Frequently Asked Questions
Understanding the basics of the commercial real estate is key to deciding whether this type of investing is for you. Here are the answers to some of the questions we often get asked.
Does Commercial Real Estate (CRE) investing make sense for me?
Commercial real estate can make sense for almost anyone. There is a myth that people need to start with residential real estate but many entrepreneurs we know started their real estate investing in commercial and have done very well. While commercial real estate is not going to make you rich overnight, investing in multi-unit properties produces a steady cash flow and builds profits.
What are the advantages of CRE investments?
The biggest advantage is that income from multi-unit properties like apartments comes from a number of tenants rather than a single family in a house. There is still cash flow if one or two units go vacant, as opposed to zero income during the times when a rental house is vacant.
How much money can I expect to make?
Commercial real estate is not going to make you rich overnight – expenses are generally 50% or more of the income, there’s usually a mortgage and you likely will have partners who get a share of the profits. BUT, over time, multi-unit properties can produce a steady cash flow that covers those costs and makes it much easier to acquire properties with a larger number of units. Having more residents and clients will obviously increase your income stream and build more wealth. How much more depends on your own drive and dedication.
How can I find potential partners to go into business with?
Probably the best way to find partners is to meet like-minded people who have the same interests. You can find these people in classes like the ones we offer. In fact, a number of people who have come one of our classes have found their partners right there. There are also Meet Ups around most urban areas that focus on commercial real estate.
What does it take to shift from flipping a single home to investing in commercial buildings?
It really doesn’t take much because a lot of the basics are the same. However, the numbers are bigger so the risks can be larger if you don’t really learn the business and the differences. For example, the consumer protections that exist to protect buyers of single family homes don’t really exist in commercial real estate so that needs to be taken into account when you do your due diligence.
How much risk is there in investing in CRE?
Risk exists in every type of real estate or in any business for that matter. The key is managing and mitigating the risks. Our series carefully details all the actions you need to take to reduce your risks. You’ll learn what to consider when you analyze a property, finance a deal, do due diligence and hire property managers.