By onlyinvesting.info
Mar 26, 2014
#Commercial Property #Commercial Property Advisors #commercial real estate #Commercial Real Estate for Beginners #commercial real estate investing #commercial real estate investing 101 #commercial real estate investing for beginners #Commercial Real Estate Investing for Dummies #Commercial Real Estate Investment #Peter Harris Real Estate
Hello Peter and all, I was planning to purchase a fairly inexpensive duplex and dumping everything I can on the principle in order to use the equity for a down payment on a commercial property. Is this a decent method in your opinion? I think it would build a larger down payment much quicker. Any advise would be greatly appreciated..thank you very much…Josh
Another great book
Peter – at southern Ca – so far almost all deals after putting down the 30% down pymt there is barely any cash flow after paying the expenses n mortgage. Any feedback. Thank you
You are a great teacher. Is it too late for a 49 years old person to get in real estate business?
Thanks for responding back sir. Your response encourage me.
If you do a Udemy class i would pay for it…
Well explained. Thank you
What is the best commercial zoning-code to look for on a property…if I want to sell used-cars from it?
Great video, Peter. Many thanks for sharing!
I live in the UK but just wondering if you run a forum or online mentoring program 🙂
It's funny because I bought this book but when I read it, I read it in Pete's voice! lol
There is no way in today's (2018) market that you can find a 20 unit apartment for $550,000, hence the 20%+ annual capital gain!
WTF are you gonna find a 20 unit apartment building selling for 550,000.00 ??
How can I become a student with you
where do you find a 20 unit apartment building for $550,000.00?
Peter Harris: I’m ready! Can you mentor me?
Peter, first of all, thank you for taking the time to make and post this video. I wanted to recognize this generous public service before I take issue with some of the items you presented. I’m a real estate investor who, so far, has only invested in single-family residences and I am contemplating dipping my foot in the pool of commercial real estate investing. So, before I start quibbling, I wanted to thank you for taking the time to show me how to analyze a commercial deal.
Now for the quibbling. I’ve read through all of the comments and nobody seems to have noticed that right in the middle of calculating the return on investment at the end of your video, you switched over to calculating a cash on cash return. While the cash on cash return may be a valuable metric, it is not the same as return on investment. When calculating the return on investment you would compare your profits with your total investment. In your example, your profits are $22,858 per year. Your total investment is $550,000. Actually, it’s probably higher- every single property I’ve purchased has required some sort of renovation at the outset, making my initial investment more than simply the purchase price. But even if we use just the purchase price to calculate return on investment, the return on investment is actually a mere 4.16% ($22,858 is 4.16% of $550,000). That is quite low for a return on investment for a real estate deal. Even if we ignore the financing (because some people do buy with cash), and we calculate the return on investment using the $56,230 number (I got this number by adding the sum of your mortgage payments back into your annual cash flow) the return on investment is still just 10.22%. While this is nothing to sneeze at when compared with interest on a savings account, it is not much better than what you would get in an S&P 500 index fund. On my single-family residences, I am getting between 12% and 14% return on investment. When you add to these facts the additional fact that the $550,000 purchase price for a 20 unit apartment building was obtained during a downturn in the market and that such a low-cost apartment building is not available for sale today, I would have to say that I’m planning to stick with single-family residences.
I don’t mean to be confrontational or a naysayer, if I have done my math incorrectly, please let me know. I like the idea of investing in apartment buildings because it would allow me to scale my business much more quickly than continuing to purchase single-family residences, but in my mind, return on investment is king. And unless apartment buildings yield a higher return on investment than single-family residences, I don’t see a reason to switch over.
Awesome video for beginners!! I had several questions and you hit the main ones. Now I understand ROI also. Keep up the great work.
I just bought this book! Hello 2020!!!
With an average tenancy of 18 months having one apartment vacant and one dedicated to the management team, that part of the equation seems accurate. In my theoretical model I assumed a 5.5% rate, and a 15 year term to give us 43,140 annual mortgage expense, but equity does build up faster.
One must also consider the missed opportunity cost, what could that $110,000 down payment deliver in revenue if it was invested elsewhere, opportunity cost is a real cost. Although the margin initially looks very meager the mortgage is fixed, but the income and expenses are variable, so long term projections on those costs and incomes needs to be considered, and should produce more favorable results, provided one is not buying in the middle of a bubble like we have now.
I understand how to invest and be smart with money. My issue is acquiring enough money for a lump sum like that down payment to work with in the first place. Even with being frugal and smart with my money, I have very little left to put aside at the end of the day.
bless up
We hope to hear from you soon
Thank you 🙏
Before taxes Cash Flow: after taxes including depreciation and passive loss if there any left increases the roi or reduction or eliminating taxes.
Thanks for the video. I think it'll be safe to deduct from your NOI also repairs and other improvements that usually Yale's place anytime a building changes ownership, I'd take the NOI down to $10000. Which will bring the COC to %9.09.
You are da MAN !!
I just ordered your book, Commercial Real Estate Investing for Dummies on Amazon. Thank you Peter.
Good Video!
Initial capital is always the btch isn’t it
Great video!! Thanks for the content!!
Great informations. Thank you
Can you provide a link for the book ?
What should I do to start commercial real estate
Become a successful commercial real estate investor with our Protege Program: https://www.commercialpropertyadvisors.com/protege-program
Fantastic video. Way to go with distilling down to the basics.
Very very helpful!!