I was recently asked the below questions for an interview. It had me thinking that this information would be helpful to everyone right now. So, here we go!
What are your tips for investing in real estate, given the current economy?
Buy for cash and be patient. CRE is a long term investment and not a simple buy, repaint and then sell. What makes CRE valuable is the income that is produced from the tenants that occupy the property.
What do you think are some of the 'do's and don'ts' of real estate investing? Are there are sorts of investments that you should avoid right now?
-work with someone that focuses on CRE.
-be patient - CRE transactions take time and are expensive
-there is no MLS - so someone that is "plugged" into the market is key
-work with a friend of a friend without knowing their experience. If they only help people buy and sell homes, they are not the right person to help you with a CRE transaction.
What advice do you have for a first-time investor? What resources do you recommend?
-Be prepared to take time learning the market in which you want to invest in. Each property type is different.
-learn about the fundamentals of the property you are interested in.
-get information from the trade associations associated with that property type.
How do the potential returns on real estate investments compare to stocks/bonds?
-when I talk about returns, I'm actually talking about cash in the bank. So if you buy a $1M property and it is producing a 10% return that means you are physically getting $100K in cash that first year. Unless you buying a stock that pays dividends or your return calculation are based upon what you paid for it and the stock price that day and you sold the stock....then their returns are paper returns and no real money going into your bank account.
These are just a few of the questions. More to follow.
What would you recommend to someone getting into CRE as an investment?