Commercial Real Estate: Five Things To Consider

Investing is vital for financial freedom. For small business owners, commercial real estate offers some unique benefits beyond stocks and bonds and mutual funds. Deciding whether to take the leap into commercial real estate is not a simple one and should be approached with due diligence and learning about the local market in your area. But the benefits can take your business and your portfolio to the next level.

If the thought of commercial property ownership has been floating through your mind, here are five things to consider:

Stability: Commercial property ownership can provide a steady stream of income for investors. Renting to other businesses can cover your cost of office or warehouse space, and incoming rent provides stability independent of your other revenue streams. This can carry a small business through tough times and provide a buffer to downturns in your primary business.

Tax Benefits: The interest on your commercial loan is tax deductible. This can offset the taxes your business owes at the end of the year. Depreciations on the property are tax deductible. If the commercial property investment is a retirement asset, the Capital Gains tax may be lower than the tax rates on other retirement assets.

Diversity: Commercial real estate typically does not experience the same volatility as stocks and bonds. Investing in commercial property can provide protection when the stock market is unpredictable.

A Hedge Against Inflation: A report by TIAA Cref showed that commercial investors fare better during times of inflation. Historically commercial investing returns out-paced inflation over a five year holding period.

Succession: Some business owners use commercial property as a succession plan, giving your company a guaranteed asset at the end of it’s life.

Big investments can bring big rewards, but it’s always necessary to do your homework and weigh all the factors.

At KKS Audit Financial Services, we partner with businesses to help guide them through the world of business finance. We have helped many clients feel more secure in their financial goals, systems and processes, and stand with you as we move through this journey towards better financial habits. Contact us today if you feel ready to take the first step toward true financial freedom.