Asher Zamir: Pros and Cons of Commercial Real Estate Investment

New York City NY

06 December, 2021

5:48 AM

Description

Almost any property could be a worthwhile investment, if you know how to manage it properly. You also need to know the unique risks of investing in commercial properties (and the unique benefits). Here, Asher Zamir, Founder, Chairman and Chief Executive Officer of the privately held New York City-based real estate private equity firm Zamir Equities, explains some advantages and disadvantages of investing in commercial properties that you should know before you jump into the market. Pros: Higher Income One of the biggest advantages of business investment? You can charge a higher rent. Commercial properties have some key advantages over residential apartment buildings. They are more centrally located, tend to be larger, and generally have more extensive resources and services than an apartment complex provides. Because of this, you can charge a much higher rent in commercial buildings than in residential apartments. In addition, because your tenants are businesses, they won't blink at the higher rental rate. In addition, commercial leases tend to be longer, whereas residential leases generally last between six and twelve months, commercial leases can last between three and ten years. Cons: Greater Economic Vulnerability When you invest in residential property, you are investing in a property that people will need no matter what. After all, people need to keep a roof over their heads! Commercial real estate doesn't work that way. Its tenants are businesses, and if the economy plummets, those businesses may downsize or close their doors entirely. When this happens, you must find a tenant quickly or risk losing money on your investment. In a struggling economy, most businesses are not looking to relocate. Pros: Appreciation Of course, if you calculate the buying and selling of your commercial property, you can make a decent profit with appreciation. Typically, when you rent commercial property, you do so to cover operating costs - maintenance, insurance, utilities, taxes, and the like. You may make a small profit, but the actual returns come from the value of the property itself. A smart investor who buys a commercial property when it is relatively cheap, keeps it for eight to ten years, and sells it during an economic rebound that can generate millions of profits. Of course, this technique only works if he knows how to read economic signals (and if the economy continues to perform in a healthy way). A recession can cause the value of your property to plummet, even if you recover some of the lost value when the recession ends. Ready to Invest in US Commercial Real Estate? Knowing all that, do you think you are ready to invest in real estate? If so, the Zamir Equities team is here to help. We help make investing in real estate uncomplicated so your money can work for you as you continue to live life to the fullest. Whatever options you are looking for, we can connect you with great US real estate options with better returns. Since inception, Zamir Equities has executed more than $1 billion in commercial real estate transactions and managed over 6 million square feet in commercial and residential properties mostly along the east coast.