If you’re an investor who has not yet invested in commercial real estate, it may be helpful to understand the benefits of further diversifying your real estate portfolio with this versatile class of assets that encompasses a wide variety of possibilities. At the core of passive commercial real estate investments is to earn money from money and not your time, based on the purpose of the property. Commercial real estate investors earn cash flow income from rentals to tenants, who make their income through conducting business on the premises. Commercial properties include apartment buildings, retail shopping centers, offices and warehouses, hospitals, hotels, resorts, and many other business enterprises; the sky is the limit for commercial property uses.
Whether you’re just getting started or a seasoned pro, the ultimate goal for investors like you is to earn the highest return on your investment dollar. But, at the same time, create an investment portfolio that provides a reliable passive monthly income stream with a healthy long-term outlook, and commercial real estate fits the bill. So read on as we explore five reasons you should invest in commercial real estate in Chicago.
While commercial property typically comes with a heftier price tag and higher rental rates than residential real estate investments and more risk, the payoff is higher returns, which is our first reason you should invest in commercial real estate in Chicago. Often, the use of a triple net lease in commercial real estate means that the tenant is responsible for the costs of all expenses for the unit, including property taxes, maintenance, and insurance. For you as the investor, triple net leases provide a reliable income; the payment doesn’t fluctuate month to month because of the elimination of expenses.
Global property consultant CBRE reports that inquiries for commercial properties in the US are rising, surpassing 2019 levels. Additionally, they note a decline in the average number of days a commercial property is listed. While demand is high for commercial properties, there tend to be fewer buyers with the funding to purchase commercial properties, equating to less competition in the buyer pool for these listings, yet another of the reasons you should invest in commercial real estate in Chicago.
Less Impact from Vacancy
Leases tend to be for longer terms with commercial real estate, ranging from five to ten years. In addition, tenants often recreate the space for their specific purposes and individual branding, further entrenching their investment in staying in the same commercial unit. Because there is less impact from vacancy, there are fewer expenses and time lost from the process of turnovers and marketing for new tenants. Higher occupancy rates are another reason you should invest in commercial real estate in Chicago.
Longer-term tenants are more invested in maintaining a peaceful environment. Typically, the issues between neighbors seen in residential settings are unheard of within the location of commercial properties. These tenants often make significant improvements to the building to suit their business purposes and take great care of the property because it’s the outer face they present to their paying customers. In addition, because the tenants are interested in keeping everything in top condition on the property, the value of your investment is protected. Typically more high-impact locations draw nationally based companies who’ve proven themselves successful, providing you with higher quality tenants, decreasing the odds of the business leaving the location before the end of the lease. When you add it all up, these tenants provide you with greater profits for less work, and this is another reason you should invest in commercial real estate in Chicago.
The potential for leverage and high appreciation are only a few reasons commercial real estate holds such high potential for investors. In addition, commercial real estate is adaptable; as trends moved from office-based workforces to home-based, savvy investors adapted the spaces to ever-expanding life sciences, medical retail, and technology-based tenants. Additionally, logistics, industrial, and warehousing centers have flourished. As a result, the potential that commercial real estate holds for investors continues to grow and is another reason you should invest in commercial real estate in Chicago. As your income grows from your investment and the value of the holdings in your portfolio increases over time, your growth potential is exponential with the right team backing your investment business, like the pros at Chicago Home Buyers.
If you have questions about getting started or ready to invest in commercial real estate in Chicago, the highly qualified professional investors at Chicago Home Buyers are happy to answer your questions with no obligation. Chicago Home Buyers with years of experience, our pros can help you find the perfect location for your commercial real estate investment. Don’t forget to ask about our current inventory of the best commercial properties available in Chicago. Contact Chicago Home Buyers at (312) 300-2043.