Statistics show that a total of around £20 billion was transacted in the London’s commercial real estate market, 77% of which was by foreign investors. Investing in commercial property is one way through which investors diversify their investments. From the given statistics, it is evident that foreign investors are playing a dominant role, probably because locals have no idea how they should invest in a commercial real estate. Here’s where you can invest in such in 2018:
Invest in REITs (Real Estate Investment Trusts)
REITs are a great way of investing in real estate without your active involvement. A REIT is a company which owns or manages income-producing real estate assets such as shopping malls, apartments, hotels, office buildings, self-storage facilities, and so on. A REIT does not develop any commercial properties for resale, rather it buys and develops such in order to operate them as part of their investment. There are different types of REITs, that is, mortgages, equity, and hybrid. A mortgage REIT company invests in mortgages while an equity REIT company invests in assets. A hybrid REIT company mixes the two.
Start flipping commercial properties
Commercial real estate flipping can be quite risky, but it is ultimately quite rewarding. Flipping involves the purchasing of distressed or unused commercial properties at a value that’s below the market value, then fixing them up for resale, and making a profit in the process.
To be a successful flipper, you need to have a network of realtors, commercial brokers, bankers, and attorneys to help you out. Such will help you secure properties as well as tenants and buyers due to their knowledge of the local real estate market.
Perform meaningful upgrades such as installing energy efficient features, making it aesthetically appealing, and adding on to its luxury. This improves the property’s market value.
Develop your own commercial property
Another way of investing in a commercial real estate is securing land and constructing your own property. Depending on the location and future trends, you can put up structures such as office space to let, industrial spaces, warehouses, apartment buildings, and any other structures to lease out.
You need to come up with a well-thought business plan to present to your financier. One advantage of owning your own commercial asset is the tax advantage, which allows you to depreciate your asset as you write off the mortgage interest you have paid in the course of the year.
Technology has enabled people to invest in the commercial real estate industry from the comfort of their homes via the internet. Through platforms such as Crowdfunding, auto-invest advisors, and eREITs, investors are able to set up accounts, deposit their funds and choose their investment platform. They then receive updates on their investment’s performance and are able to interact with their fellow investors.
While there are many ways of investing, a commercial real estate is one of the most rewarding investments especially as it pays out regularly. This is unlike investing in stocks which have no dividends. Capital appreciation is another factor that would make a commercial real estate investment worth your while.