The 3 Myths of Commercial Property Investing
If you are looking for an investment, commercial property investing can provide consistent, lucrative returns. It isn’t just a great way to build up your portfolio of passive income or prepare for retirement; many people have actually amassed great wealth primarily through commercial property investing. There are countless stories of successful investors who used commercial real estate to build their wealth. That being said, there are several myths that scare investors off: the upfront capital investment, the time investment, and the fear that hiring a management company will cut into their profits.
Myth #1: Commercial Property Investing Takes Too Much Upfront Capital
While most physical asset investments require upfront expenditures, commercial property investing rises above many other investments because of the available financing. Between traditional bank lending and private money, there are many options that can enable you to buy a substantial, income-producing investment with little money down. If you are purchasing a $10 million commercial office, for example, a bank may lend you $7-8 million with the remainder left to private and owner financing. The lending options as well as interest rates and investment types will vary from investor to investor, but it is important to know your options before dismissing what could be one of your best investments.
Note: Each investor needs to be aware of his or her individual financial situation. Keep your personal leverage in mind as you use commercial property investment as a part of a diversified portfolio.
Myth #2: Commercial Property Investing is a Full-Time Job
When you are a commercial property manager, it is a full-time job. Whether it is dealing with calls about a broken A/C or issues with the landscaper, it takes a ton of time to keep all tenants happy. This is especially true if you own multiple properties, because problems seem to arise simultaneously.
Luckily for you, commercial property investing does not require the management of the property. You are the investor, not the property manager. The use of commercial real estate management companies allow you to reap all the benefits of the investing without the hassle. No longer do investors have to deal with phone calls and firefight issue after issue.
Myth #3: Hiring a Management Company for My Investment Cuts Into Profits
The use of these companies lead to the third commercial property investing myth: hiring third-party management takes away your profits. Fortunately for you, this is a myth. Most investors choose to increase rent by a small fraction to cover the costs. You are happy because you save hours a week, and the tenant is happy because they work with a professional company that has been doing this for many years. Not only that, but you save money in other places, such as in construction and landscaping contractor agreements because these management companies have relationships with them.
Still not sure if investing in commercial real estate is right for you? Want more information on how a commercial property management and brokerage company can help you? Give Blackwolf Commercial a call, and see how you can profit from commercial property investing.