1.) Equity Growth- Equity growth is one of the most important benefits of commercial real estate investing. Revenue secured by leases generates a regular income stream that allows you to pay the mortgage down and have continued profits as rents are increased. Depending on the investment, tenants can be responsible for all operating expenses as well. Over time, holding on to a commercial property with leases in place will allow an investor to slowly increase equity through debt payments while also being able cover costs associated with running the property.
2.) Cash-Flow through Ownership- When I mention “Cash-Flow” I am referring to the profit an investor is making between the time of purchase and time of sale. Generating a positive and sustainable cash flow is critical in the success of an investment. In commercial real estate, one of the luxury’s of being an owner is the money you can make on a monthly basis after covering the expenses. This profit can be used for whatever the owner chooses, but in many cases is saved for potential capital improvements down the road like roof repairs or new HVAC units. It’s a great advantage to be able to take those profits and put them back into the property in order to improve it and keep from having to go elsewhere in order to cover those capital costs.
3. Professional Relationships- Business owners take pride in their businesses and what they stand for. Owners of commercial properties are generally not individuals, but LLC’s, and operate their property or properties as a business. With that being said, the Landlord and the Tenant have a business-to-business relationship, keeping interactions professional and courteous. The Landlord and Tenant also have a vested interest in the property, which is very helpful for the owner because having that aligned interest allows the Landlord to maintain and improve the quality of the property and thus the value of the investment.