Investing in Commercial Real Estate
Right now, more and more of us are looking for investments to make. The pandemic that has dominated most of our lives over the past couple of years has gone to show the importance of having multiple streams of income and of having savings behind you. By investing, you can provide yourself with both of these things. Of course, if you haven’t been involved in investments before, it can be difficult to know where to start out. There are businesses, stocks, shares and other things you can happily invest in. But for now, let’s focus on real estate. Property tends to increase in value over time, making a good investment opportunity. Here’s some information on commercial property investment in particular!
Residential vs. Commercial Real Estate
When we think of real estate, we tend to think about buying a house. If you’re considering investing in property, you may want to consider investments in commercial real estate, as opposed to investments in residential real estate. There are a number of reasons for this. Consider the financial crisis in 2007, which saw many property investors experience losses. There is going to be risk when it comes to investing in residential property. Commercial property is a good alternative that can serve as an important and alternative asset in your portfolio, helping to diversify your investments.
Ways of Investing
Whether you plan to buy a property outright, do it up and flip it or whether you intend to invest in a niche property such as a farm, fit it out with a barn and farm water tanks and let it out to a farmer, there are countless ways to invest in commercial real estate. Here are a few that you can consider.
If you have the money available to invest in a property outright, direct investment could be a good option for you. Direct investment involves buying a property outright. You can then do what you want with it – sell it on, renovate and refurbish it or let it wait to gain value. This, of course, isn’t a realistic option for everyone though.
Direct commercial property funds
You might hear direct commercial property funds referred to as bricks-and-mortar funds. These are a more common form of investment than direct investment, as it has a lower initial investment. Put simply, you become part of a collective investment scheme, such as a unit trust, Oeic or investment trust which then invest in property for you and provides you with a share of the profits.
Indirect property funds
An indirect property fund is a type of collective investment scheme that will allow you to invest in the shares of property companies that are listed on the stock market. This makes your investment more dependent on the movement of the stock market rather than the value of individual properties themselves.
Of course, these are just the basics. But hopefully, some of the information above should help you to take your first steps into commercial property investment!