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Make a Real Estate fortune investing in clever ways
I’ve always believed in learning from the best. In a real estate investment career that has seen me rise from the bottom of the ladder and end up with millions in the bank and more than 4,000 apartments in my name, across more than six states, I made mistakes, and learnt from them but I also made sure that I learnt from those who were ahead of me and were successful.
As you’d expect I get asked for a lot of advice and many questions about the best way to succeed in real estate investing and in many cases I point those who ask to my workshops and courses which are designed to help new real estate investors gain the insights and experience-based information I would have loved to have had when I was starting my career. But I also give advice and insights away free because I too, valued such information when I was learning.
This brings me, rather neatly, to this piece. I am often asked what’s the best way to invest in real estate and my response is that there is no ‘best’ way as such. Each investment decision you make depends upon the circumstances you are in as an investor, what the market is doing and the level of risk you are comfortable with.
Tags: Apartments, circumstances, Fortune, good real estate, insights, investment career, investment decision, investor, ladder, new real estate, perspective, real estate investing, real estate investment, real estate investors, risk management, single family, smart money, steady income streamRelated posts
Commercial Real Estate Values After the Bubble
Recently I spoke with my co-managing partner Michael Facchini, of Regent Global Funds, an alternative investment fund, at an Institutional Investor conference on Distressed Real Estate in New York City. The folks at Institutional Investor did a fantastic job putting it together and assembled a group of very knowledgeable and informed speakers from the industry. Usually when you put together people in the upper echelons of the industry, you find that they are out of touch with the reality on the streets. However, what I found to be incredibly interesting about this event and a bit scary at the same time, was that reality has hit all levels of this market and the individuals that are in charge of pulling the trigger on other people’s money are paying attention.
Of particular note was the general consensus that commercial real estate is going back to realistic levels and maybe just a bit below as a result of the real estate bubble being popped. We all know that residential has popped and crashed, but commercial has always been a question. I have written several times about valuations on commercial real estate getting back to reality instead of popping, and in my reality I never liked to buy anything less than a 10 cap. So for conservative investors, the bubble popping is just getting back to reality.
What really turned my head was that everyone else at the conference was now living in a 10 CAP reality (for more information on CAP rates see “The Golden Rule of Lending: How Banks Got it Wrong”). In fact, for this group of professionals a 10 CAP was the new norm. What does it all mean for the average commercial real estate investor? It means that if you are holding commercial real estate, it’s probably not worth what it was 6 months ago and it probably won’t be worth what it is today 6 months from now. The usual suspects that get hit during a downturn are things like office and retail, but this time around due to the overbuilding in some markets, properties like multi-family are also getting hit. For example, rental absorption is pretty devastating in places like San Diego and Las Vegas where there was so much overbuilding, and now the supply of rentals looks never ending. This all goes back to the basic fundamentals of knowing your market and using your head instead of just a spreadsheet.