Factors to Consider While Making Passive Commercial Real Estate Deal

by Sharon Rousseau Personal Blogger
Summary: Passive investing is the act of investing in assets without much if any additional investment of your own energy.

Passive investing has become synonymous with the best retirement vehicles. Other investment strategies can compound investment profits in the same way cash flow from a rental property can. Passive investing isn’t relegated only to single family properties. It is possible for investors to invest passively in commercial real estate.

Have you wondered why people are interested in passive commercial real estate investing? Passive investing in commercial real estate has become synonymous with advantages over single family counterparts, that include:
  • Cash flow
  •  Higher income
  • Longer leases
  • Less competition

There is more money in commercial real estate as the building are bigger and also come with a larger price tag. The potential to make money on a given deal is real. While there is more money in commercial real estate, there is also more risk. If it is done correctly, passive investing in commercial real estate can result in a lucrative payday for savvy investors.

Factors to consider before making passive commercial real estate deal:

  1. Commercial investment sponsor
    The first thing to consider when evaluating a commercial real estate deal is who the sponsor is. They are also known as developers or operators. They help you acquire the deal. It is the sponsor that act as a fiduciary in the deal, they help you execute the deal to perfection. It is in your best interest to work with a good sponsor that way you can also increase your own adds of success. 
  2. Commercial basis metric 
    It is another way of disclosing the all-in price per square foot of the subject property.  Often the basis is used to compare two similar properties. It is a great indicator on how you can expect a property to perform. If you compare your own property’s basis to a similar asset that is already performing, you shield to gauge how well yours will perform.
  3. Best commercial market 
    We have heard of the rule of real estate: location. This is where you invest plays an important role in the value of your property and commercial real estate is not an exception.  It is important to determine the best possible market for your intentions. If you intend to passive commercial real estate investing in Arizona, the market needs to support your goal. If you are going to be leasing commercial real estate, just make sure there is a continued demand for it.

Passive investing belongs to an investor’s portfolio. The barrier to entry is larger than single family properties, that can successfully invest in passive commercial real estate will find the benefits are well worth the hard work. Passive income through commercial real estate is one of the best long term exit strategies. If you know how to get into commercial real estate investing, consider adding it to your portfolio.

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About Sharon Rousseau Advanced   Personal Blogger

35 connections, 0 recommendations, 130 honor points.
Joined APSense since, April 8th, 2020, From Boynton Beach, United States.

Created on Dec 9th 2020 07:37. Viewed 241 times.


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