The Other Side to Property Investing
When it comes to investing in real estate, the majority of people will consider something akin to looking around properties in their area with a view to doing them up, and renting them out, or flipping them a few months down the line to a new buyer after make some home improvements.
People have a tendency to stick with what they know in order to avoid property investment pitfalls, yet there’s a whole other side to property investing.
Introduction to REITS
This other side might be more attractive for investors than the typical residential properties, as the commercial property investment market, offers a way to earn a decent return on your investment with potentially lower risk.
This is also what’s known as a “hands off investment” meaning you can sit back and see your capital appreciate, unlike with a domestic property where you tend to have to get your hands dirty, whether that’s literally, in the sense of building work, or just keeping on top of receiving rent payments from tenants.
See, the value of a commercial property tends to increase over time and therefore, it provide a steady source of investment income. However, that is the case, only when the economy is strong – yet if the economy slows down or crashes you are less likely to experience big losses, like you might if you had a residential property.
Value Down Under
Today, property syndicates known as Australian Real Investment Trusts (Australian REIT) are becoming more popular with commercial investors. Yet, not everyone has heard of these before or fully understand what a REIT is.
Essentially they open up investment opportunities within large-scale commercial properties, such as shopping centers or office buildings. The benefit is that they enable savvy investors to diversify and tap into the strong and consistent income stream on offer in the commercial property sector without having to invest millions into a project, like most commercial investors are required to do.
Since commercial properties are a lot more expensive that residential, it’s understood that not everyone has the funds lying around to play at that level, this is where syndicates come in, as they help individual investors to invest in bigger commercial projects than they would otherwise be able to, and therefore tap into the profit potential of the corporate market.
Here are some of the benefits to this side of the property investment market, using a REIT.
- Save Costs
Understandably, you need a huge sum of money to purchase a commercial property, but by pooling financial resources with other investors, you can invest in profitable properties that are within your budget.
- Save Time
If you purchase a commercial property as an individual investor you will spend a lot of time managing different aspects from property selection to tax issues and maintenance. A property syndicate, on the other hand, allows you to share these responsibilities with other members – meaning you’ll save time, and also mitigate risk.
- Diversify Your Portfolio
Many property investors stick with what they know, and this can be good advice, however the best way to make a lot of money as an investor is to diversify your portfolio, and what better way than to invest in commercial property in addition to residential.