The industrial sector within the real estate industry has many alluring benefits and makes it a perfect location for financial investments. Furthermore it is a commercial property that is used for industrial use is considered to be industrial property (warehousing manufacturing, storage, warehouse, logistics, showrooms, etc. ).
Even though all investments carry a level of risk, industrial real estate investments like the commercial real estate listings in Fredericton tend to be more steady as compared to other investments. While analyzing this conclusion, there are a few things that should be kept in mind, and here they are.
Consistent and Predictable Cash Flow
In most industrial real estate like Cushman & Wakefield ventures leasing with a single tenant is an accepted norm, except for Flex industrial properties, which are typically multi-tenant. Leases can run for 20 years and more and there are several ways to extend the lease. Additionally, annual rent increases are often included in the contract. Investors’ cash flow is more stable and predictable when leases with a long term have annual rent rises.
Double-net or triple-net (NNN) leases can be described as the most common of industrial leases. This implies that the owner has no involvement in the operation or management of the building. Other than structural components like a roof structure, the tenant generally is accountable for the entire cost of the building’s occupancy under a NN lease. Some of these include home insurance, property taxes and even insurance. During the term of a NNN lease, the renter is responsible for paying all of the building’s running expenditures, which includes all of the costs associated with repairing and maintaining the structure. Maintenance of the property is solely on the shoulders of the tenant.
Returns on Investment/Distributable Cash Flow
The investment in industrial real estate yields higher net returns and more distributable cash flow because of the combination of predictable, increasing, and steady cash flows, together with the tenant’s obligation to cover the majority (but certainly not all) expenses associated with operating and maintaining the property. A preferred annual return in the range of 8-10 percent are not common, and annual returns of 15% or greater aren’t common either.
One of the many benefits of investing in industrial real estate for sale in Saint John for industrial purposes is its possibility for future expansion and diversity. The investment in industrial real estate could lower your risk exposure due to its distinct characteristics. You can build a solid fund of investments by investing in many solid industrial properties across various areas and industries of the country.
If we were to discuss the advantages of industrial real estate investment, we would have to consider the potential tax benefits. Real estate is a tax-advantaged investment for everyone. The industrial real estate market is not any different. Asset depreciation applies to any industrial real estate owned by a commercial entity. For commercial and industrial properties, depreciable assets can provide significant tax benefits. Depreciation can be a non-cash expense therefore, it is important to track it. There’s a paper loss while paying taxes, but this doesn’t affect the company’s cash flow. In some cases, loss of paper can be used to decrease tax-deductible gains from the sale of other assets.
Capital gains can be made when an investment is stored for a lengthy period. When an asset is sold profit is taxed at the long-term capital gain rates rather than the higher short-term capital gains rates or on earnings. The new long-term 0% capital gain tax rate set in the Tax Cuts and Jobs Act in 2017 is especially advantageous to investors with smaller assets.
Due to its steady cash flow, higher yields, lower maintenance requirements Long-term tenants, as well as one-of-a-kind tax benefits, industrial real estate is an asset every investor must consider seriously when evaluating their portfolio.