Investing in real estate can be a great way to expand and diversify your portfolio. Commericial real estate attracts several people; though the investment returns take longer to actualize, they are usually higher and are not subject to daily fluctuations in prices. You should prepare yourself before diving into this investment, and these are a few ways to do so.

Crowdfunding vs. Single Property

There are two basic approaches to commericial real estate investment. A single property is as it sounds—you invest in one commercial property, whether it is office, retail, industrial, multifamily, or special purpose. The other option is crowdfunding. With this format, you team up with other investors to provide funds for a property. Both options have things to consider. If you are crowdfunding, look at the record of the company you are working with and know what their rights and obligations are in withdrawing funds. If you choose to invest in a single property, determine what features make that one property separate itself from others, whether it be design, size, location, or trends.

Try Single-Family Properties First

Residential real estate differs from commericial real estate; the market can be fickle, and you are usually pretty involved in managing the property. However, many commercial investors get started in the residential sector. This is an effective way to “practice,” as you can learn, accumulate wealth, and better prepare to expand your investments. 

Consider Technology

The internet has increased possibilities in many areas, including investments. This has been apparent in crowdfunding. With the rise of online lending and fundraising, people of different levels of experience can come together to purchase property and network with others for more success.

As with everything, there are risks and rewards in commericial real estate investment.  Real estate depreciates, and in some circumstances, businesses are affected significantly. If you also make an investment in a building that is lacking in an area—locations, building features, type of business, etc.–you can lose money. However, there are plenty of rewards. You can receive tax breaks, whether through depreciating the value of the building for repairs to holding off on capital gain tax while trying to sell property. Investing in commercial real estate can also yield better returns since the leasing terms are longer than residential leases. Research the workings of commericial real estate investment, and if it can benefit you, it could mean an impressive addition to your portfolio.