Commercial real estate investing is preferred by investors because it fetches more profit and it also provides passive income. A lot of people prefer to invest in commercial property because of its higher ROI but it is also true that commercial real estate investment is a risky business.
The current fear on real estate investing arose from the 1980 crash of the real estate market and some people say that the current state of the market is very much a parallel of those times. In 2006, money gushed into the market which drove real estate property values to unprecedented heights creating fortunes for many real estate investors. It was the time for buying and selling properties, but as the law of demand and supply has already predicted, prices started going down as demand started to fall. At present, a lot of real estate investors claim that another market crash will happen, but fortunately, many precautions are already in place and there still are a lot of real estate investors see low priced commercial and residential real estate properties are still good investments. Residential & commercial real estate is a perfect way to fulfill your desire for obtaining properties to fulfill your cash flow needs.
A lot of market pros are seeing a parallel, that is true, but there is no indication that another market crash can happen. As a matter of fact, commercial real estate investment has earned an asset class that competes with that of bonds and stocks. Structural changes in the market have created the stability that it needs in order for it to become a good investment capital. Some of these changes include the rewriting of the tax code and the fact that tax-loss syndicators are now out of business. But these aren’t the real reason why commercial real estate investment is becoming one of the major industries of today. Three fundamental and lasting changes have made residential as well as commercial real estate properties the perfect choice of investment.
1. REITs take off. In order to produce capital for their already dried up businesses, owners opened their companies in the form of real estate investment trusts, more commonly known as REIT. In the period of 1992 to 1997, 150 REITs were opened to the public which in turn increased the value of many companies. At present, there are about 180 REITs in the US are being traded.
2. Residential and Commercial Real Estate Investment by the Wall Street. Wall Street has found an opportunity to enter real estate through the mountains of Sell and Lease loans from the Resolution Trust Corporation (RTC). Because of the low price of real estate, investors can now earn more by leasing property if they are unable to sell it at a specific period of time. Residential real estate with the right financing solution can be as lucrative as investments in commercial property.
3. The Rise of Secured Debt. With the active participation of Wall Street in real estate investing, RTC proposed a plan to sell loan packages instead of the usual one property at a time. Commercial mortgage-backed securities were then issued in payment.
A lot of market pros believe that in order for the stability of the real estate market to continue, there is a need for information. Thanks to the existence of the information superhighway, this is task is so much easier. An advisor is there to help you in planning for the perfect commercial property as per the needs.
In the real estate investment industry you have to be sure to stay on top of things, that being said our commercial real estate investment newsletter will help you to do just that. We provide wonderful insight on this fascinating industry and will surely prove to be a vital tool in regards to your efforts to dominate this business.