Why a investing in a business is a viable real estate investment alternative
Investors are looking for a real estate investment alternative. Real estate investments in the USA have been very strong after the recession. There were many properties on the market. The currency exchange rate was also very favorable to many countries. Thus, many foreign investors invested in real estate. Then the economy recovered in the USA, real estate prices went up and opportunities have started drying up.
And this trend is not going to change any time soon, as described in the OCDE economic survey. Which is very good news for the US economy, but not such good news for real estate investors. The market is hot.
A business can be a viable real estate investment alternative. Start ups are risky. Purchasing an existing business or a franchise are safer choices. Per bizbuysell, the past 3 years have seen an exceptional number of transactions for existing businesses, with more than 10,000 businesses sold in 2018.
Comparing returns and more
The stock market historically yields around 8%. Real estate, including rental properties and trusts between 9% and 11.8%. A profitable business can easily yield around 30%. However compared to the stock market or a real estate investment, there needs to be more involvement from the investor.
However not all businesses require to be actively involved in the business. Franchises have a net advantage to existing businesses for sale. Many systems and procedures, automate running the business on a daily basis. Also, some franchises can be run passively or semi-passively.
So franchises are a great real estate investment alternative. They can provide better yields with marginal involvement in some cases.
Franchises are also a great real estate investment alternative for foreign investors as well. Many franchise systems qualify for an E-2 Investor visa. This visa allows the investor to come to the USA and operate his business. Real estate investments do not qualify for an investor visa.
If you are US based or based abroad and you want to explore real estate investment alternatives, we will be happy to help. Contact us for a free consultation.