Is commercial real estate common stock a good investment?

Answer 1

I'm not sure what is meant by "commercial real estate common stock". Do you mean stock in a holding company that owns commercial properties?

If so, the best way to decide if it's a good investment is to look at the occupancy rates of those commercial properties, and whether the businesses in them seem to be thriving stable businesses or dodgy here-one-week-gone-the-next places.

There's a general rule of thumb "lease cars, own land". The meaning of this is that cars generally depreciate (due to wear and tear, most cars won't be worth as much in ten years as they are right now), but land usually (though not always, and especially not over the short term) appreciates ... the historical trend is upward, so that an acre of land will probably be worth more in ten years than it is right now. That would indicate that owning land, or owning part of a company that owns land, is a good thing. But you've got to take into account current economic conditions, because if you had bought a lot of land in most places in 2007, by 2010 you'd have been real sad about it, since it would have been worth less than you paid for it.

The short answer, if there is one, is really that if you don't understand something well enough to judge for yourself whether it's a good investment or not, you probably shouldn't invest in it unless you've got money to burn and are willing to take risks. Even then, you'd probably do better taking risks on things you understand better, because then you could at least identify what the risks were.