One of the biggest positive factors when buying real estate is all the tax benefits you are able to realize. Real estate is actually one of the most tax-friendly investment vehicles. You can write off practically everything — mortgage payments, expenses,…even the property itself in most cases! Of course there’s multiple ways of structuring a real estate sale as well to defer tax payments.
If you pick up a copy of any major newspaper and open it to the business section, you’ll commonly see headlines of extremely large real estate purchases that are usually well over $50-100 million. Most people glance at these articles and think “man it must be nice.” However, most people don’t realize that these extremely large transactions don’t involve just one individual as a seller or buyer…in fact, only a small percentage of these super large transactions are bought or sold by just one or two people. Easily over 90%+ of these properties are bought and sold by groups, companies, retirement funds etc.
One common misconception I see when I’m working with new investor clients is related to financing. Most people who are ready to invest in commercial real estate are usually somewhat familiar with the home loan process. That’s commonly because they might have bought a home or two in the last few years and they remember the mounds of paperwork that go with it. Although there are a select few similarities, getting a loan for a commercial property is a bit different.