Now that many people are feeling better about the economy, and feeling that the toughest times are now behind us, people are now asking, “Where should I be investing my money right now?” While many experts agree that a diversified portfolio is one that will help ensure that your risk is minimized, commercial real estate is definitely a solid arena to be investing in.
Think about it for a moment–the people who invested in stocks and bonds before the economic downturn have, in many situations, experienced major drama within recent years, as these markets have experienced their own changes. But if you invested in commercial real estate wisely, and invested in properties with tenants who would weather the storm, your income, and your life wouldn’t have been affected nearly as much. Granted, you might have experienced a decrease in the value of your properties during the downturn, but if you’re a veteran investor, you would have recognized that this too would pass once again.
As far as investing in stocks is concerned, within recent decades the amount of dividends being paid to investors has, with so many corporations, been minimal. Because of this many investors have had to rely primarily on whether or not their stocks have been going up in value, in determining how well they’ve been doing. In addition, the investors who were having a tough time with their personal income during the downturn had to sell some of their stocks at lower market prices in order to raise more money. But for those people who purchased commercial real estate with solid tenants in place, their investment income was largely unaffected with these properties, and they didn’t have to sell.
This is one reason why you’ll want to buy the kinds of properties where ideally the demand will still be there for them even in tougher times. Because even if you have tenants in these properties who won’t be able to weather the economic downturn, you’ll still have demand coming in from other new tenants who will want to move in.
Our economy has been improving, and this has been good for commercial real estate. But at the same time, many experts have been saying that the stock market is now long overdue for a substantial correction. But when you own good commercial real estate, and you have solid tenants in place, you’ll be largely unaffected by this kind of correction. A severe economic downturn is one thing, but a periodic correction in the stock market is definitely another one. As an example, between March, 2000 and October, 2002, the Nasdaq Index lost a full 78% of its value. But as long as you owned commercial properties that were rented out to solid tenants, you did fine.
Commercial real estate has already had its economic downturn, and it’s recovering now because of the overall recovery within the economy. When businesses are showing us that they’re now more confident, and that they’re buying, leasing, and expanding again, this is a solid signal for everyone. But at the same time, so much of the money that was given as bailouts to the major institutions has now been reinvested by them back into the stock market, creating the feeling within many people that the value of stocks may now be “pumped up”.
With this in mind, commercial real estate, whenever it’s bought, owned, and leased correctly, is one of the best investments you can ever make.