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How Investing in Commercial Real Estate Can Help Your Portfolio

How Investing in Commercial Real Estate Can Help Your Portfolio

If you are now in search of a new investment avenue or if you want to diversify your portfolio a bit, CRE, or commercial real estate, is an excellent investment opportunity.

Many people assume that investing in commercial real estate is something reserved for investors with substantial portfolios. However, property investing doesn’t need to be reserved for the very wealthy, even though research shows that most wealthy investors commit about 15% of their portfolio to real estate. If you are now in search of a new investment avenue or if you want to diversify your portfolio a bit, CRE, or commercial real estate, is an excellent investment opportunity, and one that you should consider adding to your portfolio in 2019.

Diversification

If diversification is your goal, commercial real estate is an excellent choice because it traditionally behaves very differently than other asset classes like stocks or bonds. This is because commercial real estate usually displays a low correlation to the stock market. So even when the global market is fluctuating, it doesn’t necessarily impact your CRE investments. There is also diversification potential within CRE, as there are different types of properties, and different factors drive demand for them. For instance, a good job market drives the need for office space, while a period of family growth fuels the need for increased living space like apartments.

Investment Win-Win

The major thing that makes CRE different and positive addition to your portfolio is that it has the added potential of cash flow through rental. Unlike some other investments, your CRE can be rented to a tenant, resulting in income now while the investment also retains the value of the potential sale in the future.

Less Volatility

Because of the nature of commercial real estate, this asset tends to be less volatile. There are two significant reasons for this. Since CRE is not directly tied to the market, and not publicly traded, its value is protected from the daily impact of the news cycle. This helps the investment maintain a smoother valuation over time. Second, CRE is often leased to long-term tenants, with 3-5 year leases being common and some being even longer, which removes much of the stress of finding or keeping tenants or of having unrented space.

Tax Benefits

Commercial real estate is one of a handful of investments that have associated tax incentives. The IRS allows for the deduction of some of the property’s depreciated value if your investments are structured correctly. This means that the deductions you receive could potentially offset the costs of maintenance and upkeep you have to put out.

Trust the Professionals at Clagett Enterprises for Your Realty Needs

If you’re looking for the perfect realtor for your property or a professional to assist you during your purchase of any home, you can rely on Clagett Enterprises. Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistance with selling your home and getting the best possible price, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook, Twitter, Pinterest, and Google+.

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