Investor’s Guide To Commercial Real Estate Equity Investment

Investors have always preferred commercial real estate property as it is proved a great source of income. Knowing the steps of investing in commercial real estate property is very important to succeed.

New players in this field consider multiple investment options, and there is no doubt that the equity options attracts them more.

It is always to get a guide on ‘How to Invest In Commercial Real Estate?’ from the top investors in the market.

Here are the top options one can consider for investing in equity.

1. Real estate investment trusts

Equity investments are the easiest way to consider putting money in commercial real estate. REITs are used to make money professionally, purchase and manage multiples commercial properties.

Investors get dividends besides significant tax benefits when they pay 90% of the income earned as dividends. And, therefore it is considered the most reliable and passive income source.

There are two REIT classifications, Cash REIT and Equity REIT. Investors can buy shares for the REITs through the brokerage account or publicly traded fund.

2. Real estate exchange-traded fund

Investing in multiple is a better option than choosing and purchasing shares for individuals. Therefore, the real estate exchange-traded funds where the fund manager decides to get real estate securities for investments, including RETF in multiple commercial sectors.

RETF should be considered a little risky for new investors as there are many risks across industries and companies that need to keep an eye on it.

3. Crowdfunding

It’s a perfect choice for investors looking for safe, reliable, and passive options. Crowdfunding connects third-party investors with developers giving effective options for the funding.

Crowdfunding platforms connect sponsors with the investment, but it is essential to understand that due perseverance should be conducted before advancing to ensure that your investment is safe and desired returns.

Although higher than the REITs, the returns come with more risk and less liquidity. Crowdfunding opportunities take around 25 years to mature, and within this time tenure, investors can easily pullout from the deal.

But then, investors must pay attention to every detail before investing in crowdfunds. The slightest wrong step can cause a considerable loss.

4. Become an equity partner

Active investors also choose funding partners as an excellent option. Here they work silently and passively, only focusing on providing funds in cash, equity, or both. Although it is similar to crowdfunding, the number of partners is lower and comparatively high returns. But it also has a higher risk, and hence should take precautionary steps before investment.

The partnership between fund and equity is common in the commercial real estate market. However, they are not advertised publicly, and most of them are found only in the relationship with active investors of the industries. Therefore investors should check diligently before putting in their money.

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