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Commercial Real Estate Investments


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Hey All,

I'm a new physician assistant (1 year out of school) working in EM in Boston, MA. 

Love working in the ED but am looking to branch out and earn additional income through property investments. 

I'm wondering if anyone here has invested in commercial real estate and would be willing to provide me with some insight on the process. I have been considered investing in residential properties, but believe that commercial would be the better option and involve less financial risk. 

I'm essentially illiterate when it comes to investing, so if anyone out there has a story, either positive or negative, I'd love to hear it.

Thanks guys, 

Dan

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What do you mean "commercial real estate"?

The term usually means owning properties rented by businesses, such as office buildings, warehouses, strip malls, etc.  This usually requires significant money (or enormous leverage) to get into.

 

Plus, you are in Boston.  It takes GINORMOUS money there.

Easiest option to "invest" in commercial real estate is to buy a REIT (Real estate Investment Trust) which is sold by shares traded like stocks.

This is a good way to begin investing in real estate until you have money to make your first 

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I work with a PA who has purchased 7 homes over the last ten years, which she rents out at a significant profit. She is going to retire from medicine at 50 and live off of these.  She buys foreclosures at rock bottom prices and low interest rates and rents them out at fair market value, which is typically 2-3x the mortgage cost every month. The renters pay all the utilities. 

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On 4/25/2021 at 2:26 PM, dspicer716 said:

I'm essentially illiterate when it comes to investing

Wanted to discuss this a bit as a lot of people are.

First rule- dont invest in ANYTHING you dont understand completely.  Start with basics, and broaden your investments as you broaden your knowledge.

The first thing most people should invest in is their company managed 401K, up to the match given by the company.  Understand what a 401K is, and understand what a stock, a mutual fund. and what a bond is before you do this.

The next thing is to get out of debt except for your house.  No CC, car, or student loan payments and suddenly most of us would be flush with cash to invest.

Then expand your investments to a ROTH IRA, then max out your 401Ks....then invest in real estate.

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commercial is good

in MASS residential is horrible,  renters are protected and the landlord almost always looses

commercial is going to take at least 20% down to get a note

you have to factor in repairs, and they are expensive, and vacancy (I always have had a second job to ramp up if we loose a tenant)

I agree with Boats, max out 401k and retirement vehicles, get a nest egg built, then to real estate - 

BTW I have put max contribution into ROTH IRA since age 22

I just realized I could retire now (and live frugal) or if I work till 60 will be getting a big fat raise when I retire...... 

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13 hours ago, Boatswain2PA said:

Wanted to discuss this a bit as a lot of people are.

First rule- dont invest in ANYTHING you dont understand completely.  Start with basics, and broaden your investments as you broaden your knowledge.

The first thing most people should invest in is their company managed 401K, up to the match given by the company.  Understand what a 401K is, and understand what a stock, a mutual fund. and what a bond is before you do this.

The next thing is to get out of debt except for your house.  No CC, car, or student loan payments and suddenly most of us would be flush with cash to invest.

Then expand your investments to a ROTH IRA, then max out your 401Ks....then invest in real estate.

Boats, you buying any real estate? 

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On 4/25/2021 at 2:26 PM, dspicer716 said:

Hey All,

I'm a new physician assistant (1 year out of school) working in EM in Boston, MA. 

Love working in the ED but am looking to branch out and earn additional income through property investments. 

I'm wondering if anyone here has invested in commercial real estate and would be willing to provide me with some insight on the process. I have been considered investing in residential properties, but believe that commercial would be the better option and involve less financial risk. 

I'm essentially illiterate when it comes to investing, so if anyone out there has a story, either positive or negative, I'd love to hear it.

Thanks guys, 

Dan

This is a huge topic. This is my goal and have been planning it for a couple of years + at least. Before you pull the trigger on anything research and talk to as many people you can to learn from their mistakes. Even then your bound to commit some mistakes. That is how you learn. Anyways RE is a good investment but it all varies with your location and laws. Right now due to moratorium that is another big variable. And due to the Biden admin, if all the extreme socialist packages pass (especially with the spending but with raising taxes) we likely will see large inflation over the next decade like we have not seen since the early 80s or prior. This will cause interest rates to inevitably rise causing less people being able to finance things. A lot of factors, plus people will want to invest in real estate for a hedge against inflation. So to sum it up, look at your market and variables, go from there

 

ps: I am in Texas btw, sounds perfect right? It has its own challenges with high property taxes since there is no state income tax. I like land as a starting point especially if near a large area that will appreciate due to population growth, pulled the trigger on 1 place and if you like ranching you pay only AG taxes, depends on your likes, dislikes, lifestyle. But I doubt there is any ranching in Boston 😀

Edited by martinitosnl
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Texas is tricky.  Some areas have gone nuts and others have just stayed flat.  There is so much land to build on that it's not a space issue, but more of a proximity to jobs issue.  North Dallas has gone nuts, as had north of Ft. Worth, but get a little more rural and it's hit and miss.

The other thing about Texas (next to its horrific property taxes) is the cost of property insurance.  Home owners ins with all the disasters there has become almost out of reach.  

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20 hours ago, airslant said:

Boats, you buying any real estate? 

Trying to.  Always getting outbid.

Building dream house this fall/winter as well.

As Martini said...inflation is hitting, and its gonna get ugly.  Owning RE is a great hedge against that.

One mistake, in my opinion, is people thinking owning leveraged RE is a good idea.  Look at what has happened to mortgages and other debts in the past when countries had hyperinflation: The bankers worked with the socialist (why does this always happen in socialist countries?) government and resets the debt to the hyper inflated amount.

In other words, your $400k debt on the $400k house turns into a $4M debt on the $4M house with the stroke of a pen....or executive order.

 

 

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2 hours ago, martinitosnl said:

But I doubt there is any ranching in Boston 😀

There are many small farms just outside of Boston, many of them niche farms that direct sell.  It's pretty cool (as long as you are ok with paying $9/lb. for tomatoes, etc).

My spread would likely cost $10-15 million if it were outside of Boston.  Plus the cattle.

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I have invested in residential real estate....not on purpose exactly as I moved when I attended residency and never moved back into my original place. It can be a great investment but a real headache. Things are good for us now that we hired a property management company so we don't deal with the day to day BS. It's can be nice as your tennants should be covering your mortgage, insurance, and property taxes in the perfect scenario and hopefully you can pull in a little profit after that. That is where we are and our little profit also pays most of our mortgage of our current house. 

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