Borrowing for commercial real estate is different from a home loan.
Commercial real estate (CRE) is income-producing property used solely for business (rather than residential) purposes. Examples include retail malls, shopping centers, office buildings and complexes, and hotels. Financing – including the acquisition, development and construction of these properties – is typically accomplished through commercial real estate loans: mortgages secured by liens on the commercial property.
Luxury real estate prices are hot and keep soaring. The top luxury real estate sale in New York was for a whopping $91,541,000 million according to the latest report from Christie's International Real Estate.
When you think about buying real estate, the first thing that probably comes to mind is your home. But physical property can play a part in a portfolio too, especially as a hedge against the stock market. However, while real estate has become a popular investment vehicle over the last 50 years, buying and owning brick and mortar is a lot more complicated than investing in equities and bonds. In this article, we'll examine the leading options for individual investors, listed in approximate order of how direct a real estate investment they are, and reasons to invest.
Investing in real estate can be a lucrative avenue for building wealth, and it’s an effective way to diversify your portfolio. Real estate investment trusts (REITs) and real estate crowdfunding allow you to invest passively, but some investors may prefer to own property directly.
To maintain a portfolio of investments that will weather the market's ups and downs, ideally, you'll want to be diversified and own both stocks and real estate. But sometimes that's not possible.
If you have to pick, which should it be? Stocks or real estate?
Let's take a look at how these investments stack up against each other.
Choosing Real Estate over Investing in Stocks
When done the right way, real estate investing can provide great returns through rental income, tax advantages and the capital appreciation gained from buying below the market value.