All Forum Posts by: Greg V.

I like your idea. I love investing in retail, office and mixed use in smaller towns in the suburbs of bigger cities assuming the jobs outlook for the larger city is good. If someone wanted to get into those spaces and was starting out, I would say drive outside the larger city about 45 minutes and make a ring around the larger city and see what smaller cities are there. It's still close enough to enjoy the economic gains from the large city but far enough away where the big money doesn't venture as much. Also small towns are sometimes more receptive to investors especially smaller scale than large cities. The risk with this is that higher gas costs may deter growth in the suburb and the migration back into downtowns. However I think it's still a great place to start building your business and finding great deals.

After I posted I realized I didn't really help you get started:). If you are looking at buy and hold learn the concepts of cap rate, debt service coverage ratio (important when getting loans), and of course cash flow. Do your best to understand ALL the expenses you will incur. That was my biggest downfall when I started. I didn't account for all the expenses in a conservative manner. I was too optimistic. The Fed calls them "stress tests" but I learned everything in life comes with a range of outcomes with various probabilities. Do your best to figure out your worst case outcome and how probable it will be and balance that against the upside potential. That takes experience.

So the traditional training for me has been just books and Biggerpockets. Honestly the concepts are pretty simple but most of the stuff is learned by doing in my opinion. The key is to not go broke learning. You need to learn what you enjoy and what you don't. I prefer business tenants over residential. I learned that through owning SFHs and a small apartment building. Others may enjoy that. If you really enjoy what you're doing, you'll keep learning and keep doing. Stick around long enough and you'll become an expert in a specific property type and area. That's when you start making good money. My recommendation is understand your goals and try to find your niche that you enjoy. Start with a small purchase in that niche area and learn.

I found that the local credit union or bank, commercial brokers (be careful, many realtors will tell you they sell commercial properties but have no idea how to value a property) along with appraisers can be great sources. They see what's selling. Build a relationship with any of those and ask.

So I once thought that too. You probably have to put a good amount of money to bring it up to liveable condition, maybe $30k or more. Let's say you get tenants but the tenants that come and go continually trash the place and you have to replace the carpet, paint, appliances, etc. If you are going to buy, I would suggest that you live in the area and can keep good tabs on the property and have a personality that can handle the drama. Even if you get a good property manager, most likely they will move on to higher priced properties with less drama. From my experience, you can lose a lot more than your initial investment.

We own and are continuing to invest in the suburbs of the Twin Cities of Minnesota. Our properties are retail, and office spaces.

As far as one versus many, I would look at the equity position in each property and the risk level. For commercial, I look at business types that are leasing and separate riskier (bars) from the others. For SFH, not sure.

Hopefully you will be buying in cash. If you are looking for conventional financing for SFH, I haven't found anyone that will lend to an entity. You could probably do some sort of commercial loan over multiple SFHs but I would expect the bank would want that to be a big balance for them to hold. How much equity will you have? Don't answer this on here but how much are you worth? If your net worth isn't more than a couple tens of thousand then why bother?

Ahh Loopnet. It's funny. I can find more commercial (office, retail) listings on the MLS than Loopnet in my area. Some of them on the MLS are actually great deals or at least starting points for negotiations. The most destructive for me starting out was impatience. I was so ready for a deal that I bought properties I shouldn't have. I should have really understood an area better. I should have first been able to know what a great deal was for almost every property in my farm area.

As far as elevators, we briefly looked at updating one and they can go well over $100k assuming you have a current shaft that can support it. They are not cheap. It would surprise me if the city doesn't make you update it. In our area we can get an exemption if it's an historic building and doesn't currently have one. I believe that's only for under 3 stories. With a current shaft, in their eyes they could easily force you to update. I would look up ADA requirements at the federal and state level. I did a while ago but can't remember where I found them.