| We all are thinking about it and some of us are | | | | completely different than financing a single family |
| actually taking action and getting their hands on | | | | home. While financing a single family home you |
| real estate investment properties. The longer the | | | | are at the mercy of lenders who want to make |
| NY Stock Exchanges doesnt produce desirable | | | | sure that you are in the position to pay for the |
| returns the more people are starting with real | | | | house with your personal income. Commercial real |
| estate investments. | | | | estate financing is based in the properties ability to |
| For most of us the obvious choice of properties | | | | produce positive cash flow and to cover the |
| are single family homes. Although you can invest | | | | financing cost. |
| in real estate without owning a home, most | | | | After reading all these information about |
| people follow the experience they made while | | | | commercial real estate you want to go out there |
| purchasing their own home. This is familiar ground | | | | and dive into the deals. Not so fast. First, you |
| and the learning curve for doing a real estate deal | | | | need to learn as much about real estate as |
| of this type is pretty slim. | | | | possible. In commercial real estate youre dealing |
| Of course theres a drawback with this approach. | | | | with professionals. If you come across too much |
| The competition is fierce and there are markets | | | | as a newbie you will waste these guyss time and |
| where investors are artificially driving up the cost | | | | your commercial real estate career ended before |
| of the properties while completely discouraging | | | | it actually started. Second, no commercial real |
| first time home buyers. If this is the case, the | | | | estate lender will lend you any money if you cant |
| burst of the real estate bubble is just a matter of | | | | show at least a little bit of real estate investment |
| time. | | | | experience. |
| How do you avoid these situations and still | | | | Whats the solution to this? Go out there and do |
| successfully invest in real estate? How do you get | | | | one or two single family home deals yourself. It |
| ahead of the competition and be prepared for | | | | doesnt matter if you make huge profits to start |
| bad times in real estate investments as well? The | | | | off with. Most newbie investors are loosing money |
| only answer I have is commercial real estate. | | | | on their first deal anyway. If you can manage to |
| Why commercial real estate you might ask? | | | | show positive cash flow with your single family |
| Commercial real estate is a solid investment in | | | | home deals you are ahead of the pack. |
| good and bad times of the local real estate | | | | My advice, buy a small single family home in a |
| market. The commercial real estate Im referring | | | | decent neighborhood and rent it immediately. This |
| to are multi unit apartment buildings. | | | | will keep your out of the pocket expenses at a |
| Yes you will become a landlord and No you dont | | | | minimum and you will have rent income to cover |
| have to do the work by yourself. You are the | | | | for your monthly expenses. Bonus, you gain |
| owner and not the manager of the apartment | | | | experience as an investor and as a landlord. |
| building. The cost of owning and managing the | | | | Heres another observation I made during my real |
| building is part of your expenses and will be | | | | estate investment career. Most people like to |
| covered by the rent income. | | | | analyze, learn, discuss and analyze some more. |
| Apartment buildings are considered commercial | | | | They never actually got to do a real estate deal. |
| real estate if there are 5 or more units. To make | | | | They love to talk about real estate investments, |
| the numbers work you should consider to either | | | | but never did it themselves. |
| own multiple small apartment buildings or you | | | | My approach to real estate investment was |
| should opt for bigger buildings. This will keep the | | | | simple. |
| expense to income ratio at a positive cash flow. | | | | - I bought some books about real estate |
| Owning rental properties is all about positive cash | | | | investment. |
| flow. | | | | - I read every single one of them. |
| With investing in single family homes it is easy to | | | | - I put together a simple plan on how I want to |
| achieve positive cash flow. Even if your rent | | | | get started. |
| income doesnt cover your expenses 100%, the | | | | - I started looking for properties. |
| appreciation of the house will contribute to the | | | | - I bought my first investment property 30 days |
| positive cash flow. With commercial real estate | | | | after I started reading my first book. |
| the rules are different. | | | | - I made positive cash flow with all of my |
| While single family homes are appraised by the | | | | properties so far. |
| value of recent sales of similar homes in your | | | | What is my point? You have to go out there and |
| neighborhood, commercial real estate doesnt care | | | | practice what youve learned. The only valid |
| about the value appreciation of other buildings. | | | | credential in the real estate business is practical |
| The value of the property is solely based on the | | | | experience. Having a couple of deals under your |
| rent income. To increase the value of a | | | | belt, you can go out there and start looking at |
| commercial real estate you need to find a way to | | | | commercial real estate and even impress |
| increase the rent income. The formula on how | | | | seasoned investors with your knowledge. Because |
| this is calculated would be too much for this short | | | | you made this experience by yourself and you |
| article. I listed a few very helpful books where | | | | know what youre talking about. |
| you can find all the details. | | | | Book reference for commercial real estate |
| Whats another advantage to invest in commercial | | | | investments: |
| real estate? Commercial real estate financing is | | | | Gary W. |