Please don’t misunderstand—many people actually do quite well at failure without following these rules. But if you want to do a miserable job at commercial real estate investing, then you will need to believe in these statements:
I can’t invest because I don’t have enough net worth.
If I invest in a syndicate, I can’t communicate with the syndicator.
Real estate investing is an easy way to get rich quickly.
I’m too young to invest—or I’m too old.
Brick and mortar retail is being replaced by e-commerce, so why try?
Actually, let’s talk about how you can debunk these ideas. (You didn’t really think we wanted you fail, did you? Of course not!)
When you are ready to invest in Commercial Real Estate (CRE), you will want to know if you qualify to be accredited, as that will dictate where you can invest. If you need to be an “accredited” investor, you will need to earn more than $200,000 in each of the last two years (or more than $300,000 together with your spouse in each of those years) and reasonably expect the same for this year. Or, you have a net worth over $1 million, either alone or together with your spouse, excluding the value of your primary residence. Keep in mind that there are many, many opportunities to invest in good, substantial properties without laying out a huge amount of money. That leads us to Syndicates.
Syndicates, Fund Managers, or Crowdfunding Platforms, pool monies to balance the risks of investing in CRE and sometimes, the investor continues as an asset manager. However, more often, other professionals handle the day-to-day management of the property. The involvement of the firm where you are investing your money is something to consider before making that first investment.
Reputable fund managers deliver transparent reporting to their investors. Make sure you ask as many questions as you have. At Paradyme, investors are provided with real-time reporting through a personalized portal that you can access at any time.
“Easy,” “Get rich quick”? Nope, nope, nope! Well, okay, it could be easy, if you consider that for most of the effort, all you really need to do is place your funds with the fund manager. The fund manager does all the heavy lifting of vetting the project, the sponsor, the market, and so on. Just make sure you do your own due diligence and ask to see the research on a project prior to investing.
However, it does takes time—it’s just like any business and needs to be treated as one. You need focus, discipline and patience to make it work. By the way, it’s nothing like what you see on TV, and it takes much longer than they make it look. While you wait for a project to be turned over or make a profit, sometimes two to eight years might go by.
Also—age doesn’t matter. However, the sooner you begin, the better. A twenty-something young professional has just as many opportunities as a retiree. Each faces the same risks and obstacles. Each can have a seasoned professional by his or her side leading them to smart decisions.
Lastly, brick and mortar retail remains vital and even some e-commerce businesses that got their start online are now looking to establish a foothold in the physical world and open up as many avenues as possible for their customers. According to CBRE, one of the largest commercial real estate services companies in the world, e-commerce is actually driving the market, especially for in-fill sites close to major population centers.
Ready to move forward? Talk to us. We’ll make sure you have every advantage we can offer to make sure you succeed.