Favorite Asset Type and Why?
I always find it so interesting that in the world of real estate investing there are so many ways to make money.
I personally focus on the industrial world because my background is in manufacturing and distribution. I also love the scalability.
What do you focus on and why?
Commercial multifamily.
I like the scalability of this asset class and I started in small residential multifamily so it was an easier transition.
I am interested in getting into distribution, but haven't spent the needed time to understand the industry.
Best of luck!
My preference is industrial, and flex industrial demised into two or more spaces specifically, as the inventory of decent Class A and B properties is in lower supply. But holy smokes it has gotten challenging to find new properties in my areas of interest in which to invest due to high competition nowadays (both investors and owner occupants are pursuing these properties).
The cash flow is absolutely fantastic, as are the net lease terms. But have sufficient capital reserves in the event of vacancies or tenant improvements!
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I like industrial/warehouse as well. Its the most laid back tenant, NNN, and covid proof. Currently have two buildings 75k sq ft in DFW.
@Jade S. do you look at Dallas? I see plenty of flex/showroom/office warehouse spaces available. They are too expensive given the vacancy risk IMO.
Originally posted by @Ronald Rohde:I like industrial/warehouse as well. Its the most laid back tenant, NNN, and covid proof. Currently have two buildings 75k sq ft in DFW.
@Jade S. do you look at Dallas? I see plenty of flex/showroom/office warehouse spaces available. They are too expensive given the vacancy risk IMO.
Hey Ron,
I haven't looked at Dallas previously, but I would be curious about your opinion on how much spec building is happening in that DFW metro area. The areas I have primarily stuck to have been east central Georgia, as well as the Upstate of South Carolina, as both are growing areas, closer to home, and it has allowed me to be "boots on the ground". We have had very little spec building of new flex industrial assets, and there are a lot of local and regional businesses who seek these out (both as tenants and owner occupants). I agree with you on how expensive properties have gotten in recent years, and I'm now seeing outside investors enter both of my main markets searching for all kinds of industrial assets. I'm slowly moving out of my SFH rentals and am aiming to get into more industrial commercial opportunities as they avail themselves (either directly owned or partner).
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#2 Commercial Real Estate Investing Contributor
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Originally posted by @Jade S.:Originally posted by @Ronald Rohde:I like industrial/warehouse as well. Its the most laid back tenant, NNN, and covid proof. Currently have two buildings 75k sq ft in DFW.
@Jade S. do you look at Dallas? I see plenty of flex/showroom/office warehouse spaces available. They are too expensive given the vacancy risk IMO.
Hey Ron,
I haven't looked at Dallas previously, but I would be curious about your opinion on how much spec building is happening in that DFW metro area. The areas I have primarily stuck to have been east central Georgia, as well as the Upstate of South Carolina, as both are growing areas, closer to home, and it has allowed me to be "boots on the ground". We have had very little spec building of new flex industrial assets, and there are a lot of local and regional businesses who seek these out (both as tenants and owner occupants). I agree with you on how expensive properties have gotten in recent years, and I'm now seeing outside investors enter both of my main markets searching for all kinds of industrial assets. I'm slowly moving out of my SFH rentals and am aiming to get into more industrial commercial opportunities as they avail themselves (either directly owned or partner).
Yeah, I sent you a PM!
We're talking buildings of 2010s...
As far as passion, I always felt hotels were very cool. Multifamily is the most practical though.
NNN and self storage can be quite interesting too and less labor intensive!
Multi-tenant, small bay industrial. Under 50K sf to stay under institutional radars. Mostly modified gross structures with some pass-throughs. Great cash flowing investments, with some of the highest returns in the industrial asset class over a long time period. Very little supply coming online in my market (and other high barrier to entry to markets). But they do require active management. And yes, deals are getting harder to find. Just for example, was talking to some brokers last week, and foreign money is now starting to invest in these types of assets in one of the major submarkets here. That would have never been the case even three years ago.
Mobile Home Parks more specifically ones with tenant owned homes
I prefer value add multifamily. I like having the ability to force appreciation and the economies of scale.
Light industrial space (under 100K sqft) is my main area of focus. I grew up around metal buildings an have an unfair competitive advantage. My main area of focus as of now is north Alabama.
FYI for those following this posts that invest in the same kind of space. Steel prices and material lead times are currently at an all time high! Most reputable manufacturers can not deliver you a building until 2022 if you ordered it this month. The numbers for new construction and the current lease rates for spec space are no longer making sense. After the end of this year, I would be real surprised to see a lot of new spec space coming online until these material prices cool down some.
@Logan Hartle SFHs in mature drive to VR markets. By self managing I can really juice our returns and hit FI quickly. This is a quick way to jack up our income which is our current focus.
Originally posted by @Cole Bigbee:Light industrial space (under 100K sqft) is my main area of focus. I grew up around metal buildings an have an unfair competitive advantage. My main area of focus as of now is north Alabama.
FYI for those following this posts that invest in the same kind of space. Steel prices and material lead times are currently at an all time high! Most reputable manufacturers can not deliver you a building until 2022 if you ordered it this month. The numbers for new construction and the current lease rates for spec space are no longer making sense. After the end of this year, I would be real surprised to see a lot of new spec space coming online until these material prices cool down some.
So, still too expensive to develop in this space (at least in your market)? Hearing similar things from developers up here. Only buildings under 100K getting greenlit are basically B-T-S, although still a bunch of spec coming online from the pipeline that was there pre-COVID. And the big box stuff will continue as far as the eye can see. Just a crazy amount of sf being built, and its all getting absorbed pretty quickly.
Originally posted by @Logan Hartle:I always find it so interesting that in the world of real estate investing there are so many ways to make money.
I personally focus on the industrial world because my background is in manufacturing and distribution. I also love the scalability.
What do you focus on and why?
I'm currently purchasing 1 more house and then intend to move towards industrial myself, how has that gone for you?
On the active side of my business I focus on land. It's so much easier to buy at a discount than most other assets, I have far less competition and it's extremely simple in that I'm not dealing with tenants/contractors.
Dan
Anyone that is just now pulling the trigger on a spec building, will have way too much in it. Yes there is still a lot of building going up but most those have been in the pipeline for over a year.
On the larger buildings that consist of tilt-up walls, bar joists and decking, almost all bar-joist manufacturing companies can't deliver any materials until 2nd quarter of next year if you ordered this week. They also won't guarantee you a price until it ships! Like you said the B-T-S projects will continue to go on, I just don't see how anything spec that is just now going in the pipeline will make sense upon completion.
why do you say that spec going up now is a bad idea. I am putting up a 15k sf steel fab in nashville. Price was not too bad but for sure a tad higher than the last one I bought.