How Revenue Sharing Grows Your Wealth at the Fastest Rate Possible!admin
Several aspects require discussion when it comes to commercial real estate. Buying a commercial space to lease out to a company or organisation not only yields higher returns but also gives you a fixed source of income for a longer time.
It is for such reasons that seasoned real estate investors like Chetan Kapur highly recommend commercial real estate investments over residential real estate investments.
However, investing in commercial spaces brings its host of queries and dilemmas. One such dilemma we have already discussed, regarding retail spaces and the differences between the different kinds of commercial retail real estate.
Another such dilemma presents itself in the form of revenue sharing.
What is revenue sharing?
Revenue sharing is one of the various methods you can use to get your monthly rental income. The objective of owning a property and leasing it to a tenant is a reliable monthly income. Revenue sharing determines the way you get it.
Simply put, revenue sharing is self-explanatory. Rather than paying a fixed rental income every month, you become a partner of the company and get 6-8% of the revenue that branch earns. This is a particularly effective route if you lease your property out to big-name, well-paying brands like Domino’s, Pizza Hut, KFC, Subway etc.
The branches of these fast food brands tend to grow and acquire wealth at an immensely fast pace. And it is natural that while they get richer, so do you. It is a win-win!
Why choose revenue sharing?
Much like any other wealth-building tactic through commercial real estate, revenue sharing comes under scrutiny. However, it completely holds up.
The idea behind revenue sharing is the sharing of profits. If you do your diligent background research on companies looking for tenancy in your property, who are offering revenue sharing as the alternative to monthly rental income, they need to be completely reliable.
Revenue sharing is essentially purchasing a company’s share. However, rather than going through the share market, you use a leasing contract. This means it also operates the way stocks do, i.e. when the company makes a profit, you make a profit, and when the company makes a loss, you make a loss.
However, in the long run, revenue sharing has massive potential to grow your wealth. This is because it not only relies on your getting a cut of the company’s revenue but also the fixed rental rate per square foot. By focusing on the former more, it contributes more to your wealth. In fact, several of CK’s clients have returned to him completely enthralled by the revenue sharing model.
The model allows the investor to earn 6-8% of the company’s revenue and, as we have established, depending on the size of the company, this could be a massive amount.
Always Do Your Research
Revenue sharing is one of the best ways of growing wealth in a reliable manner. However, as CK says, the importance of doing your due diligence and knowing about the company you are leasing your property to is integral to your wealth growth. Without this basic knowledge, there is a high chance of your revenue sharing strategy failing. CK especially emphasises the validity of case studies in determining the value of revenue sharing in a specific company.
By looking at that company’s case studies and noting the kind of revenue other investors who chose the revenue sharing model received, you get an idea of the type of income this brand is likely to make. Again, if it is a big brand, then the chances of you getting high returns, increase. However, smaller brands require some amount of research before you can put your faith in them.
CK Investments helps you with this research! We believe it is our responsibility as experts in the field of real estate to ensure that you invest safely and securely. This means that you know exactly what you are getting into when you choose a revenue-sharing model. Using over 10 years of experience, CK is an excellent consultant who knows what exactly the state of commercial real estate is and how you can gain maximum benefits from the various models, which guarantee you a steady monthly, rental income.