Throughout 2018, hundreds of thousands of visitors came to our website to learn how to invest in commercial real estate. Below are our ten most viewed commercial real estate investing articles from 2018, in descending order:
10. Top 10 Commercial Real Estate Blogs for Individual Investors. We identified 10 regularly-updated blogs and websites that, like ours, help individual investors navigate real estate investing. These websites cover everything from commercial real estate investing concepts to the latest industry news and trends.
9. 3 Benefits of Investing in Private Real Estate. This article explains how private real estate offers the ability to generate high absolute returns, helps investors temper the volatility in their portfolios, and has a low tax burden.
8. 5 Underwriting Variables Critical to Value-Add Real Estate Investing. Underwriting is a complex and crucial part of the value-add real estate investing process. We explain the five main factors that play the most critical role when we’re analyzing our real estate investments: rent growth forecast, vacancy, resetting property taxes, exit cap rate, and debt assumptions.
7. What to Know Before Investing in Qualified Opportunity Zone Funds. The Qualified Opportunity Zone (QOZ) program was created as part of the 2017 Tax Cuts and Jobs Act to spur long-term economic development in thousands of designated communities throughout the United States. This article explains how the QOZ program works and what potential commercial real estate investors looking to invest in a QOZ Fund should know.
6. How Much of Your Investment Portfolio Should Be in Private Real Estate? It’s confusing to know exactly how much of one’s investment portfolio should be allocated to private real estate. In this article, we share the allocations of a top university endowment, results from a recent survey of high net worth investors, and our guidelines.
5. Using Weighted Average Cost of Capital (WACC) to Quantify Debt Risk in Real Estate Investments. Debt has a large impact on the amount of risk a commercial real estate investor faces, so every investor should be aware of how a potential real estate opportunity is being funded. We also recommend that every investor knows how to use WACC to quantify the exact debt risk they may be undertaking, so we walk through the formula with an example in this article.
4. How Internal Rate of Return (IRR) Can Mislead Investors. IRR has become the measuring stick for private investment managers, but this metric has serious limitations that all investors should understand. We explain why comparing IRR to annualized returns to make investment decisions can be a costly mistake.
3. How to Use Discounted Cash Flow Analysis (DCF) in Commercial Real Estate. DCF is the foundation for valuing all financial assets, including commercial real estate. In this article, we explain why DCF is the most comprehensive and accurate way to value an asset and we walk through an example of comparing two investment opportunities using DCF.
2. What is a K-1 and How is it Used for Taxes in Private Real Estate? A K-1 is the tax form prepared for each private real estate investor that reports the share of income, losses, deductions, credits and any contributions or distributions made during the year. We outline what investors should keep in mind regarding K-1’s and tax reporting.
1. What are Core, Core Plus, Value Add and Opportunistic Investments? Core, Core Plus, Value Add and Opportunistic are terms used to define the risk and return characteristics of a real estate investment. They range from conservative to aggressive and are defined by both the physical attributes of the property and the amount of debt used to capitalize a project. In this article, we share what investors need to know about each term.
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If there is a pressing question you have about investing in commercial real estate as an individual investor, please email firstname.lastname@example.org and we’ll do our best to write about it. We look forward to writing more articles for you throughout 2019.