Why Keep Commercial?

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Commercial Real Estate is the All Time Wealth Builder

So why do we want to keep commercial real estate? The reason is simple… Cash Flowing properties! There are four reasons to keep cash flowing properties and each one has its own separate benefit.

•    Appreciation
•    Depreciation
•    Cash Out
•    Cash Flow
Most investors purchase commercial properties for one main reason other than cash flow and its Appreciation. Unlike residential property commercial property goes up in value much quicker and when the rents increase the NOI (net operating income) goes up when the NOI goes up the value goes through the roof.

I never buy retail, I buy wholesale and investors who buy with good old conventional wisdom put down huge deposits and personally sign for loans “which I do not”, they do understand the rule of property value increase which is the Appreciation.  They buy on appreciation because they understand commercial real estate is always stable not cyclical like residential.

The next is Depreciation good old “Uncle Sam” will allow you to right off a portion of the property each year, this is a right off for wear and tear.

Cash Out is the wealth builder that I’ve been talking about.  When you fill vacancies on a commercial property and keep it at market occupancy for just 180 days this is called “Seasoning.”  Any lender will require you to season the properties income then you can do Cash Out refinance.

Read on…

Here’s the wealth explosion, you can take out all the equity in the property and put it into “HNB” Hip National Bank.  This means your pocket all the cash and you don’t pay taxes on that money until you sell the property and still you can do a “1031 Tax Deferred Exchange and roll it into another property without having to pay capital gains.

And then last but not least is the Cash Flow unlike in the residential house buying business where Cash Flow is minimal if any. Commercial Real estate is all about the Cash Flow and you don’t need to hunt for a buyer to have monthly Cash Flow on autopilot!

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