November is National Entrepreneurship Month, a celebration of all the risk-takers and go-getters who push their ideas forward and hedge their bets on themselves. There are obviously so many kinds of entrepreneurs and businesses in which they operate. But today our focus is specific to the commercial real estate entrepreneur.
Whether you’re looking to get your start as a CRE entrepreneur or actively adding more properties to your portfolio, continue reading to see the lucrative advantages of operating a commercial real estate venture. Even better, now’s the perfect time given the current economic environment and its positive effects on the CRE market.
Types of Commercial Real Estate
Investors purchase commercial real estate as a business venture with the intent to earn a profit either through 1. rental income or 2. price appreciation of the property. So, let’s start with the basics: the types of properties that are considered commercial real estate.
Here are the four major asset classes that make up commercial real estate:
- Office space
- Industrial properties
- Retail properties
- Multi-family units
In most cases, a commercial real estate property is rented out to other businesses, but it can also be leased to individual tenants, such as with multi-family properties.
Each asset type comes with its own risks and advantages, though the industry as a whole is continuing to show upward potential for savvy CRE entrepreneurs.
A Good Investment Vehicle
Owning a commercial real estate business helps investors diversify their assets and better weather the storm through market downturns.
The value of commercial properties tends to perform well even when the value of equities and stocks is in decline. Particularly during periods of market volatility, owning commercial real estate is a strategic endeavor for investors.
Steady Rental Income
One of the biggest benefits to such entrepreneurs is that CRE delivers supplemental income and even passive revenue streams through tenant lease payments.
The best investments are made when those payments cover the owner’s loan payments and carrying costs, and even turn a monthly profit.
In addition, the property is gaining equity over time through natural market inflation or building renovations and improvements.
Versatility
Above all, owning a commercial real estate venture gives investors the benefit of versatility in how they purchase, manage and sell their investments.
These entrepreneurs can either make improvements to their properties and flip them for a profit, or they can keep the property and continue to collect rental income for the business.
That’s what makes this type of entrepreneurship so exciting. CRE entrepreneurs have tons of options to leverage and control their money, while gaining more wealth from their investments.
About Extensia Financial
Established in 1998 and headquartered in Simi Valley, CA, Extensia Financial is one of the most seasoned credit union service organizations (CUSO) focused on commercial real estate lending. For decades, we have partnered with credit unions across the country to offer competitive and collaborative CRE loans. We also uniquely support and guide our partners through the entire lifecycle of our loans. Extensia Financial is a proud member of the AVANA Family of Companies.
Contact us today to learn more about becoming an Extensia Financial partner.