Residential Investor Preparing for the Move into Commercial Real Estate
Hello everyone,
My name is Jayson, and I'm a real estate investor based in Southern California. I currently own and operate a portfolio of single family and small multifamily rental properties in Mississippi and Ohio.
Over the past few years, I've focused on building a strong foundation in real estate investing by acquiring and operating cash-flowing rental properties, working with property managers across multiple states, establishing an asset protection structure, and developing systems for long-term portfolio growth.
While I plan to continue owning residential rentals, my long-term vision is to transition into commercial real estate investing and eventually build a portfolio of larger multifamily and other commercial assets.
This transition isn't just a future goal it is something I'm actively preparing for today. I've been spending a significant amount of time underwriting commercial opportunities, studying financing structures, analyzing cap rates, reviewing lease agreements, and learning the due diligence and asset management processes that drive successful commercial investments. Recently, I've been evaluating opportunities ranging from multifamily properties to triple-net retail assets to better understand how experienced investors assess risk and identify value.
I'm joining this forum to learn from those who are already operating in the commercial space, build relationships with other investors, and gain insight into the lessons you've learned throughout your journey.
For those who have successfully made the transition from residential investing into commercial real estate:
-What was the biggest mindset shift you had to make?
-What asset class did you start with and why?
-What mistakes should newer commercial investors avoid?
-If you were starting over today, what would you focus on first?
I appreciate any advice you're willing to share and look forward to contributing to the community, learning from experienced operators, and connecting with fellow investors who are pursuing similar goals.
Thank you,
Jayson
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#5 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
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#5 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
The challenge with commercial assets (and I am talking truly commercial, not large apartments, which are still residential use) is knowing the nuances of what makes a good property from a bad.
From smaller tenant pool (residential: every human, commercial: only people that want to own/run a business) to lease structures to general costs and materials, i.e, many apartments in my area have (granted much larger) residential roofs, most retail/industrial/office have TPO or EPDM flat roofs. Metal framed plate glass versus standard double hung windows, RTUs versus furnace/AC.
Value of asset is still NOI based, but tenant credit, lease terms, visibility, traffic counts, access, side of road, signage, population density, co-tenancy, etc all factor in heavily. If industrial, you are looking at proximity to population, highways, airports, rail, clear heights, dock sizes, parking lot size, bay door counts, etc. If office, looking at both site amenities as well as proximity to complimentary businesses, population, restaurants, tax rate of area, etc.
I mean there are simply so many factors that you need to understand. ANd then the general, market cycle. If businesses are expanding, then most commercial will do better. If economy retracting, it will struggle more.
But, generally, you are buying at higher cap rates. You have much easier management. You have far fewer novices to compete with. If you are syndicating, you will not be "just another multifamily syndicator".