Commercial Real Estate Can Fund the Bahamian Dream

Commercial real estate is one asset class in particular that is experiencing a rapid transformation. Once reserved for high-net-worth individuals or institutional investors, it can now be positioned as an attainable alternative investment option. Commercial Real Estate investments are appealing because they provide consistent returns, produce passive income and have a great potential for growth.

Everyone has their own version of The Bahamian dream, from owning a successful business to building a future for their family or achieving an early retirement with a beautiful home on the beach. However, this dream takes money, and making money requires a combination of hard work, dedication and calculated risk. Unfortunately, many Bahamians believe that risk is a reward of the wealthy and, when it comes to money and savings, they stick with what they know. When it comes to alternative investments, while Bahamians want in, many simply don’t believe they’re qualified or have a hard time knowing where to start.

This way of thinking is quickly becoming a thing of the past. A new wave of technology-powered startups is making various alternative investment options accessible to everyday investors looking to put their money to work. In order to tap into these opportunities, one should have a firm grasp on the space, and that includes an understanding of not only how and why to invest, but how to approach the industry in its current state.

IT’S TIME TO OVERCOME COMMON MISCONCEPTIONS.

The fact is, you don’t have to be a professional investor or wealthy entrepreneur to invest. A minimal initial investment, which is usually 5%-10%, to get started, while the professionals manage the entire process from vetting assets to the day-to-day management of the investment.

Most Bahamians still have a traditional approach and limited view of planning for their financial future, with minimal insight or control into where and how their money is invested. Thanks to new technologies it is now possible to capitalize on opportunities outside of traditional mutual funds, stocks and bonds. Exploring income-producing alternative assets like commercial real estate not only provides added safety through diversification, but also offers investors the chance to put their money to work in new ways.

WHAT YOU NEED TO KNOW BEFORE INVESTING IN COMMERCIAL REAL ESTATE

1. Not all property types are the same – commercial real estate is classed into 5 different categories; industrial, office, retail, multifamily and special purpose. The overall profitability of each category can vary and is based on supply and demand and yield.
2. Understand the market – Having a good understanding of legal implications, competition, rental averages and vacancy allow you to make a better investment that yields higher returns
3. Assess risks by property types – It is important to understand the range of risks inherent to your potential investment
4. Find capital or a good deal – To be successful you need two things: capital or a deal.
5. Remember everything takes longer – In comparison to residential real estate investing, due diligence can take months instead of days. Build out or renovation can take a bit longer, leases are longer as well. Patience is key.
6. Know the time frame for approvals – Before buying you need to understand the time frame required for approvals from planning to zoning and building permits

With all of that said it is important to note that all real estate investments carry a risk and are not guaranteed. Ensure that you do your research before making a commitment to invest and never invest money that you cannot afford to lose.