New Investor Looking To Invest In Commercial RE

[David Toupin]

Hi BP community!

I am an aspiring investor in the Metro Detroit area (Royal Oak, specifically) and I am really looking to get into commercial real estate.  I understand that the more traditional route is to purchase residential real estate and move your way into commercial as your grow, but I was wondering if anyone has had experience in starting out in commercial, or advice for someone who would like to.  

I am considering small storefront space that I can lease out.  Would anyone be able to provide some advice for investing in commercial storefront space, and how I can find the best deals and close on them?  Any and all tips/advice is welcome.

Thanks!

[Joel Owens]

Hey Robb,

It's all about the risk, return, and how passive you want to be when it comes to commercial.

Your capital to outlay will also matter as various commercial investments and cap rates are based on deal size.

A 2 million commercial property is more hyper competitive for cap rate because of the low barrier to entry point.

When you start going up into the 4,5,6, million and up you can land higher cap rates as not as many buyers have millions to put down versus 500k to 750k.

The asset classes are highly specialized. Large multifamily and retail single tenant or multi tenant it's all I do day in and out.

If you were looking for office, industrial, etc. then I would not have much value there. Learn the ins and outs of various commercial asset classes and see which ones line up the best for your goals. The sub asset classes within commercial are at different points in the cycle for being at the bottom, recovering, and peaking.