CRE real estate – whether it’s industrial, medical, retail or some other industry type — has one big benefit in common that it outshines stocks, bonds, and mutual funds. Ultimately, you have more control over how your real estate investment performs. There are specific differences that we’ll share here. But, when it comes down to it, who doesn’t want more say so in how their money will grow?
Here’s how commercial real estate compares to other investments:
Stocks vs. CRE
While stocks have proven to get results for long-term investors who know what they’re doing, it is a volatile situation for an investment. It’s been compared to gambling, because you don’t know if that stock will fall or rise. Much like you can’t determine where a roulette wheel will stop. Once you commit to a stock purchase, you are partial owner of a company no matter how small your investment. If you decide to purchase a property, you are the sole owner – unless you choose otherwise.
Bonds vs. CRE
Unlike stocks, bonds don’t give you a stake in a company. They are a smaller risk than stocks, but their returns are typically small, as well. They act as a loan that is paid back to you over time with returns. However, the interest on a bond is fixed, so unlike real estate you don’t get the advantage of an appreciation of your investment. The main way the can compete with CRE real estate is if you are knowledgeable and strategic in which bonds to invest.
Mutual Funds vs. CRE
A mutual fund is monies pooled together and invested in a variety of assets – stocks, bonds, art, metals, or other like mutual funds. The growth of this investment is determined in terms of the increase in the fund’s net asset value, dividends, and capital gain distribution over a specific time frame. While you have the freedom to select your investments, a professional money manager oversees them.
Gold vs. CRE
Gold’s popularity is the main reason investors seek it. It’s also invested in as a way to beat inflation. While it’s considered a safe investment, there’s no option to leverage it for growth. Compared to commercial real estate, it offers no tax incentives or income potential.
If you have any questions about buying commercial real estate, don’t hesitate to contact us at the Menlo Group. We are here to help you learn more about how CRE can be a great investment for you.