The commercial real estate became a distinct form of real estate investments due the collapse of the residential real estate industry. The attractiveness of the sector can be traced to the subprime lending crisis that was characterized by the failure of mortgage. The home mortgages were backed by securities caused reduction of property values for homeowners and institutions that lend money.
The commercial real estate involves the construction and selling of properties that are used for a business like office buildings, hotels, industrial parks, and apartment complexes among others. Although the commercial real estate suffered from the market fallout during recession, it is still considered a safe place to invest in since investments do not lose its values significantly..
For example, you do not need to be a sophisticated investor to put your money in Home park investments. The home park is still a great investment, especially in a recession because it provides people with affordable housing. It is therefore, perfect for persons seeking investment opportunities that are more resistant to recessions.
There are two ways for investing in Commercial real estate. The first method is to participate in the direct investment of properties. You can purchase buildings individually, or you can form partnerships and limited companies that are used to make the direct investment. The direct investment has numerous advantages like annual write-offs through depreciation and sheltering of capital gains.
Besides, you can consider investing in Real estate investments trusts (REIT). These are investment vehicles that operate either through trusts or corporations to pull capital from many investors. This capital is then used to purchase a property like equity or mortgage loans. Participating in equity REIT will result in you owning and managing property collectively. On the other hand, when you contribute to mortgage REITS, the trust either purchases the mortgages or borrows money from banks that is used to lend other people hence fetching higher interest rates. Click here to read more. Either way, you will still make good returns.
Some of the advantages of REITs include lower risks and provision of hire dividends that are greater than the one provides in the stock market.