All Forum Posts by: Brent C.

Just reading up on NNN leases for the first time. Seems they are common in commercial real estate which would be ideal for me if it was the right kind of property. What are some expected returns on these? Are they lucrative enough? Also how long do they usually run for?

Sincerely,

Brent

Hi Bryce,

Yes Exactly. Point being is the "Passive Nature" doesn't seem so "Passive". I am absolutely not considering Rehabbing or managing rental properties either. I am considering buying multi-family units and have them professionally managed. Still from what I am hearing you need to really watch over the management company and property itself and should visit the property every month or two. Then if you are buying a property that you intend to increase it's value and do upgrades like painting and renovating units as they become vacant then need to line up trades and make decisions on what needs doing as well as carefully watching over the trades. Many people are saying do not use a management company to look over this as they will use the cheapest people and charge high prices. I guess this is not always the case but it would be wise to watch over these thing I presume. All this of course taking time out of the investors life. Flying over there every two months etc.

Perhaps this becomes less of an issue in certain areas or in larger properties with proper management managing.

This is a good point Bryce. The question is just how Passive can a person be realistically owning Multi-family units without neglecting it? I am thinking 50+ units per building.

Sincerely,

Brent

Hi David,

Good point. Yes banks loan against real estate making it easier for anyone to get into. As well it makes it far more competitive making opportunities harder I guess.

On the other hand many good businesses want to sell for obvious reasons. They are just bored, want to retired, it got to big to handle, or tired of running it. Often giving a large opportunity for someone to come in and turn it around with new blood.

Hi Jon,

Very true about the scalable part. It is similar to rehabbing a property and increasing rents but can only be done once really. So there are defiantly thresholds in all businesses and will hit times where profits stabilize and or go down. Furthermore the time used in keeping the company profitable takes away from the time to consider what to do with the profits. This is a problem for me right now. Profits have stabilized for 3 years while I was on a sabbatical but now back at it and anticipate sales to increase by at least 30% being conservative. I was thinking more along the lines of buying another company and applying my skills to make it more profitable at which point sell.

Then comparing this to investing in Real Estate.

Sorry not familiar with the triple net leases. I check into that.

Hard money loans sounded really attractive, just need fully understand the risks and find a way to get returns of around 15% with money not sitting idle. Plus I still need to travel to view deals regularly. Not a big fan of flying every month to the other side of the planet. ;)

I'm a bit younger than you 44 and own a couple companies. I think a 5-8 year plan sounds like a good one to me. Keep your business strong and make it grow and add to your RE. I think as you get older you will enjoy the simple life anyways and won't require a new Porsche every other year. ;) Keeping it safe would be my focus firstly then profits. Not to say Profits should be neglected. Maybe being in an area that has been always strong relatively. Or get into something in another country where prices are lower but a high possibility for an upside.

Just my thinking outside of the box speaking. Not from experience.

Sincerely,

Brent

Hi David,

Well put. Sounds pretty like much like you are in the same situation as I am in. My strong ability is in thinking outside of the box, risk management and finding creative ways to solve problems. My abilities can't really be applied to Real Estate very well. In some ways it seems harder for me as I am limited on what my possibilities are. I can't see much I can do to get my tenants to pay 20% more next year and the years after. Or Force up appreciation beyond what the market dictates. Or make the supply for my rentals greater. Sure paint and renovate but after that? Hmmm

I'd like to add knowing the right people in the Real Estate industry is also a key factor.

Deal Making can be done the same in business, so don't think it much different. Plus this works best when you are in the loop and have access to deals. Works when using OPM.

Rehabing is a job. More headaches than many other businesses plus dealing with the most unprofessional industries out there TRADES. So money made like a Builder. Rehabbing makes sense when using OPM.

Buying at the right time and right place is speculation with no way out if things go the other way. With a business you often have many options to recoup. If using OPM and works in your favour then you're golden.

To summarize just to note the major differences that are uniquely Real Estate;

Leverage

OPM

Tax advantages

Otherwise it's like any other business. Maybe I am still missing something. ;)\

Sincerely,

Brent

As a newbie looking into Real Estate as a way to make money, the more I read the more feel that Leverage and tax advantages are the two main ways to make money in Real estate, otherwise it is like any other business, in fact maybe worse in many cases. I am thinking about buying some multi family properties and realizing if I am not watching over everything I am surely going to loose money or make a less than acceptable returns. Furthermore I have limited options with what I can do to increase my profits, like paint the exterior or put in new carpet. I am physically stuck to a location while a business can often move locations or expand. 30% plus returns investing into a company is very very doable. I often have turned $20,000 into hundreds of thousands. There are also many more options that you could play with if things didn't work out work out, unlike a property.

I would love to hear more from others who perhaps have owned or ran a somewhat successful company and now involved in real estate and how you feel the two compare.

Just trying to pinpoint at which point does it make sense for me to get involved in Real Estate because if I have to watch over everything regularly and get returns less than I would in a company it makes no sense for me.

I look forward to your view points.

Sincerely,

Brent

Hi Joel,

In Tokyo.

Sorry I don't remember talking about cash-flow. Was thinking a 10 to 12 year Amortization to pay off the loan thus the 10% Cap would be ideal. I agree there are many ways to skin a cat, the thing is I am limited with my time so want to get in and hold for the long haul and willing to have a strategy that has less than perfect returns in return for a safer and easier investment to manage. (Storage units came to mind) FInding this balance is the hardest part. Maybe there just isn't one. I do not trust anyone with my money so getting into some partnership is not for me. I rather just keep cash and buy outright and hold than get involved with others. With my 25 years of doing business no one cares about your money more than you so buyer beware. :)

Yes the main points being, what TRUE Cap rate am I looking for. I think 10 is good which means a C class property. Perhaps some room to improve the property and increase rents Inside and out. Also an area that is geographically sound with a strong potential for appreciation based on Growth and Unemployment.

Hmmm hard to say considering all factors like location and if I buy cash first then a year later pull 50% out. I may get a better deal paying cash. 10% CAP would be ideal but not going to get that on an A class property. I want to keep my risk down and be in a disirable area.