With commercial loan interest rates dipping below 4 % it's a good time to revisit the idea of investing in property for your business. The advantages are many and the timing is great. We are big fans of commercial real estate investment for a number of reasons, besides the obvious. Take a look at these points and be sure to contribute your perspective in the comments below.
Top investment choice
In a Bloomberg.com article earlier this year real estate was named the top alternative asset class to own in 2014. The article goes on to state that:
"U.S. commercial-property values rose 8 percent in the 12 months ended Jan. 31, and have jumped 71 percent since hitting their post-recession bottom in 2009" and that "investors see stocks getting expensive and interest rates staying stable or even declining over the next couple of years."
Own vs. lease comparison
When you compare the expense of owning property to leasing there are a few points to consider:
- Leases and rent can increase with each renewal term. Some leases now include a clause allowing periodic increases in cost based on indicators like the Consumer Price Index. Invest in your property with a fixed rate loan and your payments remain flat for the term of the loan.
- Appreciating land and property values are a great reason to consider investing now. Many areas in Maine are seeing a gradual upswing in property value positioning you to eventually sell it and realize a profit.
- If the property is big enough the option to lease out a portion of your space produces another steady stream of revenue in the near term. This extra space also provides room to expand your business as it grows in the longer term.
The topic of purchasing commercial real estate is deep and complex with many more points to consider than we have room for in this format. Let us help you explore your options for commercial real estate investment.