Direct vs. Indirect Commercial Real Estate Investments
2 min read
Investing in commercial real estate is the way to go when looking to diversify your investment portfolio. Why? It offers various advantages such as passive income, low volatility, and overall leverage on the market. However, not all CRE investments are the same.
Below are the key differences between direct and indirect investments you should know.
Direct Investments
Direct investment involves an investor having ownership of the commercial property, where they then become a landlord. As a landlord, the investor must manage the property and acquire suitable tenants. Making a direct investment involves a considerable amount of market knowledge, as this type of investment tends to be a higher risk. Consider a property located in an area with low CRE supply but high demand. This will increase the chances of receiving higher rental rates. Before investing, review the local economy as this may affect the property's value.
Indirect Investments
Indirect investments involve investing in marketable securities such as real estate investment trusts (REITs). Investing in a company that purchases, manages, and operates commercial properties is often less risky than making a direct investment. This is a great way to increase your portfolio diversification with less commitment. Investing in exchange-traded funds in commercial property-related stocks or companies that cater to the commercial real estate industry, such as banks, is also a secure way to enter the market.
Whether you choose to make direct or indirect commercial real estate investments, both investment types will help you secure a recurring revenue stream and increase your footprint on the market.
References
Chen, J. (2022, February 8). Commercial real estate definition. Investopedia. Retrieved July 5, 2022, from https://www.investopedia.com/terms/c/commercialrealestate.asp
Shannon Terrell . (2021, November 5). 7 types of real estate investment options: Finder Canada. finder CA. Retrieved July 5, 2022, from https://www.finder.com/ca/real-estate-investing
About Royal LePage Commercial Westhaven
Our commercial real estate industry and segment expertise coupled with Royal LePage’s national platform and integrated systems provides best-in-class real estate strategies and a competitive advantage that can’t be beat.
We help businesses identify opportunities and maximize their return on investment with actionable goals, centralized support services and a strong commitment to customer success. Our national partnerships help us establish, guide and execute successful business investments.
We offer commercial real estate agents a professional environment, focused 100% on commercial real estate. Agents can expect unlimited market boundaries to build their business without the interference of a heavy corporate structure. In addition, agents will be able to access Royal LePage’s national referral network of over 18,000 agents to develop more business in their target markets with incoming leads generated daily. The brokerage provides agents a suite of services including marketing, promotional, networking and professional development needs.
Innovation and service excellence have developed and propelled the Royal LePage brand since 1913. When you join Royal LePage Commercial Westhaven brokerage, you have the backing of one of the most powerful commercial real estate services company in Canada—Bridgemarq Real Estate Services Inc. (formally Brookfield Real Estate Services Inc.). Bridgemarq is a leading provider of services to real estate brokers and agents. They are an affiliate of Brookfield Business Partners, a business services and industrials company focused on owning and operating high-quality businesses and is listed on the New York and Toronto stock exchanges.