Passive Investing In Commercial Real Estate

Passive Investing In Commercial Real Estate

Are you looking for a way to diversify your financial holdings? Do you find yourself looking for more predictable income-earning opportunities than your current holdings allow? Then, consider passive investing in commercial property. Brevard County, Florida, has numerous options for you to find the right property for your financial goals.

What is Passive Investing in Real Estate?

In passive real estate investing, you invest in a property asset without direct control over its management. This type of investment is a good option for individuals looking for financial investment but who lack time to manage a property actively.

Passive income investments in commercial property are the perfect way to generate income and create financial security for yourself. As your property brings in passive income from rent and appreciates over time, you will continue to see returns with little effort.

Want to learn how to invest in commercial real estate passively? Read on to find out!

How Passive Investing Works

There are two ways passive investing generates returns: income and appreciation. Income includes the monthly rental income collected from tenants. This is generally divided between the property owners and the real estate investors. A lower risk option for obtaining passive income is to take over a fully leased commercial property and work to retain the current tenants at market lease rates or higher.

Appreciation is the increase in the property’s value over time based on market conditions, improvements made to the property, or quality management of the property. For most investors, the big payout comes when the property is sold or refinanced.

Read more about property appreciation on our blog post Do Investment Properties Always Appreciate?

Commercial Real Estate is Ideal for Passive Investing

A commercial real estate is a fantastic option if you invest with a group of partners because it offers the potential for larger properties. In addition, these types of properties usually have a more consistent cash flow than residential real estate. However, not all commercial real estate is equal, and it’s best to work with a local real estate broker specializing in the product you are interested in to understand what types of property will best serve a community.

For example, it may cost more to invest in a flex space property or a medical building, but the payout can more than makeup for the expense. The higher price tags for the properties also deter competition, so you don’t have to compete with as many investors.

However, the key thing about commercial real estate is the tenants. Instead of relying on rent from residential tenants, whose leases usually last about a year, businesses who rent your property are devoted to longer leases, usually 3, 5, or as long as 10 years, in the Melbourne-Palm Bay, FL marketplace. A company has more at stake with paying timely rent than a resident. Their business depends on customers knowing where to find them! This provides you with a more stable income and gives you a safety net you might not have if you invest in residential properties.

How to Start Passively Investing in Real Estate

Generating passive income streams is one of the wisest ways to grow wealth. Here are several popular options for developing a passive income stream from real estate.


Online crowdfunding platforms like Fundrise offer investment opportunities for beginner commercial property investors looking for a low-risk option. You can generate passive income with a minimum initial investment of as low as $500. In addition, you will receive cash flow from dividends, distributions, and long-term appreciation of the properties of which you own a share.

Hire a Property Manager

Is owning an office building or apartment building an investment option you’ve been considering? Hiring a property manager can turn the building into a passive income opportunity. While you would still be actively investing in a rental property, hiring a property manager would take all the pressure off.

Property managers take care of minor repairs, collecting rent, vetting prospective tenants, and other daily tasks. They usually charge around 4% to 10% of the gross rent collected. Hiring a manager for your investment property will turn your real estate investment into passive rental income.

Exchange-Traded Funds

An ETF, or exchange-traded fund, is a grouping of stocks into one fund. ETFs invest in stocks issued by REITs or real estate investment trusts. These investment vehicles enable you to pool your money with other investors to get involved in a larger project. This is a good option for investors with lower risk tolerance because you do not own the properties. Instead, you receive the benefits.

Mutual Funds

Mutual funds are a form of passive investing similar to ETFs. Investing in real estate mutual funds comes with extra security because economists and other real estate veterans usually run them. In addition, it’s easy to research a mutual fund’s track record to ensure you will get a good return on your investment.

Passive Income Investing Opportunities in Melbourne, FL

For more information about real estate investing opportunities in Melbourne, FL, contact the experts at Ullian Realty. With over 60 years of combined experience, our team has the skills and knowledge to help you navigate the real estate passive investment options available in Brevard County.

This article was originally published on December 3, 2020, but has since been updated for accuracy and freshness.