The administration has an excellent opportunity to help commercial real estate owners by creating pathways to intergenerational wealth. The federal government can support community-based efforts to expand neighborhood commercial property ownership.
Building sustainable wealth takes time and effort. Avoid getting sucked into get-rich-quick schemes or too-good-to-be-true opportunities that will lead to a life of debt.
It’s a Long-Term Investment
Often overlooked, wealth development is critical to helping small businesses thrive. Historically, government and banking policies have denied communities of color access to homeownership, a vital way to build wealth.
While wealth development involves risk, it also consists in building a well-diversified portfolio and a long-term perspective. This can be achieved through investments in stocks, bonds, real estate, or other assets.
Higher Income: Commercial real estate provides a higher return on investment than residential properties because it is typically rented to businesses. It also offers investors a stable cash flow because of more extended lease periods and the potential for asset appreciation.
Low Vacancy Risk: Commercial spaces have fewer vacancies than residential properties, and tenants are more likely to pay rent.
Still, commercial lending could face challenges if there is another recession or a dip in the overall economy. Its debt will be able to pass banks’ recent refinancing standards, but some new loans may require additional tests.
It’s a Passive Income Source
Creating passive income is one of the best ways to improve your finances and reduce stress. It can allow you to pursue your passions and goals without trading time for money.
A popular passive income idea is investing in high-yield savings accounts. This way, you can earn interest on your cash while minimizing tax risks.
Another option is buying and renting residential or commercial properties out to renters. This can be a great source of income, but it also comes with many expenses.
You can also flip products to make a profit, but this is a risky business requiring much knowledge. It’s a good idea to research before you start. This is especially important if you need clarification on the market for the product you’re trying to sell. You’ll want to find a reliable supplier and promote your products on social media to get them sold.
It’s a Diversified Investment
A well-diversified portfolio helps you reduce the risk of your investments. This means that if one investment goes down, the decline won’t be as significant as if you had all your eggs in one basket.
Diversification is a common financial strategy, and many professionals encourage it. But it can be expensive and complex to manage, as you have to track a lot of holdings and investments. For example, Eva wants to invest her savings in a diversified portfolio. It will protect her against losing all her money if her home loses value.
It will also allow her to sell some investments and reinvest them in other assets. This would help her grow her wealth to buy a house deposit.
It’s a Way to Help Small Businesses
When small businesses thrive, they create jobs and economic growth. They also pay local sales and property tax, use vendors from within the community and support local nonprofits.
They help build a vibrant and diverse community where people feel proud to live. Many studies show that for every dollar spent at a local small business, many percent goes back into the local economy.
This is especially true for minority-owned and Black-owned businesses, which contribute to closing the racial wealth gap.
Communities can also help business owners withstand shocks to their operations, such as pandemics or gentrification, by providing resources like commercial property acquisition funds. For example, the District of Columbia’s $4 million Commercial Property Acquisition Fund provides down payment assistance to disadvantaged small business owners who purchase property in gentrifying neighborhoods.
Resources:
https://fnrpusa.com/blog/commercial-real-estate-a-safer-way-to-build-wealth-faster/
