4 Goals to Consider Before Investing in Multi Tenant Real Estate
Real estate can be an excellent vehicle for building generational wealth and consistent cash flow. However, this doesn't mean you should go all in on the first deal you encounter. To maximize success and build an optimal portfolio by including multi-tenant real estate, investors must clearly understand their goals and property investment basics.
A well-defined investment plan helps investors determine which type of investment deal they would best benefit from and which investment group suits their desired outcomes. Not all real estate deals are alike, and savvy investors must weigh what they value most in a deal.
This blog looks at the leading considerations property investors should cross-check, plus an investment group that hits all critical markers for a successful long-term strategy.
4 Main Goals of Investing in Multi-Tenant Real Estate
The first and most crucial step is to consider the following: should you add real estate to your portfolio?
Building a successful real estate portfolio requires deep research and often a long commitment. It's not for everyone; of course, it carries some risk, like every investment.
What are the goals you should set? Examine the four primary considerations below to determine if multi-tenant real estate is the right fit for your investment future.
1. Cash Flow
While some stocks may not pay dividends, property investment provides cash flow through rental or lease payments.
Property investors should determine whether they prefer passive income (money delivered into an account without management duties), or active income, which involves managing and administering the asset. While both incur cash flow, commitment, and responsibilities will vary greatly.
Investors may consider a REIT (real estate investment trust) or other dividend-based investment vehicle if investing purely for cash flow. However, this strategy will not incur the benefits of appreciation and equity, which can contribute to a substantial payout for those willing to wait.
Due to the power of appreciation, property investors in a multi-tenant deal with a long-term vision can be rewarded with a significant payout at the end of an investment lifecycle.
When considering appreciation, investors should look at factors including the location, classification, investment type, and management expertise of the deal syndicators, as appreciation may be a riskier option than investing for cash flow.
If one of your investing goals is to hold a traditionally vital asset as a hedge against inflation and to minimize tax obligations, investing for appreciation is the right move.
3. Deal Structure and Payout
Having aligned optimal investing goals means nothing if the investment group you are backing underperforms or mismanages the deal.
Investing with a successful, experienced, and forward-thinking investment group should be one of if not your leading goals. If you're interested in commercial real estate and multi-tenant properties, you will most likely invest through a grouped investment.
Some fundamental considerations include the following:
Property management duties and responsibilities
Cash flow entitlement
Reinvestment in the property to increase value
Tax reduction strategies and investor support
With Kenwood Management, our deal structure puts investors first by covering their investment amount once cash starts coming in before the sponsors take anything out of the deal. Additionally, we offer a higher return of 7-8% annualized and self-manage all the properties we own to ensure mutually beneficial relationships.
4. Ethical Outcomes
In addition to earnings and appreciation, today's investors are looking at companies' ethical underpinnings and moral outlooks. Whether it's enacting social change or doing right by tenants, investment groups can be more than just a money-making process.
While some companies may be entirely focused on profit, we determined that building a support network and maintaining solid relationships with business tenants and investors is the key to the success of our real estate investments.
We're driven by the go-giver laws, a business philosophy based on generosity leading to reciprocity and success. We believe strongly in giving back to the tenant community and placing the interests of others above those of our own, which yields greater returns, net happiness, and stronger relationships with tenants and investors.
In short, a sense of community and strategies to help businesses succeed leads to longer and more mutually beneficial outcomes.
Multi-Tenant Real Estate Is a Key Ingredient in a Healthy Property Portfolio
Holding multi-tenant real estate means having an inflationary-resistant asset that provides consistent cash flow, appreciation, and equity. Goal setting and understanding the driving forces behind why investors choose multi-tenant real estate brings you one step closer to accessing and holding this historically vital asset.
If you'd like to learn more about the power of multi-tenant property investing or are interested in what we do, why we consistently reach larger-than-expected returns, or what sets us apart from other real estate investment groups, reach out to a member of the team.