Benefits of Owning Commercial Property over Residential
Investing in real estate can be a lucrative and rewarding experience for investors. However, there are different types of real estate investments that should be considered, including commercial real estate (CRE) and residential real estate (RRE). While both types of real estate investments have their benefits, investing in CRE can be more advantageous for several reasons.
1. Higher Income Potential
Investing in CRE typically offers higher income potential than investing in RRE, due to commercial properties typically generating more rental income than residential properties. Additionally, commercial properties often have longer lease terms than residential properties, which can result in more stable and predictable cash flows for investors.
Investing in CRE provides diversification benefits that RRE investing does not. Commercial properties can include a variety of asset classes, such as office buildings, shopping centers, industrial parks, and warehouses. This diversification can help investors spread their risk across different industries, locations, and tenant types.
3. Longer Lease Terms
As mentioned earlier, commercial properties typically have longer lease terms than residential properties. This means that CRE investors can enjoy a more stable and predictable income stream over the long term. Additionally, longer lease terms can reduce the risk of vacancy and turnover, which can be costly for investors.
4. Professional Management
Commercial properties usually require professional management, which can be an advantage for investors who do not have the time or expertise to manage properties themselves. Professional management can help ensure that properties are well-maintained, tenants are satisfied, and cash flows are maximized. Additionally, professional management can help investors stay up-to-date on industry trends, regulations, and best practices.
5. Access to Institutional-Grade Properties
Investing in CRE can give investors access to institutional-grade properties that may be out of reach for individual investors. Institutional-grade properties are usually larger and more expensive than properties that individual investors cannot afford to purchase on their own. By investing in CRE through a real estate investment trust (REIT) or private equity fund, investors can gain exposure to these types of properties and benefit from their potential appreciation and income.
In conclusion, investing in CRE can offer several advantages over investing in RRE. CRE investments generally offer higher income potential, diversification benefits, longer lease terms, professional management, and access to institutional-grade properties. However, like any investment, CRE investments also come with risks, such as market fluctuations, tenant turnover, and unexpected expenses. It is important for investors to carefully evaluate the risks and benefits of CRE investments before making any investment decisions. Contact us today to learn more about your CRE investment options.
Among the myriad of data points available, there’s two that stand out as key indicators of profitability: Internal Rate of Return (IRR) and Cash-on-Cash Return.
In the world of alternative investments, few sectors have garnered as much respect for their stability and long-term appreciation potential as commercial real estate.
A real estate private equity firm that owns and operates high quality multi-tenant office assets in emerging secondary markets.
Interested in learning more about Excelsior's investment opportunities?
104 Woodmont Blvd, Suite 120
Nashville, TN 37205
Disclaimer: Under no circumstances should any information presented on this website be construed as an offer to sell, or solicitation of an offer to purchase any securities or other investments. This website does not contain the information that an investor should consider or evaluate to make a potential investment. Other materials related to investments in entities managed by Excelsior Capital are not available to the general public.