When you think about it, owning real estate is considered by many to be part and parcel of the American Dream. If fact, the U.S. Declaration of Independence’s original draft featured the language, “…Life, Liberty and the Pursuit of Property'' until the last word was ultimately changed to “Happiness” by Thomas Jefferson. There’s nothing that compares to the pride and financial freedom that comes with owning your own property. Beyond that, investing in commercial real estate (CRE) can be a fantastic way to diversify your investment portfolio and earn passive income. But if you’re new to the world of CRE investing, knowing where to start can be confusing—or even downright daunting. Fortunately, Fountainhead Commercial is here to help. Here are three ways to invest in real estate from our experienced property investment advisors.
1. Rental properties with positive cash-flow
Buying a fully-leased property or buying a vacant building and leasing the property to a new tenant, whether it is residential or commercial, is the most fundamental form of investing in real estate that allows the investor maximum autonomy and control over decisions. Broadly speaking, as the property owner you will be responsible for paying the mortgage on the property (unless you’re an all-cash buyer), property taxes, and operating expenses that are required to maintain the property. In return, you’ll charge the tenant(s) enough to cover these costs and generate a profit. Fountainhead Commercial focuses on providing expert consultative guidance to investors that seek this strategy.
2. Crowdfunding & DST
Investing in real estate can be scary. No matter how ‘bullish’ an investor is on the then-current market, there is always some degree of risk involved…which is why the yield/return outpaces many other investments. The good news is you don’t have to go at it alone. There are a variety of different real estate investment options that allow multiple investors to band together and purchase properties, thus sharing risk, responsibilities, and rewards.
One of the most common strategies is to co-invest. This process typically involves buying shares of a property with other partners. In this type of real estate arrangement, each investor is only responsible for their share of the property. And any returns are split amongst the group.
You can also buy into a real estate investment group (like a Delaware Statutory Trust aka DST). In this type of strategy, investors usually buy properties that are held by a bigger company. And as a result, you will most often own more than just one unit and leave the maintenance, management, and other upkeep to the parent company.
3. Real Estate Investment Trusts (REITs)
As you know, real estate can be publicly traded. One way to get involved in investing is by acquiring a real estate investment trust, or a REIT. REITs are similar to stocks in that they are bought and sold on exchanges such as NYSE.
When you purchase a REIT, you’re essentially purchasing a small stake in a given property that is owned by a large corporation or trust such ProLogis (NYSE: PLD). Similar to stocks, you receive income in the form of dividends.
One of the key attributes of REITs is that the investor is totally hands-off with these types of investments making them a solid strategy for only generating passive income. However, they can have higher risks than other types of real estate investments. Still, when REITs are successful, they offer decent yields and liquidity.
Why work with property investment advisors
Making money with real estate investments isn’t easy. If you’ve ever bought or sold a home, you know how complex that process can be. Commercial real estate investing is a similar process but on steroids! To ensure you’re getting the best ROI, you’ll want to work with experienced property investment advisors. They know the ins and outs of real estate investments and are here to help you succeed.
Work with Fountainhead Commercial for your real estate investments
If you’re considering a 1031 Exchange or want to avoid future stock-market whiplash by diversifying your portfolio, reach out to us at Fountainhead Commercial. Our property investment advisors are well-versed in acquiring and selling commercial real estate and will help you find the right property generating the targeted return on investment.
Contact us today to learn more.
