There are many great options for investing your money today. The stock market is at record highs and looks to be heading even higher. Bonds have been steady and always guarantee a low to no risk consistent return. Gold appears to be moving up also, although at a much slower pace than it did at the start of the decade. All of these investment areas can and have been bringing investors good to decent returns lately.
But over time, the best established way of getting high returns on your investment has been through investing in commercial real estate. And the smart way to get involved in commercial real estate investing is by working with reputable companies the Welfont Group who provide investors with opportunities to purchase interests in commercial real estate in hot US markets.
Why is commercial real estate such a good investment? Here are some of the reasons:
Proven Stable and Gradually Increasing Income
Perhaps the best part about real estate investing is that it is a proven income producer. If you invest in the stock of a new company, there will be no dividends paid and you must hope that the share prices continues to climb or you will not make any money. Commercial real estate has come to be defined by its ability to pay out regular cash distributions. These payments continue through bad economic conditions and don’t rely on the sale of the asset for income.
Commercial real estate has a history of increasing in price and value over time. One reason why is that rents increase with inflation, and commercial real estate’s value is built upon those rents. If the rents double, then the value of the property may double as well. Inflation also drives up the cost to build new properties, so the values of existing real estate will go up to match those new values.
Real estate in general and commercial real estate in particular is purchased with only a percentage of the purchase price paid. There may be a down payment of twenty or thirty percent paid initially that allows the owner to own and control the property. The remaining balance is paid via a long term mortgage. Rates for commercial mortgages remain near their historic lows allowing commercial real estate owners to purchase larger properties and therefore gain an ability to leverage more for their purchasing dollar. Also as property values rise, the owners can take loans against the equity in those properties and purchase additional commercial real estate.
Owning commercial real estate gives you the benefit of having a concrete and tangible asset as opposed to a stock. When you buy shares in a company there is always the chance that company will be here today and gone tomorrow. Real estate is an asset that investors can literally touch and feel. Some of your occupants may leave, and there may be ups and downs in building valuations over the course of its life, but the property itself will be there continuously.
Commercial real estate is built around supplying a basic need. Whether it is office space, plant space, or even an apartment building, it is simple and straight forward and built on a perpetual and proven need. Many other investment involve complex profit models that rely on other complex and delicate models for their success. As a result when some small unforeseeable factor comes into play, the investment can turn bad. Hedge funds are a great example; during the good times they can return great investment, but when unforeseen and uncontrollable factors emerge, their returns dry up quickly. There are investors in these complex investments who are upside down and have no idea how to get their investment back.
With this list of amazing benefits it is easy to see why so many pick commercial real estate as their primary investment choice.