Hello guys and gals, I am a 22 year old college student in his final semester of class. I have some experience in real estate, I own a SFH and a 3-unit building is in the works. I have to do an independent project and I wanted to do something with commercial real estate investment (apartment buildings), as I hope to enter that field when I graduate. I was always fascinated by the different markets across the United States, where investors can get greatly different passive returns. So I was thinking of looking at the different real estate markets across the United States, and try to find the best locations for real estate investment. I wanted to look at it from a ROI approach and determine what areas will provide the greatest cash flow. Obviously to do this properly I’ll have to dig fairly deep and consider factors that aren’t necessarily obvious, from a numbers perspective, to make sure the market isn’t tanking. Although I may have my work cut out for me this is a semester long project and I am willing to do the work because I feel that I can potentially move to one of the locations and begin investing in commercial real estate.
So with that being said, I wanted to ask for input from the REIclub community. Any suggestions, thoughts on the idea? Good/bad? Also any tips for approaching this idea would be great also, Thanks.
Start small. Build you level of experience first. Commercial is complicate. Need alot of cash reserve depending on what you buy. And good credit helps. When you graduate, I will teach you about commercial property.
Yes, and when you graduate I will teach you as well grasshopper.
Seriously, do yourself a favor and get a job as a commercial real estate broker or commercial appraiser. You need to get paid while you learn about commercial real estate, b/c mistakes can be costly in the commercial end. I started in appraising and the experience and knowledge gained was priceless. Plus I made a decent living. I looked at hundreds of properties and met all the big players in the market. You get access to financial documents (pro formas, leases…) that no one else can see. As far as your assignment, good luck. I can’t tell you how to do your homework.
Keep in mind, ROI is going to vary from one investor to the next based on their initial investment and the financing they use. How will you determine the ROI for a given area? It will vary for every property. I don’t think ROI alone is going to be a very good measure nor will the information be easy to obtain. You can get a great ROI in certain parts of my area, but you’ll have horrible tenants and you might get shot. See what I mean? You need to examine other trends (demographics, overbuilding, vacancies, rent trends…) to determine a good place to invest. By the way, there really isn’t a BEST place to invest. Some are better than others, but ultimately a good deal is a good deal whether you’re in California or New York.
First off I wanted to thank both of you for your timely responses. Fortunately for me, I have been able to use poker to earn a substantial amount of money over the past few years. I plan on using these funds to start my venture into commercial real estate.
I wasn’t exactly planning on getting a job but this is a really good idea. I’m definitely going to look into this. As far as telling me how to do my homework I’m not exactly asking that. I just want to accomplish a few things with this project. One of them is learning something useful and another is actually producing something that is helpful. If I spend 80+ hours on a project that does neither, I’d be pretty disappointed.
Basically I wanted to look at two main components, average rents and purchase prices. I wanted to look at the project from a cash flow basis and determine which areas provided the best cash flow. I know all this is not fixed and depends greatly on financing and negotiating. Basically I just wanted to cross compare places on the ground floor, a basic level. Your post pushes me down a different path and makes me think I need to revamp my idea, hopefully I can figure out what road to take.
Have you read “Confessions of a real estate entrepreneur”? If you haven’t you should, its all about commercial real estate investing. One of the best real estate books ive ever read to be honest.
Confessions of real estate entrepreneur is very very good.
Joker, what other books on commercial real estate do you recommend?
That is the only commercial real estate book i have read. Ive read many residential investment books but that one book sold me. Since reading it i now want to become a broker and developer in commercial real estate.
Hello everyone,
Just passing through checking the message board. I was trying to read the article on "Confessions of real estate entrepreneur. I clicked on the link indicated in message and was unable to locate the article. Is there another link and or website that this information can be viewed. Thanks
Debbie,
Links people put in their signature lines can be for whatever website they wish. In this case, Joker’s website listed doesn’t have information about that book. You may just have to go to somewhere like amazon.com or a regular bookstore.