Common Ways to Invest in Commercial Real Estate
There are different ways a person can enter and participate in the commercial real estate (CRE) investing market. With this type of investing, your money is funding investments in commercial real estate properties including office buildings, retail spaces, hotels, restaurants, industrial spaces, and multi-family housing.
Here are some common ways to invest in CRE:
Outright property ownership. In this scenario, the investor purchases a CRE property which they own and operate. If you can afford to buy a CRE property on your own, this can bring you a steady income and appreciation. Sometimes, this option of buying a CRE property is unrealistic because it’s a high cost and requires a lot of effort (for example: being a landlord).
Traditional direct investing. In this scenario, you, as the investor, purchase a debt or equity stake in a CRE property. You do this by pooling your funds into a limited liability company (LLC). Through direct investing, multiple investors can access CRE with the combined resources. The amount invested is usually significantly less than outright property ownership. However, it requires a lot of work to find these types of investing opportunities.
Publicly traded REITs. In this scenario, you, as the investor, buy shares in real estate investment trust (REIT) that owns a range of income-producing CRE properties. You then receive a portion of the properties’ earnings going forward. This scenario is a simple way for investors to add CRE to their portfolios. Unlike other CRE investments, REITs can be bought and sold at will, so their performance coincides with stocks and bonds. You, as the investor, also do not have control over what properties the REIT invests in unlike directing investing or outright property ownership.
Online direct investing. This scenario is also called “real estate crowdfunding” and it allows you to hand-pick real estate projects that make sense with your financial goals with a pool of other investors. These real estate projects are listed on online marketplaces, which means they are easy to find. You can find projects near you and far away from you. Minimum investment amounts can start as low as $5,000. This type of CRE investing makes it easier to diversify and get tax advantages.
At HOWE Louisville, we work with real estate investors and small business owners who are interested in commercial property. We know this can be a daunting process for investors, so our goal is to provide unrivaled support and find the best CRE investment for you. Our deep commercial real estate experience and market knowledge gives you a critical competitive advantage in the greater Louisville market. We do the hard work.
Still not convinced about investing in CRE? Click the link for more reasons to invest in commercial real estate.
Louisville Commercial Property Investing
Whether you’re new to investing or a long-time investor, you can benefit from investing in a commercial space, especially with our team at HOWE Louisville looking out for your best interests. CRE investing offers some unique benefits that can help in a diversified portfolio.
In the past, investors often needed a minimum of about $100,000 to even start a CRE investment. However, online direct investing platforms and LLCs have made it possible to invest at a lower minimum.
We want to help you reach your financial goals with a CRE investment.
Let our team of professionals at HOWE Louisville help you get started on looking for commercial property. We work with buyers, sellers, lessors and lessees across all property types in and around Louisville. To contact us, send us an email or call 502-890-4475.