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Investing in Commercial Real Estate: What You Need to Know

investing in commercial real estateThe housing market may have taken a dive in 2007 and 2008 but commercial real estate has done extraordinary well over the past few years. The commercial real estate market is doing so well, in fact, that the National Association of Realtors has predicted that the market will continue to grow through 2015 despite the slowing global economy. This is welcome news to developers, businessmen and women, construction workers, and investors who are activity engaged in the multi-billion dollar industry.

There has never been a better time since the economic recession began for investing in commercial real estate. Commercial real estate loans are doing better than ever. An estimated $1.4 trillion in commercial real estate loans are expected to mature from 2014 to 2017. Of those, nearly a quarter are in the form of a highly-lucrative investment known as commercial mortgage-backed securities (CMBS). CMBS are a kind of security that are backed up by commercial mortgage loans rather than residential mortgages. Financial experts agree that approximately $350 billion worth of CMBS will mature from 2014 to 2017. There are about 11,000 of those loans with 35 financial institutions issuing them. Needless to say, the amount of money and investment put forth over the past few years is more than enough to convince any skeptical financial analyst about the soundness of commercial real estate investing.

One reason why investing in commercial real estate loans has risen over the years is because of their more than favorable interest rates. Interest rates for commercial real estate loans can be as low as 3.5% for five-year terms or 4.5% for 20-year fixed terms. This provides a lot of incentive for borrowers to take the loans, lenders to grant them, and investors to provide the needed money and resources.

For these reasons and much more, consider investing in commercial real estate today.