Since 2015, I’ve been investing in real estate and have enjoyed the benefits. Real estate is not all that you see on HGTV, I promise.
I’ve been in courtrooms and some nasty houses and had tense discussions with tenants.
However, real estate is a sound investment, and the numerous ways the asset works for you are a multiplier.
However, as my career got busier and kids have gotten older (and multiplied), my time has gotten way more valuable. I do not have time to find these houses, renovate and handle the tenants’ phone calls.
My investments must receive the same impact without the time factor.
Enter: Commercial Real Estate
In Any Economy, Multifamily Investing Makes Sense
The demand for rental accommodation continues to outpace supply significantly.
The current status quo is that the rental housing supply needs to catch up by hundreds of thousands of units annually across the United States.
According to The National Multifamily Housing Council and The National Apartment Association, this situation will continue for many years.
Current demographic preferences reveal a trend at both ends of the age spectrum for renting instead of owning.
The younger demographic finds it more challenging to get the financing for property ownership, and the baby boomer generation favors downsizing and the increased freedom that allows it.
The result is that the demand for rental property is increasing.
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The combination of these two market factors gives a strong positive indication for sustained revenue growth in the multifamily sector.
The conditions remain favorable for multifamily investment in most locations for the foreseeable future.
Now, look at four more reasons why investing in multifamily makes good financial sense.
#1 Economy
of Scale
The basic meaning of the economic term ‘economy of scale’ is that there is a real cost-saving benefit to being more extensive.
To quote Investopedia, an ‘economy of scale’ is an advantage “that arises with increased product output.
Economies of scale arise because of the inverse relationship between the quantity produced. And per-unit fixed costs.
How does this concept apply to the argument that multifamily investing is more advantageous than single-family property?
For example, repairing the roof on your multifamily property after a year of rent collection is a better scenario than repairing a roof on a single-family property. Neither is desirable capex expense; however, there is more income from a multifamily property to protect your capital.
The rationale applies even more if you add more—single-family properties to the equation.
The cost of managing ten individual properties, which could be spread across multiple states, and hiring different contractors to care for each one would be punitive.
The cost would be much higher, and the management would be less efficient and less cost-effective than caring for one multifamily property of 10 units in one geographic location.
#2 Greater
Control of Property Value
With a single-family property, you are almost entirely at the mercy of market forces.
If you need to sell in a down market, your hands will be tied. Nearby property values determine your property’s value.
Multifamily properties are perceived differently due to their commercial nature. This puts the value in your hands.
A property can increase profitability and value by driving the Net Operating Income higher.
Something as straightforward as adding a laundry facility or paid parking are two examples that can very positively affect the profitability of your multifamily property and, in turn, its value.
With a multifamily property, there are many more ways toto bring your management and entrepreneurial skills to bear to increase the property’s value independently of the surrounding property market.
In a nutshell, you can raise the value of your multifamily property by decreasing expenses and increasing income.
#3
Positive Cashflow
In addition to the ideas mentioned previously, namely, adding laundry facilities and paid parking, you can add several amenities to a multifamily property to increase positive cash flow.
In addition, the adage of not having all your eggs in one basket applies here, also.
A tenant vacancy in a single-family rental property will bring your cash flow to a grinding halt.
In contrast, if one of your units in your multifamily property is vacant, the impact on your cash flow will be minor because you will still collect rent from all the other units.
#4 Tax
Benefits
One of the great things about supplying housing for the populace is that you are helping the government fulfill one of its essential responsibilities.
Not surprisingly, in return, the government offers you certain tax advantages.
One of the most significant tax advantages for multifamily property owners is the ‘depreciation deduction,’ in effect. It can allow you to deduct a large amount of the income your property generates.
Another way multifamily property tax laws benefit you is by allowing you to use some of the cash flow from the property to pay down the mortgage.
Collecting revenue is permissible, but the IRS allows you to show a much smaller amount of income on your taxes.
This IRS rule allows you to take a portion of that rental income and use it to pay down your debt on the property, which will steadily increase the equity.
With the help of a good tax advisor, there are many other legitimate ways to capitalize on tax deductions, incentives, and even grants that the government makes available to multifamily property owners.
Summary
In the current fluctuating economic climate, multifamily properties are tangible assets representing an excellent focal point for your investment and wealth creation strategy.
Due to shorter lease terms that allow regular rent increases, multifamily assets represent less risk than other commercial real estate investments.
The overall demographics are also favorable.
The steady increase in the number of professionals in the workplace, families, and empty nesters looking to downsize and simplify their lifestyle means that focusing on the multi-family market makes sense.
Multifamily is and will continue to be a solid strategy for investors looking to achieve financial freedom by employing attractive, attractive, low-risk investment returns.
Commercial real estate investing can be a great way to achieve financial freedom and build wealth over time. Whether you’re an experienced investor or just starting, it’s crucial to access the best resources available to make informed decisions and grow your portfolio. That’s why we’ve compiled a list of the 11 best books for commercial real estate, covering everything from investing to advanced strategies for maximizing returns.
“The Millionaire Real Estate Agent” by Gary Keller, Dave Jenks, and Jay Papasan
“The Millionaire Real Estate Agent” is a comprehensive guide to building a successful real estate business focusing on commercial properties.
The book covers everything from lead generation and marketing to negotiation and closing deals. It’s a must-read for anyone looking to become a top producer in the commercial real estate industry.
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“The Art of Commercial Real Estate Investing” by Doug Marshall
“The Art of Commercial Real Estate Investing” is a step-by-step guide to investing in commercial properties.
Marshall shares his years of experience in the industry, providing practical advice and case studies to help readers navigate the complexities of commercial real estate investments.
This book is an excellent resource for new and experienced commercial real estate investors.
“The ABCs of Real Estate Investing” by Ken McElroy
“The ABCs of Real Estate Investing” is a comprehensive guide to rental property investing, covering everything from finding and financing properties to managing cash flow and building wealth over time.
McElroy provides practical advice and real-world examples to help readers build a successful rental property portfolio.
“The Millionaire Real Estate Investor” by Gary Keller, Dave Jenks, and Jay Papasan
“The Millionaire Real Estate Investor” is an excellent book for anyone seeking financial independence through real estate investing.
The authors share the strategies and mindset of successful real estate investors, providing a step-by-step road map for building a profitable portfolio.
“Long-Distance Real Estate Investing” by David Greene
“Long-Distance Real Estate Investing” is a practical guide to investing in rental properties from a distance.
Greene shares his years of experience in the industry, providing actionable strategies for finding and managing properties remotely.
This book is a must-read for anyone looking to expand their real estate portfolio beyond their local market.
“The Commercial Real Estate Investor’s Handbook” by Steven D. Fisher
“The Commercial Real Estate Investor’s Handbook” is a complete guide to investing in commercial properties.
Fisher covers everything from due diligence and property management to tax strategies and capital markets.
This book is an excellent resource for anyone looking to take their commercial real estate investments to the next level.
“The Real Estate Game” by William J. Poorvu
“The Real Estate Game” is an excellent book for anyone looking to understand the world of real estate investing.
Poorvu provides a comprehensive industry overview covering everything from residential properties to shopping malls and office buildings.
He shares real-life examples and practical advice for making informed investment decisions.
“Buy Even Lower: The Regular People’s Guide to Real Estate Riches” by Scott Frank and Andy Heller
“The Intelligent Guide to Real Estate Investing” is a master guide to building wealth through real estate investing.
Frank and Heller provide a step-by-step roadmap for finding and financing properties, managing cash flow, and maximizing returns.
This book is a must-read for anyone looking to become a savvy real estate investor.
“The Best Ever Apartment Syndication Book”
It is a comprehensive guide to investing in apartment complexes.
Fairless and Hicks share their years of experience in the industry, providing a step-by-step roadmap for finding and financing properties, managing cash flow, and maximizing returns.
This book is an excellent resource for new and experienced commercial real estate investors, covering everything from due diligence and property management to marketing and raising capital.
One of the key insights in the book is the importance of syndication, which involves pooling resources and expertise to acquire more significant properties than one could afford individually.
Fairless and Hicks explain how to create a syndication structure, find the right partners, and navigate legal and regulatory requirements.
“The 4-Hour Work Week” by Tim Ferriss
While not specifically about commercial real estate investing, “The 4-Hour Work Week” is an excellent book for anyone looking to achieve financial independence and create passive income streams.
Ferriss shares his strategies for building a successful business that allows for a flexible lifestyle and financial freedom.
This book is a must-read for anyone looking to break free from the traditional 9-5 work model and create their path to success.
“The Book on Tax Strategies for the Savvy Real Estate Investor” by Amanda Han and Matthew MacFarland
“The Book on Tax Strategies for the Savvy Real Estate Investor” is a practical guide to maximizing tax benefits and minimizing tax liabilities for real estate investors.
Han and MacFarland provide actionable strategies for structuring deals, deducting expenses, and taking advantage of tax credits.
This book is a must-read for anyone looking to build wealth through real estate investing while minimizing their tax burden.
In conclusion, these 11 best books for commercial real estate are a great place to start for anyone looking to build a successful real estate business, achieve financial freedom, and maximize investment returns.
Whether you’re just starting or have years of commercial real estate experience, these books offer a comprehensive guide, practical advice, and real-world examples to help you succeed in the competitive world of real estate investing.
So, whether you’re interested in apartment buildings, office buildings, shopping centers, or any other commercial property, check out these great reads and take your real estate business to the next level.
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The industrial real estate market has experienced significant growth in recent years, driven by the rapid expansion of online shopping and e-commerce companies. Investors seeking lucrative investment opportunities increasingly consider industrial properties such as warehouses, distribution centers, and fulfillment centers attractive alternatives to traditional commercial properties like office space or retail spaces. This article explores the pros and cons of investing in industrial real estate, focusing on warehouse properties as a prime example. Let’s dive in.
Pros of Investing in Industrial Real Estate
High Demand
One of the main drivers behind the growth of the industrial sector is the increasing demand for warehouse space due to the surge in online shopping. As consumers continue to shift their buying habits toward online platforms, companies require more square footage to store and distribute products. This trend is especially prevalent in urban areas and industrial zones in the United States and the United Kingdom, where warehouse properties are in high demand.
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Industrial properties, particularly warehouse facilities, tend to have long-term leases. Tenants often prefer these arrangements because they provide stability for their business operations. For property owners, long-term leases can translate into a steady stream of passive income, as rental rates for industrial spaces tend to be more stable than those for other types of real estate, such as residential or office buildings.
Triple Net Leases
Investing in industrial real estate can provide investors with substantial tax deductions. These can include depreciation on the property’s structure and easily removable or mechanical assets (plant and equipment), interest repayments, insurances, and property management fees. Taking advantage of these deductions can help offset the costs of owning and maintaining an industrial property.
Warehouse Automation and Technology
The increasing adoption of warehouse automation and other advanced technologies is making industrial warehouses more efficient and attractive to potential tenants. Automated systems can help businesses reduce labor costs, streamline operations, and improve productivity, making the properties more appealing to a wide range of tenants, from small businesses to large e-commerce companies.
Cons of Investing in Industrial Real Estate
Upfront Capital Requirements
Industrial properties, especially warehouse facilities, can be quite expensive to purchase. Investors looking to enter this market will need a substantial amount of upfront capital, which may limit the pool of potential buyers. It is crucial for investors to consult with financial professionals to ensure they have the necessary funds in place and can manage the ongoing impact on their cash flow.
Maintenance and Repair Costs
Although triple net leases can help reduce property owners’ maintenance responsibilities, investors should still be prepared for occasional repair costs. Issues such as leaks, structural damage, or the maintenance of assets owned by the property owner, such as air conditioning systems, may still require attention and financial investment.
Illiquid Investment
Industrial properties, like other types of real estate, are considered illiquid investments. It may take time to sell an industrial property, which can be challenging for investors who need to access their capital quickly. Consequently, investing in industrial real estate should be viewed as a long-term investment strategy.
Finding the Right Tenant
Securing a suitable tenant for an industrial property can be challenging, as the specific needs of different businesses can vary greatly. Investors may need to invest in modifications or improvements to the property to accommodate the needs of prospective tenants. Additionally, potential investors should carefully consider the types of tenants they would like to attract and research the local market to ensure that there is adequate demand for the type of property they are considering.
Market Fluctuations and Economic Factors
The industrial real estate market, like any other investment sector, is subject to market fluctuations and broader economic trends. Factors such as interest rates, financial crises, or changes in trade policies can have a significant impact on the demand for industrial spaces and, consequently, on the value of an industrial property investment.
Location and Accessibility
The success of an industrial property investment is heavily dependent on its location. Proximity to major highways, transportation infrastructure, and urban centers can play a crucial role in attracting tenants and ensuring the property remains in high demand. Investors should carefully consider the location of a potential investment property and evaluate its accessibility and potential for growth in the coming years.
Environmental and Zoning Regulations
Industrial properties, especially those used for manufacturing or distribution purposes, may be subject to various environmental and zoning regulations. Investors should familiarize themselves with these requirements and ensure that their property complies with all applicable regulations, as non-compliance can lead to fines, penalties, or even legal action.
In conclusion, investing in industrial real estate, particularly warehouse properties, can be a lucrative and rewarding endeavor for those willing to navigate the challenges and complexities of this market. The high demand for warehouse space, driven by the growth of online shopping and e-commerce, presents a compelling opportunity for investors seeking long-term, stable income.
However, potential investors should carefully weigh the pros and cons, conduct thorough research, and consult with professionals before committing to an industrial real estate investment. By considering factors such as location, tenant mix, and market conditions, investors can make informed decisions and build a successful industrial property portfolio.
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John C. Maxwell is a renowned author, speaker, and leadership expert who has written over 100 books, many of which have been New York Times bestsellers. He is an internationally recognized leadership expert named the #1 leadership expert in the world by Inc. magazine.
Maxwell has trained millions of people in leadership through his books, speaking engagements, and leadership programs. He is also the founder of The John Maxwell Company, The John Maxwell Team, and EQUIP, a non-profit organization that provides leadership training to people worldwide.
His leadership philosophy is based on the idea that anyone can become a great leader with the proper training and development. Leadership is about influencing others to achieve a common goal. Maxwell’s work has had a significant impact on the world of leadership, and he is widely regarded as one of the most influential leaders of our time.
In this book summary, we will review the business week best-selling author’s book: The 21 Irrefutable Laws of Leadership.
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Good Leaders: Good leaders get the job done and meet expectations. They are dependable and reliable but only sometimes take their organization to the next level.
Better Leaders: Better leaders have a vision and can inspire and motivate others to work towards that vision. They can create a positive and productive work environment and bring out their team’s best.
Great Leaders: Great leaders are those who not only have a clear vision but also can execute that vision. They have a deep understanding of their organization and its people, and they can bring out the best in everyone. Great leaders can create a legacy that lasts long after they have moved on.
Strong Leadership
Studying strong leaders such as Winston Churchill, Theodore Roosevelt, Harriet Tubman, Maurice Mcdonald, and Mother Teresa, John Maxwell keenly understands what successful leaders do and how they live.
Teaching his team members to take suitable action and understand how to develop each of their leadership abilities is an example of why John Maxwell is considered an authority on the best leaders.
There are several books on effective leadership laws, each with its laws or principles. However, one popular book that outlines 21 laws is “The 21 Irrefutable Laws of Leadership” by John C. Maxwell.
The 21 Irrefutable Laws of Leadership
The Law of the Lid: Leadership ability determines a person’s level of effectiveness.
The Law of Influence: The accurate measure of leadership is influence, nothing more, nothing less.
The Law of Process: Leadership develops daily, not in a day.
The Law of Navigation: Anyone can steer the ship, but a real leader must chart the course.
The Law of Addition: Leaders add value by serving others.
The Law of Solid Ground: Trust is the foundation of leadership.
The Law of Respect: People naturally follow leaders stronger than themselves.
The Law of Intuition: Leaders evaluate everything with a leadership bias.
The Law of Magnetism: Who you are is who you attract.
The Law of Connection: Leaders touch a heart before they ask for a hand.
The Law of the Inner Circle: A leader’s potential is determined by those closest to them.
The Law of Empowerment: Only secure leaders give power to others.
The Law of Reproduction: It takes a leader to raise a leader.
The Law of Buy-In: People buy into the leader before they buy into the vision.
The Law of Victory: Leaders find a way for the team to win.
The Law of the Big Mo: Momentum is a leader’s best friend.
The Law of Priorities: Leaders understand that activity is not necessarily accomplishment.
The Law of Sacrifice: A leader must give up to go up.
The Law of Timing: When to lead is as important as what to do and where to go.
The Law of Explosive Growth: To add growth, lead followers, to multiply, lead leaders.
The Law of Legacy: A leader’s lasting value is measured by succession.
In conclusion, John Maxwell’s “21 Irrefutable Laws of Leadership” is a comprehensive guide to becoming an effective leader. The book covers many topics, from the importance of character and integrity to the value of vision and communication.
Through his insightful and practical advice, Maxwell teaches readers how to cultivate the skills and traits necessary to lead excellently. By following the 21 laws outlined in the book, readers will understand what it takes to be a successful leader. They will be equipped with the tools they need to impact their personal and professional lives positively.
“The 21 Irrefutable Laws of Leadership” is a must-read for anyone seeking to develop their leadership skills and become a more effective leader. Whether you are a seasoned leader or just starting, this book offers valuable insights and practical advice to help you achieve your goals and lead excellently.
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As a sales professional in the United States, there’s nothing quite like the thrill of the hunt. Whether you’re pounding the pavement, networking at industry events, or scouring social media for new leads, the excitement of chasing down a potential sale keeps us going. It’s actually these free things that are a real adrenaline rush.
For many salespeople, the ultimate payoff of all that hard work is the commission check that comes with a successful sale.
That sense of accomplishment and the financial rewards that come with it can be a major source of motivation for sales hunters. In this article, we’ll explore the joys and challenges of being a sales hunter, from the rush of the chase to the satisfaction of closing a deal and earning that coveted commission.
As a sales hunter, the thrill of the chase and the ultimate payday of a commission check are what keep you going.
It’s no secret that high-performing salespeople can earn some serious money. And when the commission checks start rolling in, it’s tempting to indulge in a few of life’s luxuries.
From fancy dinners to luxury vacations, high-performing salespeople often live well and enjoy the fruits of their labor.
However, balancing the thrill of the hunt and the excitement of earning a commission with the need for long-term financial planning is important.
In this article, we’ll explore some of the common temptations that salespeople face when it comes to spending their commissions, and offer tips for making smart financial decisions that can help you build a secure financial future.
So whether you’re a seasoned sales veteran or just starting out in the world of sales, read on to discover how to balance the thrill of the hunt with the importance of financial planning.
But as the years go by, you may start to wonder how you can make your hard-earned money work for you.
Perhaps you’ve already indulged in a few of life’s luxuries with your commissions, but you want to do more than just enjoy the fruits of your labor. That’s where passive investing comes in.
Passive investing puts your money to work for you. A couple google checks will show you that for many high-performing salespeople, real estate is a popular choice for passive investing.
That’s exactly what I discovered in 2015 when I decided to take the plunge and invest in a rental property.
At first, I wasn’t sure what to expect. The idea of being a landlord and dealing with tenants was daunting. Being a hunter, I was looking for great deals.
Eventually, I found a property that met my criteria and had the potential to generate passive income for years to come.
After purchasing the property, I set to work getting it rent-ready.
I worked with contractors to make necessary repairs and upgrades to give it a fresh new look, and I even added some special touches to make the property more appealing to potential tenants.
I was thrilled when I found the perfect tenant and even more thrilled when I saw the rental income roll in.
As time passed, I had more responsibilities and challenges as a landlord.
I had to be available to handle maintenance issues, collect rent, and address any concerns or complaints from my tenant.
I also had to be prepared for unexpected expenses, such as repairs or legal fees.
Despite the challenges, I found that being a landlord was a rewarding experience.
Not only was I able to generate income, but I also had the satisfaction of providing my tenant a safe and comfortable home.
I managed my property and successfully built a profitable rental business.
Since 2015, that same $20,000 commission check has earned over $150,000. Other commission checks have done the same; however, each path has yet to be equal and not without some hard work in addition to keeping my sales job and family.
Eventually, finding deals on the internet was not financially feasible anymore. To get easier access to discount properties, I began networking with real estate groups.
This became like a job in itself. Prices were moving faster than rents were, and I still had to manage the property and find tenants.
I feel that all the best sellers I read about passive income through rental properties were just a bunch of fake content. Not to mention that over time, some properties become average performers.
Flipping
I’ve had the opportunity to flip several properties over the years.
Each project had its own set of challenges and opportunities, but the end result was always the same – a successful sale and a profit to be reinvested into my next project.
Which, inevitably, is the challenge with flipping…you are constantly pushing profits into the next project and never really in a comfortable spot.
Finding a distressed or undervalued property is my 2nd favorite part. The hunt for the deal, putting it together, and buying it is a rush.
This involves research and due diligence, including analyzing the local real estate market, evaluating the property’s condition and potential resale value, and calculating the costs of repairs and renovations. It also involves some risk and a bit of luck.
Once I’ve found a property that meets my criteria, I begin renovating with modern and favorite features.
This usually involves a complete interior and exterior overhaul, from replacing the roof and updating the electrical and plumbing systems to installing new flooring and fixtures to give the whole house a new look.
In addition to a discount on the house, it is critical to find great deals on all materials where possible.
Throughout the process, I work closely with contractors and other professionals to ensure the work is completed on time, within budget, and to my specifications.
Once the renovations are complete, I work with a real estate agent to market and sell the property. This involves staging the home, creating high-quality photos and videos, and holding open houses to attract potential buyers.
Flipping houses is not at all passive income; this is a genuinely active job, and I don’t suggest this for people that have a full-time sales job.
My work suffered, and it was also pretty hard on my marriage.
This form of real estate investing does not work well with sales professionals.
Syndications
After purchasing several single-family rental properties, I realized that scaling my portfolio would be slow and arduous if I continued.
I began to explore other investment opportunities and eventually found myself drawn to multifamily syndications.
Making the transition from single-family rentals to multifamily syndications was an exciting but different experience.
One of the main benefits of investing in multifamily syndications is the truly passive nature of the investment.
Unlike single-family rentals, which require a lot of hands-on management and maintenance, multifamily properties are typically managed by professional property management companies.
This means that the property’s day-to-day operations, such as leasing, rent collection, and maintenance, are handled by someone else.
As a passive investor in multifamily syndication, I can sit back and collect monthly cash flow without worrying about the day-to-day management of the property.
In addition to the passive income benefits, multifamily syndications also offer the potential for higher returns compared to single-family rentals.
By pooling funds with other investors, I’m able to invest in larger properties that generate higher rental income and have more potential for appreciation.
Additionally, the economies of scale associated with multifamily properties mean that expenses, such as maintenance and management fees, are often lower per-unit than for individual single-family homes.
While the transition from single-family rentals to multifamily syndications required a lot of learning and adaptation, the passive income benefits and potential for higher returns have made it a worthwhile investment strategy for me.
The cash flow returns are the same, or slightly less; however, overall returns are on par with single-family rentals. The primary difference is the time requirement.
There is very little due diligence up front, and no maintenance or tenant calls after.
There is only cash flow distributions and appreciation and tax benefits.
Investing in syndications is similar to buying stock except having much better tax benefits and adding an actual asset to your portfolio.
In conclusion, real estate syndications offer a unique opportunity for sales professionals to diversify their investment portfolios and generate passive income.
By pooling funds with other investors and partnering with experienced real estate professionals, sales professionals can access larger and more profitable properties than they could on their own.
Syndications also offer a truly passive investment, allowing sales professionals to focus on their careers and personal lives while still earning monthly cash flow from their investments.
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