How Your Investment Portfolio Could Benefit from Commercial Real Estate
When it comes to building a successful investment portfolio, there’s no one-size-fits-all strategy. However, conventional wisdom says your investments should include some mix of savings, stocks, bonds and real estate.
While savings is liquidity defined, poor interest rates (sub 1%, anyone?) make idle cash the antithesis of “investment.” Bonds, at a return of 2 – 3%, aren’t a whole lot better. Stocks can yield high returns, but carry potential market volatility and the gains can quickly turn to pain. Yet, despite providing potential lackluster returns, investment portfolios tend to be bond and stock heavy. What about the asset class: real estate? For many investors, even high net-worth individuals, real estate is often an underrepresented portfolio asset.
Still, many do not question the value of real estate investments. This makes sense, given that investing in commercial real estate (CRE) in particular generally means:
So, what exactly is “commercial property”? From an investor’s standpoint, it’s property that is meant to generate a profit, through capital gains or rental income. For real estate investment purposes, it can be helpful to categorize commercial real estate as follows:
As alluded to before, while there’s a potential upside to investing in commercial property, there’s typically a downside as well. Some risks center around these questions:
This is where crowdfunding comes in. Online real estate crowdfunding, through industry leaders like RealtyMogul.com, democratize real estate investing by granting “unconnected” investors access to curated and pre-vetted private real estate investing at different price points. The platform is fully online, leveraging technology to make everything about real estate investing faster, more efficient and transparent—all while keeping fees down.
One way RealtyMogul.com has swung open the doors to commercial real estate investment is with its first-ever crowdfunded Real Estate Investment Trust (REIT). The newly launched MogulREIT I, offered exclusively through RealtyMogul.com, grants members access to vetted commercial real estate investment deals. In fact, with an investment of just $2,500, members can realize the strong returns and steady cash flow afforded by commercial property ownership. And because of the platform’s transparent, streamlined process that eliminates all the middlemen, there’s no sales commission and expenses are capped at 3 percent—making returns potentially higher than past REIT participation.
As an investment vehicle, commercial real estate can provide some diversity to your investment portfolio—especially one that’s currently overloaded with savings, stock and bonds. Since commercial real estate investments can generate income through tenants that aren’t tied directly to the stock market, stable commercial properties are able to provide you with the potential for reliable and predictable cash streams. Online crowdfunding makes the whole commercial real estate decision, buying and tracking process potentially easy, convenient and affordable.
That makes this a potentially great time to diversify your investment portfolio with the commercial real estate of your choice. And the opportunity to build a more successful asset mix that’s just right for you. Keep in mind that real estate investing has risks, including risk of loss, and is not suitable for all investors.