When Does Commercial Financing Outperform Residential Scaling?

[Tracy Thielman]

At what point did commercial assets make more sense for your portfolio than continuing with residential rentals? Interested in hearing different perspectives.

[Don Konipol]

Quote from @Tracy Thielman:

At what point did commercial assets make more sense for your portfolio than continuing with residential rentals? Interested in hearing different perspectives.

I was into both residential and commercial from 1977 thru 2017.  Emphasis was steadily moving toward full commercial during most of this period.  Now I’m full commercial.  But my belief is that overall residential is lower risk with steadier returns.  So now I’m considering rebuilding a residential portfolio.  

I have found that “good - great” deals are more difficult to find in residential in MOST economic climates.  However, there seems to be periods every 15 - 20 years where residential properties can be had for 1/2 price in some areas (2008-2012 in Miami, Phoenix, Las Vegas, etc.).  For a small to mid size investor it’s difficult if not impossible to find quality management for SFR or small apts; once you scale to a certain size you can find quality managers.