4 Steps To Choose The Right Commercial Multi Tenant Real Estate Group
Commercial property is a superb vehicle for investors looking to create passive income and target deals that may be out of reach as an individual.
Most investors access multi tenant real estate through an investment group or portfolio that syndicates and manages the property on their behalf.
However, while it's a great way to be a part of lucrative deals, that doesn't mean that it's for everyone, nor does it mean that every investment group will act in the investors' best interest. Undertaking foundational research on an investment group and its managers is fundamental to investing success in these group investments and minimizing losses.
In this blog, we look at four steps you can take to determine whether a commercial real estate group is the right call for your portfolio.
What Is Multi Tenant Commercial Real estate?
Multi tenant real estate is a building that houses several businesses conducting commercial activity.
For example, a multiple-tenant facility could include an office with several different tenants, a strip mall, or an industrial building with multiple manufacturers. Investment companies will buy multi tenant properties and source funding from investors who will receive dividends from rental income. Investors can also receive funds upon the sale of the property.
So, how can investors choose a company that helps them reach their passive wealth-building goals? Use the following steps to determine which commercial real estate investment company is right for you.
1. Study the Background, Motivation, and Investment Philosophy of the Group
Long-term investing in multi tenant real estate has generated significant returns for investors, but this doesn't necessarily indicate future returns. Instead, focusing on the investment company's fundamentals and what they stand for would be best.
Use the following questions as a foundation for your research:
Who are the syndicators or investment managers? What are their backgrounds?
How do payouts work? What is the split on investment?
Do the business managers invest their capital into the project?
What is the minimum investment amount?
Are there accreditation prerequisites?
How long have the investors been in business?
How do they add value to the properties? Do they support tenants in their business operations?
At Kenwood Management, our investment strategy is investor focused and value-oriented. We have a $25,000 minimum buy-in and do not require accreditation for any of our investors.
In addition, we structure our investments so that the sponsors will only receive money once investors have recouped their original investment amount. Finally, the team manages all Kenwood Management properties, allowing us to build long-term, mutually beneficial relationships with business owners and investors.
2. Speak To the Team
Investing in a deal can be a huge step. Unfortunately, emotions are often tied to decision-making. While top private equity groups mitigate risks as much as possible, there are never any guarantees in the investing world.
One of the best ways to determine if this is the right financial decision and investment company for your portfolio is to reach out to the team to dive deeper.
Asking specific questions can put your mind at ease and help you understand the fund better.
Start with the following questions:
How do you choose a multi tenant property to invest in?
How do you manage risk?
How do you manage debt?
How do you prepare for precarious market conditions and black swan events?
Remember that a successful investment group will be open to all questions and happy to engage with potential investors.
3. Determine How the Group Chooses Property
Knowing the decision-making processes behind an investing group can help you better understand the deal.
Look at the following questions to help you decide:
Where do they invest and why?
What is the amount of risk associated with the assets?
Do they focus on Class A, B, or C Properties?
Why do they choose the locations they invest in?
The Kenwood Management approach is to invest in carefully selected properties in the Baltimore and Washington D.C. area. We buy property locally for two essential purposes:
First, we know the surrounding market and location, which allows us to offer an unparalleled tenant experience.
We create long-term investment opportunities for investors by helping businesses succeed.
This approach leads to more significant long-term investor relationships and a better investing experience. In addition, we invest in Class B properties with minimal value-add requirements, allowing us to locate high-value properties often overlooked in the Baltimore and Washington D.C. area.
4. Outline Your Investing Goals
The final step is aligning investment opportunities with your goals and investing plans.
This will require an analysis of your risk appetite, minimum investment amount, and desired dividend returns (amount and frequency). Additionally, consider the group's ethical pillars, such as how they treat investors and tenants.
Our investment strategy is to provide the highest possible value to our investors through long-term investments in areas we know inside and out. We self-manage all properties, which allows us to provide unbeaten care for tenants and align all interests. When our tenants succeed, so do our investors.
Good Multi Tenant Property Investing Starts With Great Management
The success of a multi-tenant investment rests squarely on the heads of the managers and fund syndicators. That's why it's essential to research and understand the background and motivation of the people behind the deal.
At Kenwood Management, our investor-first philosophy allows us to build substantial investment opportunities that have outperformed projections for the past 22 years. If you'd like to learn more about the power of multi-tenant investing and how we secure industry-leading deals for our investors, contact the team today.
Learn more about why we believe commercial multi-tenant real estate is the best investment strategy! Download our free resource, "Why Multi-Tenant Commercial Real Estate Is a Good Investment."