Commercial real estate can be beneficial for the portfolios of many types of investors. If you’re looking to diversify your portfolio in California, the following is how this type of real estate might be a viable resource for you.
Keep your cash flowing regardless of the economy
Commercial real estate can give you stable returns and appreciation even when the economy is at its most uncertain, exactly when you most need that security. There are a wide variety of commercial real estate options, including:
- Apartment complexes
- Offices spaces
- Light industrial facilities
- Self-storage
These investments are a way to keep cash continuously and stably coming in. In some cases, their yields can be even greater than your typical dividend stock or bond. Diversifying your portfolio may help protect you when the financial markets are volatile.
Tax benefits and inflation hedges
Inflation is a common concern among investors due to the devastating impact it could have on a portfolio. Investing in commercial real estate can help create an inflation hedge, which may shield you from inflation’s effects.
This type of real estate can come with some alluring tax advantages, such as depreciation and interest expense deductions, which may offer protection. You might also be allowed to defer cash distribution taxes.
With commercial real estate, you may also get leverage by putting your debt on the property. Doing so might allow you to see higher returns while simultaneously raising the risk.
If you have a portfolio exclusively devoted to stocks and bonds, there are some advantages of commercial real estate you may be missing out on. Commercial real estate investments come with stable cash flow, tax benefits and financial leverage while providing you with an inflation hedge. These investments also give you a sense of ownership that only a hard asset can bring.