What is Commercial Real Estate?

Types of Commercial property:

• Multifamily
In today’s market, these properties are hot, so it’s going to be difficult to find an apartment complex that meets your criteria. When we look into buying an apartment complex, we want to be able to make a boatload of money on it immediately and we want to be able to do it without our money or our credit; that limits the number of apartment buildings we’re able to buy. You have to be able to buy them cheap with a great upside; unfortunately, they’re hard to find.

Apartment buildings come in all shapes and sizes. We also look for senior housing and low-income housing. Fortunately, wherever there’s an apartment complex, there’s an owner of record and they’re easy to find.

•    Industrial
It’s amazing how cheaply you can buy industrial buildings out there. You can find them all day long for less than $10 a square foot. You can’t come close to building an industrial warehouse for $10 a square foot. Sometimes you can’t even buy the land for that little.

The upside and the cash flow have to be there. The obstacle: These properties rent for so little that the cash flow is not there to support a greater value.

•    Office
Again, it’s the same situation, getting them so they’re economically feasible, so we can get into them and actually have an upside worthy of our attention to turn them around.

•    Health Care
You’ll be amazed at how many closed hospitals there are in this country, which you can buy for practically nothing if you can figure out what to do with them. For instance, a common exit strategy for hospitals is to convert them to schools, training centers, or even an adult congregate living facility.

•    Retail
Retail properties come in all shapes and sizes, from big box to small box, to strip malls and rundown shopping centers that nobody knows what to do with.

•    Raw Land
The key is taking dirt at wholesale price, changing the use, changing its value, and creating something from nothing. “Buy it by the quart and sell it by the shot” all it takes to sell it by the shot is to hire an engineer to take a map and divide it into small pieces by residential, commercial, or mixed use, then sell it off.

It’s easy to increase the value of dirt because once approved for its highest and best use, it automatically increases the value several times over. You just can’t do this with buildings.

•    Mobile Home Parks
Mobile home parks are great for cash flow. The tenants who occupy them drag on their house so it’s easy to collect the rent. When you buy mobile home parks, you’re buying the land with utilities on it and you’re renting it out by the pad. Therefore, it’s like renting an apartment without the apartment to maintain. It’s very easy to get seller financing on mobile home parks.