Navigating the realm of alternative commercial real estate can be a rewarding endeavor for investors seeking to diversify their portfolios and tap into sectors with promising returns.
Traditional commercial real estate investments, such as office spaces and retail properties, have long been favored for their potential to generate steady income. However, the rise of alternative assets like self-storage facilities and mobile home parks has opened up new avenues for investors to explore.
Benefits of Investing in Commercial Real Estate
Investing in commercial real estate offers several advantages:
- Stable Income: Commercial properties often provide a consistent stream of income through lease agreements, which can be longer-term compared to residential leases.
- Hedge Against Inflation: Real estate often appreciates over time, and rental income can increase with inflation, providing a hedge against rising costs.
- Portfolio Diversification: Real estate can act as a counterbalance to other investments, such as stocks and bonds, thereby reducing overall portfolio risk.
- Tax Advantages: Investors can benefit from tax deductions related to property depreciation, mortgage interest, and other expenses.
Why Invest In Self-Storage Facilities
Self-storage facilities have emerged as a compelling alternative commercial real estate investment for several reasons:
- Low Expense Ratios: Self-storage facilities often have lower operating costs compared to other real estate assets, as they require minimal staffing and maintenance.
- Higher Profit Margins: The combination of steady demand and low overhead costs can lead to attractive profit margins.
- Recession Resilience: During economic downturns, people often downsize or move, leading to increased demand for storage space.
- Scalability: Investors can start with a single facility and gradually expand their portfolio.
Mobile Home Parks: A Unique Opportunity
Mobile home parks present another lucrative investment avenue:
- 80% Mom and Pop Owned: A significant portion of mobile home parks is owned by small-scale operators, presenting opportunities for consolidation and professional management.
- Affordable Housing Demand: With a growing need for affordable housing, mobile home parks cater to a consistent demand base.
- Low Turnover: Residents typically own their homes and are less likely to relocate frequently, ensuring stable occupancy rates.
- Low Expense Ratios: Similar to self-storage, mobile home parks can have lower operating costs as residents often own their homes and are responsible for their upkeep.
Conclusion
Navigating alternative commercial real estate requires a keen understanding of market dynamics and the unique attributes of each asset class. Both self-storage facilities and mobile home parks offer distinct benefits, such as low expense ratios, higher profit margins, and opportunities to professionalize fragmented markets. By strategically investing in these sectors, investors can unlock value and enhance their portfolios while contributing to meeting essential housing and storage needs.
Next Steps: Interested To Learn More Or Invest In Commercial Real Estate?
If you would like to learn more about our Open Funds or invest in Commercial Real Estate please contact our investor relations team by completing the New Investor Form here (it will take less than 2 mins).
