Asset Classes That Reveal The Most Stability

Have you already succeeded in single-family home investing? Would you like to improve and progress with more property? Here are a few ideas to delve into bulk investing and succeed:

  • Mobile Home Parks
  • Apartment Buildings
  • Self Storage

But just how does a novice investors jump into the bigger bowl of fish? Here are some more ideas:

Partnering with like-minded investors
Saving current cash flow, and securing a down payment
Qualifying with a lender through exceptional credit
Using the equity on already owned single-family homes

In order to get approved for a loan, investors need to get all financial affairs in order, both on the personal and business side. Personal income is much less of a requirement on multi-family homes than other properties like gas stations, retail spaces, churches and other forms of commercial property.

Also, commercial properties that involve residencies are usually more marketable to investors for many reasons. These include:

  1. Properties that are grouped in the same place are easier to manage, because it’d be on the same insurance, the same group of tenants, and the same management system. Having all the units or homes in the same place reduces the need for multiple mortgages and multiple headaches.
  2. Residential properties are less institutionalized, with fewer zoning restrictions to get the property rented.
  3. The pricing strategy for office spaces for example, are prepared per square foot, with complex formulas. A home just needs a set monthly rental.

Jason Hartman’s Tips for Wealthy Investing

  • Be proactive about maintenance, instead of deferring this expense
  • It’s better to fix bad properties in a good location than the opposite way around
  • Add value to the property with simple amenities that will increase rent, and/or decrease expenses. Value added amenities include showerheads, reducing water waste, etc.
  • Other ideas include arranging with utility companies to score better deals, and then reselling to tenants at a minimum or lower than average rate.
  • Get a mentor or commercial investor who has operated and profited from commercial investing before and for a long period of time.

Commercial properties such as retail spaces are suffering from low vacancies for several reasons. The internet for instance, has made it easier to conduct business without a storefront. This in turn saves business owners the expense of rent.

On the other hand everyone needs a place to live – and will always do. As such, commercial properties or asset classes that involve housing individuals and their families are usually the most profitable.

The Commercial Investing Center Team


Residential – the Best Kind of Commercial Real Estate

Commercial real estate is a giant umbrella of sorts. What usually comes to mind when speaking about this subject are offices, retail spaces, airports or church buildings. Along the lines of commercial investments though, are homes that carry multiple units, whether this consists of two, three, four or 100 homes – within the home.

In fact, these types of investments are the best kinds for today’s real estate climate. Here’s why:

· The population is ever increasing, with no signs of slowing down.

· The cycles of rent will continue at an unstoppable pace, as older generations buy new homes, and younger generations start out with rent.

· Multiple generation homes are increasing too, and these multiplexes offer a comfortable solution for living within the same place.

· Fortune 1000 companies are recommending employees to work out of their homes. As a result, many office spaces have closed up shop and are manning operations virtually.

· Technology also eliminates the costly overheads of running a brick and mortar store.

Based on these reasons, there’s been a decline in commercial property leases. There are no statistics needed to disclose this. Just drive or walk along any city in America, and the situation is evident with commercial lease signs plastered across windows. Meanwhile, the same cannot be said about residential properties.

Property owners for housing still have a clear advantage with excess demand. Renters are required to undergo rigorous screening, prove their income, background, and the likes.

Investors should therefore look closely at commercial properties such as mobile home parks, single family homes or multi-family homes versus retail and office.

Warren Buffet has done this successfully for years. He saw opportunities in mobile home parks, where others saw cynicism.

Bottom line: Everyone needs a place to stay.

In addition, Jason Hartman advises readers about the profitability of self storage units. With the unstable levels of unemployment seen across the nation, people are moving freely to where the jobs are, or where there’s support from family and friends.

Again, measure the scale by the amount of U-haul trucks you see lining the streets on busy days. No statistics are needed.

Bottom line: Everyone needs a place to store possessions, while transitioning from place to place.

Instead of delving into the uncertainty of office spaces, Jason Hartman recommends residential units in plexes or mobile parks, as well as storage. (Top image: Flickr |Omaha Homes for Sale)

The Commercial Investing Center Team


CI 33 – Getting Rid Of A Bad Property and Lawyers Are Liars

Jason explores some ways to get out of a bad property then he interviews author/attorney Mark Kohler about his book “Lawyers Are Liars: The Truth About Protecting Our Assets.” Mark is an attorney, CPA and entrepreneur who has owned numerous businesses since high school, through college and even as a professional. Mark’s principal career has been as a partner in the law firm Kyler, Kohler, Ostermiller, & Sorensen, LLP. He specializes in the areas of business, estate and tax planning. Mark owns several commercial real estate projects and loves the people, transactions, and everything to do with real estate. You will be pleasantly surprised at how exciting and interesting a discussion regarding tax and legal planning can be. Jason and Mark will distill complex legal and tax strategies to common layperson terms, adding interesting stories and anecdotes.

Some lawyers, and others who are not lawyers, use fear tactics to sell the unsuspecting public various asset protection structures or strategies that are outright lies. Until now, no other professional has been willing to call out the frauds and cheats in this powerful industry where self-professed experts and do-it-yourself hacks wreak havoc on the innocent just wanting to protect their assets. This episode we will expose the liars. Undoubtedly, this book will become a desktop resource for not only the average middle income American wanting to protect his or her assets, but attorneys, estate planners and financial professionals guiding their clients through this complex area of the law. Learn the best kept secrets in asset protection planning, learn the truth about Nevada corporations, off-shore planning, land trusts and all of the so called silver bullet strategies! Mark and many other great speakers will be presenting at “The Masters Weekend: A Gathering of Experts”.

CI 27 – ROTH IRA Changes – Bypass Tough Lending Regulations – Invest in Real Estate Using Your IRA / 401k

The lending regulations have changed drastically within the past two years, causing investors quite a head ache when attempting to buy America’s most tax-favored investment, income properties. With a self-directed IRA or real estate IRA you can be in control by investing your retirement funds when, where, and how you want.

On this episode of The Commercial Investing Show Jason talks with Jennifer Williams, an expert from The Entrust Group about the current investing opportunities with your IRA and 401k. Don’t miss the latest Roth IRA conversion changes and cutting-edge strategies to invest in real estate!

3 Inherent Risks in Buying Commercial Real Estate

The temptation for the business owner is there. He’s the proud owner of a thriving enterprise but hates the idea of scratching out a monthly check to the building’s landlord. Wouldn’t it be better to own the real estate instead? Well, if you’re talking about a self-storage facility or a mobile home park, we’d be more inclined to agree with you. When it comes to the larger commercial real estate market in general, we’re not so quick to recommend an investor pull the trigger right now.

Of course, the major caveat is always whether or not the deal makes financial sense the day you sign on the dotted line. Until that criteria is met, you shouldn’t be thinking about buying anything. At the Commercial Investing Center, we love a great deal as much as the next guy, but there are three risks we see all too often when it comes to buying commercial real estate. Let’s look at each in turn.

1. The Incredible Location Backfire: In commercial real estate even more than residential, we see the “hot” area suddenly turn cold faster than you can imagine. Business locations are trendy and that which trends upward can turn around and trend downward even faster. Sometimes developers run out of cash and those pie-in-the-sky projections of a shopper’s paradise never quite materialize, so there you are owning a plum property in the middle of nowhere. They built it but no one ever came. Why is commercial real estate so much more erratic than residential? We’ve thought about that one long and hard and the best answer we can come up with is the concept of “universal demand.” Put simply, we all need a place to live but nobody needs to go shopping at your store.

2. Liquidity: The idea of liquidity can cut both ways when it comes to buying commercial real estate. A business that ties up too much liquidity through the process of buying real estate could end up shorting itself of critical cash flow and reserves. On the other hand, a struggling business that owns real estate at least has something of value to liquidate and raise cash from the sale. The problem is that you can’t always unload a piece of property when you need to. There are these things called slumps that tend to happen every now and then, and Murphy’s Law dictates that the time you need to need to sell property in the worst way will be the time that nobody’s buying. There’s no logical reason that this should be the case – but it almost always is.

3. Skating on Thin Ice: There are a couple of variables that can throw your commercial real estate venture into complete disarray. The first is when a tenant (s) stops paying rent, throwing your cash flow into chaos. That’s why a reliable tenant is worth their weight gold and unreliables a serious pain in the neck. While it’s usually easier to evict a commercial tenant than a residential tenant, it stills plays havoc with your monthly budget. The other variable that can upset the apple cart all at once is major repairs or maintenance, which can run into the hundreds of thousands of dollars if you have the misfortune to lose a major system like heating or air conditioning in a shopping center. Or plumbing. Or any of a dozen different minor or major catastrophes that must be fixed quickly.

Consider also the fact that buying commercial real estate very likely involves the services of an entire professional team that you’re going to have to create. It’s not as simple as a residential buy where you can tend to most matters yourself. When it comes to buying a multi-million dollar property, you’ll need at least an accountant, lawyer, commercial broker, and mortgage broker. You’re playing with the big boys now and can’t afford to make the kind of financial mistake that sinks your investing business for good.

We’re not trying to scare you out of ever investing in commercial real estate, but only to make sure you realize exactly what you’re getting into. Yes, the potential for incredible profit is there, as is the chance to go completely bust. In recent years, we’ve seen better opportunity in self-storage facilities and mobile home parks, which combine a relatively low investment (when compared to commercial property) but a higher rate of return than most residential deals. If you don’t believe us, do your research. Jason Hartman interviewed self-storage investing guru, Scott Meyers, about the profit potential in owning and operating this type of property investment. There are worse ways to spend 39 minutes and 22 seconds of your life.

The Commercial Investing Center Team

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(Flickr / Hub)

Get a $10,800 Raise With Self-Storage Investing

There aren’t very many jobs where you can guarantee yourself a $10,800 raise next year without exerting any extra energy. Self-storage investing just happens to be one such field. We’ve discussed the topic of raising rental rates at various times in the past but never directly worked through the numbers to show how you can give yourself a raise whenever you want. Next month if you like, though we like to reserve raises for January when people are expecting them. Keep in mind that you can’t be too greedy about. If you jack up rates multiple times a year there’s a good chance you’ll start losing tenants.

But don’t be afraid to raise that rent. They might not like it but most tenants with at least a tangential grasp of reality realize that the cost of living always goes up – never-down – and self-storage rental units are not immune.

Here we go.

Let’s assume you are the proud owner of a storage facility boasting 300 units which each rent for $60 per month. For the purposes of this example, assume that you have 0% vacancy at all times. Nice idea, huh? Multiplying your rental rate out yields a gross income of $18,000 per month. The basic idea is that you should raise your unit rental rates every year. The federal government issues what it calls a Cost Of Living Adjustment (COLA) every January that applies to recipients of Social Security payments. Although stingy in recent years about increasing check amounts, it used to be that retirees could expect an annual 3% to 4% bump in income due to the yearly rise in prices of goods.

So even though the government hasn’t handed out COLA increases in a while, we think it is fair to assume that inflation causes at least a 5% jump in prices each year. The real number is likely to be double that but even a 5% increase in rental rates, spread across 300 units, will bump your income considerably.

5% of $60 equals three dollars, so now you’re going to be getting $63 per month for each unit. Work the math however you want but the end result is the same – $900 additional dollars each month for a grand total of $10,800 for the year. The trick is to not get complacent about raising your rates every January. You might lose a few tenants but most will pay it. After all, who wants to move all their junk out over a lousy three bucks?

January will be here before you know it. Make plans now to use your self-storage investing business to give yourself a healthy raise.

The Commercial Investing Center Team

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(Flickr / jollyUK)

CI 25 – Self Storage Investing

Jason talks with Scott Meyers, CSSM©, the nation’s one and only self storage millionaire maker. Scott’s company focuses solely on buying and selling self storage facilities, that’s it. At the present time, he owns and operates several facilities throughout Central Indiana. Listen in at: https://commercialinvestingcenter.com/category/podcast/. As a leading self storage educator, he travels the country revealing why self storage has become the hottest sector in commercial real estate over the past 30 years.  Practically every real estate investor and entrepreneur has uttered the words “I’ve always wondered about self storage, I’ve heard those things were cash cows.”  As a result of his research and 16 years experience, he’ll reveal the top 10 reasons to invest in self storage and how built a $10,700 positive monthly cash flow his first year in one of the best kept secrets in real estate: self storage! You will learn the following:

The endless opportunities available in the over 60,000 facilities nationwide
The two reasons why demand is projected to skyrocket in the next 10 years
Why self storage facilities are “cash cows” and why they have outperformed many other investments

3 Self Storage Investing Myths Revealed

CommercialInvestingCenter.com

Have you heard of the dangers involved in self storage investing? Too much competition. You have to build a new facility to make money. Financing is difficult to find. While one should never enter a serious investment on a whim, we suspect that much of this type of propaganda is circulated by people already making nice money in the industry, and who would say anything to keep others from taking a slice of the quite lucrative pie. We know real estate investing is history’s best bet. The numbers prove that fact. Self storage investing, though, might be the best of the best, so don’t pay attention when the naysayers drop one of the following lines on you.

Too much competition: It’s true that, over the past two decades, the self storage industry has grown from a lazy little pastime into a billion dollar industry. With over 45,000 facilities nationwide, there is six feet of storage space for every citizen in the United States. That’s a bunch. Overbuilt? Maybe. Too much competition? Not even close. The truth is that a large number of facilities are ineffectively run and poorly marketed. Even a little effort to create a better business can be rewarded exponentially by increased occupancy. The ones claiming too much competition are those afraid to really work their business. Don’t listen to this myth!

You need a new facility to make money: Even though building a new self storage investing facility could be considered cheaper than a traditional commercial undertaking, it’s still not inexpensive or quick. Far better, and likely more profitable, it would be to find a facility that has been poorly managed and perhaps is in need of minor repairs. Owners like this are usually itching unload what has been an under-performing asset, in their eyes.

Financing is hard to find: The truth is that self storage financing has the lowest default rate of any commercial loan type. Lenders are fighting to loan this kind of money, with many offering 90% financing. That’s right, you put up only 10% of the total purchase cost. While you’re going to have to pay more than if you bought a rental house, self storage facilities are not as expensive as you might think. A 30,000 square foot complex, twenty years old, can be had for less than it would cost to buy a single family home in California.

Before we go, let’s consider some quite feasible numbers associated with self storage investing. Assume you own 300 units, 90% occupancy, each renting for $50 monthly. You’re grossing $13,500 every 30 days. Take out loan service and minimal maintenance. No wonder other self storage investors want to keep you out.

The Commercial Investing Team

Flickr / celesteh

CI 22 – Intro to Commercial Real Estate and Getting Your Spouse Into Investing

Jason talks with commercial real estate expert Tolliver Morris and one of Platinum’s clients turned Investment Counselor, Dave Toombs. Visit: https://commercialinvestingcenter.com/category/podcast/.

Commercial real estate: A review of product types and their corresponding tenant profiles. What is best for you and what are the management responsibilities of; apartments, retail, office, industrial, triple net NNN properties, medical properties, mobile home parks or self-storage?

Client and Investment Counselor, Dave Toombs, talks about maintaining marital bliss while investing and helping his kids buy their own rental properties.

Baby Boomers Increase Self-Storage Demand

self storage investingThe post World War II Baby Boomer generation has rolled through the decades like a large wave, causing economic and social changes from its sheer number of people – almost 80 million strong. Self storage investing is likely to spike as another large life event, death, begins to filter through the Boomers. Morbid? Perhaps. But we all know the two certainties in life and one of them is not taxes.

How will the spike in the coming number of Baby Boomer deaths from the natural cause of aging be felt in the self storage investing industry? Some self storage owners are already feeling the ripple of increased need for storage from Boomers’ sons and daughters who have recently gone through the estate settlement of a loved one. Many of us don’t have the room to put another whole household of stuff in our own home while we decide what to keep, what to sell, and what to parcel out to distant relatives.

What are you going to do? Turn to self storage, of course.

Well known economist, Ben Stein, summed up his view of self storage investing in a keynote address to the Self Storage Association Conference and Trade Show:

“I can’t think of one single long term trend in our country and our economy that doesn’t benefit self storage – It’s the perfect storm – a Hurricane of Profits. This is the sweetest spot in the whole American economy; a receptacle for an enormous cascade of money! The opportunity in self storage right now resembles the opportunity in the oil industry in the 1950’s or Silicon Valley in the 1990’s”

Strong words from a man who has spent many years studying stuff like this. We at MHPListings.com think he might be right.

The MHPListings Team

MHPListings.com

Flickr / madLOLscientist