Commercial Real Estate Investing for Beginners

February 25, 2022

If you’re interested in getting into commercial real estate investing but finding there’s a lot of misinformation and a high barrier to entry, you’re not alone. The good news is it doesn’t have to be that way, and we believe there are options to consider.

With the right support, you can feel good about making your first commercial property investment. You can also get started for much less than you probably expect, so you can start building your portfolio today.

We think the biggest thing you need at first, is insight. When you couple that with opportunity, you get the chance to start investing in commercial property. Note: commercial real estate investing is different from residential investing, so there’s a learning curve even if you’re familiar with residential real estate.

Here’s what we believe one should consider when it comes to real estate investing for beginners.

What Are the Common CRE Property Types?

We believe deciding which specific types of property you want to invest in is a crucial part of the journey for commercial real estate investors. Office buildings and shopping centers aren’t the same types of investments as storage facilities or multifamily apartment buildings.

We believe they can all be excellent investments, and many property owners will invest in more than one type of commercial property for greater portfolio diversification. That said, knowing the differences can help you make wiser investment decisions.

The main types of commercial properties are:

  • Office: These buildings are used for office space for both big and small companies, or for individuals who want to rent a space where they can work.
  • Retail: Commercial properties that fall into the retail category include standard stores and big-box retail spaces, along with strip malls and other spaces that allow for more than one retail venue.
  • Multifamily: Apartment complexes, duplexes, triplexes, and other configurations where more than one family has a home are considered multifamily properties.
  • Mixed Use: A mixed use property is exactly what it sounds like and may include things like an apartment building with shops on the ground floor, or a retail space that also has offices in it, among other configurations.
  • Industrial: Industrial properties are factories and similar types of operations, and they’re generally very specific in that they really can’t be used for anything other than their intended purpose.
  • Hotels / Hospitality: Motels, resorts, and some types of entertainment venues fall into this category, and most of these are larger investments simply due to the size requirements of these types of properties.
  • Land: Land can be considered a commercial investment if it’s zoned for commercial operations and not residential buildings.
  • Special Purpose: Anything that doesn’t fall into these categories is probably a special purpose property that’s unique, such as a stadium or similar type of property.

We believe every one of these kinds of properties can have value for investors, but they also have risks. Considering both the risks and the rewards of any type of commercial property gives you the knowledge you need to make the best choice for your commercial real estate investing portfolio.

What Potential Risks Should You Consider?

Investing carries risk. While that’s a calculated risk and one that investors need to be willing to take if they’re going to see their wealth grow, it’s still important to consider what kinds of problems could arise.

The most significant risk is loss of the money you’ve invested into commercial property, or loss of the property itself. Just like other material assets, a commercial investment property of any kind can lose value. It can also be destroyed through a natural or man-made disaster.

Also consider the risk of making a poor investment that isn’t giving you the returns you’re looking for, which can tie up investment dollars that would be better used for another property. You can also have bad tenants and other types of issues, but financial loss is by far the greatest risk for commercial property investing. To learn more about the risk/reward spectrum for specific property types, please see this article.

What Kinds of Potential Rewards Can You Expect?

Although there are risks to real estate investing for beginners, there’s also the potential for rewards when investing in commercial properties. These are primarily financially focused, with investors creating more wealth for themselves and their families over time.

As you invest, you can look for rental properties that traditionally offer higher rates of return. But remember that there aren’t any guarantees with investment properties. Unlike bank accounts that are FDIC insured, for example, investment properties don’t offer this type of protection. That’s why we believe wise investing is so important.

Another reward we believe you can expect from commercial real estate investing is confidence. In our opinion, as you make more investments and become more comfortable with market conditions, you’ll gain confidence to make stronger investment decisions.

What is the Best Way to Get Started?

If you’re ready to get started in commercial real estate investing, but you don’t have the level of capital many opportunities require, EquityMultiple is here to help. We serve accredited investors with a valid US government-issued ID and offer minimum investments that are as low as $5,000 to start.

We also provide plenty of information, with a transparent process we believe offers opportunities for you in for the long term. We have diversified offerings, so you can find the investment strategies that work best for your portfolio.

Whether you’re looking to invest in apartment buildings, office buildings, self-storage facilities, or another commercial real estate property type, we have passive investment opportunities you can choose from. A comprehensive dashboard gives you access to everything you need, right on our platform.

You can see where your dollars are going, we provide security protocols, and we offer the potential to help you build your commercial real estate investing portfolio. We also offer Short Term Notes as an alternative to a traditional savings account, giving you additional passive income options to build wealth on your terms.

To learn more about EquityMultiple, please feel free to check out our Track Record, or contact Investor Relations for more information.

This document is for informational purposes only and is not an offer or solicitation to purchase or sell securities. Investing involves risks, including the potential for principal loss. There is no guarantee that the strategies and services will be successful or outperform other strategies and services. Certain assumptions may have been made in connection with the analysis presented herein, and changes to the assumptions may have a material impact on the analysis or results.

Past performance is no guarantee of future results. The investments discussed herein may be unsuitable for investors depending on their specific investment objectives and financial position. Investors should independently evaluate each investment discussed in the context of their own objectives, risk profile and circumstances.

All opinions expressed herein constitute the author’s judgement as of the date of this article and are subject to change without notice. Statements made are not facts, including statements regarding trends, market conditions and the experience or expertise of author are based on current expectations, estimates, opinions and/or beliefs. Such statements are not facts and involve known and unknown risks, uncertainties and other factors. Past events and trends do not predict or guarantee or indicate future events or results.

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