Have you considered investing in the real estate market? There are plenty of commercial real estate investment opportunities available. Your Calgary commercial Realtor® can provide you with a list of properties within your price range. Why would you want to own commercial property in Calgary? There are many benefits of owning commercial property, some of which are mentioned below.
Owner user
You can be your own landlord. Buying a commercial property where you can operate your current business makes sense. When renting space from someone else, your rental fees help the building owner pay the financing. If you own your building, you are essentially investing in your future. Your lease payments that generally would be paid to your landlord can now be applied to your building’s financing. So after a few years, you will have built equity in your commercial building.
Moreover, it may be cheaper to own your real estate than it is to rent. Contact us today for a rent-to-own analysis.
Revenue
Owning a commercial building with multiple tenants allows you to invest your money and see a return on your investment. Additionally, a multi-tenant building reduces the risk if a tenant has financial issues or one’s lease expires. If such is the case, there is still cash flow from the building to cover the mortgage payment. This setup allows your realtor time to find a replacement tenant for the vacant space.
Look for buildings with a positive cash flow. This means the money coming in from the rent is more than the money going out for expenses. Every building has expenses, but if you can purchase one that has a positive return on your investment, it can be better than putting your hard-earned cash in the bank.
Leverage
Owning a commercial property allows you to leverage your money. The commercial real estate market can offer you ways to invest minimal cash in more than one property. When you own more than one property, you have the opportunity to grow your profits at a quicker pace. When prices increase, you can sell one or all your properties and reap the rewards of your investment. However, this is all subject to interest rates and property values—they can both work in your favour or against you.
Control tenants
Owning a multi-tenanted commercial space for rent in Calgary allows you to control the type of tenants in your building. You can choose the businesses you want to have in your building to complement each other. Make sure to get long-term leases for all your tenants in the event you choose to sell your building. Having solid leases makes a building much more attractive to a potential buyer and certainly more viable for a commercial lender. Choose your commercial investment property based on the information provided by your Calgary commercial Realtor®. They can provide you with all the necessary details. One way to determine a building’s value is based on the lease rental rates. To compare properties, your realtor must be aware of these and current market rates.
ROI (return on investment)
Commercial real estate investing has long been associated with high returns. And while there are no guarantees, there is potential for a high Return On Investment (ROI). ROI is based on the capitalization rate of the property’s net income. The calculation takes the total revenue to the property, less operating costs, and less allowance for vacancy to determine a ‘net income.’ The capitalization rates or cap rates vary between regions (i.e. Calgary vs Vancouver), building types (i.e. industrial building vs office building) and timing (i.e. 2021 vs 2023). It’s important to note that cap rates aren’t static. Your commercial realtor would be able to analyze your building, compare it with others in the area and estimate your cap rate to determine a market value if you were to list the property for sale.
Final Thoughts
The benefits of owning commercial property can be far-reaching. And when done right, this type of investment can potentially help you accomplish many of your personal and professional goals. At CMS Real Estate Ltd., we are a full-service industrial and commercial real estate company in Calgary. With nearly 40 years of industry experience, we’re here to help. So contact us today to see how we can meet your commercial real estate needs.
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Disclaimer
The material presented in this blog is provided for general information and educational purposes only. It is not a substitute for professional advice. All information is subject to change regularly and without notice. CMS Real Estate Ltd. assumes no responsibility for any errors in the information provided, nor assumes any liability for damages incurred as a consequence, directly or indirectly, of the use and application of any of the contents of the blog/website page.