Newbie interested in Commercial RE

[Jorge Quintero]

Hello, everyone! I am new to RE and I’ve wholeheartedly committed to becoming a buy and hold real estate investor. I’ve been exploring different real estate possibilities and one of those is commercial real estate investing. I was wondering, however, how friendly this space is to new investors. In particular, one of the ideas that a friend and I have is to develop an RV park in Harris county on about a 1 acre plot of land. However, neither of us have held a property before but we have dealt with real estate in some capacity (internships with a family real estate investor, wholesales, etc). If we were to do careful research and analysis, are there going to be people interested in investing with us or is the inexperience enough to rule us out, even if the numbers look good? I’ve heard that HML invest on the asset, not necessarily on credit scores or current debt. I’ve also heard that HML don’t do business with new investors. We could do private lenders but as of now we don’t know anyone with the kind of money we’ll probably need. What has been your experiences financing these projects? Did you go in with real estate experience? Are there organizations that finance based on the asset and analysis, regardless of the investors experience? Thanks in advance, guys!

[Charles Kennedy]

Think about it from an investor's perspective: would you want to invest your money with someone who has done a deal 50 times before or has never done it before? Clearly you'd want someone who's done it 50 times before (or at least once before!). I'm a believer you should start with your own money on something small before you break into something larger. Not only will you have a hard time getting investors, but even if you do manage to get some from someone (likely friends/family) you could end up losing an investors money and really stopping yourself from getting capital again.

What do you know about developing an RV park? Have you entitled land? Worked for a developer? Do you have a GC who could bring in the water, sewer, drainage? Will you have septic tank on-site instead? Do you know the difference in cost between the two? Can you make a cash flow and IRR projections in excel to present to an investor on what you project returns to be with justification? Are you plannign to lever up to develop this site? If so do you know a lender who will lend to you? Are you sure this land is even zoned to allow you to develop an RV site?

It sounds like you are very early on in your real estate career. That's OK, but I would suggest starting small first, building that knowledge base, before jumping in the deep end.