Easiest Commercial Real Estate Investment to Get Started
Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
Hello everyone. What is the easiest path to get started in commercial real estate? I'm currently doing multifamily family but I'm considering other options. Would purchasing like a restaurant be a good way to get started for beginners? I'm gunshy when it comes to office buildings and retail. I don't have the capital for industrial. If there are any mentors out there I'd love to hop on a zoom call to see your analysis process.
I buy and hold all types of commercial properties including office, retail, daycares, etc. I haven’t owned industrial yet but I’m always looking. There’s a lot of aspects you should keep in mind before you get into this space. I like investing where I know which usually means staying in my local area. We assume a vacancy will last 2 years and depending on the size of the unit, it could be $100k+ to remodel and get someone in. I can talk you through it if you want. Shoot me a message.
Commercial Real Estate is pretty broad.
Use your Real estate background, so your building off a starting point and start doing country Subdivisions. Make a Subdivision so you control the type/value of the homes. No Pink Trailers that wipe out your value. Look up Journeys End subdivision, Glenwood, Iowa.
I'm showing you the concept and not specifically analyzing the following example.
Tontogany, OH there is 16 acres land for sale. $190,000 listed for 639 days. Again, go with the concept. This could be an old listing, it could be sold, it could be whatever.
Could be in the city or county. Zoning. Road access. Etc Etc Etc.
This location has two access points. See if zoning will allow shared drives, then take the parcels and re-plat and subdivide into 4 lots.
Spend $10,000 on everything. Survey, subdivision, etc.
Make the 4 plots into $80,000 plots. Make different selling prices based on Lot appeal, so you hit different price points.
Do minimal work. Leave for the owners to run in electrical, water, sewer.
First check everything is possible.
Run your numbers.
Make an offer that works for you. Then walk away. Start your next deal.
Say you make an offer of $140,000 versus the $190,000. They say no, then you say $150,000. They want $180,000 you say no, but will do they do Seller financing on $90,000 no interest for 5 years. They agree to the replotting of the land and releasing each property as sold, and you pay them that portion.
As all ways, market and do the numbers work.
Low input costs.
Carrying cost is usually what eats a deal up. But we are at low interest rates. See if you can lock in a 5 year note.
Do some landscaping. Grass the area. Buy some trees and have tree spaded into key visual areas. Plus plant some fast growing screen trees. $6,000
Maybe spend $10,000 and dig a pond out in the middle adjoining as many of the lots as possible.
This one doesn't work, look for the next deal. No one else will be doing this in the Toledo area, and that's a lot of area. No bidding wars. Look for property that has multiple sides or access points. On listings for a while, 180 days or longer. Learn zoning requirements.
Actually like this one. Across from High School. after landscaping in the country, yet in the city. Bowling Green nearby. Toledo easy to get to. Been on listing for a while, seller understands market now. With that said, it probably won't happen. Just keep looking and checking. See if there are any Rock quarries around.
Water, clear water, cheap, Real estate people normally don't think of these, easy to bulldoze and land scape.
Sand and Gravel pits are great also.
I buy and hold all types of commercial properties including office, retail, daycares, etc. I haven’t owned industrial yet but I’m always looking. There’s a lot of aspects you should keep in mind before you get into this space. I like investing where I know which usually means staying in my local area. We assume a vacancy will last 2 years and depending on the size of the unit, it could be $100k+ to remodel and get someone in. I can talk you through it if you want. Shoot me a message.
Commercial Real Estate is pretty broad.
Use your Real estate background, so your building off a starting point and start doing country Subdivisions. Make a Subdivision so you control the type/value of the homes. No Pink Trailers that wipe out your value. Look up Journeys End subdivision, Glenwood, Iowa.
I'm showing you the concept and not specifically analyzing the following example.
Tontogany, OH there is 16 acres land for sale. $190,000 listed for 639 days. Again, go with the concept. This could be an old listing, it could be sold, it could be whatever.
Could be in the city or county. Zoning. Road access. Etc Etc Etc.
This location has two access points. See if zoning will allow shared drives, then take the parcels and re-plat and subdivide into 4 lots.
Spend $10,000 on everything. Survey, subdivision, etc.
Make the 4 plots into $80,000 plots. Make different selling prices based on Lot appeal, so you hit different price points.
Do minimal work. Leave for the owners to run in electrical, water, sewer.
First check everything is possible.
Run your numbers.
Make an offer that works for you. Then walk away. Start your next deal.
Say you make an offer of $140,000 versus the $190,000. They say no, then you say $150,000. They want $180,000 you say no, but will do they do Seller financing on $90,000 no interest for 5 years. They agree to the replotting of the land and releasing each property as sold, and you pay them that portion.
As all ways, market and do the numbers work.
Low input costs.
Carrying cost is usually what eats a deal up. But we are at low interest rates. See if you can lock in a 5 year note.
Do some landscaping. Grass the area. Buy some trees and have tree spaded into key visual areas. Plus plant some fast growing screen trees. $6,000
Maybe spend $10,000 and dig a pond out in the middle adjoining as many of the lots as possible.
This one doesn't work, look for the next deal. No one else will be doing this in the Toledo area, and that's a lot of area. No bidding wars. Look for property that has multiple sides or access points. On listings for a while, 180 days or longer. Learn zoning requirements.
Actually like this one. Across from High School. after landscaping in the country, yet in the city. Bowling Green nearby. Toledo easy to get to. Been on listing for a while, seller understands market now. With that said, it probably won't happen. Just keep looking and checking. See if there are any Rock quarries around.
Thank you for you detailed input Clark!
I post a lot on industrial, but for beginners I recommend anything that has strong tenants and high occupancy. You need a few decision points and an established cash flow for your first deal. Doesn't matter what the asset type is as long as its covering debt service you'll learn a ton from working with your broker, PM, lawyer, accountant, etc.