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The lure of new commercial real estate investment options

7/6/2016 | Real Estate Blog

Many investors in Pennsylvania and around the country are starting to take a closer look at the commercial and residential real estate markets. This interest is fueled partly by the persistently sluggish returns of more traditional investment vehicles like the stock and bond markets, but it is also being driven by a number of new real estate investment options that do not involve buying properties or tying up large amounts of capital for long periods.

Real estate investment trusts are a particularly popular option for investors more accustomed to funds. REITS feature a portfolio of properties, and investors can buy shares in them in much the same way as they would in a mutual fund. REITS may provide a hedge against more speculative investments as their returns are based on cash flow and property sales that could be better able to weather fluctuations in the financial markets or disappointing economic forecasts.

Investment partnerships are another form of real estate investment that is attracting interest. These partnerships are based on the premise that pooling resources provides leverage while reducing risks, but experts caution investors to check the credentials of the real estate developer or property manager involved and review all paperwork carefully before making a commitment.

Other developing trends in real estate investment include crowdfunding opportunities and peer-based lending schemes that provide mortgage financing for home buyers. Attorneys familiar with the commercial real estate market may help their clients to avoid poor investment decisions by performing some due diligence on the property portfolio of a REIT or the individuals involved in an investment partnership.