All commercial real estate investors have one primary goal: to buy commercial real estate and generate revenue. However, there are many ways investors may go about achieving this goal. Depending on factors like access to capital, risk tolerance, and more, they might deploy various commercial real estate investment strategies. This post will explore the more common strategies investors use.

Common Commercial Real Estate Investment Strategies

Core

The core strategy in commercial real estate offers the lowest risk. However, it also offers the least upside. It generally focuses on Class A income-generating properties to deliver reliable returns. These are properties in prime locations and with no serious problems. They also usually have existing revenue with no tenant issues. The primary profit goal with this strategy is the steady income from the property rather than appreciation. Investors favor this strategy because it promises low risk and predictable returns.

Core Plus

At its heart, core-plus follows the basic strategy of core investing. You buy income properties and hold them to generate revenue. It differs because the investor is looking for properties that provide them with options to increase revenue. For example, an office building might need renovations or upgrades to attract a higher quality of tenants. The risk is usually slightly higher than with standard core investing, but the upside is also higher.

Value Add

The value-add strategy in commercial real estate involves acquiring properties with the potential for significant improvements, repositioning, or operational enhancements. However, the primary return is not from operating revenue with a value-add project. Instead, the plan is to buy a property with significant issues and make improvements to increase value. If the project succeeds, the investor sells it for a profit. This strategy can offer significant returns, but it comes with significant risks. The timeline on these projects is often several years before there is a return.

Opportunistic

This strategy in commercial real estate involves high-risk, high-reward ventures aimed at capitalizing on unique opportunities. Investors pursuing this strategy seek out underperforming or undervalued properties. It might also include the acquisition of distressed assets or development projects. The opportunistic strategy carries significant risks, including market volatility and execution challenges. However, successful ventures can deliver substantial returns for investors. These projects may also require years of work and investment before realizing a return.

The suitability of an investment strategy will depend on various factors. They all require differing skills and resources to execute. Investors may also need the help of commercial real estate agents and other professionals to succeed.

CRE Investing in Columbus, GA

Are you interested in commercial real estate in the Columbus, GA, area? Click here to contact the Cummings Commercial Team. We can help you find the right properties for your investment strategy. Reach out now to learn more about how we can help.

Thanks for visiting!