A big investment risk may yield a big return, and a minimal risk may offer lower returns but more security. This is why savvy New Jersey investors include some of both in their portfolios and why more investors are looking to commercial real estate for that steady, reliable return. Those who are considering adding CRE to their investment strategies may start by learning more about its many benefits.
Over a 20-year period, the average commercial real estate investment may return 9.5%, which is more than that of the S&P 500. This is because the rent from a high occupancy property may bring a steady income that the owner can adjust for inflation. These returns are not linked to the performance of other markets, so poor performance of stocks or bonds typically does not affect the return on commercial property.
As long as property owners use debt moderately, they can leverage their investment dollars while building equity. It is relatively easy for an investor to gain a return on a real estate investment while putting rent payments toward the mortgage debt. Property in certain areas of New Jersey will appreciate with time, and skilled investors can find ways to minimize tax ramifications in ways they cannot do with other types of investments.
These benefits may entice investors to diversify their portfolios by pouring money into commercial real estate. However, it should also be noted that the process of purchasing real estate can be complicated and requires a keen understanding of real estate law. With so much at stake, it is wise for an investor to seek the guidance of a skilled and experienced attorney to improve the chances of a successful real estate transaction.
