- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Developing commercial properties
Posted on 4/28/24 at 7:43 am
Posted on 4/28/24 at 7:43 am
I have a high income, but I want to invest in other things than stocks, residential land, and retirement.
I have thought about apartment/house rentals, but maybe I am scarred by my childhood of helping maintain my family's properties, and the issues they had with tenants. For the most part they were crappy tenants so that was our fault for setting the bar so low.
In recent months I have expressed interest in owning/developing commercial properties. I don't know about it in depth so I want to surround myself with the right people. First person I found is an architect in our social network who designs the properties. I have an old friend who is a commercial builder, so building it out is covered by someone I can trust. He does great work. My concern is speculation and how to figure out that by building X property that serves Y purpose it will bring in tenants. My fear is that it turns out a dud and it sits vacant.
I have not yet talked in depth with the builder and the architect but soon will be. The architect mentioned taking a property and developing it in phases. Sounded logical to me.
I wanted to see before I dip my toes in it if anyone out there deals with this, or if they are an owner of commercial property. What advice do you have?
I have thought about apartment/house rentals, but maybe I am scarred by my childhood of helping maintain my family's properties, and the issues they had with tenants. For the most part they were crappy tenants so that was our fault for setting the bar so low.
In recent months I have expressed interest in owning/developing commercial properties. I don't know about it in depth so I want to surround myself with the right people. First person I found is an architect in our social network who designs the properties. I have an old friend who is a commercial builder, so building it out is covered by someone I can trust. He does great work. My concern is speculation and how to figure out that by building X property that serves Y purpose it will bring in tenants. My fear is that it turns out a dud and it sits vacant.
I have not yet talked in depth with the builder and the architect but soon will be. The architect mentioned taking a property and developing it in phases. Sounded logical to me.
I wanted to see before I dip my toes in it if anyone out there deals with this, or if they are an owner of commercial property. What advice do you have?
6
Posted on 4/28/24 at 8:26 am to Mariner
Be careful with commercial real estate. Class A properties tend to be resilient in the current market but a lot commercial space is in a world of hurt as occupancy is not where it needs to be and many buildings are going to have to refinance into higher interest rates.
Lower occupancy plus higher interest rates is not a good place to be.
Lower occupancy plus higher interest rates is not a good place to be.
Posted on 4/28/24 at 11:56 am to Mariner
Is there a reason you want to build new properties instead of buying an existing property that's already leases up and has a steady stream of income?
Posted on 4/28/24 at 12:44 pm to jfw3535
Good point. I was thinking if the vision is right it will be attractive and the place to be. It has to be done right though. Maybe I can get my feet wet with an existing property.
Posted on 4/28/24 at 2:33 pm to Mariner
Invest as a limited partner with a sponsor that knows commercial real estate. As you learn you can become the sponsor and do your own deals.
Posted on 4/29/24 at 10:04 am to Mariner
Is the area growing or shrinking? What sector of tenants are growing in volume/income? What are they looking for in a building? What would it cost you to build that building? Is there a “moat” that will protect your investment in the space from competition in the future?
These are the sort of questions that I would be asking beforehand. In a large/diversified market I would look to specialize the building and draw in a more narrow slice of clients. In a smaller market I would lean more towards generalization.
These are the sort of questions that I would be asking beforehand. In a large/diversified market I would look to specialize the building and draw in a more narrow slice of clients. In a smaller market I would lean more towards generalization.
Posted on 4/29/24 at 10:46 am to Decisions
Developing commercial properties is challenging in today financial and social climate. Just getting the entitlements on a piece of dirt to put a building in a location that may or may not be the right location for the asset you plan to develop can take any where from 3 months to 2 years (or longer). Also, you could buy a pc of dirt and find out the people living in the city, county, or parish don't want it rezoned to what you initially planned, which happens a lot to people don't know how to properly get through due diligence.
The easy part is design and construction and what it sounds like you are focused on right now. The hard part is understanding the guts of the deal, which are (but not all inclusive of): financing, rents, taxes, insurance, operating expenses, lease up, etc.
I'm not trying to discourage you but being a passive investor in a few CRE deals to start maybe a good idea.
The easy part is design and construction and what it sounds like you are focused on right now. The hard part is understanding the guts of the deal, which are (but not all inclusive of): financing, rents, taxes, insurance, operating expenses, lease up, etc.
I'm not trying to discourage you but being a passive investor in a few CRE deals to start maybe a good idea.
Posted on 4/29/24 at 11:50 am to Mariner
quote:By this, do you mean "multifamily" or do you mean "office/retail"?
commercial properties
Depending on your answer, I have much different feedback.
But, as always, everything depends on price. Even presuming you have all the requisite skills gathered (internally and/or externally) it could still be bad if the price is bad.
Posted on 5/1/24 at 5:45 pm to Mariner
I had a roommate in law school with the initials ML, he was from the Northshore and had a younger brother in school for Merchant Marine. Is that you?
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News