Insights
Investing in commercial real estate can be a great way to build wealth over time. But what are the benefits? Let’s take a look at a few.
One of the key benefits of commercial real estate is that it tends to have relatively steady pricing, making it a stable investment compared to other types of assets like stocks and bonds.
Commercial real estate can also provide inflation protection, as the rent that tenants pay typically increases over time, helping to keep pace with rising prices.
Another advantage of commercial real estate is the potential for capital gain. When a commercial property is bought at a low price and then sold at a higher price later on, the difference represents a capital gain for the investor. This can be especially beneficial for investors who are looking for long-term investments that can help them build wealth over time.
It’s no surprise that commercial real estate is a favorite among the wealthiest 1%, like Kevin O’Leary. Mr. Wonderful actually keeps 40% of his net worth in Real Estate – “because it never goes to zero”.
Wealthy individuals and investment funds often have the resources to purchase and manage large commercial properties, which can generate significant income and appreciation over time. Commercial real estate can also provide diversification benefits as it’s not correlated with the stock market, which can help to reduce the overall portfolio risk.
That being said, investing in commercial real estate does have its challenges. It typically requires a significant amount of capital, and it can be difficult for retail investors to find and purchase properties that are a good fit for their investment goals and risk tolerance.
Managing commercial properties can also be pretty complex and time-consuming, making it challenging for individual investors to handle on their own.
In conclusion, commercial real estate can be a great investment for those who have the resources and expertise to purchase and manage properties effectively. It offers steady pricing, inflation protection, and capital gain potential, which can help investors build wealth over time.
But it’s not for everyone, and it’s important to do your due diligence and understand the risks involved before investing.
