commercial real estate requires a larger initial investment, the returns on that investment aren’t always as well known. Depending on the market, commercial properties can see annual returns between 6% and 12%, versus single-family that sees 1% to 4%. From increasing rental rates to additional charges like CAM (common area maintenance) to NNN leases where the tenant pays for most everything, commercial properties yield greater returns at a faster speed than residential investments. Don’t let us forget to tell you that commercial properties appreciate at a higher rate than any other investment type.
You’ve Decided What, Here’s How
Now that you know what type of investment you want to make, the challenge becomes finding it. Good news, we can help with that. While we are experts finding commercial real estate in Baton Rouge and surrounding areas, we are a part of a nationwide network of CRE brokers located across every market in the U.S. Not only can we find you that perfect commercial investment down the street, we can find you one across the country. Contact us today and start your search here.
About Us – The team at SVN | Graham, Langlois & Legendre has over 99-years of combined experience helping clients across the Baton Rouge market get the most value out of their CRE investment. Contact one of our dedicated CRE professionals today with any questions you may have and start seeing the returns in a market that will make sure to give today, tomorrow and for the extended future. To reach us, you can call us at 225.367.1515 or you can send us a message on our website. You can also follow us on Twitter at @svngll or on Facebook.