Pierre-Mary Bachelet: Investing in Commercial Real Estate
Pierre-Mary Bachelet is an experienced commercial real estate investor, having built and leased more than one million square feet of retail space since 2009. This article will take a closer look at the commercial property market, providing an overview of some of the benefits and pitfalls of investing in commercial real estate.
For investors seeking to diversify their portfolio, real estate is an incredibly attractive option. Whether commercial or residential, investing in property is an excellent means of generating a passive income outside the stock market.
Commercial real estate falls into several subcategories, including office buildings, retail space, self-storage facilities, industrial properties, data centers and hotels. In addition, multifamily properties consisting of more than five units are treated as commercial property and must use commercial financing.
Although investing in commercial real estate has become very popular over the course of the last two decades, it is still technically considered an alternative form of investment versus stocks, bonds, and other equities. Once the remit of high-net-worth individuals, changes in federal legislation enacted in 2012 in the US have made it easier for people to invest in large commercial properties fractionally via crowdfunding platforms. As a result, the market is now open to investors of all kinds.
Financial incentives of investing in commercial property include capital appreciation, the ability to generate a passive income, and attractive tax benefits. Commercial property tends to offer longer leases and higher revenue than residential real estate too.
Diversification is the cornerstone of wealth building, as savvy investors know all too well. Spreading money across various different asset categories means there is less risk of incurring losses should one type of investment perform poorly. Real estate has a proven track record of returns. Investors can also reap significant tax advantages, as well as using it as a hedge against inflation.
In terms of getting started, prospective investors have several options, depending on their investment goals, risk tolerance, and budget. They could purchase a property outright themselves or pool their resources with a partner. An increasingly popular route is purchasing via a syndicate, joining with a group of investors, and providing cash in exchange for ownership shares in the property.
The key benefits of owning real estate lie in the fact that, depending on the property, commercial real estate provides a steady and regular income in the form of rent payments from tenants. In addition, as real estate typically appreciates in value, equity increases over time, enabling commercial property investors to profit again when the time comes to sell.
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