Commercial real estate investment is a hot investment that pays off well, and there is enough evidence for this.
If done right, commercial real estate investment can be one of the most lucrative investments. However, doing it right is the challenge.
Although the trade seems very attractive, most people back out as they are unfamiliar with how commercial real estate investing actually works.
Adding to this dilemma are the myths about commercial real estate investing that are prevalent in the market which lower the spirits of a person willing to invest in commercial real estate properties.
If you’ve always wanted to explore the commercial real estate investing but held back from investing due to whatever reason, now is the time for you to rethink about your decision of investing.
If you want to learn how to invest in commercial real estate properties but are very hesitant to move away from the single-family properties as you’re unfamiliar with commercial properties, there’s great news for you!
With the help of REITs, you can now invest in commercial real estate properties without actually having to learn the nitty-gritty of the trade, without actually having to do the groundwork or the leg work, and without even having to meet the tenants, close deals, negotiate or do anything at all.
Entering the commercial real estate investing space cannot be easier with the introduction of REITs. So, what are REITs and how can you use them to start your commercial real estate investing finally. This blog is all about that and more. Read on.
What are REITs?
REITs or Real Estate Investment Trusts are individual companies or agencies that own and/or finance real estate properties that generate income, including commercial real estate properties.
REITs help individuals who want to enter and venture the possibilities of making money from commercial real estate investing. They are managing properties on behalf of the bunch of people with a small percentage charged as fees and pay the profits of an investment in the form of dividends from time to time.
How REITs help to invest in commercial real estate
#1 – REITs provide an opportunity for beginners to invest in the portfolios of large scale investment properties
Large scale investment properties come with a wide range of risks and rewards. Analyzing and weighing such risks and rewards carefully before deciding on investing in them is important.
Since these investments are large, more often than not, people have their own set of apprehensions, which keeps them from investing in such high-risk high-reward investments.
With the introduction of REITs, such insecurities can be removed, and investors can invest in such large scale properties without the entire burden of risks and responsibilities.
Even at the face of a situation where a particularly large scale investment does not make great profits, the burden of sharing such losses is spread across a wide range of people.
Thus, it’s a great opportunity for beginners to enter the commercial real estate markets and also invest in large scale properties. You might not get to experience the nitty-gritty of investing in commercial properties first hand, but it will surely give you a bare idea of how things work, and you may invest in such Properties all by yourself on a later date if you wish to. REITs provide you the little experience of how these investments are in real-time without the risk of undergoing losses.
#2 – REITs lets investors capitalize on the massive commercial real estate market without the direct investment of time or energies on the same
Commercial real estate investing is an entirely different ball game than single-family properties. The rewards are huge undoubtedly.
But at the same time, it involves a huge investment of time and energies and a whole bunch of responsibilities that need to be fulfilled.
Everything – right from finding the right kind of commercial real estate loan to fund the property, finding the best commercial real estate loan lender in the market, narrowing down the list of commercial properties, negotiating the prices, finding prospective tenants etc. is a whole new set of activities which will require new skill sets which you probably are not accustomed to.
Does that mean you give up on your wish of investing into commercial real estate sector? Not at all.
You can still invest in commercial real estate properties through REITs without focusing and channeling too much time or energies on the same.
REITs are also a great solution for investors who want to take up real estate investing as part of their passive income-generating activities.
#3 – REITs allow interest real estate investors the perfect opportunity to explore and learn how to invest in commercial real estate property without the risk of making bad decisions and choices
How to invest in commercial real estate property? It’s a question that often has way too many answers and various types of investing.
Beginning with what type of commercial real estate property, you would like to invest in, in the first place and everything in between. For beginners, this whole process might be quite overwhelming, and that’s where REITs come into the picture.
They provide the perfect opportunity to explore and find out how to invest in commercial real estate property by removing the one big fear that holds people back from investing in commercial properties by their own – The risk of making wrong choices and failing big time at commercial real estate investing.
#4 – REITs allow investors to leverage on the highs and lows of the learning curve with the new set of skills that are required to analyze, invest and manage commercial real estate investments
The learning curve concerning commercial real estate investing is massive. With tens of things that are so important in making the right decision about commercial real estate investing, it is easy to get bogged down by the lows of the negative curve.
However, with REITs, the burden is on the REITs, and you can closely observe and learn the new skill sets that are required to owning, funding and managing properties without actually burning hour hands in reality.
You can learn by watching as a mere spectator and still take home some of the most important skills needed to enter, explore, and venture commercial real estate investing opportunities. You have the benefit of the learning curve in the case of REITs.
#5 – With REITs, investors do not have to go through the pain of buying a commercial real estate property: everything from choosing a property, finding a loan, negotiating prices, advertising for tenants, maintenance of properties and so on
The groundwork and the paperwork needed in order to start investing in commercial properties is huge.
Understanding how it works – and learning everything about it, beginning from how to choose the best commercial real estate property and ending at how to manage commercial real estate investments takes time and experience successfully!
Tens of real estate property asset management companies have had years of experience in doing this, and their expertise is what helps them rock at it.
Doing it all on your means that you’ll be taking a lot more time to see real cash inflows and profits and also shelling out huge amounts of money on hiring professionals and experts at every stage of commercial real estate investing, which again, might or might not yield you desired results. With REITs, you cut all this out and directly start investing in a good portfolio of commercial properties which are carefully chosen by your REIT.
#6 – REITs can be the perfect vehicle needed to introduce investors at the beginner level to the world of commercial real estate investing.
There could be no better means than REITs for beginners to kick start their commercial real estate investing without investing too much time, too much money or energies!
At the least, REITs lets you get hands-on experience with the performance of commercial real estate properties and help you decide whether or not you may want to venture into it further.
It can act as the perfect vehicle that’ll provide you a sight tour of what it’s like to invest in commercial real estate properties and lets you decide whether or not commercial real estate investing is your cup of tea.
It saves you so much time and efforts which you would otherwise waste in the case of investing in such properties and then wanting to back out! REITs have easy withdrawal options, and you can stop investing in commercial real estate whenever you want without too much of a hassle.