Benefits of Investing in Commercial Real Estate
March 15, 2022
Investors are looking for opportunities that will maximize return, work to protect them from risk, and deliver results in both the short and long term. One asset class that can accomplish all of these needs is commercial real estate. Investing in commercial real estate has been one of the safest and most lucrative investments over the past decade and is showing no signs of slowing.
In this article, we break down the specific benefits of including commercial real estate investing as a segment of your overall investment strategy and share how you can confidently capitalize on these opportunities now.
What are the Major Benefits of Investing in Commercial Real Estate?
Commercial Real Estate investing can put your overall portfolio into a position of strength that you currently aren’t benefiting from. With this being such a powerful inclusion into your investment mix we wanted to break down the most significant benefits of investing in commercial real estate assets.
Low Price Volatility
Achieving maximum return through an investment vehicle that generates the lowest price volatility within the market can be achieved using private investments in commercial real estate. Historically this asset appreciates slowly but steadily over time. This stability provides security within your portfolio when compared to publicly traded securities that fluctuate wildly based on market sentiment, reports, or news.
Stable Deal Structures
Commercial real estate investments are structured in a way that puts the investor first by aligning the incentives of both the investor and the fund manager. Other types of investment structures are built to always benefit the fund regardless of performance. In many cases commercial real estate investment deals are structured so that the firm must achieve specific milestones and benchmarks to partake in their share of the profits.
One thing that cannot be denied is the tangible ownership of a commercial real estate asset. More volatile assets that have no physical form can shift in value wildly and in some cases lose all of their value during a single day of trading. Investments in CRE are real and hold a value that in most cases is steady and stable allowing you to be confident that your investment is protected.
One of the biggest tax benefits of physical assets is the ability to depreciate that investment. The fact that depreciation can be applied and expensed year after year provides you with a way to lower your overall tax obligation. In addition, you can in the event of a sale use a vehicle known as a “1031 Exchange” to defer taxes on any gain you receive from the sale of the real estate.
Utilizing this strategy could insulate you as an investor from ever having to pay these taxes, thus increasing your overall return.
Finding the Right Investment Strategy
Every investor wants to ensure that they are choosing the right strategy for their investment goals. Luckily commercial real estate investing is one of the most highly recommended components of an overall portfolio. So the bigger question is why invest in commercial real estate with a firm like CRE Income Fund?
CRE is one of the country’s top private equity investment firms focused on commercial real estate. Our focus is on investing in world-class, mid-market, multi-tenant assets that provide long-term risk-adjusted returns for investors. The preferences of every investor vary, which highlights how critical it is to work with a firm that can share how its strategy may align with those preferences and goals.
Commercial real estate generates flexibility for investors that allows for a match to many of these investing types and tolerances.
Whether you’re just getting started or searching for ways to diversify your portfolio, we’re here to help. If you’d like to learn more about our middle-market commercial real estate investment opportunities, contact us today.