What do you like out there?

Question

Hello, I'm sort of new to the forum.  Looking for real estate investors with about 10+ years of experience to just talk about real estate.  Of course, anyone can chime in.

Just wondering what kind of opportunities that they see out there.

I'm currently doing rehabs of commercial properties and just thinking about what I can invest in 1 year from now.  SFH (high or low income)? Brownstones? Medical office properties?  Just wondering what might be hot a few years down the pipeline.

Roger Doe · Answer

Hey, thanks for replying.  I would be interested to see why you say that.  Here is my take on it.  I'm sure you have more specific experience than me.  I'm only talking in generalities.

Medical offices.  Can medical offices have value since they can be converted easily from regular offices?  There are issues such as elderly/handicap access and sufficient parking but on the most part, can't office buildings easily be converted?  With Obamacare, I do think that doctors will be more busy a few years from now.  Not sure that will translate to higher reimbursement rates which will mean increased income.  I thought about medical offices but I didn't see the clear cut value in holds.

Strip centers.  aka neighborhood shopping centers, I wonder why you think they hold value and might increase in value in the future.  The way I see it, rent is based upon the income of the neighborhood (among other factors).  I don't see that much value in strip centers generally because I don't see towns going up substantially up in income except for areas that focus on growth industries.  However, I do see strip center deals that are good when they are strategically placed, regardless of the town.  For example, when there is a dearth of modernized strip centers in a neighborhood, if you come in and clean one up, I think some new businesses want that. eg. five guys will pay premium rent if you build them a well thought out parking lot and arrangement of stores.

My opinion.  I live near NYC and I see very fast growth in areas that cater to the finance industry.  The only problem is that it's very hard to find good deals because everyone is looking for the same exact thing.  For example, you could buy a brownstone for $1 MM, put in $500k and then flip it for $3 MM.  But the problem is that demand these days have driven those run-down brownstones to $2 MM and then your profit margin is gone.

Joel Owens · Answer

Right now medical office and small retail strip centers is where a lot of value is.