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BUSINESS OF
MEDICINE

real estate, is a popular choice because rising specialized profession that requires special- of the tenant is based on the business itself,
prices increase the resale value of the of ized knowledge and hard work. There are often a corporation with more locations to
property. In addition, certain types of real many steps that must be taken in a particular secure the lease.
estate can be used to generate income, way before purchasing a rental property. One of the stark differences with invest-
specifically from rent paid by tenants. There This includes sourcing the property, con- ing in commercial real estate vs. residential
are many options for investors to seek cur- ducting due diligence, budgeting for repairs, is that the vast majority of the opportunities
rent income in real estate, but the question marketing the property to find a tenant, en- available to investors are done by profession-
that investors need to ask themselves is: suring the tenant has the financial viability als that specialize in real estate investing. This
to lease the property, and a slew of other does not mean that there is not risk, there is
managerial tasks to maintain the property. always risk. Compare this to the large por-
How much risk am I taking or On top of that, one must manage the finan- tion of rental property owners who are using
willing to take, and how much cial risks associated with purchasing the their own, non-professional skills to deter-
time and energy do I have to property, not to mention personally guaran- mine which properties to purchase for in-
devote to these investments? teeing a mortgage. And even if that laundry vestment, and you can see the increased risk
list of tasks is completed, one the biggest of loss immediately.
risk factors is that the property is either
100% occupied or 0% occupied.
Barring any undisclosed risks,
What does that mean? the diligence, management, and

The vast majority of residential properties operations of commercial real
are single-tenant assets, so if they decide to estate should be handled by a
vacate the property early, no income is being professional company, which
generated to offset the costs associated with allows the investor to receive
owning the property, and the investment passive income, allowing their
quickly turns into a massive liability. In order money to work for them instead
to protect against the 100% / 0% risk pro- of signing up for another job.
file, owning multiple houses to create a port-
folio can help diversity the risk — which also
incrementally increases the work and the Ari Rastegar is the founder and CEO of Raste-
capital outlay for purchase and upkeep. In ef- gar Equity Partners, a Dallas-based private equity
fect, this is not a passive investment like in- real estate firm. Rastegar is a Platinum Sponsor of
vesting in the stock market; real estate the Medical Society. He can be reached at 917-703-
requires active participation. 5027 or email: ari@rastegarep.com.
On the other hand, commercial real estate
refers to any non-residential properties used
Residential Real Estate VS for commercial purposes — most com-
Commercial Real Estate monly, apartment complexes, shopping cen-
Many novice investors elect to buy resi- ters, and office buildings. The properties in
dential real estate and rent it out to generate these instances are multi-tenant, so the risk
income. On paper, this seems like a very at- of default is spread out considerably and not
tractive opportunity, but upon closer analy- reliant on a single tenant for rental income.
sis, the risk may not outweigh the reward. In some cases, there are single-tenant com-
To begin with, real estate investing is a mercial properties as well, but the solvency

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