The Benefits of Investing in Commercial Real Estate with a Partner
Investing in real estate is by far one of the top ways to create long-term financial stability. Some people may start small and invest in a single rental property, while others may invest in apartment buildings. What you may not know, however, is that there are more advantages to investing in commercial real estate. People shy away from commercial real estate, only because they view it as complicated. By being wary, however, investors miss many opportunities.
Of the benefits of commercial real estate, here are a few:
- Passive income
- Tax benefits
- Lower expenses
- Longer lease terms
- Higher appreciation
As is clear to most, there are plenty of benefits. If you are still wary, however, investing with a partner may be an even better choice. In fact, the benefits grow when utilizing an institutional investor as a partner.
Commercial real estate is complex. If you have a co-investor, however, you will be in business with a company that has experience in commercial real estate and can help you make the most out of your investment.
An institutional investor has information that you may not find with the public. They have people who spend their time finding deals, analyzing them and underwriting deals. The sophistication that they have when performing these tasks is not typical of a normal investor. This is their specialty.
When it comes to investing in commercial real estate, banks want you to put a lot of money down. Few people have that type of equity. Institutional investors, however, can allow you to put just a fraction down while still getting the full benefits of the real estate.
Institutional investors also have a longstanding relationship with pension funds, banks, life insurance companies and others that provide low cost debt. Most institutions have exceptional credit that exceeds most personal standards. In addition, these institutions have management expertise. They understand the ins and outs of commercial real estate that you may still be learning. While you still need to pull your weight and do your share of research, you can let the partner drive the deals.
When it comes down to it, investing in real estate is complex and difficult for the average person. Most are too wary to go at it alone. Of course, in forgoing commercial property, you are missing a lot of different opportunities. This is why it is highly beneficial to have an institutional partner.