There are several ways to invest in commercial real estate opportunities. Start by picking a commercial real estate property or company to invest in. These properties are typically office buildings, hotels, malls or multifamily apartments. Commercial real estate is an illiquid asset as your money may be held for a long period. These investments allow you to manage your commercial real estate portfolios. As an investor, fund illiquid investments to receive potentially higher returns and avoid daily price volatility. Read on to discover the top ways to invest in commercial real estate opportunities.
Certainly, crowdfunding is a popular way to invest in commercial real estate. Join a crowdfunding platform and be paired with third-party developers. These developers are looking for investors to fund their commercial real estate opportunities. Typically, platforms vet the sponsor and investment opportunity before adding them to their site. Therefore, you can inquire the investment opportunities, partnerships and rewards before funding the project. Furthermore, participating in crowdfunding can cost as little as a couple thousand dollars. Generally, you have reduced liquidity and higher risk but the potential return rate is higher. However, investment returns could take up to 5 years. Definitely use crowdfunding to invest in commercial real estate to have a better chance of earning a higher return.
Real Estate Investment Trusts
Another top way to invest in commercial real estate opportunities is through real estate investment trusts (REIT). Purchase shares of REITs through discount and full-service brokers. They can be purchased as common stock, preferred stock or debt security. This works best for small investors who don’t want to find and manage properties directly. Typically, these properties range from hotels and assisted living facilities to retail spaces. Furthermore, REITs provide easy portfolio diversification and passive incomes. In fact, REITs are legally required to pay 90% of their earnings to shareholders in the form of dividends. This makes REITs guaranteed return investments. Certainly, REITs are a liquid asset you should use to invest in commercial real estate opportunities.
Commercial Real Estate Company Investments
Of course, you can fund commercial real estate opportunities by investing in real estate companies. By directly investing with a company, you get to choose which project to invest in. Additionally, you can oversee the project as wanted to provide feedback regarding the project. Typically, these companies focus on commercial estates such as hotels, shopping centers and offices. You can determine your returns as you research the company you are investing in. For example, if the company has a history of providing investors of hotel construction with high returns, you might consider putting your money into that project. Certainly, invest in commercial real estate companies to have input in the project without managing responsibilities.
Hard Money Lending
Furthermore, use hard money lending to invest in commercial real estate opportunities. Use hard money lending when you cannot secure traditional funding. Applying for a loan is simple as there are limited regulations and no required FICO score. If approved, funding can be received in about 3 weeks. These loans are made with reduced term flexibility and are used for non-occupied properties. These commercial real estate loans is based off your assets. And typically, they are capped at about 75% of the asset’s total value. More so, you have access to endless capital and deals. Certainly, use hard money lending to invest in commercial real estate if you cannot secure traditional funding.
Finally, you can invest in commercial real estate opportunities directly. This investment opportunity works best for high-net worth individuals as it requires time, money and knowledge. Ensure you understand the cash flow process, financial alternatives and tax implications of owning your own commercial estate. Typically, you need to contribute an equity of at least 30% of the purchasing cost to become the direct owner. Once you own the physical property, you need to fill vacancies, maintain the building and advertise. This is the most risky investment type but it can provide the highest rewards. If you have the funds and time, investing in commercial real estate opportunities directly can bring in high rewards.
There are various ways to invest in commercial real estate opportunities. Invest using crowdfunding as it can cost as little as a few thousand dollars. Use REITs to invest in commercial real estate because it diversifies you portfolio and provides an income. By investing in commercial real estate companies, you get to contribute to projects without managing or maintaining the responsibilities. Furthermore, utilize hard money lending if you cannot receive traditional funding. Finally, directly invest in commercial real estate to own the property and earn your returns. Certainly, these are the top ways to invest in commercial real estate opportunities.