5 Reasons Why You Should Still Invest in Commercial Real Estate in 2022 and Beyond
After two years of a pandemic, it might seem like a mistake to invest your hard-earned money in a commercial property. People have been spending most of their time working remotely, which makes a physical office space obsolete. Furthermore, traditional working spaces have become more expensive.
While it may seem like most business owners will continue renting or do away with office space entirely, business owners and entrepreneurs know that commercial properties have potential advantages.
Continue reading to find out why you should invest in commercial real estate in 2022.
Consistent income
It’s impossible for businesses to continue working completely remotely. While remote working has served entrepreneurs well during the pandemic, and employees now know that working remotely is a great perk, recent studies show that working from home full-time doesn’t work for most employees.
Instead, most employees prefer a mix of home and office work. Therefore, commercial properties are still in high demand. As a commercial property owner, you can charge businesses anywhere between $1,000 and $2,000 per month, depending on the property’s location. Plus, finding tenants won’t be difficult, which means that you’ll have a stream of income.
Opportunity to become a landlord
Most commercial properties are owned by large property developers, and only a small portion is owned by average investors and small businesses. However, purchasing commercial property is a great investment. You can eve use your property as your office and avoid the uncertainties of rental rates hiking or non-renewals.
You’ll have fewer responsibilities
As a commercial landlord, you’ll have certain responsibilities to your tenants and the public. However, it can sometimes be confusing to know who is responsible for what, especially when it comes to insurance, safety requirements, and legal health.
Still, what you’re expected to do isn’t as intense as residential property owners. For instance, your tenants will mostly occupy your premises between 9 am and 5 pm. Therefore, you’ll rarely receive repair requests from tenants after business hours.
Fortunately, you can leave all the day-to-day management to a trustworthy commercial property management company. Your manager will typically oversee building maintenance, rent collection, finding and screening tenants, handling legal and regulatory matters, managing vendor relationships, managing and reporting property finances, and supervising building employees.
The help of a commercial property manager will make a difference in the success of your investment portfolio.
Increasing rents
Cash flow is a key driver in asset capital growth. Therefore, as rent increases, so does the capital value of your property. Now that people have exited the long-term lockdowns, businesses are expected to reopen, and this will cause an increase in rents.
In addition, there is a potential for high inflation in the coming years. Note that most leases are directly affected by inflationary-based rental increases, and this means rent rates will increase much faster than over the last decade.
Post-COVID boom
There are signs of economic life now that COVID-19 lockdowns have been lifted. Most households and businesses saved money during the pandemic and are ready to spend in their first post lockdown summer. This means there could be a boom similar to that of the ‘20s. Therefore, as more businesses reopen, you can expect to see a higher demand for commercial property.
Summing Up
Although residential real estate has always been considered a good long-term investment, investing in commercial real estate in 2022 can bring in some serious cash flow. Commercial properties can bring passive income and bring your investment portfolio to a whole new level. Plus, investing in commercial real estate has tax advantages and leverage.
