All Forum Posts by: Paul Moore

Hi @Chris Lai! I spent well over a decade in residential real estate. I did all types of things including flipping houses, flipping waterfront lots, building homes from the ground up and a subdivision. I always wondered about commercial real estate but I did not know who to trust or how to get started. 

When I looked into it further I realized there were massive barriers to entry that stop most people from investing. Net worth, liquidity, experience, deal size, and more. 

Thankfully the Jobs Act of 2012 and some other things have allowed many people to participate in commercial real estate through commercial syndications and funds. Now a lot of accredited and non-accredited investors have access to invest in self storage, apartments, RV parks, mobile home parks, light industrial and more. @Chris Lai if you'd like I can share a brief, free 5-day course I put together on how to invest in commercial real estate, please feel free to DM me. Good luck and happy investing! 

Hi @Aaron Heers! I will add a comment you did not ask for :) 

It's often difficult to connect the dots between activities and income on the ground with your returns when investing in REIT. The returns are often impacted by the mood on Wall St., a war in Europe, a CEO scandal or even a random tweet by an executive (like Elon Musk).

As an example, check out the year-to-date performance of Sun Communities and Equity Lifestyles: 

Sun and ELS both invest in RV parks, mobile home parks and other asset classes that my firm loves. But their investment performance is down about 20%. And each of them follow a similar pattern. But of course we know that their internal operations and profitability certainly do not follow this pattern. They are driven by the market, etc. If you want an investment like this that is fine. Millions of people have benefited. Personally I like direct investments in real estate syndications and funds. Happy investing!

Hi @Koddie Schumaker! There are still some investors willing to overpay for multifamily. Apartment owners who are facing refinance and have experienced significant appreciation, AND have a ready buyer willing to pay a premium are getting out and holding cash for a potential downturn. Or reinvesting into proven value add, recession resistant syndications and funds. Great question! 

Hi @Greg Scott! I really love your original point. Thank you for raising this issue. My two cents...

I've been following Warren Buffet and trying to apply his stock principles to real estate. If he were a real estate investor I believe he would go for cash flowing assets all day long. But he would start with assets where he finds hidden intrinsic value. Assets where great operators can force appreciation and get cash flow rather than assets where investors count on the market to raise their value. Counting on the market is a fools errand. When it helps you that is great. But smart investors find value, look for cashflow and hold for long periods to give the flexibility of the market to help them even further. Good luck and happy investing!

HI @Kelly Olson! Great question! My answer may be a little different than some. I would recommend investing passively (if you can find good opportunities and opportunities) as long as you are in your J-O-B. I find that most investors who have a job get over stressed and cannot pull off a side hustle. If you can however that would be best. Someone mentioned house hacking and that is a great idea. Or possibly live-and-flip a few times. When you are able to quit your job you will have all types of opportunities. Good luck and happy investing!

Hi @Kim Hopkins! You did a great job with this question and spurred a wonderful discussion with this question. Thank you for staying involved along the way. It's so much better than the posts where somewhere asks a question and then never responds again (it makes you wonder if they are even reading the responses that people take collective hours to write.) 

You got a lot of great responses above. A lot of food for thought. I especially like @John McKee's thoughts above. 

The decompressing cap rate can potentially be overcome by finding and executing deals with significant intrinsic value. Value add deals where a seasoned operator can extract value others have missed. That's the way I like to invest and I think others would agree on that. 

Some of these issues can also be offset through a long hold time as was mentioned above Warren Buffett (when talking about stocks of course) said I wouldn't hold a stock for 10 minutes that I didn't want to hold for 10 years. A long hold time as as also mentioned above can compensate for a decompression and hopefully a recompression of cap rates. Then inflation of rents and therefor net operating income should do its work to increase values over time. And if you're getting payouts along the way all the better. Good luck and happy investing!

Hi @Ross Kline! I'm guessing you have a successful financial planning career and you are very smart. As the host of the How to Lose Money podcast, I can tell you that it happens a lot. But it's not normal in the sense it should not happen to you. 

Fortunately, as Mr. Buffett says, investing is a zero-strike called game. You don't have to invest. You can keep analyzing the market and wait for it to turn. Or wait for a better situation. 

If you intend to keep your day job I highly recommend partnering with or investing into someone else's deals. An expert. It could be a syndication or a fund. This will give you the benefits of real estate investing without the liabilities, headaches, debt, toilets, tenants and trash. (It's really not as fun as it looks like on HGTV.)

I've talked to a few thousand investors in the last decade and the common theme I hear from those with a great career is that they wished they had not acquired their own properties and tried to manage them. 

If you agree with my thesis, I would recommend you get @Brian Burke's BP book The Hands-Off Investor. Good luck and happy investing! 

Hi @Amar Modi! You're in an enviable situation. As a commercial real estate syndicated fund manager, I've talked to well over 2000 investors in the past decade. The vast majority of those I have spoken with, who have well-paying careers, are disappointed when they buy their own real estate. Typically the returns are not what they expected. A bad roof or plumbing situation can cost them years of income. A bad tenant can cause them months of sleepless nights. It's just not worth dealing with toilets, tenants and trash. 

I highly recommend that you find a great syndicator or fund and invest with them. BiggerPockets published a fantastic book by Brian Burke called The Hands-Off Investor. It's a meaty read, but it should give you more than enough knowledge to vet syndicators and funds to invest in. Though it's not always true, I've seen that most of these investors are happy to be getting better returns with no hassle, no debt, non liability, no toilets, tenants or trash. Good luck! 

Hi @David Jarvi! I sold my company 25 years ago and started investing in real estate in 1999. I did all types of deals: dozens of single family flips, dozens of waterfront lot flips at Smith Mountain Lake, VA, built 7 or 8 houses, did a small subdivision, lease-options, and more.

I don't say that to impress you but to tell you that I knew nothing about commercial real estate and syndication. 

After doing a ground-up multifamily/hotel development in North Dakota, I paid $25k to join a 1 year coaching program. It changed everything for me. My fund's have now raised over $100 million and invest in a diversified portfolio of commercial real estate. I have written multiple books on real estate investing and done hundreds of podcasts. My point is I couldn't have done any of this if I hadn't gone through the 1 year coaching program. I highly encourage you to find a coach to teach you about the exact field you want to get into. Good luck!

Hi @Bailey Kramer! It seems to me that in the short run I would rather have the same revenue at a lower occupancy rate. But when playing the long game, considering Air BnB algorithms and the opportunity to raise rates, I would absolutely want to see higher occupancy. Good luck!