Are you intrigued by the idea of generating passive income from commercial real estate but unsure where to begin? In the past, opportunities in commercial real estate were limited to industry insiders and accredited investors. Passive investing in commercial real estate has been gaining popularity among investors looking to diversify their portfolio and earn passive income. The process of investing in commercial real estate can be daunting, especially for beginners who are not familiar with the industry jargon and investment strategies.
However, thanks to the JOBS Act of 2012, the landscape has changed dramatically. Now, individuals like you can explore the world of passive investing in commercial real estate through real estate crowdfunding platforms. In this article, we’ll delve into the concept of passive investing, highlight its benefits, discuss various investment options, and provide you with a step-by-step guide to get started with one of our favorite platforms, FundRise.
What is Passive Investing in Commercial Real Estate?
Passive investing in commercial real estate involves putting your money into real estate assets with the aim of generating a steady stream of income while minimizing your involvement in day-to-day operations. Unlike active real estate investing, where you would directly manage properties, passive investing allows you to leverage the expertise of professionals and benefit from economies of scale.
Passive investing in commercial real estate has been gaining popularity in recent years. It is a great alternative to active investing, where investors must be actively involved in the management of their properties. Passive real estate investors simply choose a property and collect rent checks from the tenants. Passive investors can also earn money through capital appreciation as the value of a commercial property increases over time.
Benefits of Passive Investing
Passive investing in commercial real estate has become a buzzword in the investment world. As an investor, you can easily diversify your portfolio by investing in real estate through passive investments. However, many beginners find this type of investment intimidating and complex. Real estate crowdfunding platforms have made it easier for investors to participate in passive real estate investments without having to buy property themselves. With just a few clicks, investors can invest in projects located across the country or even globally. Some platforms, such as FundRise, allow an individual to begin investing in commercial real estate for as little as $10.
Commercial real estate provides an excellent opportunity to diversify your investment portfolio, reducing risk and creating a stable income stream.
Commercial properties tend to have longer lease terms and stable tenants, making them more resilient to market fluctuations compared to residential real estate.
By investing in commercial properties, you can earn passive income from rental payments, allowing you to build wealth over time.
How to Invest Passively in Commercial Real Estate
Real Estate Investment Trusts (REITs)
REITs are publicly traded companies that own and manage income-generating real estate properties. Investing in REITs offers a convenient way to gain exposure to commercial real estate without the need for direct property ownership.
Private placements involve investing directly in a commercial real estate project alongside experienced sponsors. This option provides an opportunity to participate in larger projects that may offer higher potential returns.
Real Estate Crowdfunding
Real estate crowdfunding platforms, such as FundRise, enable individuals to pool their resources and invest in a diversified portfolio of commercial properties. These platforms have made it more accessible and affordable for individuals to enter the commercial real estate market.
Getting Started with FundRise
FundRise is our recommended choice for getting started with passive investing in commercial real estate. With FundRise, you can invest in a variety of commercial properties for as little as $10.
Here’s how to get started:
Step 2: Complete your investor profile, providing information about your investment goals, risk tolerance, and preferred investment horizon.
Step 3: Browse through FundRise’s investment offerings, which include commercial properties across different markets and sectors.
Step 4: Select an investment plan that aligns with your goals and risk tolerance.
Step 5: Fund your account and start investing in commercial real estate. FundRise will handle all the property management and administrative tasks on your behalf.
Unlocking Long-Term Gains
Passive investing in commercial real estate refers to a strategy where investors put their money in an investment vehicle without actively participating in the management of the asset or project. The goal is to generate passive income and capital appreciation without committing time, energy, or expertise. Passive real estate investment can take several forms, including real estate investment trusts (REITs), private equity funds, limited partnerships, and real estate crowdfunding platforms.
Passive investing in commercial real estate has the potential to deliver substantial long-term gains. Historically, real estate has outperformed other asset classes, providing attractive returns and acting as a hedge against inflation. Commercial properties, in particular, have demonstrated resilience, even during economic downturns. With the projected growth of the real estate sector, investing in commercial properties can offer a path to wealth accumulation and financial security.
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In conclusion, passive investing in commercial real estate offers a compelling opportunity to generate passive income and diversify your investment portfolio. With crowdfunding platforms like FundRise, gaining access to this asset class has never been easier. By following the steps outlined in this article, you can embark on your journey towards achieving financial independence through passive investing in commercial real estate.
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