Exploring the Rewards of Commercial Real Estate Investment
by Brad Broyles
Commercial real estate investing can be very rewarding, both financially and personally. For many business owners and entrepreneurs, the objective of investing in commercial real estate is for wealth and security, which can be grown into a portfolio and passed down to future generations. Commercial real estate also offers an abundance of tax benefits for investors and increased diversity on their investments.
Commercial real estate investment offers the following advantages:
Higher Potential Income: The biggest reward of investing in commercial real estate is higher potential income. Typically, commercial properties have a better return on investment, which could average from five to twelve percent, while single-family home properties struggle between one and four percent annually.
Longer Leases: The hallmark of commercial real estate is the attractive length of leasing contracts. Residential properties are typically set for one year, while commercial leasing contracts are set for three up to twenty years. These leases offer impressive returns and considerable monthly cash flow to investors.
Cash Flow: Commercial investing has one very clear advantage: a relatively consistent stream of income. Remember, the tenants are business professionals and need the property for company operations. Therefore, rental payments are steady and thus deemed a reliable monthly income. Some commercial properties consist of more that 1 unit, resulting in multiple streams of income.
Tenants Pay Property Expenses: In most leases, tenants will also pay operating expenses on a commercial property. This is commonly known in the industry as triple net (NNN) lease. Triple net leases generally state that the lessee must pay the building’s real estate taxes, property insurance and maintenance costs, in addition to monthly rent.
Lower Vacancy Risk: Another perk, is that commercial real estate provides lower vacancy risk with leases spread over several units or properties. Typically, vacancy rates range between ten to fifteen percent and can be leased within two to four months.
Building significant wealth through commercial real estate investing requires planning, patience, and persistence. It may take time, but the right property investment it will generate genuine wealth and security that can carry on for generations.
Brad Broyles is a real estate professional with over 11 years of experience in real estate investments, management, development, leasing and sales.
Since joining COBE Real Estate in March 2013, Brad has participated and closed over $50 million of commercial real estate transactions. Prior to joining COBE Real Estate, he spent 4 years as a Vice President of Commercial Banking which he was responsible for managing and selling a $30 million commercial portfolio. Brad also specialized in business start-ups, SBA lending, cash flow capital and special asset management. His unique business and real estate background allows him to be the best representative to any business owners who are wanting to expand or relocate their company.
Brad has a Masters of Real Estate Development from Arizona State University and a Bachelors degree in Accounting and Finance from the University of Phoenix. He is a member of the Arizona Small Business Association and is active with the Mesa Chamber of Commerce.
Cell: (480) 797-5266