Which asset class and why?

Question

I wanted to hear if from the community: which asset class are you focusing on and why? Non residential commercial has lots of options: self storage, many subcategories of industrial, office...

Joel Owens · Answer

Retail. I buy it all day at the right price. Neighborhood street retail in good locations have strong demand. Tenants expanding now because rents are cheaper. I buy vacant dark building for less than it costs to build and offer lower rents for good location to tenant expanding then they can pay for a new development deal.

Amazon is not crushing retail. That is a myth the uninformed read through a slanted news snippet. It doesn't bother me just more millions for myself in upside. Online sales used to be about 1% of all retail sales in 2000. Now at about 18%. Economists are predicting a top out by 2030 of about 25%. Most of the sales are clothing type goods and small items. They have nothing to do with experiential type places for brick and mortar or necessity based medical or other type tenants.

Big box stuff has been going vacant a long time. That is not news at all. Those in the industry have know this for a decade it's old news. Those types only need about 40k to 60k sq ft now instead of 150k because of the merge of online to brick and mortar for that retail sub type. I know someone here will post they see tons of dark building for retail where they live. It's likely a small town or cold belt type state that overbuilt to begin with and the states are anti business and population moving away. So in those areas where most tenants are not expanding they will not want the dark buildings. With any asset class you have to know what you are doing.

People on this multifamily kick I just laugh because can remember many cycles ago you could not give it away. You can absolutely get destroyed buying the wrong multifamily property. Some people just look at that asset class with blinders now like it can do no wrong.

Jade S. · Answer

Multi-tenant Flex Industrial under 40,000 sq feet! Can’t find much product in these hot Southeast markets easily, and they stay rented out.  We have had tenants recently contacting us 8-12 months before lease expiration inquiring about extensions...brings a nice level of certainty for sure.

Ronald Rohde · Answer

How much can you scale that? Seems like the check size are really small for buildings like that. Do you have a team for in house PM? I've looked at several buildings, but the leases were just a nightmare. From gross to NNN....

Ronald Rohde · Answer

Industrial, anything under 100k sq ft is not being built right now. Replacement will take years and rents will go up!

Paul Moore · Answer

Hi @Aurelien Bonin. Great question. I would focus on asset classes that have a very fragmented ownership base. Self storage, mobile home parks, RV parks typically fit the bill. We have even found mom and pop owners in the industrial and retail space. We are looking for a recession resistant assets we can acquire from mom and pop operators. These operators typically don’t have the desire, skill, or resources to improve the asset, increase income, and maximize value. By doing that, we see great results.

Here is a post I wrote on how to find assets like these:  https://www.biggerpockets.com/...

Good luck!

Ash Patel · Answer

I am asset class agnostic.  I would rather focus on high returns.  I have purchased warehouse, retail (mom and pop -> NNN), industrial, land, mixed use, restaurants, medical etc.  I prefer non-residential commercial.

Zachary Inman · Answer

B+ to A Multifamily. Great returns, lower risk, and superb tax benefits. The only problem is finding a good deal because multifamily is so hot right now.

Jared Hottle · Answer

I think that industrial commercial is intriguing and things that amazon can't replace. Otherwise mid-tier to higher end multi-family/singlefamily that is BRRRd is still a great strategy.

John McKee · Answer

I buy retail, some office.  For me it all comes down to location, unique feature or anchor, ease of releasing, and traffic counts.  Traffic can be either foot or car traffic.

Which asset class and why?

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