The Advantages of Owning Commercial Real Estate
Introduction
There are many reasons why owning commercial real estate vs. leasing commercial space can be advantageous. Obviously, pride of ownership is the most intangible advantage and one that is almost impossible to place value on. Many professionals become business owners because of the control they get to achieve over their career and daily life. So it makes sense that owning commercial space is something a business owner would take great pride and pleasure in! But it is also important not to overlook the financial advantages owning property can give you. Here are a few of these advantages:
Equity
A very important factor in commercial real estate (CRE) investing is that the owner can place debt on the asset that can be worth several times the original equity of the commercial asset. This means that as a business owner you gain the ability to purchase more assets with less capital expenditure.
Appreciation
CRE investments provide excellent appreciation, especially compared to other investments. They can also provide an additional income stream stemming from rentable units.
Inflation Protection
As the economy continues to print more money to spark economic growth it is essential to consider the benefits that owning commercial real estate can offer as away to hedge against inflation. When inflation occurs, the value of multi-tenant commercial assets tend to rise with it.
Security Advantage
A CRE investment is considered a hard asset that will always have some level of intrinsic value based on the owned land and building structure. So there is security in knowing that your commercial asset can produce income and will hold value in the long term.
Tax Benefits
Mortgage interest and depreciation deductions can shield a large portion of your income stream, that would otherwise have been lost to tax payouts. A reputable accountant can fully outline the tax advantages specific to your commercial ownership situation.
As we have outlined, there are many benefits to owning commercial real estate, from pride of ownership to varied tax advantages. To realize the full scope of advantages purchasing commercial space can offer you, make sure to engage an agent who specializes in investment properties and owner/occupied real estate transactions. Contact Transworld Commercial Real Estate to engage a licensed commercial real estate agent.
Phil Kubat is the Principal & Managing Broker of Transworld Commercial Real Estate, a Colorado commercial real estate firm. Transworld Commercial Real Estate will serve as a strategic partner to clients for commercial real estate acquisitions and dispositions. Phil’s services include real estate advisory, site selection, strategic planning, incentive negotiations, development consulting, and financial analysis. In his spare time Phil enjoys hiking, skiing, golfing, and living life to the fullest!
