When you ask experienced investors about the benefits of commercial, they’ll rattle off things like bigger cash flow, less turnover, economies of scale, affordable property management, bigger payoffs, and more passive investment. And some may say a bit less “emotion,” as commercial is all about the numbers.
Commercial real estate has proven to be one of the greatest hedges to inflation of all investment types. Unlike single family rentals that have a value stuck to what the market will support, if the rents double in commercial, then the value of the property doubles – it’s that simple. Another nice thing is most commercial properties have multiple tenants. This gives the owner some portfolio balance and diversity – they are not 100% reliant on just one tenant’s rent.
But wait, I don’t have a $1M laying around!
Remember leverage. Most commercial is bought with only 20-30% down. This ability to buy assets that exceed your immediate cash available allows you to build wealth rapidly through cash flow, appreciation AND equity as the loan is paid down by your tenants.
You can raise the down payment! Plus you can 1031 a SFR into a commercial property and defer any capital gains until later.
- But how do you evaluate the properties to the find the best deals?
- What niche should you choose?
- And HOW do I talk with a commercial lender?
Surprisingly, farming commercial deals is a lot like farming SFRs– know your neighborhood, know your tenant base, and know how to evaluate the deal.
Commercial properties may refer to apartment buildings, mobile home parks, storage facilities, retail buildings, office buildings, warehouses, industrial buildings, and “mixed use” buildings, where the property may combine various uses such as retail, office and apartments.
On June 21st, Ron Largent, a 45 + year commercial Broker and Investor, will share insights into different niches he’s been involved with, how they differ, and how to deal with commercial lenders. Over his career, Ron has been involved with gas stations, hotels, mobile home parks, apartments, commercial lending, and various other aspects of commercial investment.
Ron will show us why understanding the difference between the structure and the value of the land is so important. He will share success stories of people he’s worked with as a Broker and how they each got started in commercial.
Ron is a WEALTH of information (and loves to share it freely) so bring your questions!
Learn more about Ron (click Here!)