Investing in Commercial Real Estate
Once an asset class that was only available for investment from corporations, high net worth individuals or those within particular networks, real estate crowdfunding has now opened investment into commercial property to a wider range of individuals. This means that you too can invest in Commercial property!
Commercial property generally refers to office buildings, industrial property, medical centres, hotels, shopping centres, apartment buildings and warehouses. As It is more of a scarce asset as opposed to stocks and residential property, commercial buildings have added intrinsic value as hard assets.
Historically, commercial property has provided investors with significant returns on their investments – with attractive risk adjusted returns and portfolio diversification.
Commercial property is purchased and money is made in two ways – by charging rent and appreciation in value over time.
Commercial Property and Rental Income
When it comes to commercial property, rental income can be made from differing and multiple tenants over time. Depending on the type of commercial property, rental income can be made:
For example, CrowdfundUP recently funded a commercial retail development in Geraldton, Western Australia with a commitment to lease made by Aldi and Caltex as well as national food chains, a warehouse and other retail establishments.
Commercial Property and Appreciation
Potential returns from a commercial property investment can also come from an increase in the property’s value over time. A number of factors contribute to an increase in value, including the scarcity of land and therefore an increase in demand, or through a “value-add” in the form of improvements to the property.
Unlike other forms of investment such as the stock market, commercial property investments often provide stable cash flow through rental income and also through an increase in intrinsic value.