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Commercial real estate investment strategies

Many Florida investors consider commercial real estate to be a sound hedge against the volatility of traditional investment vehicles such as the stock market. In addition to realizing gains by selling office, warehouse or retail space at a profit, investors can develop a stable income stream by collecting rents from these properties. An improving economy has led many observers to predict solid growth for the foreseeable future, but the high down payments often required in commercial real estate transactions may be a formidable barrier to entry.

Real estate investment trusts are one way to tap into the profits available in the commercial real estate market without a significant cash outlay. These trusts invest in commercial properties and are sold like stocks on major exchanges. In addition to offering a lower cost of entry for this type of investment, REITs offer attractive yields and possible tax benefits.

Commercial mortgage-backed securities offer another investment strategy for those seeking access to commercial real estate profits without actually purchasing property. The number of CMBS issued each year is expected to grow by $35 billion over the next two years. Both REITs and CMBS allow investors to realize profits without the headaches often associated with managing commercial properties. They are also far easier to dispose of if cash is needed in a hurry.

Investing in commercial property can provide significant returns, but the risks are often high. While investment vehicles such as REITs and CMBS may appear to be attractive alternatives to conventional property speculation, they are often complex and specialized. An experienced real estate attorney may evaluate a REIT by assessing the diversity of its real estate holdings. Legal counsel could also provide advice and assistance to those who want to directly purchase commercial property either as an investment or a business location.

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