Hi Everyone, I am conflicted on the current state of my real estate investing journey and wanted some external opinions on the matter.
I currently have three properties. One primary in Orlando with good equity and two vacation STRs listed on my profile. My wife is expanding her Clinical Mental Health Counseling business and I am looking to purchase an office area in downtown Orlando.
My conflict is this,
I am not sure if buying commercial will add or subtract value to my rental business or hinder my growth by slowing me down significantly with the financing and cash up front.
There are a few properties I am interested in BRRRing now to build my portfolio strength but I’m apprehensive to jump into that before this big commercial property deal.
long story short. Should I wait to buy the commercial property until a have a larger real estate portfolio strength or will the commercial property add value on its own?
I think that this is impossible to answer without more specifics, but I will attempt to ask questions at a high level that may prove useful:
- Do you want to make "all-in" bets in real estate and business? Or do you want to build wealth more methodically? One provides the chance at a life of abundance far earlier, the other may let you sleep well at night.
- What do you believe is the better long-term investment? Do you want to hold rentals in the area for the next 30 years? Or office space? Are you agnostic?
- What are the debt terms like? Residential properties often allow 30-year mortgages that are much lower risk than what might come with financing office space - again the sleep at night question.
Personally, I have a bias towards boring old long-term rentals, financed conservatively, that cash flow, and slowly accumulate to build lasting wealth. I will buy residential until I can no longer access conventional financing at 30-year terms. Then, I will transition most likely to commercial to large multifamily and buy property that I will be happy to hold for 30+ years if I have to, financed conservatively. Others will get rich faster. But, hopefully, I will be able to sleep well for most of this investing timeline.
thanks for taking the time to provide some feedback. That is exactly the type of answer I was looking for without having to spell out each deal.
It’s definitely two different goals that are competing right now business growth vs real estate investment growth.
Once I get more solid numbers on the proposed commercial deal I think it will paint a picture where the office isn’t the best option.
The short answer is that it depends haha. I can't give you a detailed answer because I can't confidently say what's best for your position since I don't have all the details. I would, however, challenge you to look at the option that gives you the best ROI or suits your long term goals best. If you purchase the commercial property at a favorable price, cap rate, and favorable loan terms I would argue that might be a good option, but if those factors aren't there and the BRRR's provide higher ROI's then I would sway towards that option. Whichever option you decide, you should revisit your goals and align with that.
Your certainly right, trust the numbers. My problem is trusting the system and my inexperienced projections combined. I know my way around Vacation STRs enough but commercial property is new to me. I think this is what casts a shadow of doubt per se over the numbers.