Commercial real estate (CRE) investment is one of the finest ways to achieve a return on the investment. Every investment can have its own ins and outs, so it’s important to plan ahead as much as possible.
The CRE Investor Handbook is an optimal choice for creating an established investment strategy across asset categories through dialogues and practical key insights. These insights will focus on identifying potential opportunities and measuring results.
One of the most essential metrics in the CRE Investor Handbook for gauging effectiveness of CRE investing is the internal rate of return (IRR). CRE necessitates a multi-billion-dollar investment that is out of budget for a single retail investor.
Thus, Real Estate Investment Trusts (REITs) and fractional ownership seem to be the two potential substitutes for retail investors to participate in CRE. CRE is largely unaffected by price fluctuations, making it an effective long-term investment solution.
The first and most critical contributor in CRE investment is identifying and assessing classification of assets classes because this is directly proportional to investment results. Class A, Class B, and Class C are three key asset classes that are distinguished by age, quality, rent, and maintenance, and other aspects of a structure.
After choosing an asset, it’s time to manage it for the best possible return on investment. To do this, an asset manager will work as that of the investor’s proxy and identify strategic investment decisions to aid in the portfolio’s expansion.
Using their technical and real estate expertise and the principles of the CRE Investor Handbook, MYRE Capital will provide investors with:
● High rental yield: Exceptional rental returns between 8% and 10% with stable, consistent, and accurate income flow
● Capital appreciation: Offers capital growth year after year between 17% to 25% IRR
Problems faced in CRE
Data asymmetry: CRE is well-known for its data gap or asymmetry, in which one party in a contract has an advantage over the other due to better expertise and knowledge. For both investors and asset managers, this knowledge gap leads to inefficient markets, monopolies, and moral difficulties. In industries where information is limited and many transactions are confidential, analyzing the performance of the CRE market can be challenging.
Legitimate information gathering: Unlike the well-defined markets for stocks and bonds, credible information on CRE is difficult to gather. There are roadblocks such as brokers and dealers who force investors to pay considerably more than is necessary, which is a direct consequence of data asymmetry.
Lack of transparency: Transparency is also important for investors to feel secure investing large amounts of funds in CRE of various asset classes. Transparency in CRE pertains to the open sharing of relevant data-driven insights to make appropriate decisions about which assets to invest in. This lack of transparency will have a detrimental effect on the CRE market and undermine investor confidence.
The primary considerations in any CRE investment are driven by urbanism, eco/tech-friendly locations, amenities hubs, and budget. To address all of the aforementioned issues of data asymmetry, lack of transparency, and old antiquated methodologies, MYRE Capital uses advanced technologies and innovations to bridge these gaps and provide a better environment for investors, allowing them to make better asset decisions and increase their returns on investment.
Solutions based on CRE Investor Handbook
To make the best decision on CRE investment and get good returns, every investor should take into consideration the following aspects:
- Location: When it comes to accomplishing profitable results in CRE, location is the most critical aspect. The two approaches to earn positive returns in CRE are via rent and capital appreciation, both of which vary depending on the location. You should always look for locations with a higher than 95% occupancy rate. The higher the occupancy, the more income you’ll make in rent.
- Building grade assessment: Rents may differ between buildings in the same location. As a result, determining a robust building grade evaluation based on quality is critical. LEED gold and platinum certifications will allure global premium tenants, increasing returns, selling rates, and liquidity.
- Demand/Supply: Before acquiring a commercial property, every investor must consider demand and supply. Micro markets can be found in every Indian city, such as Whitefield and Electronic City in Bangalore. Each of these markets has a strong demand and supply relationship, which boosts investment returns.
- Rental yield analysis: This is an assessment of the annual rental income as a percentage of the value of the property. Rental yield analysis can be divided into the following two categories:
- Market Rent vs. In-place Rent: It is a formulated notion that aids investors in determining the risk variables associated with various asset types.
- Base Rent vs. Fitout Rent: Developers can entice investors by offering rental returns that include fitout rents. However, the difficulty is that these fitout rents are computed per square foot and are only valid for a maximum of 5 years. The rent will thereafter be set at base rates. To lower the risk-to-reward ratio, investors should be aware about this strategy.
- Tenant Portfolio: An investor’s tenant portfolio will consist of a good tenant that makes rent on time, pays a premium deposit, and stays longer. Furthermore, the commercial property’s lease structure and tenure are substantially longer than the real estate property, which is often held by MNC businesses for 9 to 15 years.
- Interior and Exterior Design: The investor may be expected to give fully-equipped buildings with all amenities at fitout prices. Alternatively, the tenant may be asked to design the interiors to his preferences and needs, making him stay longer.
MYRE Capital is a well-known tech-based asset management company that leverages big data analytics, predictive algorithms, and stringent financial analyses to determine the best asset classes and applies the fractional ownership method to assist investors earn high rental income and IRR through capital appreciation. Predictive analytics across 30+ data points, 25 years of expert-level experience, and a proprietary SOUL process are used to pick each asset.
MYRE Capital enables an investor to invest in a well-researched portfolio of assets with a favorable risk-return profile. It offers comprehensive end-to-end management throughout the total investment to the return process, making it appear as if you’re investing in a mutual fund. MYRE Capital may now be trusted to manage assets efficiently, allowing the investor to reap the rewards with minimal hassle.