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Old 02-11-2019, 12:03 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,173 posts, read 3,938,472 times
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Quote:
Originally Posted by MinivanDriver View Post
My post was more in response to the poster who couldn't understand why he wouldn't do it himself. At the same time, I am of the opinion that multifamily is becoming--depending on the market--overbuilt. That's the same reason why I also didn't like retail, and am pretty glad we've stayed out of that. But, to your point, we like nice, safe, dull properties that consistently perform in geographic areas where we know. You know, nice ten-year leases. Just what I prefer.
I see. In many areas they can’t build enough multi family.
As businesses change, I wonder about commercial properties. It seems that demand could drop. For example an accounting firm could need less space since so much record keeping is digital , not hard copies. I winder if law firms would need less if their libraries become digital needling way less space.
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Old 02-11-2019, 12:25 AM
 
17,055 posts, read 3,816,501 times
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Originally Posted by Japanfan1986 View Post
A completely turnkey operation rarely if ever exists, but hey who doesn’t love thinking about free money?

ATMs, laundromats, vending machines. I’m sure other posters have read about how these can work as good passive streams of income. I’m also sure some posters with actual experience in these fields might hope on here and debunk them as not passive as all. So I’ll state upfront that I have no idea how passive any of these businesses actually are.

So feel free to mention in this thread what forms of passive income prove to be just that and how passive they are. Ways of achieving supplemental or hey even full-time income are never bad to hear about. Lived experience is preferred but if you’ve heard of something and would like to know more post that too
oil wells work for me as passive income.
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Old 02-11-2019, 08:13 AM
 
5,158 posts, read 2,132,068 times
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Quote:
Originally Posted by aslowdodge View Post
I see. In many areas they can’t build enough multi family.
As businesses change, I wonder about commercial properties. It seems that demand could drop. For example an accounting firm could need less space since so much record keeping is digital , not hard copies. I winder if law firms would need less if their libraries become digital needling way less space.

Well, given the length of leases, you are insulated from those kinds of sudden drops. For example, the average lease on an industrial or distribution space is in excess of five years. Ten is more the norm. Office space is typically not year-to-year either. You have a longer period to learn if someone is vacating a lease, which gives you more time to find a new tenant. Keep the property in good shape and it's hardly a problem. In my region, the absorption rate for office space is around 92-93%. Industrial is at 95%. So lack of demand isn't really an issue.



But multifamily has a host of problems. Not only do you have constant turnover in tenants, but you also have all kinds of issues with payment, property damage, and just getting the deadbeats out. It requires constant on-site staff, too.
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Old 02-11-2019, 11:24 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,173 posts, read 3,938,472 times
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Quote:
Originally Posted by MinivanDriver View Post
Well, given the length of leases, you are insulated from those kinds of sudden drops. For example, the average lease on an industrial or distribution space is in excess of five years. Ten is more the norm. Office space is typically not year-to-year either. You have a longer period to learn if someone is vacating a lease, which gives you more time to find a new tenant. Keep the property in good shape and it's hardly a problem. In my region, the absorption rate for office space is around 92-93%. Industrial is at 95%. So lack of demand isn't really an issue.



But multifamily has a host of problems. Not only do you have constant turnover in tenants, but you also have all kinds of issues with payment, property damage, and just getting the deadbeats out. It requires constant on-site staff, too.
What area do you invest in and what kind of cap rate do you get?
Multi family is more labor intensive, but I would imagine one hires a property manager then factors that into the cost as well as a turnover factor and looks at the overall return.
When I lived in the Bay Area in California I saw some turnover in leased spaces every few years. The long term people like myself typically owned their places.
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Old 02-11-2019, 12:37 PM
 
5,158 posts, read 2,132,068 times
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Originally Posted by aslowdodge View Post
What area do you invest in and what kind of cap rate do you get?
Multi family is more labor intensive, but I would imagine one hires a property manager then factors that into the cost as well as a turnover factor and looks at the overall return.
When I lived in the Bay Area in California I saw some turnover in leased spaces every few years. The long term people like myself typically owned their places.

That's why I like industrial/distribution. Lots of ten-year leases.

As far as region, chiefly in the Southeast. The overall economic outlook remains strong. I think you're seeing occupancy rates for industrial/distribution hitting 95% in most markets, especially along the 85 corridor, Atlanta, and Birmingham.

We went through a move in December, so I'd have to dig through the boxes in storage to find my last report from 3Q, but something tells me it was a little under 10%.
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Old 02-11-2019, 08:09 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,173 posts, read 3,938,472 times
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Quote:
Originally Posted by MinivanDriver View Post
That's why I like industrial/distribution. Lots of ten-year leases.

As far as region, chiefly in the Southeast. The overall economic outlook remains strong. I think you're seeing occupancy rates for industrial/distribution hitting 95% in most markets, especially along the 85 corridor, Atlanta, and Birmingham.

We went through a move in December, so I'd have to dig through the boxes in storage to find my last report from 3Q, but something tells me it was a little under 10%.
pretty good return. It's a bit over my investment capability to buy a warehouse unless I participate in some sort of syndication.
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Old 02-12-2019, 08:19 AM
 
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Originally Posted by aslowdodge View Post
pretty good return. It's a bit over my investment capability to buy a warehouse unless I participate in some sort of syndication.

Didn't mean to mislead you. We don't have that much cash, or we'd be living on our boat anchored somewhere off Fiji right about now. Instead, we are part of an owner's group. In this instance, local commercial real estate company approached us about being an investor in a privately-held REIT, one that specializes in industrial and distribution. But we have input on where the investments dollars go. In this particular case, bought in in 2004 with a $50,000 stake that has, by dint of luck and some cagey leadership, has appreciated about tenfold since then.


We've had offers to invest in multifamily projects, but have declined for reasons I mentioned earlier in this thread. I also turned down a chance to invest in a residential development project in 2006. The guy said I was nuts. But FHA has just pulled the rug out from underneath Jumbo mortgages, so I knew the crash was coming.

In other words, I like nice, safe windup toys.

Last edited by MinivanDriver; 02-12-2019 at 08:57 AM..
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Old 02-12-2019, 11:14 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,173 posts, read 3,938,472 times
Reputation: 6877
Quote:
Originally Posted by MinivanDriver View Post
Didn't mean to mislead you. We don't have that much cash, or we'd be living on our boat anchored somewhere off Fiji right about now. Instead, we are part of an owner's group. In this instance, local commercial real estate company approached us about being an investor in a privately-held REIT, one that specializes in industrial and distribution. But we have input on where the investments dollars go. In this particular case, bought in in 2004 with a $50,000 stake that has, by dint of luck and some cagey leadership, has appreciated about tenfold since then.


We've had offers to invest in multifamily projects, but have declined for reasons I mentioned earlier in this thread. I also turned down a chance to invest in a residential development project in 2006. The guy said I was nuts. But FHA has just pulled the rug out from underneath Jumbo mortgages, so I knew the crash was coming.

In other words, I like nice, safe windup toys.
Always more than one way to skin a cat.
I was not privy to any investment groups and probably would not have qualified as an investor anyways.
My path was sfh rentals. One by one. Allowed me to retire within 3 years. Yes they are more labor intensive but a property manager handles pretty much everything so I put in maybe an hour or two a month. Roi is about 13% per year and my initial investment has almost tripled in value in 5 years.
Good to see we both did well but different paths.
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Old 02-12-2019, 11:36 AM
 
5,158 posts, read 2,132,068 times
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Quote:
Originally Posted by aslowdodge View Post
Always more than one way to skin a cat.
I was not privy to any investment groups and probably would not have qualified as an investor anyways.
My path was sfh rentals. One by one. Allowed me to retire within 3 years. Yes they are more labor intensive but a property manager handles pretty much everything so I put in maybe an hour or two a month. Roi is about 13% per year and my initial investment has almost tripled in value in 5 years.
Good to see we both did well but different paths.

Absolutely. But if this intrigues you, it's worth talking to a reputable commercial realtor in your market with a good track record for development. They are almost always looking for investors.
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Old 02-12-2019, 08:13 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,173 posts, read 3,938,472 times
Reputation: 6877
Quote:
Originally Posted by MinivanDriver View Post
Absolutely. But if this intrigues you, it's worth talking to a reputable commercial realtor in your market with a good track record for development. They are almost always looking for investors.
I'm in Atlanta and there was one in Canton. I'll see if I can look him up.
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