Why You Should Consider Investing in Commercial Real Estate in 2022

By salford

Despite rising interest rates, commercial real estate has seen success in 2022. Although the forecast varies among specific asset classes, the industry outlook remains positive heading into the end of the year. Is it time that you seriously consider investing in commercial real estate? Why or why not? 

Why You Should Consider Investing in Commercial Real Estate In 2022

Rental Rates are Skyrocketing

Rental rates are increasing quickly across the United States, and as such, property values are following suit, but Is it still a good time to buy? The answer is absolutely, as long as you’re doing your research. Not all markets are performing to the same level, so it’s incredibly important that you partner with professionals, like our investment sales team. The Vista Holdings team provides specialized, need-driven servicing processes and extensive market knowledge, allowing you to make the best decisions possible, setting you up for success in both the short and long term. 

Major Income Potential

Overall, one of the absolute best reasons to invest in commercial real estate over residential is the earning potential. Commercial properties typically have an annual return off the purchase price between 6% and 12%, depending on the area, current state of the economy, and other external factors. That’s a much higher range than ordinarily exists for single-family home properties (1% to 4% at best).

Major Opportunities in “Value-Add Properties”

What you should be looking for in this kind of market is “value-add opportunities.” A value-add property describes a property that has cash flow in place, but it’s possible to increase that cash flow over time by making improvements to the property. These improvements can include physical improvements to the property that would demand higher rental rates, increasing efforts to fill vacant space(s), making changes to the property management team to increase overall customer satisfaction, or even lowering operating expenses to increase the property’s overall profitability. 

More Objective Price Valuations

When it comes to purchasing a residential property, the pricing is determined by the seller and comparable properties, leaving a significant amount of grey area. That’s not the case with commercial properties. It’s often much easier to evaluate the prices of commercial property, because you can request the current owner’s income statement and determine what the price should be based on that. If the seller is using a knowledgeable broker, the asking price should be set at a price where an investor can earn the area’s prevailing cap rate for the commercial property type they are looking at. By comparison, residential properties are often subject to more emotional pricing.

Should you consider investing in commercial real estate in 2022 and beyond? As long as you partner up with professionals like the Vista Holdings team and are doing your research, the answer is a resounding yes! If you’d like to get started investing in commercial real estate, reach out to us! We’d love to help you get started. 

Next Post

    Latest Posts

    Commercial Property Accounting -  Everything You Need to Know

    Read Full Post

    How to Choose the Right Commercial Real Estate Firm

    Read Full Post
    A man in a suit shaking hands with someone

    Beyond the Application: Unveiling the Ideal Renter

    Read Full Post
    Someone holding a red flag

    Red Flags to Avoid: Spotting Problem Tenants Before They Move In

    Read Full Post

    Subscribe To
    Receive The Latest News

    Similar Posts

    By salford  |  Jul 9 2024

    How to Choose the Right Commercial Real Estate Firm

    Navigating the complexities of buying, selling, or leasing commercial real estate can be challenging...

    By Vista Holdings  |  Jul 9 2024

    Beyond the Application: Unveiling the Ideal Renter

    In the ever-evolving and competitive world of commercial real estate, securing the right tenant is m...

    By Vista Holdings  |  Jun 25 2024

    Finding the Right Tenant for Your Rental Property

    As a landlord, one of the most crucial decisions you'll make is selecting the right tenant for your ...