Getting Into Commercial Real Estate The High-Yield Way
SOURCE: Forbes
Financial troubles have turned net-leases into a high-yield way to get into commercial real estate. Net leases involve a building owner or a multiple building owner that sells off the buildings as a way to raise cash. They then lease back the building as tenants which makes for a steady and well-protected income stream for 20 to 30 years.
"Now's a good time to be a buyer," says Michael Houge, a principal at Upland Real Estate Group in Minneapolis. "I have twice as much retail property for sale as six months ago, with higher-quality tenants, better locations and more aggressive sellers."
Buying specialized real estate investment trusts (REITs) that own buildings rather than mortgages is another way to get into commercial real estate. Net-lease REITs do much better than equity based REITs.
Most sale-leasebacks involve deals with values greater than $20 million and this is too expensive for most individuals. They can still participate by piggybacking since REITs and other institutional net-lease buyers often sell off some of their properties to turn a profit or balance holdings geographically. Nationwide there are 11,000 single-tenant retail outlets with 60% of them priced below $2 million.
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Financial troubles have turned net-leases into a high-yield way to get into commercial real estate. Net leases involve a building owner or a multiple building owner that sells off the buildings as a way to raise cash. They then lease back the building as tenants which makes for a steady and well-protected income stream for 20 to 30 years.
"Now's a good time to be a buyer," says Michael Houge, a principal at Upland Real Estate Group in Minneapolis. "I have twice as much retail property for sale as six months ago, with higher-quality tenants, better locations and more aggressive sellers."
Buying specialized real estate investment trusts (REITs) that own buildings rather than mortgages is another way to get into commercial real estate. Net-lease REITs do much better than equity based REITs.
Most sale-leasebacks involve deals with values greater than $20 million and this is too expensive for most individuals. They can still participate by piggybacking since REITs and other institutional net-lease buyers often sell off some of their properties to turn a profit or balance holdings geographically. Nationwide there are 11,000 single-tenant retail outlets with 60% of them priced below $2 million.
Read full report »
