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🎯A Commercial Real Estate First-Timer Primer🎯
A question was recently posed:
What is the most valuable piece of advice you can give to first-time commercial real estate investors?
I do NOT prefer to work with most 'baby investors' because they do not know what they don't know, and a lot of what they think they know is wrong.
Some are excited about learning. (Then, we're good. I know a little.)
So for commercial real estate first timers,
Plan your business. One of my best clients who is NOT a beginner says, "Each buy, I am buying a job." SO true!
The core issues in CRE are:
How much money goes in, and when? How much money comes out, and when?
Start at the end. If you're going to invest in income-producing real estate, take into account an EXIT STRATEGY. Hold periods are long (usually 5-10 years), but cannot be too long (see market cycles below).
Know that you actually make your money when you BUY, NOT when you SELL. (You get the money when you sell, but buying right is critical.)
Analyze it to death. Prepare a DCF (discounted cash flow analysis) for any property you are considering. It will help measure investment performance. Your ... more
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