Tag Archive for: industrial real estate

Investing in real estate offers numerous pathways to wealth, and understanding cap rate compression is crucial for investors looking to maximize their returns. InvestPlus Real Estate Investment Trust (REIT), a private investment fund based in Calgary, Alberta, showcases a compelling track record in leveraging cap rate compression to enhance investor ROI. Focused on acquiring, owning, and managing commercial and residential properties in western Canada, InvestPlus REIT has mastered the art of creating value in under-valued and under-managed properties.

What is Cap Rate Compression?

Cap rate, or capitalization rate, is a metric used to evaluate the return on investment for real estate properties. It is calculated by dividing the property’s net operating income by its current market value. Compression occurs when cap rates decrease, typically indicating an increase in property values and, consequently, a potential rise in ROI for investors.

Why Cap Rate Compression Matters for Your Investment

Cap rate compression is often a sign of a strengthening market, where demand for properties increases, driving up values and lowering cap rates. For investors in InvestPlus REIT, this phenomenon is a positive indicator. The REIT’s strategy involves identifying and transforming under-valued and under-managed properties into high-value assets. As the market appreciates and cap rates compress, the intrinsic value of these investments grows, offering investors a higher return on their investment .

InvestPlus REIT’s Approach to Cap Rate Compression

InvestPlus REIT employs a strategic approach to investment that not only focuses on immediate returns but also on the long-term appreciation of assets. By targeting properties in western Canada with potential for value creation through active management and strategic improvements, InvestPlus positions its portfolio to benefit from market dynamics that lead to cap rate compression. This approach has allowed InvestPlus to build a robust portfolio of commercial and residential properties, showcasing their capability to deliver strong returns to investors.

For those looking to enhance their investment portfolio, understanding and capitalizing on cap rate compression is essential. InvestPlus REIT’s strategic investments in the real estate market demonstrate the potential for significant ROI growth through this phenomenon. By focusing on properties with high potential for appreciation and actively managing assets to increase their value, InvestPlus REIT offers investors a smart solution to maximize their returns in a dynamic market.

There are so many factors that contribute to or prove to be detrimental to any business’s success. Being in the real estate industry for many years now, InvestPlus REIT has seen and experienced all sorts of challenges. During times of adversity, this is when businesses are tested most, and this is where operational excellence comes into play.

What is operational excellence, and why is it important to your business?

Operational excellence in real estate is being able to manage a huge volume of real estate properties really well—consistently. Not everyone can do it right, and it takes a certain skill set to grow a real estate company successfully. With operational excellence as part of your arsenal, better business-related decision-making can be expected, resulting in positive effects for your company.

Handling the marketplace can truly be stressful at times, especially during recessions and special unforeseen events such as the pandemic. When everyone is affected by soaring interest rates, measures must be taken in order to ensure profit for both the seller and buyer. How do we achieve this?

Debt Can Be an Asset!

About 56 years ago, we started exiting multifamily and went into industrial real estate. It is important to note that exiting and knowing when to sell falls under operational excellence too. Always keep in mind that exiting or selling will depend on where your company is, what your goals are for your company, and how exiting aligns with those factors.

For InvestPlus REIT, there were challenges when we moved into industrial real estate. Buyers wanted long-term financing and we found ways to work on this as well as timelines ourselves. Fortunately, we locked in our rates before the W.H.O declared the pandemic which drove interest rates up. It is in this kind of scenario that assumable debt becomes an asset.

With solid mortgage terms, you can sell your property along with it assumable debt that in time, still proves to be profitable even for the buyer. From the outside, this asset may be invisible! This is why working with reliable real estate investors can truly pay off for interested parties, as advice and factors taken into decision making are backed by years of experience.

Creativity is an Asset Too

It is important to note that each and every scenario is different. As an example, InvestPlus REIT President and CEO Domenic Mandato has faced about four recessions in his years as a real estate investor. All those instances raised the following questions:

  • How are the problems going to be handled?
  • How can we take advantage of the situation?
  • What is working/not working in the company?
  • What S.O.P.s can be standardized and improved?
  • How can we still generate income even within our portfolio?

Market crashes and times of adversity are always great opportunities to look inward. It’s a good time to reflect and rethink what works and how to build on it along with what is no longer serving the goals of the company. Discovering inefficiencies help us improve and exercising creative thinking plays an important role in coming up with solutions!

Scratch that—being creative is critical to success. No matter your role in the company there are always different perspectives that can and should be taken into consideration when coming up with innovative solutions. Consider this…

Ask your co-workers, spouse, someone who isn’t in the same field as you are, or even your kid a question that relates to your business and listen closely to their insight. This kind of creative brainstorming can spark genius solutions you would not have thought of because you’re so deep into the world of real estate. Hearing fresh input can re-jig your senses and come up with new answers to the all important real estate question: Where else can we grow?

Remember operational excellence and your hidden assets!