How to Start Investing in Commercial Real Estate

Interested in breaking into the commercial real estate market? Many people are and for good reason. There are plenty of opportunities in a wide market with growing potential. Commercial real estate investment is known to be one of the greatest ways to increase your return on investment potential. 

Where should you begin? The following information is intended to shed light on the industry and expand your knowledge on a range of foundational topics to get you started. 

What Commercial Real Estate (CRE) Involves

Commercial Real Estate (CRE) is what people assume refers to business properties, but CRE is more than just what’s familiar in a general sense. Any land used to generate profit is considered CRE and something to consider investing in.

Commercial real estate includes:

  • Warehouses 
  • Other industrial locations or buildings
  • Retail spaces, storefronts, and shopping centers
  • Mixed-use spaces
  • Medical buildings, healthcare facilities, and hospitals
  • Office space
  • Storage facilities
  • Condominiums
  • Large apartment complexes
  • Restaurants
  • Hotels and resorts

How to Invest in CRE

Investing in commercial buildings and properties typically involves one of two types of investments: direct and indirect. 

Direct investments – This type of investment means you own the building personally or through a company.

Some main benefits of direct investing:

  • Control over everyday property decisions
  • Tax benefits 
  • Portfolio diversification
  • Value preservation
  • Multi-generational wealth potential

It’s worth noting that direct investing is not passive income and it requires a large amount of initial capital to get started. Direct CRE investing is a relatively liquid type of investment that might be difficult to buy or sell. Direct investors use their high net worth to invest and enjoy the tax benefits that accompany the location’s depreciation.

Indirect Investments – If you decide to purchase shares in a company that owns the commercial property, this is an indirect investment.

Some main benefits of indirect investing:

  • Uses smaller amounts of financial investment
  • No responsibilities or obligations to the property
  • Instantaneous portfolio diversification
  • Typically liquid investments
  • Passive income

Indirect investing in CRE is more popular due to its financial accessibility and lack of hands-on responsibilities. It is an easier and faster way to break into commercial real estate investing, especially if you want to get a taste of what it’s like, start small, and build for future investments. 

It is also easier to make investments in locations outside of where you live but that are thriving in the area of commercial real estate. 

Consider starting your journey of CRE investment by surrounding yourself with those well-versed and connected in the industry. This includes successful CRE agents, property management companies, brokers, attorneys, insurance agents, etc. With the right people in your network, you’ll get a better outlook on what is involved in the process from multiple perspectives. You will also have a better idea as to the timing and location of investment, along with any legal stipulations to consider prior to making your initial or any future investment decisions. Either way, investments require calculated risks and often come with plenty of rewards and payoffs. 

Plaza Companies is the Premier Choice of Commercial Real Estate

Plaza Companies is a full-service real estate firm specializing in the leasing, management, construction, and development of some of the most innovative commercial real estate projects in Arizona. 

Plaza Companies is successfully competitive in the commercial real estate space while remaining compliant with all accessibility needs as a top priority along with all other legal obligations.  Our firm specializes in staying connected and conscientious of all emerging trends and laws.

Contact us today to learn more about leasing the right space or anything else we offer!

Ready to Get Started?

Whether you are looking to us for management, leasing or development services, we can help you find the perfect space. With almost 40 years of experience, you can trust Plaza Companies to assist you with your real estate needs.

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