CRE

Commercial real estate investing can be a very lucrative investment strategy if you know how to find the right deals, structure and fund  the deals– and take them to their highest & best use. You can buy, fix and flip properties, or you can buy them for long-term appreciation. The money is in the follow up and the strategy to take the asset to its highest & best use. That’s a FACT. Commercial real estate is a very broad term that includes everything from office buildings to apartment complexes. It’s important that you understand what your goals are before you start investing in commercial property because it will dictate the type of property you buy and how much money you need to invest. There are many different types of commercial real estate investments, including industrial buildings, apartment buildings, retail space and even mobile home parks.. Things to consider before starting Commercial Real Estate Investing Commercial real estate investing is a smart way to build wealth and increase your net worth over time. But before you jump into this type of investment, there are some things you must consider first: How much money do you have available for investment? The minimum investment amount varies from property type and region, and the strategy you are using to get the property under contract , but it’s important to have enough money available so that you can afford at least one property for starters. Once you have one property under your belt, just like in residential, and begin receiving monthly rent checks, you can use those proceeds as an emergency fund/reserve or save up for additional investments down the road. What kind of properties are most attractive to investors? There are many different types of properties out there that could appeal to investors based on their individual needs and preferences — from a duplex all the way up to multi-family residential properties such as apartments or condos. Many people start with duplexes, as it seems safer, like a residential fix & flip. However, vacant stand-alone buildings can be much easier to start with coming out of the pandemic AND with the right knowledge to work with tenants. Newer investors may have an opportunity to get financing based on a NNN lease. The Monet is in the follow up. This is a FACT.  Are you willing to take on debt? If so, then commercial real estate is a great option for you because it allows you to leverage your assets and borrow money against them in order to control more property than you could afford outright. However, borrowing money means that there are more costs involved in owning property (such as interest payments) What Is Commercial Real Estate Investing? Commercial real estate (CRE) is property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute residential real estate. Most often, commercial real estate is leased to tenants to conduct income-generating activities. This broad category of real estate can include everything from a single storefront to a huge shopping center. Commercial real estate investing involves buying and selling property used for business purposes rather than residential use. You may have heard of these properties referred to as “commercial” or “multifamily” properties but they’re not necessarily any different from what we normally think of as an office building or shopping center. The most common types of commercial real estate include office buildings, retail malls, apartment complexes and industrial warehouses. However, there are many other types of properties that may be suitable for investment purposes depending on local conditions, such as motels or hotels. The key to successful commercial real estate investing is finding properties that are located in areas where demand will support high rents or sales prices over time. The goal of commercial real estate investing is usually to make money through appreciation or cash flow (rent). With appreciation, you hope that the value of the property will increase over time because of demand or other economic factors within the market where it’s located. With cash flow, you receive income from tenants who pay rent on a regular basis each month until they vacate or move out of the building altogether. Investors typically look for properties with at least five years of positive cash flow and low vacancy rates. They also like to buy property in strong markets where rents are rising faster than inflation. FACT, there are strategies to take vacant CRE, lease it up and immediately increase the value of the building. This makes it easier to finance and a solid investment to leverage and increase your portfolio. This is why your strategy is important.  Commercial Real Estate Investing Strategies There are many ways to invest in commercial real estate, and it’s important to understand the differences between them. Here’s what you need to know about the different types of commercial real estate investing strategies: Buy & Hold: This is the most common type of investment strategy. With buy & hold investments, you purchase a property and then rent it out as-is or fix it up and lease it out until you sell at a later date. This can be a great way to build wealth over time because of the power of leverage — if done right, your initial investment can grow in value by 20% or more each year. Fix & Flip: With fix & flip investing, you purchase an older property that needs work and then renovates it before putting it back on the market for sale at a higher price than what you paid. Fix & flips can be very profitable if done correctly but they’re also risky since they require significant upfront costs in addition to rehabbing expenses before selling. Lease-Option Strategy: This strategy involves buying a property, leasing it out to tenants, then offering them an option to purchase the property at a later date for a predetermined price. There are many ways that this … Read more