Short vs. Long-Term Real Estate—Which is Better?

Published by Ryan Gibson

From multifamily and industrial to retail and mixed-use, syndicated commercial real estate assets offer unique investment opportunities for every kind of investor.

These investment opportunities are a great way to generate passive income and expand your investment portfolio. However, investors are often faced with the challenge of choosing between short- and long-term real estate investment options.

Both short- and long-term investment strategies have the potential to yield positive returns, but deciding which strategy is best for you all comes down to two things—time and risk.

In this post, we share some of the pros and cons of investing in short- and long-term real estate syndications.

Short-Term Real Estate Investing

While the high earnings and quick-turn results of a short-term investment strategy can be intriguing, it’s important to remember that the risks involved can be twofold given that there is an equal chance of making money and losing money.

Investors considering short-term investment opportunities should evaluate the opportunity cost of an investment before making a commitment. Some questions investors can ask themselves as they prepare to make a short-term investment include:

• How many exciting deals are out on the market right now?
• How much time will it take you to find a fantastic deal?
• How does the return compare to what you were getting before?
• How are you going to parlay those earnings into another deal?

These questions will not only help you determine whether the opportunity is the right fit for you but also understand if you are willing to accept the risk that comes with the investment.

Another factor investors should keep in mind is that short-term investments are not recession-proof. When a recession occurs, or even when there’s speculation of an imminent recession, the shortened time period of this type of investment limits your ability to recover from the weakened economy. If forced to sell your investment, you will likely receive lower returns than what you originally expected.

In this case, a long-term investment would provide a longer runway for the market to recover– allowing you to sell your investment at the right time and lock in higher returns.

Long-Term Real Estate Investing

Long-term investing is a great strategy for investors who want to avoid high-risk opportunities. These opportunities typically have less risk involved and offer lower, stable returns with good appreciation at the end of the tenure.

Investors with long-term business plans are good candidates for long-term investment opportunities. When analyzing your investment options, ask yourself: Does this investment’s time frame match my business plan?

For example, if you have a business plan that is focused solely on developing or expanding a facility, the initial phases of the development process could take up to two years to complete. As a result, a lot of time may pass before the investor is able to receive a return and benefit from the growth of the facility.

In this situation, it might make more sense for the investor to hold on to the investment so that they can benefit from the growth over a longer period of time and increase the value year after year.

Long-Term Investing with Spartan Investment Group

One option for passive long-term investing? Spartan Storage Fund 1, which allows accredited investors to hold a stake in the fast-growing self-storage real estate industry.

A single investment enables investors to capture $400 million worth of well-vetted opportunities, reducing investment complexity and increasing the potential for higher returns.

Are you ready to start investing with Spartan Investment Group?