How did you get started in CR?

Question

How did you get your start in commercial real estate investing? Do you move from residential to CR? Were you a complete newbie who attended "guru" training? Did you have a mentor?

I'd be interested in knowing the typical path of a successful CR investor.

Ingrid Nagy · Answer

I started with individual condos & then to multi-family.  My employer at the time was an engineer full-time and an investor part-time.  Later I switched my full-time job as a residential p.m. and became a commercial p.m. so I had a chance learn both.  Through the process I saw that commercial was the more glamorous but the residential was the more secure.  The laws of supply and demand occur in both but the gap is much easier to close in residential.  Many people need a place to live; fewer people need a building to lease.   We are in a bad place right now economically.  I have 2 vacancies out of 54 right now.  My employer has a 175,000 SF building where the tenant just skipped out overnight.  You don't have to be a genius to figure out who will rent out their vacancy first and who won't be able to make the mortgage payment in a couple of months.

C W · Answer

I would focus on first figuring out what you want to focus on. Then, I would focus on becoming excellent at analyzing properties and structuring exactly how the property is going to cash-flow. You need to prove it is a deal.

During this education period, you should begin networking and building connections with people that would be interested in investing their money into the deal. Of course noone is going to put money into something unless you are a professional that can show how it's not going to be wasted.

So the fact that you don't have a lot of money is just a way to procrastinate.

Christian Malesic · Answer

If you even suspect it MAY be over your head - it surely is.

Commercial is a different game.  Think of it as the major league game.  You need to get good at pee wee ball, then the minors, before you jump into the majors.  With all we know, we have been very hesitant to go further into commerical.  Part of that is that commerical RE is sitting vacant all over central PA right now - it is a big time renter's market.  On top of that, sales prices have not yet dropped to reflect such.

Jon Klaus · Answer

My story is similar to Christian's; my business was the tenant so we found a building that would work.  We have an IT services business that paid close to a million dollars in rent since we started in 1990.  Two years ago we lease/optioned an office building and exercised the option in 2008.  We got a pretty good deal since the area began redevelopment after we signed the lease/option.  Now our business pays out LLC the rent.

Account Closed · Answer

I am a completely NEW Real Estate Investor; trying to find my niche.  I was considering getting into SFH, but I'm finding that mulit-units have more cash-flow & income security.  THe thing is, I have no money to put down, and not sure how to go about getting one under contract with out $$... can anyone help??

I also thought about getting into office-type commercial property... but am afraid that is WAY over my head!  You know, doing a turn-key type of set-up?

Christian Malesic · Answer

We 'wanted' a buiding for our other business (electrical contracting).  So our RE company bought the building and rented it out to the electrical company.

There are pro and cons of doing it this way.

Pros:
Dependable tenant (us)
Long term lease
Good pay
Constant maintenance walkthrus

Cons:
We overpaid since we wanted a place in a certain geographical area 
We 'fell in love' with the property, which is always a no-no in RE

J Mishkin · Answer

getting started is hard.

as trump says..  if u don't start right, how can u end up ahead?  or something like that.  lol

Your first deals MUST be extremely good, money making deals.  If not, DO NOT BUY.

it takes a couple places but after that u can take off :)

Troy Stange · Answer

Hi Mike
I'm still working on getting out of the gate, really. Trying to ditch the 9-5 and get up to speed.

I've been through a couple seminars, haven't spent any egregious $$ on any gurus. Been to REIA meetings, connecting with other investors, researching, reading...trying to develop my strategy, but as of yetâ€“I've yet to actually purchase anything. I've put in some offers, had a deal fall through...still working on getting that first deal done.

Getting started is ridiculously difficult for some reason. Fear, probably.

Michael Rossi · Answer

Troy,

I started with SFHs and moved up to commercial multis as a normal progression of the business.  I have never attended a "guru" training, other than hearing the gurus speak at real estate conventions.  I did have a mentor, who was another investor at my local REIA.  She taught me a lot of things about the rental business and didn't expect anything in return.

I don't know if there is a typical path, but that was my path.

How about you?  What's your story?

Mike