Commercial Real Estate Investment can be hazardous to your financial health, especially if you're unaware of certain process aspects. Before signing o
Commercial Real Estate Investment can be hazardous to your financial health, especially if you’re unaware of certain process aspects. Before signing on with any business or broker, you must understand what you’re getting yourself into. One of the hardest parts about commercial real estate is countering the myths. For instance, many believe there’s only one way to make money in this business – buy and sell rental properties, then keep the profits. That’s not true. There are various ways to make money in commercial real estate, such as owning, managing, or investing in a building (or building) entirely on your own or through multiple partners.
Benefits That You Can Avila Via Commercial Real Estate Investment
- An Investment Options That Is Good For You
Commercial real estate investment can benefit you because of the financial rewards you can reap. For example, when you own and manage a commercial building on your own, there are two possible types of cash flow that you can receive:
- Exit Cash Flow – When you sell the property for more than what it’s worth or at least make a profit, this is known as exit cash flow.
- Growth Capital (or Income) – You can receive rental revenue when the property is occupied, or if you obtain a tenant with a long-term lease (typically 10 years or more), then you receive the Income from that tenant.
2. Incentives That You Can Avila Via Commercial Real Estate Investment
There are many benefits to owning and investing in commercial real estate, including the number of financial opportunities available to you:
- Interest on your investment – Many investors with commercial real estate earn high-interest Income, up to 15 percent on their capital.
- Capital gains – When you sell your property for more than you paid, this is called a capital gain. Some people like to take the maximum allowable deduction when they sell their properties, which lowers the amount of their gain.
- Tax deductions – If you have a tax professional, they can help you create a set of financial incentives to help with your bookkeeping. These financial incentives include capital credits, depreciation, and other expenses that save you money when you own commercial real estate.
- Saving on taxes – This is known as depreciation when you hold down the property’s maintenance costs. That helps to lower the amount of taxes that are owed on the property’s Income earned.
- Tax credits – Various tax credits can be earned from owning or Commercial Real Estate Investment. Some of these tax credits include the SITC (Statistical Improvement Trust) credit (for vacant commercial properties), the MI Tax Credit for investment in buildings, and the EITC (Earned Income Tax Credit), which you can claim if you’re employed.
You must be aware that there are financial dangers involved with commercial real estate investment. Past performance is not an indicator of future performance, and what you view as a good investment can be a disaster. As such, before committing to real estate investment, you must do your due diligence and learn as much as possible about the process.