Individual investors transforming commercial real estate

It has been noted that after the JOBS Act passed in 2012, the commercial real estate market opened up to a broader range of investors. It also led to the institution of real estate crowdfunding, which lets small investors in Illinois and other states buy smaller pieces of larger investments. In addition to reducing the price of entry, these new platforms may become popular for their diversification value. Some predict that various forms of commercial real estate, such as office spaces, retail centers and public-services facilities, could soon become more readily available to individual investors.

Real estate crowdfunding may fulfill niches created by increased bank regulation and less fluid credit in the wake of recessions. Because deals commonly rely on limited liability companies and other pass-through entities, investors may be able to reduce their overall tax burdens.

Commercial real estate might be attractive for many reasons, including the fact that it is designed to produce income. Being less volatile than other platforms like the stock market and actually benefiting from inflation trends may also make it easier to generate long-term returns. Crowdfunding investments, although unable to be traded as freely as stocks and similar financial vehicles, have provided a new way to structure portfolios, and the trend is predicted to become more commonplace.

Commercial real estate investment is becoming increasingly common as a means of wealth-building. Private individuals who simply want to create portfolios typically have different concerns and needs than institutional investors and property developers. The contract terms are also likely to be different. Those considering investing via crowdfunding may want to ask a business attorney who has real estate experience to review all of the applicable documentation before making a decision.

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