What Does it Mean to Co-Invest in Real Estate?
Access the benefits of commercial real estate investing without the usual complexity.
If you’re looking for an investment that is tax efficient, relatively stable, and appreciates in value over time, then commercial real estate is a strong contender.
However, becoming the sole owner and operator of a commercial property requires an enormous amount of time, expertise, and capital. With co-investing, on the other hand, you can experience the benefits of commercial real estate without taking on the responsibility of sourcing and closing deals or managing the property.
In this article, we’ll explain how co-investing works, share the unique benefits it offers, and compare it to two other popular investments: REITs and real estate funds.
What is a Real Estate Co-Investment?
It’s easy to get bogged down with details when learning about a new investment strategy, but co-investing is exactly what you might guess from the name: multiple individuals coming together to invest in a property which they will then co-own. Each investor owns a percentage of the property proportionate to the percentage of capital they contributed.
Often, co-investment opportunities are created by an experienced sponsor, who manages the deal and coordinates with the various investors. This strategy, also known as real estate syndication, has become increasingly popular because of the growth of online investing platforms that make it easier than ever for investors to find and evaluate co-investment opportunities.
Key Benefits of Co-Investing in Commercial Real Estate
The most obvious benefit of co-investing in commercial real estate is the ability it gives you to invest in larger deals than you could on your own.
If chosen wisely, these large properties are often more stable investments than small commercial real estate deals or residential real estate. Commercial real estate is also less correlated with public markets, so it’s less volatile and more resistant to downturns.
While the specific details of the agreement will vary depending on the sponsor you choose to work with, many co-investments are completely passive, because the sponsor does all the work of sourcing, vetting, and managing the deal.
Real Estate Co-Investments vs. Funds and REITs
Co-investment is not the only way to passively invest in real estate, but it does offer some additional advantages that real estate investment trusts and real estate funds do not.
First, a co-investment allows you to have complete control over where you put your money. When you invest in a fund or REIT, your decision is based on who the sponsor is and the types of properties they tend to invest in. You don’t have any control over where your money is allocated within the fund. In a co-investment or syndication, on the other hand, you choose the specific property that you want to invest in, and how much you want to invest.
Second, because co-investing is a direct investment, it’s subject to the same tax benefits as a typical real estate investment, including depreciation and other valuable deductions. Funds and REITs, on the other hand, are treated as dividend income and taxed accordingly.
Access Premium, Off Market Investment Opportunities with Excelsior Capital
At Excelsior Capital, we’re committed to finding the highest quality of commercial real estate deals for our investors.
As an experienced sponsor, we handle all the heavy lifting that comes with sourcing, vetting, and managing a commercial real estate deal. Additionally, our extensive network allows us to find off-market deals that you would likely not find out about otherwise.
Our strategy has delivered consistently strong results for our investors, and we believe it will continue to do so in the future. In particular, we focus on commercial assets in healthy secondary markets, especially asset classes with low volatility, including:
- Medical office buildings
- Flex/Light industrial properties
And once you’ve invested with Excelsior, we take care of all reporting and investor relations, while also operating with full transparency and giving you access to our state-of-the-art investor portal so you can always know how your investment is performing.
To learn more about Excelsior Capital and our direct co-investment opportunities, please fill out this short form to get in touch with a member of our team.
Derren Burrell is a professional money manager with 28 years of experience in both the public and private sectors. Highlights of his active-duty service as an Air Force Financial Manager include managing $15 billion at the Pentagon…
Jason McCann is the CEO of Vari. It is his mission to help companies create environments that elevate people. He co-founded VariDesk in 2013, and the brand quickly became synonymous with sit-stand desks.
Liam Bailey is the global head of research at Knight Frank, based in London. Liam runs a team providing insight on the world’s key property markets.
Stephen is the CEO of GoldCore, one of the oldest gold and silver dealers in the market today that has turned over $1 billion in transactions and manages $300 million in assets for their clients.
Jeff Hays has 27 years of experience in the financial industry and was the co-founder of the institutional asset management company Hays Advisory and ran the company until 2019.
A real estate private equity firm that owns and operates high quality multi-tenant office assets in emerging secondary markets.
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Disclaimer: Under no circumstances should any information presented on this website be construed as an offer to sell, or solicitation of an offer to purchase any securities or other investments. This website does not contain the information that an investor should consider or evaluate to make a potential investment. Other materials related to investments in entities managed by Excelsior Capital are not available to the general public.