CRE-Lending LLC Explains The Pros And Cons Of Investing In Commercial Real Estate

Understanding the advantages and disadvantages of investing in commercial real estate.


Real estate has always remained a good investment opportunity, whether it is commercial or residential. Commercial properties include any space, which is used for business like warehouses or office building. Typically, it is believed that commercial properties offer more financial rewards but it can also pose more risks. To make the right investment decision, you must understand the advantages and disadvantages of investing in commercial real estate. The mortgage pros at CRE-Finance compiled the list of the pros and cons of investing in Commercial Real Estate.

Reasons You Should Invest In Commercial Real Estate

Constant Cash Flow
If you set up a proper lease with a tenant, your commercial real estate property can become a source of regular income. The area you plan to invest in will also have an impact on your cash flow stream. Generally, the better the area the higher you can earn from renting out your property.

Higher Appreciation of Asset Value
Appreciation in commercial real estate property has always remained on par or above when compared with other types of investment. You can improve the value of your property through proactive control and management. You can take measures to improve the usability and desirability of your commercial asset.

Control
As an investor of commercial real estate, you can have control over the kind of property you may want and where it will be located. For example, you may opt for retail, office, industrial, or multi-family commercial property. Some investors like to remain passive but your active involvement can bear you fruit in the long run.

Hedge against Inflation
Typically, commercial real estate properties give a strong hedge against inflation and that is how they're viewed. In the long term, commercial properties have also given investors excellent returns for outpacing inflation.

Reasons You Should Watch Out To Invest In Commercial Real Estate

It is Time Consuming

As compared to your residential investment property, commercial property may take up more of your time with management issues. You cannot remain absent and maximize your return on investment. Commercial properties have different kinds of ongoing stuff you have to deal with, like annual CAM adjustments, multiple leases and so on. You will need management to be taken care of at two levels, one is the day-to-day operations of the property, and the other is strategic marketing. Management of commercial real estate requires a lot of time and effort on your part, and if you decide to hire someone, it will cost you.

Larger Initial Investment
Commercial properties require large initial expenditures as compared to residential properties. The upfront cost and maintenance might cost you a lot more than you planned and so you should make sure that you weigh the pros and cons before stepping your foot in commercial real estate.

Difficult To Acquire
Building a meaningful, diversified commercial real estate portfolio may be hard to achieve. For many investors, to acquire property in various locations and across asset classes may be hard. It is, however, possible to purchase units in a private pool or public property as these are backed by a diverse portfolio.

If you have any questions regarding commercial real estate or are seeking financing, do not hesitate to contact Rich or Todd Tretsky at 855-515-5585 or visit us at www.cre-finance.com

Company Contact Information
CRE Finance
R. K. Rich
2 Industrial Way West, Suite 202A
Eatontown, NJ
07724
855-515-5585

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Original Source: CRE-Lending LLC Explains The Pros And Cons Of Investing In Commercial Real Estate