Why invest in commercial real estate - Posted by john

Posted by Bill Taylor on May 09, 2006 at 21:55:47:

John with those cap rates you are pretty much on target but get out of the area with those kind of cap rates and find better ones. In my case the reason to invest in commercial real estate is if you have a lot of equity in other property you can trade that equity without a large tax hit by doing a 1031 exchange. We have been converting those equities to good sound commercial real estate. You can’t just buy anything out ther and call it sound real estate but there is some out there. We have a proeprty manager overseeing our properties and he does a very fine job so I don;t have to. We are also looking to continue with tax shelter so we don’t have to count all the income as earned. I am only 51 so if we turn all of our equities into cash and pay tax there may not be enough left in the event that I last another 30 years, I think the commercial will provide that for us. These are just my reasons and I hope there are others with more ideas that I can use.

Why invest in commercial real estate - Posted by john

Posted by john on May 09, 2006 at 17:27:25:

I see a lot of “real” cap rates in the marketplace around 5-6% . As an investor I can buy a CD and get those same rates, so why would I consider commercial real estate as an investment in today’s market.

Re: Why invest in commercial real estate - Posted by John

Posted by John on May 21, 2006 at 07:58:50:

Should point out that a CD is a static investment with limited potential for a set time. Real estate is an asset that can be altered- better tenants, better management, higher rents over time, change of use, rehabed to a higher quality or for additional tenants, change the zoning and neighborhood, take advantage of favorable tax considerations etc.? The other thing is that you can put your own stamp on your properties.

I must admit, however, that I do evaluate inital cash flows against CD rates. Been looking for more development deals and different kinds of properties in different areas to get my standard of 15% cash on cash return.

Re: Why invest in commercial real estate - Posted by Prashant

Posted by Prashant on May 13, 2006 at 17:37:26:

You can leverage your money with real estate. For example if you have 1M, you could buy a property worth 4M. Of course, you need to find better cap rates. If you are motivated you can find properties which have an upside potential. My two pence.

Re: Why invest in commercial real estate - Posted by Chris Gates

Posted by Chris Gates on May 12, 2006 at 04:07:47:

Why Invest in commercial real estate? For the same reasons you would invest in anything. But to answer your question simply, the three main reasons for investing in real estate are Cash Flow, Net Worth (Increasing assets always increases net worth) and/or Tax Shelter (you should definately talk to your accountant when making a real estate investment.