Commercial Real Estate

>>1547369
Interesting thread. I give you my bump and come back later.

biggerpockets

>>1547408
Not for commercial.

>>1547369
I've also been doing some research on CRE. So far the link you posted has been my favorite resource. I particularly like the video he has about everything that can go wrong.

Micro or macro?

All of my commercial stuff is relatively small scale. Don't really mind answering questions, but anything I say will be of questionable relevance and use, so keep that in mind.

Commercial varies a huge amount depending on your area, and saying that you do CRE is like saying you do software. It's broad enough to be effectively meaningless.

>>1549313
>relatively small scale
what exactly do you mean? do you own one-business premises that you rent out or what?

>>1547369
You need to provide some more information. Commercial real estate covers a whole crapload of different properties and uses.

please specify

>>1547369
Is that Ben Carson ?

Thanks for all of the replies. To get more specific, we were thinking along the lines of purchasing a relatively small apartment building (say 5 to 20 units) and renting it out for a steady income stream. The long term plan is essentially a buy and hold strategy where we can eventually live off of the net income. We don't have plans to do things that require us to continuously purchase and sell real estate like flipping.

>>1549313
If you have experience in this specific field and you don't mind answering questions, what would you say are some of the biggest challenges that you came across? I know some of the basics like:
1) You should consult an attorney and an account on many things, such as starting up an LLC or some other corporation type to minimize personal liability in case of frivolous lawsuits. Insurance also helps in these situations.

2) You must due stringent due diligence when purchasing commercial property since there is little consumer protection compared to residential real-estate (like double checking the finances, legal status, and the structure of the property itself beyond what the agent tells you)

3) When computing your expected income, you must break down all expenses like mortgage, interest on mortgage, taxes on property, insurances, average cost of repairs, maintenance, upgrades, cost of inspections, utilities, electricity (though you can pass those off to the renter) and be prepared for significant sudden costs.

4) You should be strict when screening tenants since a good chunk can end up damaging property or not paying rent on time or at all.

Anything major I'm missing from this list? As a separate note, do you manage the properties yourself or do you have some other company do it for you?

Thanks again for any replies

>>1547369
Call BNP as for structured products at that amount you can pull 40k a year no work

>>1549618
I mean small lots. No big box store stuff. No strip malls. No large office cubicle farms. Definitely no skyscrapers. Not quite mom and pop tier stuff, but a lot of small businesses with some random locations being rented out to big chains like fast food joints or tax services.

My primary field is residential properties.

>>1547369
God damn this needs to be a sticky.

Pick up 1 single personal finance book or actively seek people that are doing it. Maybe someone heare used to run a bar 2 days a week but i wouldnt count on it.

There is money to be had anywhere. The first thing he needs to do is hide that money out of his name before some cuck sews and takes it.

Smh...

>>1549779
Your approaching it sensibly for the most part. Attorneys are a must, for everything. As are accountants when planning.

Don't be afraid to go a bit overboard on the initial investment to get good contracts/leases, and financial planning. Legal stuff is something you are woefully unprepared for, so pay someone, and pay them well, to make sure it gets done properly. Managing expenses/taxes is a clusterfuck because of depreciation. Every state has radically different tenant laws, and local ordinances can change that even further. It's easier to go overboard and have a solid framework to expand and/or modify things in the future than to have to redo things at a later date. Often a lot cheaper too.

Things like land trusts wrapped in LLCs wrapped in your S-corp can make your accounting only a bit more complicated, but provide you sizable legal protection through obfuscation, but aren't available everywhere. Again, you have no clue what you are doing, so pay someone to cover your ass and set things up to be optimal for you.

>As a separate note, do you manage the properties yourself or do you have some other company do it for you?

I personally handle very little of the day to day management of my properties anymore. I do run a property management company though. Well, I own it. A manager runs it for the most part. I only step in to assist with unusual situations or major problems. Weird shit like handling paperwork for someone coming in from Europe on a work visa, or collating some information to handle a nasty eviction.

I don't personally handle evictions, and nobody in the company does. Pay a lawyer and get it done right so it gets done fast. The faster they are out, the less damage they can do, and the sooner I can start making money again. As I hinted at above, do it right the first time or be ready to do it again. Still, sometimes I need to stick my nose into things because of strange situations so that I can pass additional information onto the lawyer.

much less disclousres than residential real estate....

Office, Retail, Industrial and multifamily all move independently (loopnet has the best easy graphs).

City-feet and city-data are good for statistics on geographic areas.

single family is 1-4 units (stick with these for a few years)

8+ are real apartment buildings.

5-8 units a problematic, not usually large enough to get a good apartment loan, but too large to get a single family loan...

They are the shit tier goldylocks zone.

>>1550359
>5-8 units a problematic, not usually large enough to get a good apartment loan, but too large to get a single family loan...

Not to mention that in some states, 5-8 is the threshold for where you have to have an on premise manager.

>>1547369

My dad was a commercial developer for 30 years.

Shit actually all comes down to 2 rules: Buy the land when the market is down, and buy land in an area that is very likely to grow.

Beyond that there's a few other rules. Feel free to ask away. I HIGHLY advise your friend not to buy any land right now, the market is inflated as fuck.

My father sold a piece of land in Georgia, in 2007 for $16 million. After 2008 happened the value dropped to $4 million. It's currently at about $8 million.

You can lose your ass in commercial RE if you just listen to some slick agent.