Investor’s Guide to Commercial Real Estate Equity Investment

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Commercial real estate property, in one way or another, has always been a preferable choice for people to make investments. After all, it provides a great source of income. When taking the back step of investing in commercial real estate property, having a clear idea about the different options is extremely important to succeed. New Investors in the industry can benefit by having a clear idea about commercial investing options. There is multiple commercial real estate property one can consider for investment. But undoubtedly, it is the equity options that attract most investors as they need not have to take care of maintenance or any other associated things with the property.

If you are new to the commercial real estate industry and are planning to invest in equity, then here is a guide from the top investors in the market to help you make the right decision to invest well.

Commercial real estate equity investment

Equity investments offer the option of earning passive income over time. Besides, there is a great convenience to avoid the hassle of maintaining or managing the properties. Here are the top options one can consider for investing in equity.

1. Real estate investment trusts

Out of all the equity investments, it is one of the easiest ways one can consider putting money in commercial real estate. REITs are there to make money for the purchase and management of multiple commercial properties professionally. Thus, the investors herein will get dividends. Besides, the REITs receive great tax benefits when they pay 90% of the income as dividends to the investors. Thus it makes it one of the most reliable sources to generate passive income over time.

There are two REIT classifications. The first one is more cash REIT and then equity REIT. You have the option to buy shares for both of the REITs through a brokerage account or directly over the publicly traded account. It is generally a preferable option and can be purchased for quite a low amount as $100.

2. Real estate exchange-traded fund

Rather than choosing and purchasing shares for individuals, you can directly invest in multiple REITs. So it is with real state exchange-traded funds. The fund manager herein will choose to basket real estate securities for investment. This can include RETF in multiple commercial sectors. But as a new investor, one must be extra careful as RETF comes with many risks as they are spreading the investment across different industries and companies that need to keep an eye on it, which can be pretty difficult.

3. Crowdfunding

For investors looking for a safe and reliable passive investment option, crowdfunding is just the perfect choice. The investors herein can join crowdfunding platforms that help them connect with third-party investors and developers who have great investment opportunities but need funding.

Today, most crowdfunding platforms help bring investment to the sponsors before being added to the platform. But it is vital to understand that you need to conduct due diligence about the opportunity and the sponsor in advance to guarantee your investment is safe and you will get the desired returns.

The investors who choose crowdfunding opportunities can participate herein for as little as a few $1000. However, some of them might require a hundred thousand dollars. Returns here are a lot higher than REITs. Further, it comes with more risk and less liquidity. Generally, the crowdfunding opportunities have to be of 25 years. During this phase, the investors can easily pull out the findings from the deal. Given the potential risk, the Investors must be attentive and take care of the money they are putting into the crowdfunding. The smallest wrong step herein can create great trouble.

4. Become an equity partner

Another excellent option for active investors is to become a funding partner. Here you will work as a silent and passive partner who is just there to provide the portion of the funding in the form of cash or down payment in exchange for preferred return, equity, or both. This is quite a similar technique to crowdfunding, but the number of partners here is quite lower, and the returns can be extremely high. But with this comes higher risk. So this one must take proper measures before investing.

The partnership between funding partners and equity is quite common in the commercial real estate market. However, these opportunities aren’t always publicly advertised. Most of the equity opportunities can be found only with relationships with active investors in the industry. Thus, it is essential to conduct due diligence on the investment, and the investor is considering putting money in as they will be managing the property and your money. You need to be confident in their ability to manage and bring desired results.

Why commercial real estate?

Undoubtedly, real estate investments attract many people as this provides an opportunity to invest in properties with multiple income streams. When the tenant leaves, then the income stops for residential space until you find a new tenant. However, when you own a multi-unit commercial property, you will have multiple income sources that can easily offset any vacancy. Thus it provides a more stable investment option. Further, one can have a great option to earn a higher income with commercial real estate property. Depending on the type of investment and property you have chosen to invest in, one can benefit greatly. But as most investors do not want to participate in the management and maintenance of the commercial real estate property, they choose the equity options for investment.

No doubt, equity options have gained great popularity because of the benefits it is offering. The best part is it helps bring the investor a great amount of return over the period. Moreover, it is quite a reliable way of putting money into the commercial real estate market. But there are associated risks, so the investor must be attentive and active to keep an eye on the environment and ensure its safety. Nevertheless, with proper measures and considerations, the investor can expect to earn great income over the years.

Conclusion

Commercial real estate investments can be complicated. So it is vital to have a clear idea about it all to benefit from the available opportunities. Besides, as equity investments are not always made public having good relationships with the people associated with the industry is extremely important to know about such possibilities. Having good relationships in the real estate industry is the key to success. While if you are new, you will require professional assistance, for which you can contact Private Capital Investors. They have the expertise and skills to provide you with the help you need to grow. The company’s professionals will guide you well and help you choose the investment options that will work great for you. Also, they will help keep an eye on it to help you make significant income. So avoid taking a risk with your money. It will be better if you contact the company to get professional help. No doubt your investment will be safe with their help, and you will get great benefits.

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