Is Buying Commercial Real Estate the Right Move for you?
We are all on the lookout for ways to make our money work harder for us these days. If you are fed up with the low interest rates given by banks and the risks associated with the stock market then maybe you are tempted by the idea of buying commercial real estate? If you are then here are some of the points you might like to consider.
The Purpose of the Investment
There are a few different reasons why you might want to buy a commercial property. For a start, if you plan to run a business out of it then buying a property outright is going to be a lot more profitable for you than leasing one for a long time. Paying the rental amount every single month is something which is going to eat into your business profits. Of course, leasing also means that at the end of years of paying for a premises you will have nothing to show for it.
Even if you aren’t going to work from it, though, it can still make sense to buy a slice of commercial real estate and let it out to someone else. This is similar to buying a residential property to let out, in that your original investment grows over time as the property rises in value. Meanwhile, you can be cashing in with the rental money every month for it as well, making it something which starts to earn you money right away.
The Length of the Investment
Another issue which you need to think about before making any sort of investment is how long you want to hold onto it for. Property investments of all types tend to perform better when they are viewed as something which you are going to hold onto for a relatively long period of time. However, it has to be said that commercial real estate values can rise sharply enough at times to make a short period of investment something worth doing. As with every property you buy, it all comes down to buying and selling at the right time. Ideally, you will have enough financial freedom to not have to worry about having to sell it other than when the time is perfect for you. Selling any sort of property under pressure usually means not achieving the best possible price for it, and that is something you will definitely want to avoid if you want to make as much from your investment as you can.
There is no doubt that buying commercial real estate is a great idea in a lot of situations. If you are going to need commercial premises to work from then buying one is definitely the smart approach, which is going to save you a lot of money. If you are just looking to make a good investment with your money then it could be right for you as long as you find the right deal. At the moment in the UK, commercial property prices are starting to rise again, with July 2013 marking a third consecutive (modest) increase. There is a feeling among some analysts that prices are still very much on the low side and that further growth is due. Like any other type of property investment, markets can rise and they can fall. This means that investing in property is something which is best done when you are looking for a long term way of growing your cash, rather than a quick profit. Having said that, if you can lease it out in the meantime then this is going to make sure that your profit isn’t entirely dependent upon the price you sell for.