When done effectively, investing in commercial real estate can become a highly lucrative business venture. However, many people view it as a rather risky prospect and therefore often opt out altogether. As with any investment, there is some risk involved. However, when it comes to commercial real estate, the reward often outweighs the risk. These three reasons to invest in commercial real estate explore the beneficial effect that such an investment can have on your life.
Steady stream of income
One of the most popular reasons to invest in commercial real estate is that it offers the investor a steady stream of income. This is particularly true for commercial real estate properties that can accommodate multiple tenants at once. Commercial real estate properties generally yield a higher annual return than residential real estate properties. This is due to the fact that commercial properties are generally leased at a higher rate than residential properties and are generally able to keep tenants for a longer period of time. This leads to fewer vacancies over time, allowing the investor to maintain a more reliable stream of income.
More professional tenant relationship
Not only do commercial properties yield a higher profit than residential properties, but they also foster a more professional relationship between tenant and landlord. The relationship between the tenant and landlord operates more as a business-to-business transaction, rather than a transaction between two individuals. Businesses are far more likely to conduct their operations with professionalism and respect, leading to far fewer risks overall. Additionally, tenants of a commercial property generally only operate within standard business hours. Landlords of such properties will not need to fix leaks or provide assistance to tenants in the middle of the night, as is sometimes common in residential properties. This allows the landlord to take a slightly more hands-off approach while still maintaining a good relationship with their tenant.
Less competition
There is far less competition in the commercial real estate market than in residential. With the prevalence of home rental apps and websites such as Zillow and Hotpads, more and more people are entering the residential real estate market. The commercial real estate market is not quite so competitive, however, and it is far easier to take the edge on competitors in this real estate market. Because there is less competition it is also easier to turn a higher profit and find more lucrative offerings.
For more information on commercial real estate in Orlando and the surrounding areas, contact our team at Demetree Real Estate Services today. Our team will provide you with advantageous market insight that will allow you to make the most of your investment.