No one talks about commercial real estate

[Chris Lai]

Commercial Real Estate Investment > Residential

Many co-workers/friends (upper-middle class) invest in residential real estate to rent out and do airbnbs or furnished finders. But, no one I know is in commercial real estate. When I talked to my friends about it, most people just don't know how to invest in commercial and the upfront capital is deterring. I did some research online- looks like there's very limited information on CRE online as well.

I’ve found info regarding Triple Net lease and the industrial asset class seems amazing. The returns are insane in both appreciation and passive income compared to the current residential where I’m seeing 2-4% cap in CA or TX. Any other good materials y’all got for breaking into commercial real estate investing?

Here are videos I’ve watched so far on commercial real estate

How real is this deal? I’m guessing it’s very rare since there’s a video on it. For people getting in commercial what are some returns people expect?

Any other resources y’all recommend for commercial real estate?

[Mordy Chaimovitz]

I work with a lot of people that are transitioning from residential financing into CRE financing.

Here are some of the little-known facts that are important to be aware of, and catch a lot of investors by surprise.

1. Most lenders will require a borrower to have assets equal to the loan amount. 

So if you were making a 10MM dollar purchase/REFI, with a 7.5MM dollar loan amount. you would need to have a net worth of 7.5MM Dollars!

2. You can partner with someone and combine each other's net worth to reach the loan amount, as long as your partner will have a 20% share in equity or more.

3. The borrowers will need to have 10% of the loan amount in liquid assets post-closing for reserves. 

So in our example of a 10MM dollar purchase you need to come up with 2.5MM for the down payment plus closing costs, then still need 750k (10% of the loan amount) of liquid assets for reserves.

4. there are very few lenders that can lock you into a rate early on in the process. your rate will only lock after you have submitted all your documents to the lender, and they have approved your loan

5. CRE financing has the option of paying interest ONLY for 1-3 years. These loan products can help you lower your monthly payments so you can cash flow as you stabilize the property. These loans are popular with savvy investors.

6. Experience matters. Lenders will look at your and your partner's experience with similar assets when determining your eligibility for a loan

7.Fast-track your success by finding a partnership that can be mutually beneficial!

If you have any questions about these topics or would like to learn more about CRE financing I am happy to answer them here. or you feel free to DM me.

Good luck to all of you.

Mordy Chaimovitz