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

Let's examine each one of these ways that commercial property investment opportunities could possibly generate returns.

Commercial property investing returns

Rental income ​
One way commercial property 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 property that functions via 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 ability to generate cash flow depends upon numerous other factors, such as 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 an entire property management company — if the task becomes too demanding, or in the event that you lack the required financial, legal, and property knowledge needed to control a property and tenants. A property manager charges a fixed fee or percentage fee of earnings, which alleviates property management responsibilities, but additionally reduces monthly earning prospect of you, the owner.

Maintaining a balance of vacancy versus occupancy is a key part 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 regular cash flow and consistent returns. Many owners shoot for a 90% occupancy rate or higher. It's vital 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 master, depending on what they've decided to establish their management of operations at the building. While some property investors like to be fairly hands-on, others prefer to delegate operational responsibilities to property managers. In cases like those, it could be stated that the cash flow provided by rent truly is passive income with the tradeoff of an additional cost. Fundrise, however, is a truly hands-off property investment option offering passive income potential while putting no property-level management responsibilities in your shoulders and maintaining a low-fee model.

Make sure to look at https://www.reicapitalgrowth.com/commercial-real-estate-investment-strategy/ to see how tokenized realestate investing can make you money!

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