If you want long-term wealth, investing in real estate is still one of your best options. While some people try to start out with a small rental property, others might decide to invest in larger scale commercial real estate. This includes retail, healthcare, hotels and other commercial projects. One of the reasons that people might shy away from CRE is because it’s a complicated asset to invest in. Fortunately, if you have a partner, particularly an institutional investor, you may have more benefits.
Your partner may have access to information that the general public won’t. In fact, your partner may have a team of people that works to find, analyze and underwrite deals. They have more sophistication and expertise than the average investor does. If you co-invest, then you are more likely to meet someone that has expertise and opportunities that you wouldn’t before.
There are high barriers to get involved with CRE. Most people don’t have the type of equity it requires to make the investment. If you co-invest, you will have the equity and be able to overcome more barriers than you would if you were doing it alone. There are a lot of opportunities when it comes to working with an institutional investor. Barriers that others may fail at overcoming, the partner already has experience in overcoming.
Investors tend to have relationships with pension funds, life insurance companies and banks. They have access to low-cost debt that you might not have access to normally. Many have credit standards that exceed that of typical money center banks. If you want high-quality debt, consider co-investing.
A business partner, particularly an experienced investor, will understand the management and complexities of commercial real estate. If you co-invest, then you can rely heavily on the other investor to drive the process. Now, you still want to have be a part of the process and never want to follow an investor blindly, but you can use their experience to your advantage.
When it comes to investing in CRE, it’s easier to handle the investment when you have a partner. Not only will you have more opportunities, but you will be able to overcome barriers and work with people who have more expertise in the area. Commercial real estate is an extremely complicated asset, but one of the best investments that a person can make. The difference is with a partner, you are more likely to succeed.