How to invest in commercial real estate

May 21, 20213 min read
How to invest in commercial real estate
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Commercial real estate investing presents ample opportunities for accredited investors and non-accredited investors alike. Accredited investors have more investment opportunities available to them, although there is also often more risk associated with the potential for greater yields.

Owning commercial real estate

One option for real estate investing is owning property outright and collecting the rents yourself. This route can offer passive income, but you’ll need to have a property manager if you want it to be truly hands off.

A lot goes into owning real estate, so you’ve got to make sure you have all the proper documents and procedures in place. You don’t have to be an accredited investor to own commercial real estate, which means minimal barriers to entry when pursuing this path for commercial real estate investing.

Real estate investment trusts

Another option for commercial real estate investing is real estate investment trusts (REITs), which often trade on the stock market. As such, you don’t have to be an accredited investor to buy publicly traded shares in REITS. REITs own a variety of different properties, although some specialize in only a certain kind. REITs typically own, operate or finance properties that produce income.  

If you’re looking specifically into commercial real estate investing, you might consider a REIT that invests in malls or office space. Some REITs own property specifically for a particular company. For example, Simon Property Group owns and operates malls, which seek to generate rental income from tenants.

Commercial real estate investing on crowdfunding real estate platforms

Crowdfunding platforms like Yieldstreet offer an excellent way to get into commercial real estate investing with the potential to earn a passive income with very little work on your part. The platform can provide exposure to equity investments or income-generating loans backed by real estate.

Accredited investors can invest in Yieldstreet’s single-asset class offerings, although if you aren’t accredited, you will have to opt for Yieldstreet’s multi-asset class fund offering. Whether you’re interested in residential or commercial real estate investing, the Yieldstreet platform has plenty of opportunities for investors.

Yieldstreet and similar platforms seek to offer truly passive income because typically, after you make your investment, interest payments are expected to start rolling in if the underlying investment performs according to expectations. They usually come in on a monthly or quarterly basis, although sometimes the payments are event-based rather than following a regular schedule.

Commercial Real estate hedge funds

Accredited investors may want to invest in real estate hedge funds for further exposure to the real estate market.  Real estate hedge funds usually invest in REITs, although some also own property. They can serve as another way to diversify your investment portfolio.

Real estate investing offers plenty of opportunities for investors to generate passive income regardless of their accreditation status, but investors have to know where to look for deals across multiple offerings and investment vehicles.