All Forum Posts by: Vincent Dang

 If I were in your shoes I would just do residential. Fanny and Freddy backed loans are almost entirely income based.  If your net worth is low but income is high why would you want to compete with high net worth individuals for deals? You are going to get killed

I invest solely in commercial NNN (started off that way). I personally like it much better than residential as there is a lot less management overhead and leases are usually for a lot longer, plus cashflow is very predictable due to NNN nature as long as you can keep vacancies in check.

The question on whether you can start off in NNN commercial is solely a matter of your net worth and liquid investable assets. Most people don't start off in NNN because they don't have the capital. There is no way you are going to be able to finance 85% to 100% of the deal. 60-70% is more realistic. And you are not going to be able to get anything decent below $2M (500K down) and your net worth needs to be at least 1M outside of your primary residence or banks will not bother talking to you.

So really it just comes down to a significantly higher barrier of entry compared to residential. If you have the resources I would highly recommend it but if not then it's a waste of your time.

@William M. how is your search coming along? There was some solid advice given in previous responses, but I'd like to point out what I think it most important for you to start.

1. Know your budget. You will need between $250k to $400k to buy a property between $1M-$2M. You are not going to buy a commercial property with no money down unless you do something strange which will likely spook any Seller.

2. Know how to calulcate the cap rate which is how you evaluate commercial properties. ALWAYS get the lease to understand if there are landlord responsibilities. Higher the cap the higher the risk. Lower the cap the lower the risk. By risk Im talking about credit rating or footprint if they are not a publicly traded company. 

3. Know the difference between NNN and NN and how that will affect your cap rate. Some people only want NNN, but if you are buying a new build with a NN lease with the landlord responsible with structure and roof then should you pass? My anwer to you would be it depends on what your investment strategy is.

4. Find an experienced Commercial Broker or Investment Sales professional who can help guide you in the right direction. It costs you nothing to "employ" them to work for you and you get someone who has done it before. While not always the case, I would try to steer clear of Realtors who bounce between Residential and Commercial. That is just my opinion. Another opinion I have is only talk to them if you are serious about making the purchase. Otherwise, they will not pick up your call when you are serious.

5. Why North Carolina? If you buy a true NNN lease then you can live wherever you want with the tenant maintaining the building.

6. Keep doing your research and starting looking at deals. If you do not have $250k to invest in a single property now that is fine. You can keep saving and start learning how it works. 

Good luck and let me know if I can be a resource in anyway.

Cheers!