Brrrrrrrrrr strategy in CRE Vancouver, WA

Brrrrrrrrrr strategy in CRE Vancouver, WA

Rental Property Investor · Vancouver, WA · Member since 2015 · 112 posts · 142 votes

Each week I go to Investor meet ups and I am shocked.! People are sooo desperate to make deals work in Portland are flooding into Vancouver trying to make the numbers work here. Don't get me wrong, I see why. Prices are through the roof in Portland. Vancouver on the other hand is just now building on the waterfront and is throwing in 1.5 Billion dollars to do so. As a commercial broker though, I wonder.............. What are people doing still hanging out in residential? 

2 thoughts........

BRRRRR of Commercial Real Estate-

How would you do this?  You could get a small business loan which would get you a loan of 90% loan to value. It would require that you owner occupy 51% of the building  but the other 49% lease it out and pay the payments with the proceeds.

Option 2- Two of my flips- I bought old homes that were zoned commercial- got residential loans on them, I MOVED in, fixed them into offices and one to a vacation rental and later flipped. We can't keep small office space on the market.

There are soo many older properties and possibilities just ten minutes from Portland, why AREN'T  more people trying to go commercial rather than just beating their heads against a rock on equity plays in Portland. Love to hear your thoughts        

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Vancouver, WA · Member since 2014 · 127 posts · 60 votes
8y

Hi @Paige Kelsey,

You are spot on but missed one thing.  All the Vancouver residential investors left Vancouver and now are up in Cowlitz County flipping in Longview and Kelso.

I would love to get your help on the commercial side.  We are looking for new office space and my business partners want to buy a commercial property instead of leasing.  If this is your specialty I am all ears...would love to meet up for coffee to discuss.

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  • Vancouver, WA · Member since 2014 · 127 posts · 60 votes
    8y

    Hi @Paige Kelsey,

    You are spot on but missed one thing.  All the Vancouver residential investors left Vancouver and now are up in Cowlitz County flipping in Longview and Kelso.

    I would love to get your help on the commercial side.  We are looking for new office space and my business partners want to buy a commercial property instead of leasing.  If this is your specialty I am all ears...would love to meet up for coffee to discuss.

  • Contractor · PNW · Member since 2017 · 58 posts · 48 votes
    8y

    Paige, not familiar with the commercial side but I am asking a similar question for residential on this side of the Columbia, I am working on SFR flips Vancouver to Longview. I am very much interested in commercial but I don't understand it well enough to make a move into it at this point. Thanks for posting, I am fascinated by this topic.

  • Investor · Bastrop, LA · Member since 2017 · 32 posts · 14 votes
    8y
    I was actually about to post a similar question myself. My situation is that I actually purchased a 1920 house that was converted into commercial space, with 7 suites. My plan all along was the Brrrr strategy, but now that I’ve almost completed the renovation and working on filling the last 3 suites with tenants, I’m hearing from local commercial lenders that there is no such thing as a long term commercial loan. They’re telling me 3-5 years max. Right now I’m trying to figure out a way to pull my cash back out, with little to no success.
  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    8y

    Ryan small type commercial like yours it is typical for 3 to 5 years for a loan. You might could find a lender wanting to do a 5/5.

    Example rate today at 5.25% but years 6 to 10 the rate has a ceiling of 6.5% meaning even if market money then is 7.5% the loan stays at 6.5%. Harder to get lenders to do it but if you do not ask then you cannot get an answer back. Typically on much larger commercial deals you can land 7 to 10 year fixed loans as leases are longer and better tenants and locations.

    Paige I find that not as many people understand commercial as residential. With fear people stick to what they know and perceive to understand to mitigate the risk in their minds.

    I do get investors wanting to invest with me for commercial. It comes more down to TRUSTING that person as the expert to lean on when they invest in a property. 

  • Rental Property Investor · Vancouver, WA · Member since 2015 · 112 posts · 142 votes
    8y

    Hi Ryan and Joel- yup so on that first one, I filled it up with leases and then sold the commercial. Or.................. get the loan 5 yrs  and build from there . You should be making quite a bit of capital back out so you should be fine to make these numbers work. IF ........HOWEVER, it is your first you can always do what I did, panic your way out and make a sizeable amount of cash on the first one.  Please note that this was my experience as an investor and is not what I am suggesting as a broker as I am not in your market and every deal is different.

  • Investor · Newberg, OR · Member since 2012 · 161 posts · 82 votes
    8y
    Originally posted by @William B.:

    Paige, not familiar with the commercial side but I am asking a similar question for residential on this side of the Columbia, I am working on SFR flips Vancouver to Longview. I am very much interested in commercial but I don't understand it well enough to make a move into it at this point. Thanks for posting, I am fascinated by this topic.

     ^^^^ So much this! I would love to learn more about this strategy.  I've looked a few homes zoned commercial but didn't know what to do with them.  Super interested and following.  

  • Contractor · PNW · Member since 2017 · 58 posts · 48 votes
    8y
    Originally posted by @Lisa Thoele:
    Originally posted by @William B.:

    Paige, not familiar with the commercial side but I am asking a similar question for residential on this side of the Columbia, I am working on SFR flips Vancouver to Longview. I am very much interested in commercial but I don't understand it well enough to make a move into it at this point. Thanks for posting, I am fascinated by this topic.

     ^^^^ So much this! I would love to learn more about this strategy.  I've looked a few homes zoned commercial but didn't know what to do with them.  Super interested and following.  

     @Lisa Thoele, I am with ya on this. For me the interest in commercial real estate is about diversification, I would like to understand more about both commercial and residential and how they influence each other as well as have both in my portfolio.

  • Investor · Port Hueneme, CA · Member since 2017 · 73 posts · 34 votes
    8y

    Love this topic. I'm also in Residential in Vancouver, love the idea of moving towards commercial but the steep prices and learning curve are all roadblocks at the moment. Thanks for posting!

  • Contractor · PNW · Member since 2017 · 58 posts · 48 votes
    8y

    Looks like we all need to partner on a deal and get our first commercial property deal out of the way, get our education in the process! 

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