The world is in a state that none of us have witnessed before. The ongoing coronavirus pandemic plays disorder within the economies of the world while we continue our secluded lives at our homes. In these circumstances, many investors are feeling concerned and thinking about what should be done.
We know that this pandemic is not forever. One day, we will walk back into our regular lives. Therefore, there is a reason to stay patient and hang in there. There is added hope as the entire world has joined forces to fight off this pandemic.
High Risk-Adjusted Return
Investing in commercial real estate at the moment seems opportune because the market is getting beaten up and many investors who are jumping on the opportunity to buy properties at this time will also inevitably help bounce back the market. However, this does not come without risks, as there is a possibility that you buy properties before the market has fully bottomed out. Conversely, there is a possibility that prices remain low for a long time.
Low prices
Investing in a commercial building in times of a market crash seems like a good idea due to the decreased prices. The market value of commercial buildings has declined. As most tenants are out of business, they cannot afford high rents, which leaves the landlords in distress. Luckily for investors, this brings out an opportunity to invest at a lower price.
A higher profit is estimated as the commercial business is assumed to gain back its worth once the pandemic is over. The situation enables the investors to invest at a low price, and gain profit at a much higher rate.
Tax Breaks
Interestingly enough, the real estate tycoons stand to benefit from the $2 trillion rescue package that was announced by the federal government. On page 203 of the bill, commercial property owners can minimize their losses, by deducting the losses from the tax on profits. This would mean that any losses that people might face from already being in, or investing in, the commercial property business would be accommodated by the government.
Any losses would only be incurred on paper. And once this pandemic is over, they could be recovered in tax returns.
Invest in a Profit-Generating Business
Markets don’t typically execute the best when they go from good to better. They display the best performance when things go from terrible to not-as-awful as before. There are numerous reasons why you should invest in commercial property – instead of a house or an apartment – or experiment in the stock market.
From higher profits to the safety of extended leases, commercial property often has compensations over these other asset classes. Investing in this business currently could give some excellent benefits once everything normalizes.
Before acting on any of the ideas presented here, please consult with your tax and legal advisors as there is no one size fits all solution and all of the details need to be considered before making any decisions.
ChicagoBroker.com powered by Jameson Commercial has been assisting clients throughout Chicago metropolitan area since 1990 in making better commercial real estate lease and investment decisions.
If we can be of service or answer any questions please contact Steven Goldstein at 312-840-9002 or visit www.ChicagoBroker.com for more information.
