January 8, 2020
When you’re ready to diversify and strengthen your portfolio, consider the benefits of investing in commercial real estate. From added financial reliability to having a strong potential for increasing value, commercial real estate offers many benefits.
The biggest difference between residential and commercial real estate is the amount of variables that effect the valuation.
How Commercial Real Estate Investment is Different
There are several ways to look at a commercial property with regard to potential investment value. Most retail, office, and industrial buildings also have a considerable amount of square footage available. As such, they can accommodate multiple companies within a space.
Because commercial buildings typically have multiple tenants, the cash flow will likely be greater and more reliable than residential investments. Business leases are usually longer than residential leases, too, anywhere from 5-20 years.
Even though it’s relatively easy to invest in commercial real estate, you should understand what makes a successful investment strategy. Additionally, you will need to have the equity necessary to invest. At the very least, having the right experience to recognize the potential of a property and its value as an asset is key. While all real estate is local, scaling from residential to commercial investing ups the stakes, as well as, the potential returns.
Here are three reasons why you should consider commercial real estate investment.
Financial Safety and Reliability
Investing in commercial real estate (CRE) is a solid investment in a safe asset class. As an alternative investment vehicle, it provides regular cash flow through tenant payments that can ultimately reduce your loan principal balance.
As a cash-on-cash opportunity, your initial investment is basically in a vacuum, protected by the physical asset itself. While many factors go into CRE, if you invest wisely, you’ll have greater long-term protection from market volatility than if you invest in bonds, stocks, bank accounts and related vehicles.
Strong Potential for Creating Increased Value
Like flipping residential properties, CRE can be an effective tool for growing your portfolio if sound real estate investments are purchased.
Strategies like increasing rent to market value can boost your cash flow, and capital investments can improve your asset value.
For example, stocks and mutual funds offer an increase in value over time, but that increase is likely to be small. However, investing in CRE can deliver stronger growth because you can leverage variables like capital improvements and leasing.
Achieving Financial Independence
Real estate investors seeking increased cash flow and protection of their principal choose CRE instead of more volatile investments like the stock market. CRE enables investors to grow their cash flow consistently through informed decision-making and careful planning toward a clear investment objective.
How Bay Mountain Capital Can Help
As highly experienced commercial real estate lenders with a proven record of success that includes more than $100 million in commercial loans originated, Bay Mountain Capital is in a position to support commercial real estate investors seeking land, retail, hospitality, multi-family and industrial opportunities.
Bay Mountain Capital’s move into commercial real estate meets a need for private lending for investors who require alternative financing. Call Bay Mountain Capital today to discuss how commercial real estate investments can help you meet your goals.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.