There are three basic frameworks to make money in commercial real estate. By understanding these fundamental strategies, you’re better equipped to navigate the complexities of your real estate market.
1. Opportunistic Strategy: High Risk, High Return
This approach involves seizing opportunities that others may overlook. Imagine buying a property below market value due to a distressed situation. It requires expertise, quick decision-making, and ample capital.
Who Is It For?
Opportunistic investing suits risk-takers with access to capital and expertise.
2. Value Add Strategy: Medium Risk, Medium Return
Here, the focus is on improving the value of existing properties by making calculated improvements. This strategy offers moderate risk with potential for significant returns.
Who Is It For?
Moderate-risk investors seeking stable returns with existing income streams.
3. Stable Income Strategy: Low Risk, Low Return
Investors opting for stable income prioritize steady cash flow over high returns. This could involve buying income-producing assets like rental properties or established businesses. It’s ideal for those seeking passive income or minimizing risk.
Who Is It For?
Conservative investors or beginners looking for steady returns without extensive involvement.
Aligning Strategies with Your Goals
Choosing the right strategy depends on factors like risk tolerance, financial position, and investment objectives. Whether you’re chasing high returns or prioritizing stability, there’s a strategy tailored to your needs.
