People invest in commercial real estate because they believe it is a stable and reliable way to earn income. Commercial real estate is a great investment because it has a much lower risk profile than other types of investments, such as the stock market; prone to wild fluctuations in value.

1) Positive cash flow

Commercial real estate can be a great way to generate positive cash flow. This is because the income generated from commercial properties typically exceeds the costs of ownership and management. In other words, you make more money from the property than you spend on it. Mortgages stay constant for years while rents continue to increase which leads to consistently improving rates of return.

2) Leverage

Few other asset classes (if any) can be levered as highly and with such low interest rates; despite recent increases. With leverage, you can borrow at a cost far below the potential returns generated – giving “main street” access to impressive financial engineering.

3) Tax efficiency 

Real estate is special in the way that it allows investors to depreciate value over time and create paper losses to offset or lessen tax burdens. The kicker is that real estate also allows for tax  advantaged reinvestment opportunities of capital through 1031 Exchange (tax deferred) and/or refinance (using the same dollar to work harder, not smarter).

4) Managed well, it is relatively stable

The market for commercial properties is less volatile and tends to remain fairly consistent over time. This makes it a desirable investment for those looking for stability in their portfolios.