Choosing the right Commercial Real Estate Investing strategy

Putting your cash into commercial real estate is probably one of the most profitable things you can do as an investor. However, if you’ve ever invested before, you already know it’s a bit more complicated than that. In order to really make some cash, you’re going to need to choose the right investing strategy. There are several distinct strategies available, each with its own pros and cons that need to be considered compared to your ultimate financial goals. Some of the most popular options you have to choose from include:

Core-Plus

This is a low-risk investing strategy that’s proved popular among investors of all experience levels over the years. This strategy tends to focus on properties as they currently are, without investing in a ton of improvements and other changes. This makes it a less risky strategy overall, but also means it makes less cash overall than some other strategies.

Opportunistic

An opportunistic investing strategy can potentially bring the highest returns overall. However, it has the highest risk as well. Despite this, it is by far the most popular strategy within the United States. This strategy revolves are renovating old or outdated properties. These types of real estate can be purchased at a low price, and sold at a much higher price after the renovations have been completed. It’s more or less the commercial version of a fix-and-flip.

Value-Added

Value-added investing is another risky but potentially rewarding strategy. This strategy relies on adding value to properties via significant additions, renovations and other changes in order to get the most out of it during a sale. It’s more or less like a large-scale version of an opportunistic investment, and can take over 7 years to complete on average.

CMBS Investment

Buying commercial mortgage-backed securities is another way of investing in a property – or a wide number of different properties. This is a way of getting the investment you want while minimizing risk by working alongside other investors looking to meet the same goals as you.

Core

Core strategies don’t focus at all on making improvements to properties. Rather, those who practice this strategy focus on purchasing prime properties that are sure to increase in value and simple resell it. While it’s by far the least risky option for investment, it usually brings in the lowest returns.

Exploring each and every one of these investing strategies and deciding which one is the best for your goals and current financial situation is a must if you really want to make the most of your efforts.

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