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Commercial Retail as Investments


murcivu
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I would like to venture into this segment for future investments. Interested in mostly shopping strips...etc. Are there books out there that would be insightful? Would like to start reading and gathering info. TIA.

Sorry...just notice the business section. Please transfer if needed.

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Man I see so many empty centers in high traffic areas. Right next to my house is a good example.

 

I am looking for an investment right now as well. Maybe car storage? Sphere is PACKED!

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Man I see so many empty centers in high traffic areas. Right next to my house is a good example.

 

I am looking for an investment right now as well. Maybe car storage? Sphere is PACKED!

 

 

I think if you can find a shopping retail that's been established, hopefully the returns are stable and consistent. I thought about storage units as well. Need passive income.

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Books are probably not going to help.

 

Location! Location! Location! are the important factors.

 

Make sure you are familiar with the zoning codes and rules of the city/county.

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I would look into growing population states such as Florida, Texas, California, Georgia and so on. Two areas to look into, always to a good idea to invest in retail shopping strips near big malls or near big box stores.

 

Also another idea is North Dakota, with the oil boom there the unemployment is very low and population is rising so fast that shopping strips can't keep up.

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I think if you can find a shopping retail that's been established, hopefully the returns are stable and consistent. I thought about storage units as well. Need passive income.

 

My wife's cousin does this and makes millions. He knows a trick though to finding the best ROI.

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I do CRE and have been involved with many facets of it (brokerage,development and currently investment). it is a very tricky field, know your shit before you buy. I have seen alot of big/smart players go down this last cycle, guys who have been doing this for 30 plus years. I will try to find some intro level educational stuff but in the mean time I can take a look at some potential deals and help you analyze them. It usually takes under 5 minutes. FYI, I have been looking for quality retail properties in SoCal for several years to no luck, there are tons of shit properties on the market and values haven't gone down. Where you are at might be different.

 

You can start buy jumping on loopnet.com and looking at deals in your market. It's the mls for CRE and you don't need to pay for the membership. Talk to as many CRE brokers you can but take everything with a grain of salt. I know a lot of brokers and I wouldnt trust any of them.

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I went through some of my old boxes of investment books and there are many good reads to choose from. For beginners I would suggest the following two books: "Maverick Real Estate Investing"- Bergsman and "How to Build a Real Estate Empire" Hamilton, Leeds, March. The second book was put out By Marcus & Millichap (Commerical Brokerage firm), it is a decent book which explains all facets of different types of investments and many stories of how many investors started in CRE. I have tons of audio stuff, if you want send me your address and will send some of them out to you.

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Not sure if books will help, I can't imagine learning what I know from any sort of book, CRE is a very aggressive sector, good deals move very fast, if you see them advertised you are generally too late.

 

If done right it can be extremely rewarding, I wish you the best of luck.

 

On a separate note, a while ago I was considering sharing on LP a development from beginning to the end through all its stages, purchase, design, development, leasing, etc I thought it would be very beneficial to our members interested in the sector but since the forum is open I don't think it's such a good idea.

 

 

 

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Not sure if books will help, I can't imagine learning what I know from any sort of book, CRE is a very aggressive sector, good deals move very fast, if you see them advertised you are generally too late.

 

If done right it can be extremely rewarding, I wish you the best of luck.

 

On a separate note, a while ago I was considering sharing on LP a development from beginning to the end through all its stages, purchase, design, development, leasing, etc I thought it would be very beneficial to our members interested in the sector but since the forum is open I don't think it's such a good idea.

 

VIP

 

Or just email me. :eusa_dance:

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Not sure if books will help, I can't imagine learning what I know from any sort of book, CRE is a very aggressive sector, good deals move very fast, if you see them advertised you are generally too late.

 

If done right it can be extremely rewarding, I wish you the best of luck.

 

On a separate note, a while ago I was considering sharing on LP a development from beginning to the end through all its stages, purchase, design, development, leasing, etc I thought it would be very beneficial to our members interested in the sector but since the forum is open I don't think it's such a good idea.

 

I would have loved to have read about that, but certainly dont blame you and understand your concern. I remembered you talking about it briefly a while back. I believe before your hiatus.

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VIP

 

Or just email me. :eusa_dance:

 

I was thinking about VIP but not enough members have access.

 

I would have loved to have read about that, but certainly dont blame you and understand your concern. I remembered you talking about it briefly a while back. I believe before your hiatus.

 

 

Thank you for your understanding.

I am doing one at the moment which would be a great example, I am documenting it just in case, I never document them but this time I've decided to do it, mainly because the current one it's quite straight forward and easy to understand even for beginners, it certainly isn't beginner scale but formula is the same and it's less complex than most of the others.

 

There are a lot of facets to this type of investment and it's scalable, getting into it at an entry level wouldn't be out of the question even for small players (sub $1 mil), an investment which would secure a return the size of a slightly above average wage return with immediate passive income benefits and great long term goal prospective.

 

In terms of comfort there is nothing sweeter than passive income, if you are a switched on individual you can always turn dust into gold, run a business, develop, struck deals etc., but what happens when you are out of the picture out of action and nobody in your family can replicate what you do ?? You have to have systems in place and passive investments which will look after themselves with just simple management.

 

You know what they say about dirt, they don't make any more :icon_thumleft:

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I was thinking about VIP but not enough members have access.

 

I guess if it had more content, we would generate more members joining it?

 

Stop being such a tease! :eusa_naughty:

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I guess if it had more content, we would generate more members joining it?

 

Stop being such a tease! :eusa_naughty:

 

I am not, to be honest I am just as frustrated as you are but you can appreciate sensitive information which is kind of the essence of what will have to be discussed is better kept out of the public eye for a variety of reasons.

 

If any of you have specific questions on an investment which you are considering or you are involved with at the moment you can PM me, I will do my best to responded in a timely manner.

 

 

 

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Ok I will do a VIP thread in the next month or so, I will announce it here if any would like to join.

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I am not, to be honest I am just as frustrated as you are but you can appreciate sensitive information which is kind of the essence of what will have to be discussed is better kept out of the public eye for a variety of reasons.

 

I completely understand man, just busting your chops a little. :turboalex:

 

I'll thank you in advance for whenever it gets posted. :icon_thumleft:

 

 

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Retails are still hurting. Many strip malls, dealer lots, etc are rebuilt with hotels and even rezoned apartments.

 

Unlike commercial RE, residential is red hot and has been for last 2 years. This is driven up by high rent, foreign investments and booming stock market.

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Retails are still hurting. Many strip malls, dealer lots, etc are rebuilt with hotels and even rezoned apartments.

 

Unlike commercial RE, residential is red hot and has been for last 2 years. This is driven up by high rent, foreign investments and booming stock market.

 

Not just foreign but big $$$ hedge funds are going long on blue collar level residential re and its really pumping things up.

 

Blackstone went 9 figures into it with their "National rental" project, buying huge groups of properties right off the banks that rapidly dropped the foreclosure market. A lot of areas are up 20%+ over just a year ago.

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Very solid thread :icon_thumleft: Lot of good info in here, I myself was thinking about dabbling in residential properties as an investment. Now I have a few good places to start...thanks guys!

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In terms of comfort there is nothing sweeter than passive income, if you are a switched on individual you can always turn dust into gold, run a business, develop, struck deals etc., but what happens when you are out of the picture out of action and nobody in your family can replicate what you do ?? You have to have systems in place and passive investments which will look after themselves with just simple management.

 

You know what they say about dirt, they don't make any more :icon_thumleft:

 

Exactly! As long as you're there, you can make it happen. But if something were to happen to you, then what? Definitely need systems in place for your business to be self-sustained. Look at McDonald's...terrible burgers, but they are everywhere because of systems.

 

Awesome feedbacks from everyone. Thanks for all the help. Would love to hear success stories. Keep them coming, please.

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Not just foreign but big $$$ hedge funds are going long on blue collar level residential re and its really pumping things up.

 

Blackstone went 9 figures into it with their "National rental" project, buying huge groups of properties right off the banks that rapidly dropped the foreclosure market. A lot of areas are up 20%+ over just a year ago.

 

You cant touch a house in Palmdale at under $100 sqft, back in 09-10 I was buying at $50-65. And if you have patience you can rent @ $1 sqft by going thru section 8 housing, not the best tenants but guaranteed $$ and long term.

 

On the flip side my fathers commercial holdings have some that are half empty and many of his tenants have negotiated lower lease by threating to leave.

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Modo location for commercial RE is VERY critical, my rule is, I never invest money where people put their head down to sleep, I do not own any residential houses as investments and never will, maybe one but not by choice, I just sold my house and I need a place o stay while I am building my new one so I am considering buying one then renting it out once I don't need it anymore but that's more of a case of convenience than a business decision.

 

Psychologically people feel more comfortable with paying for a space when said space is used to generate income, less inclined to see value in it when it's simply a necessary expense and they feel like they are "entitled" to it.

 

Also, at least where I am, returns are less than half on residential RE.

 

There are more things which the tenants can destroy/damage/vandalize, costs of getting tenants in and out in relation to ROI are much higher, I've seen cases where people spent a 12 months intake to get he current tenant out and prepare for the next.

 

Residential involves emotions, commercial is simply business and numbers.

 

Generally in commercial, fit outs are owned by the tenant if they destroy it I don't really care, I've got enough security and deposits, personal and directors guarantees, bank guarantees etc. which I can use to make the place good again.

 

Residential is for novice and entry level investors, commercial is a lot more complex and because of that somewhat protected from an influx of novice/ inexperienced players.

 

Commercial is difficult to run properly, in order to properly run it, you need to add to your portfolio a construction company, property management company, possibly a RE agency, it's a full time job, having a unit here and there is not really the answer.

 

There is a reason why you see empty buildings, inexperience on the part of the landlord, rule number 1 for me, short term pain for long term gain, I've had 100% occupancy for the last 13 years, customer is always right and they always get what they want, I am not interested in their monthly rental, I am interested in capital gain long term, they just have to carry it there for me. Quick example, small two unit complex 12 years ago, $650k total cost, value on completion sub $1 mil, current bank value $2.6 mil, yearly rental $180k, reminder of the loan not worth mentioning. At completion it was losing me money and people said I was crazy doing it, short term pain for long term gain.

 

The other rule is, when you buy something plan to keep it for at least 10 years irrespective of what's going on, that's the reason why you MUST position yourself properly in terms of financing and when it comes to location.

 

You must work on a very low LVR 30/70 or 40/60 and be covered for 50 to 60% vacancy, there are ways of doing that properly but you must be the developer to be able to do so, hence my comment above relating to the construction company.

 

You stick to certain formulas you can't go wrong, you grow slower but you are always secured, during the GFC investors were panic selling I was actually buying.

 

Always remember dirt goes up in value what's above it comes down, when you buy, buy location and dirt do not focus on the building.

 

Look at value add developments.

 

Few months ago I helped an older guy who had his commercial premisses empty for over two years, I've remodeled his complex, partitioned it, repurposed it etc. he was completely against everything I was suggesting but desperation pushed him to go with the flow.

I've involved my architect and completely changed the "vibe" of the place along with repurposing some of the spaces etc. in less than 7 months from my initial meeting with him he ended up with 7 leased spaces and only 1 empty. Needless to say he worships me now :icon_mrgreen:

The empty one is mainly because what it was designed for does not suit the area, surrounding businesses and the current tenants, there is no much we can do about that, if he dropped his rates and listen to my other suggestions of offering incentives etc the space will fly out the door but he's quite stubborn :icon_mrgreen:

 

Anyway business is what you make it and it comes down to your personality, I NEVER take no for an answer, there is always a solution and sometimes you have to get very creative and think outside the box that's why I never read books on the subject I use gut feeling and intuition, also it helps that I always think I am never wrong about anything and nobody can tell me what to do :lol2:

 

That's about as far as I can go out in the open.

 

 

 

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