Real Estate Investment Strategies in North America
Investors should understand the different Real Estate investment strategies
In order to understand Real Estate investing, it is important to be familiar with the kinds of strategies that they employ. Typical Real Estate investment strategies include:
Strategies Based on Risk Level
Core. This is a lower risk strategy that generally focuses on fully-leased multi-tenant properties in strong markets. This strategy involves lower leverage and generally has steady cash flows.
Core-Plus. This is a moderate risk strategy that is similar to the core strategy but with some additional element of risk, such as imminent large lease expiration.
Value add. This is a medium risk strategy that generally involves the purchase of property or other real estate assets that require some (but not a high) level of improvement.
Opportunistic. This is a higher risk strategy that generally involves the purchase of property or other real estate assets that require a high level of improvement or investment.
Strategies Based on Real Estate Type
Undeveloped real estate. Purchase real estate for development or entitlement. This may add value and seeks a return based on the manager’s expertise in obtaining entitlements and completing development.
Distressed real estate. This strategy involves investment in distressed real estate assets at a low price, with plans to revitalize the asset and sell it at a higher price.
Real estate asset classes
Real Estate investing may also focus on different types of real estate, such as agricultural, commercial, hospitality, industrial, multifamily residential, single family residential, and mixed-use properties. Each asset class offers unique opportunities and challenges.
Real Estate investments, consider economic factors market trends, economic conditions, foreign exchange rate opportunities, tax strategies when selecting their geographic focus. By diversifying their investments across different asset classes and geographic locations, Real Estate investments aim to mitigate risks and maximize returns for their investors.