Oxstones Investment Club™Many investors often tire or get bored of trading conventional stocks and bonds, many don’t realize that there is a wealth of non-traditional alternatives to explore. Real estate is a very common transition (or entry-point) for investors, who wish to reap the rewards of buying, renovating and selling properties. Below are some of the many reasons that investors are making the switch.
Viable Commercial Property
Investment in commercial property entails owning facilities used for businesses, as opposed to personal housing for tenants and families. These are commonly categorized into three sections: industrial, retail and offices. The opportunity for each sub-category depends on the location and demographic in the area you wish to invest in. A highly industrial region could possibly benefit for more available properties to be utilized, while it may also indicate an overabundance of available buildings.
It is wise to not compare the housing market to the commercial market, as they each have different influencing factors in regards to how they’re valued. A viable commercial building must be profitable and able to run a business, if they are to be considered worth investing in. Infrastructure repairs and renovations can also be considerably more expensive than smaller housing properties.
Still, is possible for housing market outcomes to inadvertently affect the commercial market, however the effects are less minimal. Commercial property is often an enticing investment due to its low correlation with the traditional classes of assets, this reduces the overall risk for an investment portfolio, and creates diversity too.
Unlisted Property
Unlisted Property is another key reason why millionaires are tempted by the offerings of property investment. Unlisted property is typical defined by investments in highly sought-after and well managed office or retail environments. This is due to their focus on producing a return for the investor and the investor’s desire to increase capital growth.
Unlisted Property is never listed on the stock market, and therefore relies on individual valuations to determine their true worth. This can create fierce competition among the market.
Capital Growth
Capital growth is one of the most common reasons for investors to take an interest in the property market. The potential benefit of investing in a housing complex that will continue to rise in value, is an enticing prospect for many investors.
Since the value of a property can be more predictable and streamlined for an investor, as opposed to trading bonds or stocks, the main challenge for investors is choosing the right location and market for the property. Choosing to invest in a rental apartment in an area of 100’s of already existing apartments, may indicate a lack of interest in the market. This may result in an investor losing money on land that is unable to be rented, due to an overabundant market.
The best advice for investors is to research their target market and region, to decide what kind of properties are going to perform well in their chosen area.
Mortgages
Mortgage investment involves a mortgage holder receiving a consistent income of payments. Much like a bondholder, these types of holders act as real estate investors due to their right to demand possession of materials, in the event of a mortgagee becoming default
These kinds of clauses and situations involve an early prepayment system, which may impact the current investor’s flow of payments. Purchasing mortgages is an effective means of expanding the diversity of one’s portfolio, by choosing to invest in various regions, types of properties (housing, commercial, industrial) and length of investment time.
Conclusion
Choosing to invest in the housing market is a viable option for many investors. The premise of witnessing capital growth is an appealing prospective for those willing to invest the time and resources to research the right location and property type for them. Utilize these resources and learn from peers who are already experienced in the field. Developing partnerships with real estate agents or brokers, is a fruitful source of information to gather.
Whether you wish to buy property in Turkey or L.A, discover why millionaires are turning their heads towards the property market for that next pay check.
Tags: alternative asset classes, alternative investments, buying off-market-properties, challenge for investors is choosing the right location and market for commercial real estate property investing, commercial real estate investments, CRE, investment, real estate, uncorrelated asset classes