Many commercial real estate investors still consider the business to be something of a mystery, even though there is potential for earning a great deal of money at it. This article will attempt to de-mystify the commercial real estate business to some extent, making it more understandable for the average person.
The strategy behind commercial real estate investment
The basic strategy behind commercial real estate investment is actually fairly simple. There is always going to be demand for real estate in any specific location of the country, and any investor who purchases a property can make money on it in one of two ways. First, the buyer might earn money by leasing the property and charging tenants rental fees in exchange for using the property. A second way to earn money on a commercial real estate investment is to just allow the property’s value to appreciate over time, and in most cases after just a few years, the property value will have increased significantly.
Differences between commercial real estate investments and other investments
There are a couple important differences between investing in commercial real estate and making any other types of investments. For example, commercial real estate is considered to be a scarce resource, relative to something like stocks and bonds for instance. Real estate also holds its own value as a hard asset, as opposed to stocks or bonds, which are generally purchased for their resale potential, instead of their potential as an income source.
It’s also true that commercial real estate investments will generally provide a very stable cash income source, especially when they’re used as a rental income. By contrast, stocks are intrinsically very unstable in nature, and their value can fluctuate dramatically over time. Whereas the value of stocks is influenced by literally hundreds of factors, the value of real estate over a period of time is generally only influenced by the growth of the economy.
Commercial real estate investing with Goldendale Capital
Do you need financing in order to arrange that next big commercial real estate transaction? If so, we may be able to provide the financial assistance you require. Contact us at Goldendale Capital, so our financial experts can consider with you some options which may be available.