From Realtor Magazine Online, Daily Real Estate News November 27, 2007
So far, the softening in the real estate market hasn't been felt in commercial property. There appears to be only a slight decline in 2007 vs. 2006.
Apartments have benefited from the still-high home prices and tightened mortgage-lending standards, although the increases have slackened slightly from 5 percent to 4 percent. Office properties are up 1 percentage point to 10 percent. Shopping centers are down 0.5 percent. Warehouses are up 4 percent and still in demand.
Over the past 12 months commercial real estate has returned an average 13 percent (property appreciation plus rental income), says commercial brokerage house Marcus & Millichap. That tops the 8.4 percent total return from the S&P 500 and the approximately 3 percent return from single-family homes.
Forbes magazine suggests that anyone interested in becoming a commercial landlord should ask the following questions before deciding how to go about it:
- Do you want to invest on your own or in a group?
- How much work do you want to put into your property?
- Is a 1031 exchange worthwhile, or will fees eat up the delayed tax benefits?
- Would you make more money buying a publicly traded REIT?
~ Source: Forbes, Dorothy Pomerantz (12/10/07)
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