Commercial vs Residential

[Josh Bishop]

I have a small residential portfolio which I have enjoyed and would like to continue to grow. Commercial investing has always interested me, although I have heard its a much different animal. I have a residential license and know that side of it pretty well. My question is: is commercial investing that much different? Do most investors usually stick to one or the other? I would appreciate any feedback. Thanks!

[Chris Winterhalter]

@Josh Bishop

What interests you about commercial? Why would you want to invest in commercial as opposed to residential. I think it's important to specialize in one or two assets classes as opposed to trying to do everything. Especially if you are a smaller investor without a large team in place. There are a lot of ins and outs to every asset class. Commercial generally has more sophisticated investors with deeper pockets than small residential. That means you have to be on top of your game to ensure successful acquisitions and management. Smarter and healthier sharks swim in those waters. Hence my reasoning to specialize. I think if you are going to switch to commercial you need to spend some time understanding the asset class which you are going to invest in. The financial side is more intense and lending parameters are different. I would connect with other investors in your area that invest in your desired asset class. Possibly invest in a deal they are doing to get guidance and experience.

Commercial and large multi-family residential projects appeal to me much more than residential 1-4 units. I prefer dealing with more sophisticated investors, professionals, and vendors. Economies of scale are also important to me as opposed to a single family.