How Can Commercial Real Estate Investing Protect Against Market Volatility?
After a new tax system, predictions by economists about potential rising costs in lending and other uncertain economic conditions, many investors are moving away from the volatile stock market to safer investment options. Commercial real estate allows investors an opportunity to diversify their portfolio without having to rely on what happens with the stock market. This strategy ultimately allows investors to minimize risk.
Observed Volatility in Other Investments
Investors are frequently looking for a safe investment option, but today, there are many concerns about common investment types. Many people are buying or selling gold, but the value of this can fluctuate by the minute. Bitcoin and cryptocurrencies’ values are also in full swing. With more student loan and other debt, many young people are avoiding making a home purchase, so residential real estate investors are not necessarily safe as housing appreciation slows.
How Commercial Real Estate Avoids Volatility?
Commercial real estate avoids volatility for a number of reasons, including the following:
There are a variety of commercial real estate property types
Commercial real estate encompasses a wide variety of property types, including:
- Office space
- Industrial buildings
- Retail establishments
- Coworking spaces
- Hotels and motels
- Mutli-family housing complexes
- Apartment complexes
Because commercial real estate encompasses so many different types of properties, investors can diversify their portfolio within these sectors, spreading capital to different projects with different degrees of risk. They can also adjust their investments to meet current trends.
Delegation of property management
Most commercial real estate investors are able to secure a profit quickly because they charge commercial tenants more than their carrying costs. Additionally, they can pay a property management company to handle the investment, so their risk and hassle is further minimized.
Low cost to enter
The days when only private equity firms could afford to invest in commercial real estate are long gone. Today, many people can qualify for favorable commercial mortgages that have a relatively low down payment, so the investor’s own funds are not at risk.
Help from industry experts
Commercial real estate investors do not have to attempt to emerge into this new market on their own. They can use industry experts like Arthur Nachman of Long & Foster Commercial who can guide you through this process, identify favorable properties to invest in and minimize your risk. I know the demographics for surrounding areas and what has and has not been successful. I can use this insider knowledge to deliver important information to you, such as:
- The average household income for an area that you are planning to invest in
- How many vehicles drive past the property on a given day
- The average age for an area
- The types of jobs people have in the area
- And much, much, more!!!!!
My proprietary technology allowsme to give you the most up-to-date information. I can also give you data regarding the current and expected vacancy rate so that you can further mitigate your risk and develop an investment plan with accurate information. These actions can help you establish a balanced portfolio that avoids the volatility experienced in other markets.