A famous quote by Andrew Carnegie – a self-made tycoon and one of the wealthiest businessmen of the 19th century – states that “the wise young man or wage earner of today invests his money in real estate.” This is true now as it was very many years ago.
As an investment option, real estate continues to outrank others by big margins. The return on investment from most real estate properties is often high and, in most cases, low risk.
The low supply and increased demand for land keep pushing the prices high making the investment unmatched by the others. This tends to be true for Speculative, Residential, and Commercial Real Estate investments.
What is commercial land?
A commercial piece of land is a real estate plot that can be used for business purposes. Most can be used to set up business enterprises such as commercial houses, residential apartments, parking utilities, manufacturing centers, and warehouses among others.
Unlike residential pieces of land that tend to appreciate by a given rate, the value of commercial plots tends to fluctuate rapidly depending on a number of things including, among others: Where the land is located; Types and number of business around the area; the availability of amenities on the land; and infrastructural development.
So, why do you need to invest in a commercial plot before turning 40?
This type of real estate investment is often made to generate income for the landowner immediately after purchasing or after a later date, depending on what infrastructural developments are to be done around the area.
In Kenya, zoning regulations determine the type of property, that is, whether a real estate property is residential, agricultural or commercial property. The zoning and classification of land can, however, change depending on special situations or circumstances.
When looking to buy a commercial property it is important to first determine its zoning and whether or not a change can be possible. For instance, it would be detrimental to the value of a residential plot in an area filled with commercial buildings, heavy traffic, and public utilities among others
Why you need to invest in commercial and before turning 40
As a young real estate investor, it is important to invest in a commercial property for the following reasons:
1. It is cheap to own a commercial land as a long-term investment
Investing in a commercial plot before turning 40 is one of the best ways to park your money safely. With this investment option, you don’t have to make mortgage payments, the cost of insurance is very low and you definitely don’t have to pay any utility bills.
2. You get peace of mind
Given that there is little to nothing you are required to do to add value to the property, investing in a commercial piece of land will offer you the joy of knowing that your investment is safe and secure for your future. That is, you don’t have to worry about the land losing value, things getting stolen, destroyed or broken.
3. Source of future income
As a young real estate investor, investing in commercial property will offer you an opportunity to set up business enterprises that will generate unmatched and handoff income for you in the future, once you retire or seek to supplement your income.
4. A great guarantor for future investments
When you buy a commercial plot today, the same property can be used to guarantee you when looking to finance other business opportunities in the future. Say you want to build commercial and residential apartments on the property, you can provide the title deed as a guarantee for bank financing.
5. There won’t be more of it when you are 40!
Unlike other assets, commercial land is an extremely valuable resource that exists in very limited quantities. When investing in a commercial property especially in satellite towns around the city, by the time you hit 40, you will find yourself with a finite asset most investors will be looking for.