Challenges of Investing in Real Estate

The commercial real estate market is making a comeback! Recent data suggests that now seems to be the ideal time to add real estate to your investment portfolio. Some benefits of investing in commercial real estate are:

  1. Stable cash flows: Commercial properties are typically occupied by tenants that have long-term leases, making cash flow fairly predictable.
  2. Low risk diversification: Private commercial real estate investments can be a wise portfolio diversifier since their returns have low correlations with other asset classes such as stocks and bonds.
  3. Inflation Hedge: Given its positive correlation with changes in the consumer prices, real estate investment can provide a partial hedge against inflation. As consumer prices rise, so do real estate cash flows and, typically, associated property values.