Global securitiezed token offering

 

How commercial real estate investments can generate returns
An investment strategy often begins with purchasing a property, with the goal of making profit two possible ways: first, by leasing the property and charging tenants rent in trade for use of the property; and, second, by capturing appreciation of the property over time.

Let's examine each of these ways that commercial real estate investment opportunities can potentially generate returns.

Commercial real estate investing returns

Rental income ​
One way commercial real estate can succeed being an investment is by producing rental income from a tenant or multiple tenants. Rental income, in turn, becomes cash flow or revenue for the equity owner of the property. For commercial real estate that functions through a fund (as with Fundrise), this cash flow / revenue / rental income often reaches the hands of investors in the shape of dividend distributions.

Commercial real estate's power to generate cash flow depends on a number of other factors, such as for example operating expenses and debt service. Property landlord duties can include maintenance and repairs, loan interest payments, rent collection, evictions, finding tenants, and ensuring that property is compliant with all applicable laws at all times.

You may consider hiring a property manager — or a complete property management company — if the task becomes too demanding, or in the event that you lack the mandatory financial, legal, and real estate knowledge needed to handle a property and tenants. A property manager charges a fixed fee or percentage fee of earnings, which alleviates property management responsibilities, but in addition reduces monthly earning possibility of you, the owner.

Maintaining a balance of vacancy versus occupancy is just a key element of successfully generating rental income — with as little vacancy as possible. Each unit that is unoccupied represents lost earning potential. Ideally, a very occupied rental property will produce a constant cash flow and consistent returns. Many owners aim for a 90% occupancy rate or higher. It's crucial that you closely consider vacancy rates and occupancy rates for the areas where you're considering investments.

The income created by rental payments is usually considered passive income for the owner, depending how they've decided to determine their management of operations at the building. Although some real estate investors like to be fairly hands-on, others prefer to delegate operational responsibilities to property managers. In cases like those, it can be said that the bucks flow given by rent truly is passive income with the tradeoff of one more cost. Fundrise, however, is just a truly hands-off real estate investment option offering passive income potential while putting no property-level management responsibilities in your shoulders and maintaining a low-fee model.

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