Managing Member (CEO) of Landwin, LLC

Most investors believe that commercial properties make for better, safer investments and for a number of good reasons. Commercial properties tend to have higher upside when compared to residential options but there are still issues that you will have to deal with when investing in commercial real estate. Depreciation refers to the falling value of a property over time. One of the biggest things to consider is depreciation of the property’s value over any period of time. Before investing it’s important that you take the time to familiarize yourself with the common causes of depreciation so that you can find the best investment options possible.

Building Age

An older building may depreciate in value because it’s more susceptible to deterioration and wear and tear than newer buildings. It’s also possible that as technology improves an older building is simply too obsolete to handle and accommodate any new advances in technology or design. If your property needs multiple updates and renovations to meet various standards or to regain luster then there’s a good chance that your investment will end up costing more then it will make you.

Value of Location

Over time any location’s value can fluctuate depending on important things like the quality of the location, success rate of other businesses, demographics of residents and income levels can all lead to fluctuations in value. Investing in a commercial property that hasn’t been renovated in years or has an expensive product in a low-income area can lead to faster depreciation in the property’s value so be sure to thoroughly check the surrounding area before making any investments.

Type of Business

Online shopping has led to many a commercial properties losing value at an accelerated rate. Investing in a property that has businesses that are moving more and more online will likely lead to a reduced return on your investment. It’s important to familiarize yourself with the area and surrounding businesses and properties so that there are minimal surprises and headaches for you to deal with.

Supply and Demand

Looking to the wider market is a great way to predict what your commercial property may do and how fast it may depreciate. An abundance of available buildings with lower demand will lead to obviously reduced values while fewer available properties will likely result in your property holding a higher value longer. The success or failure of nearby properties can help you determine just exactly how your commercial building will fare over an extended period of time.

Tax Purposes

Any building not used for residential purposes can be charged with a 10% depreciation rate annually. Renovating and updating the property can help maintain some of the building’s value but over time the taxes and costs of maintaining your building will help contribute to the overall depreciation of value which will also limit any potential returns on investment. Please consult with your tax advisor.

Helping You Find the Safest Investments

For over 30 years the team at Landwin has worked Discussion With Property Manager closely with our clients to find the best investment options possible in the world of commercial real estate. Our formula helps us find multiple options that take into consideration potential depreciation, possible renovation costs and nearby businesses in order to find you as close to a can’t-miss option as possible in the world of commercial real estate investing.

If you’re looking to get involved with commercial real estate it can be difficult to get accustomed to all of the laws, jargon and loopholes that can cause multiple headaches and limit your investments’ growth. At Landwin we handle all of these risk assessments for you so that you can focus on growing your portfolio. Please contact Landwin today to learn more about commercial real estate investing and to start investing.

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