Are you curious how commercial real estate investment companies can help maximize your profits? Some key points we’re going to discuss in this article include are:
- What commercial real estate investment companies can do for you
- The four main ways to make money with real estate
- How to maximize your real estate investment profits
- Why it’s important to diversify your income stream
The main objective of this article is to learn if hiring a real estate investment company can really make you more money. But before we dive into how you can make more money, let’s consider the four main ways you can make money with commercial real estate.
Invest in a real estate investment trust
First, you can make money by purchasing a real estate investment trust. This is often referred to as REITs. An REIT is a company that owns or finances income-producing real estate across a variety of property types. Companies like these have to meet many requirements to be considered. You can research and purchase an REIT on your own or through a real estate investment company.
Use a real estate investing platform
Real estate investment apps have become increasingly popular among DIY investors. While these apps are generally user-friendly, they lack the guidance of one-on-one financial consulting. They can, however, be an option for a potential investor who has a lot of time to devote to managing his or her assets. Benzinga wrote an article rating the ten best real estate investing apps that you can access here.
Purchase rental properties
This option is quite obvious, but it’s worth mentioning. Purchasing rental properties is a great way to build wealth over time. Whether it’s a single-family home you lease on the side or a commercial property you lease full-time, you’re likely to increase profits over time. Check out our property management company’s article, How to make affordable upgrades to your rental property as an extra resource to help increase your property’s value.
Flip investment properties
Though it’s not always as easy as it appears on reality television, DIYers who flip properties usually see a huge ROI. If you have the skills and time for it, it’s a good option. The downside to flipping properties is that it can take a lot of time to complete on your own. It also often ends up being more expensive than planned. In most cases, investors will flip a building and then sell for profit; however, you can choose to keep the property as a rental. According to Bradley Clark, CFP® of Clark Asset Management, the income from investment properties can be anywhere from 6% to 8% per year.
What commercial real estate investment companies can do for you
Commercial real estate investment companies enable you to invest without having to deal with the time and responsibilities that real estate often comes with. It’s a great option to make streams of income truly passive. Additionally, real estate investment companies are knowledgeable about specific markets that you may not have time to research as thoroughly. Because of this, you can experience:
- Increased cash flow on all your investment properties
- Better tax advantages that you wouldn’t otherwise know about
- Continual appreciation of your properties because of their professional insights
- Building equity over time
- Leveraging your money instead of making risky decisions
- A hedge against inflation to protect your assets
Working with a reputable real estate investment company can help you take your investment profits the farthest.
How to profit from commercial real estate investing
When considering a new investment opportunity, create a realistic plan for your expected cash flow. There are definitely other benefits to owning real estate, but cash flow is the most sought after. You should weigh out the amount of profit potential you’ll earn from fixing up a property and selling, versus renting it out. You’ll also need to consider income against the depreciating value to determine what you’ll owe for taxes.
Commercial real estate companies can specifically help you find local buildings that have a high projection for success. While residential real estate offers its own benefits, generally, higher profits come from commercial real estate investing. And the good news is that you don’t need to be a self-taught expert if you’re working with a reputable advisor.
Diversify Your Income Stream
In Tom Corley’s book, Rich Habits, he finds that 29% of self-made millionaires have five or more streams of income. (The rest have at least three streams of income.)
Rental income is a great way to diversify your income from stocks and bonds. If equity markets go into a downturn, your rental income is unaffected, providing additional means to diversify your income stream. However, you can be impacted by a housing market downturn. Overall, it’s best not to put all of your eggs in one basket. We recommend taking advantage of income opportunities in various markets, including commercial real estate.
Be realistic about the investment of your time
While the aspirations of building your wealth through real estate investing are exciting, in application, it is time-consuming. Before any new endeavor, take a realistic look at how much time you have to spend. Do you have to juggle investing while working a full-time job? Do you have a family or commitments in your community? If you’re unable to put in the time it takes to be a well-informed investor, consider hiring a real estate investment firm.
Blackarc Investments is a commercial real estate investment company in Billings, Montana. If you’d like to talk with an experienced professional at the Blackarc, reach out to schedule a free consultation.