In the past, commercial real estate investment was something only an elite few could get involved in. Now, people are more aware of their options, allowing them to jump into this high risk, high reward segment of real estate. What are these options? Below are six different ways you can invest in commercial real estate.
1. Develop New Commercial Properties
This is the most capital-intensive option available to you. However, the potential rewards associated with this type of investment are very high. Some ways you can make this option work for you are targeting up-and-coming areas where prices are still low—or at least lower—than in other areas, and by investing in them with a partner.
2. Acquire Existing Commercial Properties
This option is considered to be a slightly lower risk than developing new properties. With this option, you can target properties that have proven themselves to be profitable; they might even come with tenants already leasing spaces. Once again, you can look at up-and-coming areas and work with a partner to make this investment more feasible.
3. Enter Into a Limited Partnership
With a limited partnership, you are not partnering with just one person, but rather a team of investors who are looking to build their portfolios and capital strategically. Ideally, this is a team that is mixed in experience level so that there are some who can guide the novices. There will also be an experienced professional managing the shared portfolio who is independent of the investors.
4. Use a Privately Managed Fund
This option is similar to a limited partnership in that an experienced professional manages the fund and assists in acquiring properties. However, you are not required to partner with anyone to do so. With this option, the portfolio manager does the research and analysis and presents their findings to you, allowing you to either give the okay on an investment or decline.
5. Join a Real Estate Investment Trust
Real estate investment trusts have a corporate structure with shareholders, which makes this investment option more familiar and accessible to the novice investor. They may be publicly traded, and there is transparency concerning investor monies. Also, unlike the options above, this is one that is easier to get out of if needed.
6. Consider Online Investing
This is a newer option in the real estate investment business, and it can take many different forms, like crowdfunding auto-investment bots. Compared to other options, it's the easiest to get into and requires the least amount of capital. However, because it's so new, there are many developments in this field, so it's not necessarily the most stable choice.
If you are uncertain which option or options are right for you, seek out the professional guidance of MGR to help develop your portfolio!
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