What type of REI to do?

Question

Hi

I've got a dilemma. I know I'm the only one that can find the answer for myself but I'm looking for guidance to get to that point.

I don't know what type of real estate to do. I am very interested in flipping homes/apartments, buy and holds (residential and commercial), wholesaling, BRRR, wholetailing, land development... literally everything. On top of being super interested in real estate, I love restaurants and retail businesses just as much. I've talked to many people who do a specific niche in real estate, and people who own restaurants and people who own retail businesses, and all of them say to find one thing I love to do and go for it. Easier said than done.

I'm curious if anyone else has had this issue, and, if so, how you figured out what to do.

Thanks in advance!

Grace Porritt · Answer

Hello Ryan,  Why not do a combination?  I worked in retail for most of my younger adult life.  I really enjoyed my business but my big mistake was paying rent and not owning the building.  I could have bought the building 10 times over.  Why not buy a commercial building, rent out part of it and run a retail business or restaurant in a portion of it.  Win - Win.

Grace Porritt · Answer

That all depends on the amount of money you have.  To qualify for a loan, you may need to show "buyer" or "renters".  If you could afford to buy the whole buildings using "renters" as a part of your income, that would be my first suggestion.  If you prefer to just own a % of the building, you could buy a unit or two and find others to buy the rest.  This may require some sort of partnership. This is where it gets over my head.  Think "outside the box".   "

Brian Turnbough · Answer

Figure out what the least expensive thing you can get in to, and just do it. You won't know what you really want to do until you actually do it.

Ryan W. · Answer

@Grace Porritt that's an interesting strategy. If the current renters do buy their units, then where does the value of the building reside from? For example, if a building is made up of 6 units, and all of the tenants purchase their spaces, what do you as the building owner have to sell? The parking lot and the building's exoskeleton?

Or are you saying to buy the building and then individually sell each of the units to it's respective current tenant? Therefore, once all of the units have been sold, you are no longer associated with the property? Hopefully that makes sense...

Grace Porritt · Answer

Would the current renters be interested in owning part of the building?  This might be a way to come up with some capital.  In essence, these would become industrial condos.  I just sold an industrial condo in Boulder that was my "commercial" investment here.  I rolled it in a 1031 and bought two residential rentals with the proceeds.  I plan to buy another (or two).   Even if the renters do not want own, you could look for investors and the "buyers" would lease back to the renters.

David Faulkner · Answer

This is a fantastic idea ... I know many successful entrepreneurs who employ it. Kinda like the commercial RE version of house hacking. Who better to have as a tenant than yourself? :) Most I know setup at least 2 separate entities, one for the business and one for the RE holding/management company for liability and tax purposes. The retail business pays rent to the holding company, just like any other business ... and the money flows magically out of your left pocket and back into your right pocket :) Seriously, though, do run them as 2 separate and distinct businesses and do not allow one to subsidize the other. If anybody out there has more details or tips on this, I'd love to hear it, as would the OP I'm sure ...

Ryan W. · Answer

@Grace Porritt I've been thinking a lot about doing just that. I'm going to be talking to my neighbor who is selling a building that he owns. It's a 15k sq ft building with six current tenants but I think it has one or two vacant spaces. Of course, it's a massive building which means a pretty expensive asking price.

@Walter Key My why is because I want to be able to give my parents the life that they deserve, and then after that is complete, to prove all the people that told me I wouldn't be rich wrong.

My overarching goal is to build an empire. I want to be in the BBC - Billionaire Boys' Club! And, I really want to build something that makes a difference in the world.

Walter Key · Answer

You need to drill down on a couple things...

1) WHY? Why do you want to invest in the first place? What's your motivation for making money anyway?

2) GOALS? What's you're ultimate goal in it all? Build an empire? Have passive retirement income? Pass down a legacy of wealth to the next generation? What is it for you?

If you can do some self reflection and firm up those to factors in your mind, it may help solidify HOW you want to get where you want to be. Just my $.02, hope it helps.

What type of REI to do?

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