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What You Need to Know Before Investing in Commercial Real Estate

What You Need to Know Before Investing in Commercial Real Estate

If you are interested in investing in commercial real estate, you are probably looking for something with a residual income over time. Commercial properties aren’t typically the type you’d purchase to immediately flip but they do offer some of the best real estate investment strategies once you understand how to invest. Do you know your investment style? This is important because that one bit of information will impact the type of investment you should pursue.

A Look at a Few Investment Strategies

As noted, there are different types of real estate investment strategies. Some involve buying a property outright, alone, or in partnership, and others are simply funds set up to invest in groups of properties. Then there is a new kid on the block, Extrance’s revolutionary platform for commercial real estate investments that works on a different set of principles. An app like this matches you with other investors and will have you up and running (investing) on the very same day.

Newer Technology by the Day

In fact, it is always good to know that technology is beginning to catch up with the needs of consumers. For so long we have relied on technology to crunch numbers, but this newly developed technology does more than record data; it actually analyzes layer after layer of raw data in order to match investors with trading styles. Technology of this type will more than pay for all the research, trials, and studies that brought it to the world of real estate investing.

The Importance of Matching Your Style

The type of investment you choose should be dependent on how ‘hands-on’ you would like to be. Some people prefer to buy commercial buildings to lease out units. This is among the slowest ways to show a profit but is generally considered to be a safe investment. One of the investment strategies that seems to be trending again would be REIT funds. These are also safe but have been known to fall prey to an overactive fund manager. Without checks and balances, any investment strategy can lose ground from time to time and that is why high-tech investment platforms are so revolutionary. It’s as transparent as it gets.

Higher Yield than Residential Properties

A great number of investors prefer commercial real estate because it is usually a more lucrative return on an investment. The ROI is higher in commercial properties, for the most part, and the returns come much quicker. Private family residential real estate, if purchased as an investment, is usually bought to flip for a profit. These can be flipped quickly, but usually they will need some kind of remodeling or renovating prior to flipping the property. This is a more hands on approach to real estate and just another reason why so many investors prefer commercial property investments.

If you are looking for a commercial real estate investment platform and don’t really want a hands-on approach, either a REID or some other type of fund might be the best options for you. These are set up in such a way as to maximize investments by ‘pooling’ resources into a fund. It’s more of a passive investment, but one that should yield adequate returns.


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by Marissa Collins //

Opinions expressed by contributors are their own.