4 Reasons Why You Need to Invest in Commercial Real Estate Today
Rick Dimidjian President & Broker of Record
Camryn Ruby Director of Marketing & Business Development
6 July 2022
Investing in commercial real estate depends not only on your urgency, but most importantly, the current market conditions! Don’t miss out on the money you can make if you invest now. There are four huge reasons why the summer of 2022, is the perfect time to make your move. Commercial real estate investors always have had the opportunity to make very high profits, but currently, they have an even higher potential. Let’s dive into the four main reasons why you need to invest in commercial real estate today.
Rising Interest Rates
Everyone is talking about it, yes, interest rates are skyrocketing. Interest rates are rising to counteract the inflation in the United States. But what does that mean for a commercial real estate investor?
Commercial real estate, like other tangible assets, tends to appreciate in value proportionate to inflation. The longer you wait to invest in commercial real estate, the worse your return on investment will be. Real estate has a long history as an inflation hedge, based on the principle that income generated by buildings tends to keep pace with consumer prices. The money you have saved right now is worth less tomorrow than it is today. This means commercial real estate investors are heavily affected by inflation. Investors’ costs for supplies are rising steadily.
Cost Segregation Study
As a commercial real estate investor, oftentimes the taxes are your biggest expenses. Thankfully, there is a legitimate strategy to manipulate that expense on your property. To break down cost segregation, you must understand what you can and cannot write off. You are not able to write off the land, however, you can write off the building. Because of the Job Act, you are now allowed to write off 100% of the building and its segregated contents in the first year. The main reason behind write-offs is to maximize your income deductions. Commercial real estate investors should do cost segregation because it will decrease their tax burden. Most importantly though, this complete write-off in cost segregation is only allowed through the end of 2022. This opportunity for investors will be phased out after 2022, so you need to take advantage of it now. If you do not take advantage of this huge tax reduction, you will leave tens of thousands to hundreds of thousands behind.
Skyrocketing Rental Rates
Another common buzz topic in the commercial real estate market is the rising rental rates and property values. Lucky for the commercial real estate investor, this is
actually a great reason to buy property right now. Now when you are looking for a property to buy, you should look for value-add opportunities in the property. An example of value-add opportunities would be bumping up the rent in an apartment building over time. Not only does it bring in extra income over the years, but it increases the property value. An increased property value will force your property to appreciate. When you purchase a property that has potential for property appreciation you can take advantage of the rising rental rates which are happening right now in our country.
Increasing Demand for Housing/Apartments
There are multiple reasons why there is currently an increase in demand for housing/apartments in the United States. First, home builders simply can not keep up. The supply of materials is stagnant while the demand for supplies is increasing. The economy is nowhere near meeting the needs for its demand, and most likely for years to come. Next, many young and middle-aged individuals do not have the money for down payments and savings to buy a house because the home prices are astronomically high. This means those individuals will be kept as renters because they are unable to afford a home. Rising interest rates will also qualify fewer people to get a home loan. So again, renters are not really going anywhere anytime soon. A commercial real estate investor needs to take this opportunity to capitalize on the current rental situation by purchasing apartments or rentals.
Our country’s current economy is the perfect storm for a commercial real estate investor to buy a property now in 2022. The investor can take advantage of the rising interest rates, cost segregation strategy, skyrocketing rental rates, and increased demand for housing/apartments. Nobody truly knows when the inflation, interest rates, and demand will decrease but chances are probably not for many years. A great investor knows when their time is right to buy, and based on our four reasons the probability for a profitable property is now.
Aegis Realty Partners Property Management services manages thousands of square feet of commercial property and over 1000 residential units, and there isn't a type of property that we are not familiar with. If you or you know of any investor that needs assistance in choosing a property to invest or manage in we are willing to discuss our professional investment brokerage and/or management services. We are in constant communication with investors actively looking to buy, sell, and lease properties.
Aegis Realty Partners Real Estate Investment specialists are well-positioned to advise our investors to seek out new real estate acquisitions as well as assist real estate investors when it comes to selling their properties.
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“Now that I have Aegis managing my properties, I have time to spend growing my business…”
Graves Investment Properties swears by Aegis Property Management. It was very difficult for me to hand over a portion of my business to another company because I spent years building my business with specific practices in mind. It was extremely important to choose a company that will adhere to my specific philosophy. Aegis and I had several planning meetings where I expressed specifically how I want my tenants to be treated and my expectations. I found it refreshing and reassuring in our initial meetings that Aegis was willing and able to meet all of my expectations. They have NOT disappointed me. I made the right choice by choosing Aegis.
Now that I have Aegis managing my properties, I have time to spend growing my business in Western Pennsylvania. I always have prompt responses and solutions to every problem I encounter from Aegis. I am a very hands-on property owner and Aegis has worked very closely with me to help me build my business. I never recommend services that I would not use myself, so I am pleased to recommend Aegis to other investors. Aegis assists in my real estate success and for that, I am excited to grow my investment properties business.
Graves Investment Properties
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