The stock market is flying high right now and the average investor is either enjoying great returns or kicking himself for not getting in earlier. The volatility of the stock market is famous. If you get in on the right stocks you can make unmatchable returns, but guess wrong and you can lose it all quickly.
With all of the euphoria of the current stock market, however, over time they always average out to a good but not great return unless you are lucky or brilliant at picking winners. The truth is that it has created many more casualties than millionaires.
Investment experts like Houston based Al Hartman will tell you that the investment that has paid the best over time continues to be commercial real estate. There are some great reasons why this has been the case. And why it is a winning proposition. Here are the main reasons for you to consider when looking for a great investment;
Unlike stocks, bonds, and other securities, real estate is a tangible asset that you can see and touch. Securities live in an intangible world where their value is held up by confidence in their worth and by forces that move in ways that sometimes defy logic. Real estate is easy to understand and have its value verified independently. As a result, you never have to guess about what you own or have faith that you own it.
The costs associated with real estate investment are easy to determine and if you work with experienced builders and operators and use quality materials in your buildings, you can project out what costs will be within tolerances. The only wildcard is a natural disaster that can destroy your building and even there, you can buy insurance.
In terms of the returns on your investment, if you build in an area with good demand and price your property competitively, you should not have a problem getting long-term tenants. They will be happy to sign long-term lease contracts. As a result, you know in advance what revenue you will collect from your property.
You Can Leverage Your Property
Commercial real estate is purchased for only a percentage of its value initially using a down payment. This amount will usually vary between twenty and thirty percent of the total value of the property. So you get to control the entire property and collect revenue from it while only paying this percentage initially and then monthly payments for the term of the loan you secure. In other words, you get to leverage the entire property for a portion of the price. As the value of the property increases, as an owner, you can take out can take loans against the equity in the property that can be used for a number of purposes including buying more commercial real estate.
The benefits of buying commercial real estate demonstrate why it continues to be one of the most popular investments around. If you have an interest be sure to research the properties you want to buy or build. Make sure they are in locations that lease well and that the market will continue to rise for the foreseeable future.