The world’s wealthiest individuals continue to consider commercial real estate as one of the most desired assets in their portfolios. So what is it that makes this asset class so popular for the affluent and sophisticated investor?
Call it yield, cash flow or passive income, but the point is that commercial property delivers it. For savvy investors, income is even more important than asset value. Everyone needs income, and particularly passive investment income.
2. Wealth Preservation
For wealthy individuals, preservation of capital is even more important than investment gains. These investors are risk adverse, and understand that promises of investment returns do not justify risking their capital. Commercial property is amongst the best investments when it comes to capital preservation, as it is a tangible asset that can provide wealth protection for families over the long run.
One of the main reasons many affluent Canadians choose real estate investment is for the tax benefits. Direct real estate investment offers many potential tax breaks and deductions. This can be taken even further by using tax preferred vehicles for investing in real estate in order to reduce tax liability and even generate tax free returns.
4. Capital Gains
Capital gains are the icing on the cake when it comes to commercial property investments. They are not normally the primary reason to invest, but can provide substantial passive wealth gains in both the short and long term. Property value cycles are in general quite predictable. Timed well, investors can use this to speed up their portfolio growth, as well as providing lump sum cash needs for larger expenditures later in life.
5. Building the Local Economy and Community
Aside from the direct financial benefits of investing in commercial real estate for personal gain, these assets are also responsible for improving communities as they create jobs and inject cash into the economy.
6. Teaching Kids Essential Investment Principles
Even when there are no immediate financial needs for increased income, wealth or tax breaks, making new investments in commercial property can provide great teaching moments for future generations and can equip them to provide for themselves in the years to come.
In summary, there are many reasons to invest in commercial real estate in Canada for both young and mature investors. Regardless of your priorities, it’s worth taking a look at this investment sector and the broad array of benefits it incorporates.