Why invest in commercial property: Tamara Wrigley
Real estate has been my blast for over 25 years and while initially just building and investing in residential real estate, I started dab my toes in the commercial sector about 15 years ago. Why?
There are many more professionals out there when it comes to commercial real estate like longer term leases, strong returns, tax breaks, and tenants pay for the expenses related to that property ie tax rates, water, maintenance and property tax.
It depends on what you want to achieve when investing in commercial or residential real estate. Some investors seek diversity, while others seek positive cash flow.
I am concerned with the return and the ROI (return on investment); To me, anything that is 8 percent or more is worth my attention.
As I mentioned above, there are plenty of pros when it comes to commercial real estate, such as strong returns that represent a combination of capital gains and income.
Stability of income as your tenants have three or five year leases, as opposed to residential leases, which are traditionally six or twelve month leases.
Investing in real estate can be extremely rewarding. I prefer to invest in real estate rather than other types of investments.
We live in a country with high taxes and as a company I am looking for companies with significant tax advantages.
Commercial offers just that with generous perks and significant write-downs.
Unfortunately there is a Con column with good pros and cons mappings.
When you take the plunge into investing in advertising, do so with longevity insight.
Buying advertising is like giving birth to a child; You have to take care of it and take care of it for many, many years.
One of the downsides to advertising is that in some economic climates it can take months and years to sell or lease, unlike our home friend who could be snapped up within days or weeks of being listed.
Knowledge is power in any industry and unfortunately there is very little information or resources available for people interested in commercial real estate.
A finance broker – you are essential to finding the best financing option for any purchase.
This is where you need a good team that will lead you in the right direction.
My team consists of:
A lawyer – they not only recognize the numbers, but above all help in understanding rental agreements or legal problems.
An accountant – they help with the numbers, the appropriate purchasing unit and tax planning.
A financial advisor – they help me set my financial goals, guide me, and focus on those goals.
A finance broker – they are essential to finding the best financing option for any purchase. I never go directly to a banking institution as this limits your financial options.
Educate yourself and keep asking lots of questions.
So are you ready to buy your first commercial property? Here are my tips for building wealth through commercial real estate.
1. Due Diligence – I said before, knowledge is power and understanding the commercial market will be key to your success.
2. Buy in a Good Location – Look at high growth areas with good exposure and potential value. Also check the accessibility of public transport and parking spaces.
3. Buying a Rental Property – In this current climate, many businesses have suffered from the COVID blues. To mitigate your loss, consider buying a property that already has a tenant and has a long-term lease.
4. Buying with Potential – Believe it or not, there is a lot of underdeveloped properties out there, so look for undercapitalized properties. Older buildings may not use all of the land, which means you can expand. Also, check the zoning of the land, as doing so may increase the possibilities of that area.
5. Pay it off – Paying off the debt on the building should be included in your financial strategy. The faster you pay it off, the more money in your pocket and more equity if you want to buy more in the future.
Investing in real estate can be extremely rewarding. I prefer to invest in real estate rather than other types of investments. For me property is king and made right; You can retire and live on the rental returns for the rest of your life. It’s a bit like the spray that you put on your exterior tiles. Sit and forget.
This is commercial to me, set it up and then you can forget about it (to some extent) and enjoy the rewards of living a positive cash flow life.
Commercial offers generous benefits and substantial value adjustments.
The following advice is of a general nature only and serves as a general guide.
The advice should not be viewed as legal, financial, or real estate advice. You should make your own inquiries and seek independent professional advice tailored to your specific circumstances before making any legal, financial, or real estate decisions.
Tamara Wrigley is a media commentator, award-winning businesswoman, and real estate mogul who bought her first property at the age of 21. follow her Instagram page and Hepburn and Corder Renovations Page.
Originally posted as Why Invest in Commercial Real Estate: Tamara Wrigley