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All-TigerNet [11644]
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Commercial Real Estate Investment....
Feb 13, 2024, 12:53 PM
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I have the opportunity to dump a lump sum of cash into Commercial RE and then get a monthly return on said investment via rent. I've talked to some financial guys and their ROIs are all over the place for what is 'good.' Just curious if any of the investment savvy people here have a thought.
Let's say I put $100,000 in for ease of math. That is cash so no loan. I'd be part of an LLC that is formed so I'll get a K-1 I'll need to pay taxes on at years end. How much would you expect to get a month back on that investment. This will likely be a long term hold unless the group decides to sell the property. It's in a growing area so it should generate steady income for 20+ years easily.
Thanks.
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Oculus Spirit [83146]
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Restaurants chancy, so bad. Nail Salons sure thing, so good.***
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Feb 13, 2024, 12:58 PM
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Legend [17815]
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I knew a great defense attorney who started his practice in back of nail salon***
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Feb 13, 2024, 5:02 PM
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All-In [27184]
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I hear commercial RE is a real boomtown right now.***
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Feb 13, 2024, 12:59 PM
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All-In [40946]
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8 to 12 percent
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Feb 13, 2024, 12:59 PM
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Depending on risk. A restaurant could be a bit higher. A chain business with a long term lease could be a bit lower. Any sweat equity that you do adds up over the years.
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Lot o points [156046]
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A month???***
Feb 13, 2024, 5:57 PM
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All-In [31520]
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Re: Commercial Real Estate Investment....
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Feb 13, 2024, 1:00 PM
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What’s your risk tolerance? What’s the rest of your investment profile look like? What’s the cost to you of locking up that 100k? A 10 year T note will get you just over 4% or so, so what’s the price for a higher-risk investment? 10%? 20% return?
I’m no financial advisor, but I don’t think I’d accept anything less than a 10% return, any decent mutual fund can get you that every year and that money is liquid.
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Orange Blooded [4100]
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Re: Commercial Real Estate Investment....
Feb 13, 2024, 1:54 PM
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With real estate it's not just the yearly return.
You might also get depreciation to reduce tax burden and hopefully the property appreciates.
Also, while the cost is fixed the return year to year can go up as rents increase.
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All-TigerNet [12595]
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Re: Commercial Real Estate Investment....
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Feb 13, 2024, 1:06 PM
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You'll need to ask some folks who hold property in the same area what their ROI is. It's a tired but true phrase regarding real estate being all about location, location, location, but it's true.
A growing area in Greenville is not the same as a growing area in Dallas or Miami, so your question is a difficult one to answer and folks on the ground in the area you're interested in can be of more help.
What are the other potential investors saying?
Lastly, caveat emptor and be very careful if your partners are family or friends. I've stupidly found out the hard way that business and family/friends don't necessarily mix well.
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All-In [46864]
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Looks like Powdersville is getting a vape store***
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Feb 13, 2024, 1:12 PM
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Oculus Spirit [81129]
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ANOTHER vape store***
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Feb 13, 2024, 1:16 PM
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All-In [43848]
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Several things here......
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Feb 13, 2024, 1:16 PM
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Fair to assume you would be part of a group that is buying the property then will collect rent from the tenant?
There are folks stacked up like cordwood in every city wanting to and willing to invest in these types of deals, in many cases to avoid a 1039 exchange. I mention this because it would be smart to give thought to:
Who is offering this deal?
WHY is it being offered?
What do they stand to gain/lose with you involved? Without your involvement?
Who else is considering involvement, and what is their history with these types of investments?
Is there a tenant already identified? If not, how long are you willing to foot the expense without the income? If you already know the tenant, can someone with experience (a CRE professional probably) tell you how that tenant is rated? For example, a walgreens is like an AAA+++ or whatever rating. Nearly zero risk of them not paying or folding up. Bob's bar and grill (first time business owner) is probably an FFF--- or whatevs.
That's the stuff I would dig into. I'd also post some big old melktiddies ITT to show appreciation for such sage advice if I were you.
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Orange Blooded [4100]
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Re: Commercial Real Estate Investment....
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Feb 13, 2024, 1:57 PM
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Is it a storage facility?
Those things print money.
It's true all real estate is local so you need comps from the immediate area.
3 to 5 miles away may be too far depending on what type of commercial real estate it is.
My wife rented commercial real estate for a business she owned and when she considered moving I had to point out to her that all of her customers were in a 3 to 5 mile radius around her business and she might lose them all if she moved the business 5 miles away from them.
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Heisman Winner [135687]
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Commercial real estate can be a tricky investment.
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Feb 13, 2024, 2:01 PM
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If you have 100k to invest, I could, however, set you up with a professional investment strategist in Gastonia where you could double your money every few weeks and never pay any taxes on it. It mostly hinges on you being able to keep your mouth shut and a willingness to do a stretch if you get pinched.
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All-TigerNet [12177]
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you should buy a lot on woodruff road and put
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Feb 13, 2024, 2:37 PM
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either a car wash or a bank branch on it, in dire need, I mean the nearest bank is........
probably 100 yrds away
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Orange Blooded [4719]
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I help manage a portfolio of such assets and it's about 50/50
Feb 13, 2024, 3:57 PM
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whether these things actually end up profitable, and almost always you need one of the other investors to really know what they are doing by either be in the commercial real estate business development/construction themselves.
Are you developing land or buying existing buildings?
I'd say there are much easier ways to earn a higher/less risky ROI.
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Oculus Spirit [79292]
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7***
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Feb 13, 2024, 4:10 PM
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Orange Blooded [4617]
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Definitely the right time to get in on a commercial real estate
Feb 13, 2024, 4:52 PM
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pyramid scheme, if you're the one on top trying to get out before the impending crash...
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