 Commercial Real Estate |  |
I thought I'd take a quick moment to give a definition of Commercial Real Estate and go over a few of the key advantages of commercial real estate over other investments that are out there.
Basically in real estate there are two broad categories to invest in:
Residential and Non-Residential
Residential would include Single Family Homes and Multifamily Homes, or Apartments. The other bucket would be Non-Residential. When we talk about Commercial Real Estate on the site, generally we're going to be talking about anything that's Non-Residential. Examples would include Retail, Offices, or Warehouses. Simple enough, eh?
OK, so let's talk about the good stuff.... the advantages of Commercial Real Estate over other investment options out there like stocks, bonds, or commodity trading.
We could probably talk for days about this but I'll just cover what I consider some of the top benefits:
1. Cash Flow
Every month checks flow into your mailbox from your tenants. If you purchase using the methods we outline on MyPlatinumClub.com you're going to purchase a property that provides enough income stream to cover all of your expenses, your mortgage, and put money in your pocket every month.
2. Appreciation
Well-bought Real Estate will appreciate over time. But here's the cool part, you get the benefit of the appreciation of the entire property and not just what you've invested - more on that in a moment.
3. Control
OK, Maybe I'm some kind of control freak...but I can't stand when I buy stock and the CEO's and managers do dumb things. There's a local telecom company that, get this, just out of bankruptcy hire an out-of-state CEO to turn things around... and of course she needed a new private jet to get her to and from work every week... Can you believe that? Dumb dumb dumb... But as a stockholder all you can do is write letters and hope they don't do more dumb things. Unbelieveable to say the least.
4. Leverage
Try going into your bank and asking if you can buy THEIR OWN stock if they'll borrow you some money to do so... They'll laugh you right out of the bank! But ask them if you can buy a piece of real estate, and they'll welcome you with open arms. Real Estate is one of the few investments I can think of where you can use the power of leverage.
This really comes into play when we're talking about Appreciation. Because you get the appreciation of the entire investment and not just what you put down. For example, if you buy a $100,000 property with $10,000 down, you get the benefit of the appreciation on $100,000, not just your $10,000. That's REAL power in investing!
5. Depreciation
OK, this is one I know the broad brush stroke on - I'll be the first to admit it. But that's why I hire smart accountants! In a nutshell, you can take a deduction on your income taxes against that rental income called depreciation. In the government's eyes, the building you purchased will depreciate over time - in other words, you have to put money into it to keep it maintained in the form of repairs and capital improvements. The government needs investors like you and I to create housing for folks that can't or don't want a house. So one of the benefits they give us is the depreciation deduction on our taxes. Since taxes are our biggest expense - every little bit helps out!
So there you have it... The definition of Commercial Real Estate and my Top 5 reasons why it's better than any game out there.
If you want to see more - check out my video on Commercial Real Estate and it's advantages on the link at the bottom of this page.