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

Let's examine all these methods commercial real estate investment opportunities could possibly 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, subsequently, becomes cash flow or revenue for the equity owner of the property. For commercial real estate that functions via a fund (as with Fundrise), this cash flow / revenue / rental income often reaches the hands of investors in the form of dividend distributions.

Commercial real estate's ability to generate cash flow is dependent upon numerous other factors, such as for instance 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 work becomes too demanding, or if you lack the necessary financial, legal, and real estate knowledge needed to control a property and tenants. Home 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 really 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 strive for a 90% occupancy rate or higher. It's crucial that you closely consider vacancy rates and occupancy rates for the areas by which you're considering investments.

The income made by rental payments is often considered passive income for the owner, depending how they've decided to establish their management of operations at the building. While some real estate investors like to be fairly hands-on, others choose to delegate operational responsibilities to property managers. In cases like those, it could be stated that the cash flow given by rent truly is passive income with the tradeoff of an additional cost. Fundrise, however, is really a truly hands-off real estate investment option offering passive income potential while putting no property-level management responsibilities on your own 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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