When buying stock from another company, your business diversifies its portfolio while creating opportunities for new revenue. These investments aren’t a sure thing, but the potential reward is well worth the risk. The same attitude has encouraged the rise of real estate investment trusts (REITs), private companies that specialize in purchasing and managing commercial property.
By investing in a REIT instead of directly purchasing real estate, investors can enjoy the perks of a strong market without having to deal with the hassle of actually buying, maintaining and selling real estate assets. It’s no wonder that the new approach to commercial financing has become so popular. For companies interested in acquiring commercial real estate assets, it is important to understand how the rise of REITs has affected the status quo.
● REITs stand out among growing field of non-bank lenders – Due to strict terms and excessive requirements, borrowers have been more willing than ever to accept an alternative to banks and traditional lenders. This demand has given rise to REITs, organizations that typically make it easier for their clients to receive capital and adopt a flexible repayment strategy, According to CoStar, REITs loaned out over $14 billion in the first half of 2017 alone, suggesting that their approach to financing has a broad audience. If REITs continue to increase their control of the market at this rocket pace, then it will only be a matter of time before they become true leaders in the industry.
● Industry sector piques interest of REIT investors – It’s interesting to see how REITs operate compared to other non-traditional lenders, who may concentrate on niche industries that banks may not be interested in. REITs, on the other hand, seem to be competing directly with other industry for the biggest slice of pie. According to the National Association of Real Estate Investment Trusts (NAREIT), most REITs are primarily focused on industrial projects. This is in line with most banks and traditional financial institutions.
● Many REITs already planning for the future – One of the clearest signs that REITs are here to stay is the fact that the industry’s leaders are already thinking about what’s next. A survey by National Real Estate Investor confirmed that most REITs are prioritizing taking advantage of opportunities in the rebounding industrial sector. In addition, REITs are also planning to zero in on medical office, multifamily and student housing investments in the next year as well. What does this mean for the rest of the industry? A more competitive pool of lenders is a boon for borrowers, and may actually create new opportunities for investors to score a big return.
It pays to know who you’re competing against when begin investing in commercial real estate. That’s why it’s so important to work with a lending professional who knows the local market (and its players) like the back of their hand.
Get the inside information you need when making commercial real estate investments by reaching out to experts in the area. Working with a knowledgeable private lender will provide your company with critical insights about the surrounding area.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.