I have a little bit of knowledge about residential, but was thinking of liquidating some stock from the retirement account and diversify into commercial. Anyone have any book they particularly like, or know of any commercial investing 101 kind of program or seminar or coach?
My highest recommendation is the Dealmakers Guide by Ray Alcorn. It is a guru type course in a binder. It will set you back about $500 but it is outstanding.
The CCIM program is the best education you can get for commercial. Even just their 1-2 day intro course many find eye opening. But that may be more than you want to start with.
I like Dave Lindahl, as a guru he is one of the better ones. His book Multifamily Millions is very good. I wrote about it on my website.
Thanks guys. I wonder if Dealmaker's Guide is Trump-esque??
I have read the Ray Alcorn info. Some of it is good but it was written awhile back so some information is outdated for today's times and markets.
Jason a book will just give you basic info. You need to converse with people actually doing it day in and out in today's market.
By commercial it varies by asset type and your deal size. I have clients that liquidate stock to buy commercial re. Some liquidate 300k and others millions. What deal size and type are you thinking and how active versus passive do you want to be?
I am really not sure. I am just at the stage where I ordered a couple books, and talked with my wife about it. I haven't even really cruised around loopnet yet. So I don't know. I think in the Charleston area an office can be bought for like $500,000 or $700,000. Do interest rates tend to be 5% if you put 20% down? When you say active vs. passive, do you mean the management of the building?
Yes active versus passive with the building. 500,000 to 700,000 purchase is small for commercial. You will be dealing with local banks. 20% down the banks usually stick you with a 20 year amortization. Sometimes you can push the committee to 25 amortization if you place deposits there.
Thanks. Well, I suppose I will have to be active, if I want to make $, since I have to pay the bank 5%. With 1/10th of the rent going to a manager, it doesn't leave me much.
Congrats on making the decision to transition into commercial. You are doing the right thing by browsing these forums and reading books on the topic as a starting point. Investing in CRE doesnt have to involve seven figures to make a great return, especially if you know your market and can spot a strong opportunity. My first investment was only $200k and I made an after-rehab profit of $150k in six months because I knew my market and my product niche. Now if you dont have that kind of expertise then partner with someone who does for your first couple of deals. You will learn a lot and lower your risk at the same time. However this partner should still have equity invested alongside you - 20% at minimum in my opinion.
Hey @Jason Merchey - I think @Ned Carey has some good points. I enjoyed David Lindahl's Multi-family Millions and would also suggest the ABCs of Real Estate.
However, after reading a book or two, searching the forums and BP blogs, I'd really suggest you find a reputable property management firm and spend time talking to them. Many of them will also buy and rehab real estate and you can learn a lot from the professionals in your market.
Is there a cap rate (or would you use GRM, ROI, or IRR) that you look for as an average, or as a minimum? I would be trying to assess what kind of sale price compared to what amount of rent/expenses the seller is offering. I was kinda thinking 7%??? Basically, help me to grasp what I should be looking for to see if a seller's price is too high or rents are too low, or both.
Tune in, Tokyo...
I agree with what everyone said here, It is a lot to learn, but you will learn fast and everyone on bigger pockets is beyond helpful. I hope you are successful, keep throwing up your questions!!
Thanks Jenna. I used to go to HB a lot when I was a kid, living in Downey :)