as a beginner, is it wise to start commercial without doing residential?
i know many pros started out with commercial directly. even when i understand the numbers that they put together and how the deal happened, it still sounds too good to be true.
i am currently focusing on residential to begin with, but commercial marketing sounds almost as easy as rez if not easier.
take out fear as an factor. i have no fear.
i mean, lose 300k or lose 3 million makes no difference at this point.
That is the stupidest thing I’ve ever heard and by far the worst approach to investing. Hell that’s not investing, that sounds more like gambling.
gambling?
i bet everyone has fear (may be a lot or very little) before they made their first purchase, i am just saying that i do not let big numbers hold me back. I am prepared for the negative, but that does not mean i do not plan risks and calculate all the numbers and facts in a deal carefully.
ignorance does not lead to success anywhere, does not matter if its a big deal or a small deal.
hope that clears it up.
other than that, i am willing to take the fastest way to wealth and power. provided that its a logical route.
I’d say that the difference in the two is learning to pay the piper. Those learning mistakes are easier to survive in a small starter house. but if you miscalculate by 2% on a 3 million dollar deal, thats 60,000. While you may not fear losing that ( its probably other peoples money, anyway, right ) it also might take you all the way down.
A few percent off in a little rental house while you learn can simply be replaced by tightening your belt a little and doing better next time.
Also, a few thoughts on fear in investing. I think that fear is what makes us sharp at what we do. Lose the fear and the edge will dull. Also, unless you have won and lost large amounts in investing, you do not really know how you will handle it. Most of those that have jumped from windows thought they could handle the risks until they became reality.
my two cents,
DB
PS as to which is better, I see a lot of people learn res and then when they are big enough and have learned enough, they move up to comm. I can’t think of anyone offhand that has gone the other way.
thank you. thats very thoughtful. :smile
For the most part. I have one client who made his money in a business not related to real estate and jumped right into commercial from the start.
That’s what I did. I have another business that is a cash cow but has no real tax advantages so I have plowed money back into commercial real estate. I own, manage, and maintain them myself. I actually got started a bit by accident but it’s grown into a full fledged business since then.
For me doing commercial was conscious decision. I think the probability of emergency phone calls in the middle of night is lower, tenants don’t treat the units as “disposable housing” and have a vested interest in maintaining them because they derive their livelihood from them, and the ROI is better (with higher risk of course).
There is a different mindset to commercial which has a much more business driven view point I think. Most things I have read on the subject suggest getting started in residential single family homes because that’s what most people have and easily understand. So there is a mental hurdle to start.
I think the barriers to entry in commercial are mostly financial however. The purchases tend to be larger and the financing requirements higher with commercial. I don’t buy into the real estate “programs” myself. I have purchased buildings with and without agents and at auction and been fairly successful at it. The key - as with any investment - is understand the market and DO YOUR HOMEWORK.
Good luck.
Any suggestions on where to start an education or what books to read on commerical investing? I’d like to grab a couple books, but if at all possibly I’d like to avoid paying $30-$40 for a “fluff” book.
here’s a few I suggest:
What No One Ever Tells You About Investing in Real Estate : Real-Life Advice from 101 Successful Investors (What No One Ever Tells You About Investing in Real Estate)
Insider Secrets to Financing Your Real Estate Investments: What Every Real Estate Investor Needs to Know About Finding and Financing Your Next Deal
What Every Real Estate Investor Needs to Know about Cash Flow… And 36 Other Key Financial Measures