When the topic of investing comes up, you’ll often hear that diversification is important.
But diversification — which means having a differentiated portfolio of stocks, bonds and other securities in addition to retirement investments — might not be enough in the traditional sense.
Maybe it’s time to consider alternative vehicles, such as businesses and real estate.
When it comes to commercial real estate, it’s always a great time to invest, said the experts at Shakiba Capital. Expanding into real estate as an asset class can be beneficial for a myriad of reasons.
Many investors seem to wince at the idea of dedicating time and putting money into real estate due to the fear of dealing with all the baggage that can come with it.
However, investing passively into commercial real estate is an incredible way to protect your investments, and build your portfolio, without worrying about troublesome tenants and time-sensitive upkeep.
It allows you to receive consistent cash flow without the ups and downs of the stock market. It can also be a great asset to hold during recessions as people will always need a place to live. Finally, commercial real estate, and in particular apartments, have historically appreciated steadily over time.
Investing in real assets
It’s not enough to invest in real estate mutual funds. When you invest, you should be putting your money in the actual asset itself. This allows you to own the building and receive all of the substantial tax benefits that can come with doing so.
Shakiba Capital recommends targeting apartment complexes in the Class B and Class C asset class, which provide cash flow from day one. Traditionally, these properties have been a great recession and inflation hedge.
Additionally, when on the search, look for properties where you can add value through improvements and efficiencies, which will allow you to not only increase rents but also lower expenses.
Commercial apartment real estate
The data is in: More people are renting than ever before.
In fact, consider the average age of owning a home in 1980 was 30. Today, that has risen to 45, according to this report. That gap has created a world of opportunity. Furthermore, some Baby Boomers no longer want t o own a home as the cost and upkeep is too much to deal with. This is another group of renters that didn’t previously exist. And of course, some millennials don’t want to own a home due to large down payments, student loan debt and rising home costs. All of these are great data points on why you should consider expanding your investments into commercial real estate as an asset class.
What to look for in your target market
Once you’ve decided to invest in multi-family properties, the next factor to identify is your target market. Specialists suggest that you should look for the following aspects:
- Areas of population growth
- Increasing wage growth, signifying a flourishing environment
- Job growth, meaning people are flocking to the area for opportunities
- Emerging metro areas with low taxes and a pro-business attitude
Need to learn more?
Commercial real estate investing is a hot topic right now based on the volatility of the stock market. It can be extremely complicated to venture into, even for those who have invested into real estate before.
There are plenty of aspects to learn and watch as you diversify your portfolio.
The experts at Shakiba Capital, a private equity real estate firm, want to help you achieve a high return on your investment, consistently and efficiently, while expanding into this new asset class.
“We’re experts at acquisition and fast turnarounds for underperforming multi-family assets. If you re looking into metropolitan markets, check us out,” the company said.
Contact Shakiba Capital to learn more about how the team can help you gain the most out of your investments moving forward.