There are a number of different players involved in the buying and selling of commercial real estate and it’s important for all brokers, new and old to understand who they are and the differences among them.
These are everyday individuals who want to get their feet wet in the commercial real estate market. An investor can dabble in all asset classes or decide to focus their funds and efforts, specializing in one asset class.
These are your local mom & pop shops who are currently renting their location of business and no longer want to pay rent to someone else. These businesses decide to buy commercial property to use for their own business, these are called “owner-users”, they own the very building they conduct their business in.
These institutions include: Wall Street, publicly traded companies, and insurance companies. Such institutions will buy commercial properties when the market shows promise and sell when interest rates rise and when bonds show to be more profitable than real estate that moment in time.
REITs: Real Estate Investment Trusts
According to REIT.com, REITs “are companies that own income-producing real estate in a range of property sectors.” Essentially turning the real estate market into the stock market, publicly trading stocks on major stock exchanges.
These types of investors are non-institutional (non-bank) entities that loan money to invest in commercial real estate. Some of which include: venture capital, friends/family, and mutual funds. To learn more about the different types of private investors visit, earlyinvesting.com.
According to Investopedia, “foreign investment involves capital flows from one country to another granting extensive ownership stakes in domestic companies and assets.” The number one foreign investor investing in United States commercial property is China.
Syndicators pool in funds from a variety of investors to aid in organizing a real estate project. Some syndicators include: corporations, limited liability companies and full or limited partnerships.