The Silicon Valley Investors Club is excited to have Steffany Boldrini join us for a talk about How to Start Real Estate Investing & How to Determine What’s a Good Project to Take On. She’s a real estate investor and professional, and host of the Commercial Real Estate Investing From A-Z podcast, based in San Francisco.
Purchasing your first real estate investment property can seem daunting and nerve-wracking. I am frequently asked how to go about finding and purchasing one’s very first commercial property.
In this post/guide, I will explain how you can start commercial investing in real estate. By the end of this post/guide, you will have gained an understanding of:
- How to start learning about real estate investing
- Which asset classes to consider
- What the options are as far as getting started with your first investment
As someone who invested in the stock market, as well as startups as an angel investor, I love real estate investing even better because you can make money in multiple ways:
- Cashflow, from tenants and other sources.
- Amortization of your loan, your tenant’s income pays down your mortgage.
- Tax benefits, including property depreciation.
- Property appreciation, driven by supply/demand as population grows, as well as fixed/finite product/land.
Let’s get started!
Step 1 – How to start learning about real estate investing
As far as how you can start learning about real estate investing, let’s all take a moment to thank the internet for its existence. You can learn so much by watching videos, joining forums, going to events, and listening to podcasts. I will share a few things that were valuable to me in the beginning of my career:
- The easiest way to get started is to take a look at your network – who do you know that is an investor (big or small) that you can set up a time to chat with and pick their brain? This is a great way to get started since they will be able to give you a ton of insights in your market, where to get started, and tools that they recommend. They can also be the person that you call for feedback when you find a deal worth looking at.
- Read SVIC’s real estate blog – SVIC’s real estate blog is written for STEM professionals. Due to STEM professionals having fruitful and rewarding careers, certain real estate investment options (fix and flip, wholesaling, etc) take too much time or aren’t as profitable for them compared to earning a raise at their job, or investing in unique asset classes like angel investing, venture capital, or private equity.
- Post questions in the SVIC facebook group to learn from SVIC members that have embarked on the same real estate investing path you are set to begin. SVIC members have a wealth of investing knowledge and experience, and you should definitely tap into their expertise.
- Visit www.biggerpockets.com – This is a great website to find all kinds of resources, and start meeting people in your area and across the country. They have webinars, forums, and tools that you can use to start the learning process and get you familiar with the language.
- Join meetups – During normal times, I highly recommend going to live events in your area and start meeting fellow investors. You can start by going to www.meetup.com and searching for “Real estate Investors” or “Real estate investing” within 25 miles of where you live. Join these groups and go to their events. I have ran into quite a few people that I met at these events, through other people. It’s a small world.
- Join mailing lists of brokers in your area, start searching for “Commercial brokers (city name)”, go to their website, and subscribe to their mailing list.
- Create an account on www.crexi.com and setup searches for the types of properties you are looking for, you will get emails when they go on the market. This is another way to start to familiarize yourself with the terminology, and with the things you should look for in a property.
- Start listening to podcasts when you are on the go. This is another incredible resource, I met several people that were guests at podcasts, and hired one of them to consult for me when I purchased my first self storage facility.
Related Article: The Busy Working Mom Edition: Real Estate Investing Guide
Step 2 – Which asset classes to consider
There are all kinds of assets that you can get started with in real estate investing and each of them has different areas you can focus on. Below are a few options:
- Multi-family: This is the most common asset class that people get started with. It is easy for them because they typically have started with a single family home investment and understand how it works – you find a property, maybe fix it up a bit, and you get a tenant.
- Office: You can focus on different types of office – company office space, startup office space, medical, R&D, and government. In this asset class, as well as retail and industrial, you can negotiate multiple things in the lease such as taxes, maintenance, cleaning and upkeep.
- Retail: Within retail there are also several types of retail investing – single tenant, strip malls, and shopping centers. There are interesting ways of adding value in retail, such as getting a national tenant. However, it is also an asset class that you need to be careful with nowadays.
- Industrial: A very popular asset class today as online shopping becomes more and more commonplace and there is a greater need for “last mile delivery.”
- Self Storage: Similar to industrial, this is another popular asset class nowadays. Some people say it has been overbuilt, but you can still find good self storage facilities. Just remember that this is like purchasing a business, because you are having to source and maintain new renters for as long as you own the facility. It is also known to be a recession resistant asset class.
Self storage and multi-family are probably the most hands on asset classes from the list above. Each of them has its pros and cons. My recommendation is to start with the one that makes the most sense for you.
Step 3 – How to get started
It can be intimidating to invest in your first commercial property, but there are a few options to make it an easier process.
- Syndication: You can invest in a syndication. It works in the same way as angel investing through a syndication. You find a good, reputable operator that has a great track record, or was referred to you by someone, and invest in their deal. This is a good way to get started and start understanding the process and terminology.
- Partnership: You can partner up with someone that has already invested in a few properties. In this case, you would be bringing in the majority of the money (if not all) and they bring their experience. If I was a beginner, I would rather get less of a return and do it with someone experienced than risk missing something really important and do it on my own.
- Work for/with someone: If you do not have the capital to get started, you can either get a job at an investment firm and learn everything you can for a year or two, or you can raise funds and partner up with an experienced operator that is looking for capital.
- On your own: Another option is to gather all of the knowledge that you learned over several months and once you find a property that makes sense, go for it on your own. Sure the first one is the hardest one, but once you go through the process, it becomes easier and easier. This was how I got started, mainly because I had a mentor teach me several things for over a year. Do not forget to have as many people take a look at your deal as possible so you can make sure you did not miss anything. You should also find someone that is very experienced in the field and get some consulting hours with them so they can be a second set of eyes and guide you in the right direction.
In conclusion, focusing in one of these asset classes is a good idea, and making sure to have someone experienced guide you throughout the process is a must. There are multiple moving parts to any of these investments and each one of them must be checked in order for you to increase your chances of succeeding.
Related Link: The Real Estate Referral Generator
The content here is for informational purposes only, and should not be taken as investment advice. All views contained herein are my own and do not represent the views of any other organization.
Silicon Valley Investors Club (SVIC) is a global community of STEM professionals interested in making smarter investment and career decisions.
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