New Member from Chi-Town!

[George Sabino]

Good Evening Everyone!

My name is George and I would like to introduce myself to all the Bigger Pockets members.    I'm a huge fan of the BP podcasts and the knowledge that is being shared by all of the contributors to BP.  I think its fantastic that there is such a large community of like minded, real estate entrepreneurs sharing their wisdom to help others be successful.  Just a little about myself, I'm originally from Illinois and currently reside in Chicago.  I currently work full-time as a Senior Investment Consultant for a local investment management (mutual fund) company.  I'm looking to learn more about the residential side of real estate investing, in particular multi-family.  My goal is to build a large portfolio of income generating property.  At this point i'm not sure if I want to go more to the commercial side with retail and net leased properties or more to the residential multi-family properties.  I look forward to being a part of the BP community!

George

[Philip Nowak]

Welcome @George Sabino! I was born and raised in Chicago (Archer Heights-southwest side by Midway Airport and Jefferson Park, where my parents still reside) and also just joined the BP community just a few days ago.

As far as investment preferences, there's no right or wrong answer. You have to go with what you're interested and comfortable investing in. When I was a multifamily broker at Marcus & Millichap, I used to envy the retail brokers and their sexy shopping center and triple net leased deals. Who wouldn't want to represent or buy a Chase ground lease, Home Depot anchored super center, or a Starbucks out lot in a tertiary market?

If retail is your thing and you can make the numbers work, go for it. The corporate real estate departments are fully armed and hire the best brokers as well as lawyers to structure their leases to their advantage. Unless you have years of experience, are very sharp, and work for a professional retail investment firm, the odds of you structuring a deal that will be in your favor short and long term are against you. 

I personally realized retail investing wasn't for me after I spent 6 years working in the ecommerce division of Sears and Kmart. Brick and mortar retailers are being disrupted by online and mobile for every vertical. It's not just Amazon destroying retailers like Sears, Target, Walmart, and Macy's. Tires.com has been disrupting the auto space for years. Netflix and Redbox killed Blockbuster. Email has been killing the USPS. Tellers are being replaced by advanced ATM machines at Chase. Banking is going all mobile anyway and peer to peer anyway. If you do go retail, stick with businesses that will always be around like oil change centers, convenience stores, gas stations (for now), and hospitality (restaurants, hotels, etc).

If you haven't already, listen to  here on BP. He's the number one advocate of multifamily as he cites the fact that the U.S. population continues to grow, the U.S. is turning into a renter nation, credit profiles were destroyed during the recession, and millennials don't want to be tied down to a mortgage or location. I agree with him. 

The downside is the multifamily sector is on fire. Investors are shifting capital to secondary and tertiary markets across the country in search of cash flow/favorable cap rates. Larger complexes listed by companies like Berkadia and Marcus & Millichap don't even have asking prices anymore. I get emails everyday from my old colleagues and all the listings are unpriced calls for offers, driving up competition and the price.

I think there are still deals out there for us newbies, but we have to search high and low for them. Otherwise, we may have to sit out and accumulate capital for the next downturn in the market. Trust me, it's all cyclical. When I graduated from college a decade ago and joined the commercial real estate industry, multifamily valuations were insane. Just a few years later, property owners were under water after the economy collapsed. Well capitalized investors swooped in and made a killing.

That's just one person's perspective, but hope it helps!

-Phil