Many Florida residents may invest in real estate by buying a second home. This is because they are familiar with the process of buying property and understand how it can appreciate in value over time. However, an individual may underestimate the challenge and risk in owning a single-family home for investment purposes. In many cases, it may be easier and more effective to passively invest in commercial real estate.
Putting money in commercial real estate may allow an individual to invest in groups that have a track record of making profits. By acting as a partner in a commercial real estate project, losses are limited. Furthermore, passive investing provides an individual with the opportunity to invest in any type of project anywhere in the country. Another benefit of passive investment in commercial real estate is that someone else manages the project and the cost of doing so.
Those who own a single-family rental either have to manage the property themselves or pay up to 10 percent to a property management company. Another risk to a single-family property is that it is either occupied or not, with no middle ground. Even if it is occupied, it may provide little in the way of predictable or sustained cash flow.
Before investing in any property or security, an individual may wish to review the profit/loss potential of that investment with a financial adviser. It may also be a good idea to consult with an attorney as this may make it easier to understand the terms of a real estate investment. With legal help, one may be less likely to have financial difficulties that may result in having to get out of the investment early or take drastic steps such as filing for bankruptcy.