If you’re looking to diversify your investment portfolio in 2018, you may be considering the booming real estate market. When choosing a real estate investment, it is important to do your research and to seek the advice of a trustworthy agency. Here are four reasons why 2018 could be a great year to invest in real estate.
High-net-worth investors are expecting large profits from commercial real estate investments after the federal tax overhaul was passed in December. The new law provides a 20 percent tax deduction for income derived from pass-through entities that meet certain specifics. The deduction benefits investors who own real estate property through a partnership or LLC. In addition, the deduction may apply to investments in both public and private real estate funds. The new law also allows taxpayers to include 2.5 percent of the purchase price into the 20 percent deduction, assuming they are using pass-through income. With the tax overhaul, real estate investments could be taxed at a 29.6 percent rate, 10 points lower than last year.
High demand for urban and coastal properties
With a constant influx of startups, business expansions, and talented individuals, Orlando has become the center of Florida’s economic growth. In 2018, the office and industrial real estate market will likely experience huge gains as Orlando strengthens its reputation as an economic hub. Orlando’s exponential growth coincides with a high demand for urban and coastal properties. An estimated 29,000 people are expected to move to the coast per year for the next five years. The value of urban properties is also skyrocketing.
Business is booming
Since 2018 is projected to be a good year for businesses, investing in a larger office or another piece of commercial property may be a sound decision. With low unemployment rates, tax cuts, and an increase in consumer confidence, many businesses will thrive in 2018. As businesses grow and become more successful, managers will look to expand into new locations and buildings. If your business is predicted to experience higher profit margins, investing in a new medical facility, office space, or industrial warehouse may help your business stay on its projected growth track.
Since the markets for mortgage originations and the volume of real estate transactions are expected to remain strong, commercial real estate investors are anticipating high risk-adjusted returns in the coming years. Since the applicable financial and real estate markets are experiencing growth, many investors are considering adding on debt to a multi-asset or equity portfolio. The volume of real estate transactions is predicted to average $360 billion between 2017 and 2020. Commercial real estate lending grew in the second quarter of last year and will likely increase in 2018 and beyond.
Interested in commercial real estate investments? Lee and Associates offers superior real estate services to both buyers and sellers in Central Florida. Contact our team at (321) 281-8500 or view our listings to buy or sell a commercial property today.