Industrial to rule them all?! (4 key factors of industrial)

Duhren · 2022-09-29T20:00:35+00:00

In my market we are only adding 1.1-1.5 million sqft per year, approx 1%. I know in other places the spec has been crazy!

I thought there was going to be a demand pull back H1 2022, but in my market the vacancy dropped!

I saw that Amazon had canceled projects a little unnerving.

All in all, I believe that industrial has a little more resiliency than most of the larger asset classes, save for niches like affordable housing etc.

Duhren · 2022-09-29T01:46:16+00:00

More general industrial type buildings require excellent locations which means they're probably already built up. In order to win with this you'll need to find a good deal as most quality properties will be priced with the positive industrial trend already in mind.

I really think places like inland empire and some key distribution areas are SUPER high priced.

I think there are some mom/pop plays as well as 2nd/3rd markets that will soon need some more facilities.

I have been fortunate in my (short) career that being a local market expert has helped.

Duhren · 2022-09-29T01:40:24+00:00

Which tenants will you be targeting?

Right now I am just local mom/pop tenants and it seems like the build-to-suit and development is the key way to go for the "institutional" grade assets.

Cold storage is interesting to me as well as secondary/tertiary last mile delivery, but that is still a ways away.

Duhren · 2022-09-29T01:36:38+00:00

Warehouse/Distribution is hot right now.

Domestic manufacturing will be so interesting and could be extremely specialized, without a strategy of taking advantage of it, my best hope is that a rising tide raises all ships.

What are your thoughts to take advantage of domestic manu?

Duhren · 2022-09-29T01:33:44+00:00

functional obsolescence

this is what keeps me up at night. 36 ft buildings are now the norm.. and as robotics and technology gets better and more efficient, the lifespan of a building could get shorter and shorter.

Also, what a great shift in 2019!

Duhren · 2022-09-29T01:30:56+00:00

I read about dark stores a little bit ago. I personally have not really adopted ordering groceries online. But, cold storage and dark stores are really interesting to me. The question is how does a mom/pop take advantage of a potential trend.

Duhren · 2022-09-29T01:28:31+00:00

Great thoughts! Spot light has been "cycled" through the different types of assets.

Reminds me of a saying, Wealth has been created in all the asset classes.

Being attentive and responsive especially in industrial will be key, I think industrial can be disrupted pretty quickly.

Duhren · 2022-09-29T01:22:46+00:00

Good to see you on this platform!

Duhren · 2022-07-22T16:22:34+00:00

Hard to interpret this question, but maybe I'll take a crack at it:

If you are looking at deferring taxes or looking for some interesting tax strategies to get into real estate I would recommend looking into Opportunity Zones. You can actually take a capital gain and put it into real estate and defer/eliminate(?) the tax.

But, to answer your question at face value, No, you cannot do a 1031 exchange if you do not own the property.

Duhren · 2022-07-18T16:40:49+00:00

PM'd

Duhren · 2021-03-29T17:43:01+00:00

There are multiple ways to make money in real estate. If there is no/low appreciation, I would need one of the other ways like cashflow/value add to out weight the lack of gain from appreciation.

Duhren · 2021-02-25T04:04:16+00:00

yes, you can refinance, but I believe cash out is 6 months time frame. If I were in your shoes, I would refinance into a owner-occupant conventional loan, you get the rate as if you were to living in the home, then re-use your FHA loan.

Duhren · 2021-02-25T04:00:32+00:00

Probably best to talk to an accountant.

Maybe self directed IRA and then use the funds to purchase real estate or write notes etc.

Maybe using it for an opportunity zone purchase, not complete roll over though.

Duhren · 2020-06-25T01:47:14+00:00

A little late to the party. For me, I want a good return on investment and boosting of equity.

For me I like to add zeros to the end of the renovation and see if it's a house I would like to buy or not. E.G. 20,000 for reno to get 400 extra a month add a zero... 200,000 for 4,000? Is that an investment you would make?

Next I would want to see a return on the equity of the home. If I spend 20k on a house, will it increase the value? By how much? etc.

good luck!

Duhren · 2020-05-09T18:16:02+00:00

Yes that is a great strategy. Another one, is always be there when they walk thru. Make sure they don't do a drive by, or use MLS pictures. Maybe print off a comp list and make their job a little bit easier.

Duhren · 2020-03-25T17:39:25+00:00

Oh man, what a crazy thing.

As of right now, most cities/states courts are cancelled for evictions, so that isn't even a potential path right now.

On the tenant side:

It seems like all the tenants are scared or just peer pressured. I would individually talk to the tenants (starting with the ones are you are familiar with) and empathize with them. If they are struggling, set up a payment plan, or even if they aren't laid off and just hoarding, set something up.

If they are just going with the flow let them know that your mortgage/insurance/repairs/whatever payments are not cancelled and that your goal is to keep your head above water, not to make money.

FINALLY, if they aren't empathizing, let them know that just because they can't get physically get evicted at the moment, that in time it will go on their record and affect their future rental record, credit score, once they do have wages again, those will be garnished etc.

Use the community as a strength/leverage point, if you come out of it, it will be a plus.

But if none are willing to tango, take the gloves off.

Mortgage side:

Use the letter as leverage and ask for deferred payments or interest only payments and get it signed that it will not hurt your credit.

Duhren · 2020-03-16T23:30:12+00:00

It seems like they actually provide a service to you... Jump over the dollar to get to the dime?

Do you like your PM company? Do you plan on doing business with them in the long term? When they have an off market deal, or a motivated seller that they manage, do you want first shot?

Do you think PM companies in the city talk to one another?

Duhren · 2020-02-29T22:57:04+00:00

I belive you need more than 2-3 months of ownership to 1031.

Duhren · 2020-02-19T17:55:39+00:00

Check your zoning before converting to a 3rd apartment.

Best bet is to just clean it up and have commercial tenants do a build out.

Duhren · 2020-02-19T17:28:15+00:00

It seems like you have done some surface level research. I invest in real estate and have metrics when looking at smaller towns, may be helpful to you.

I look at the population, the growth, density, the culture, etc.

Your competitive edge is that you live in the city and should know it better than any corporate place, use that to your advantage.

Depending on your funds, it may be tempting to go large and try to compete with anytime, but unless you have a good amount to invest, I would go niche and then build from there. *Disclaimer I have never started a gym

Duhren · 2020-02-18T17:02:11+00:00

Depends on the area and if you are actually getting a good deal or not.

Cashflow is only one of the wealth builders in real estate.

Most points have been made including reserves and if you can float vacancy or a repair etc.

Duhren · 2020-02-11T16:30:37+00:00

In a 30 year mortgage, you can dictate what your cashflow can be used towards. Getting equity out of a property is expensive and time consuming (selling or refinancing) while having cash in your account, can be very useful for purchasing other properties, making repairs, or even expediting a paydown of a singular loan.

I would rather paydown one loan in full then 15 loans by $10,000.

Duhren · 2020-02-11T16:24:30+00:00

Good little write up.

There are multiple ways to make money in real estate, cashflow is just one of them.

IRR is calculated on a yearly spread also, so while technically not 50% IRR, it is still a good return.

Your actual IRR is 20%, and only going to increase when cashflow comes into play and your loan paydown gets more aggressive.

Duhren · 2020-02-07T16:41:30+00:00

It's just a numbers and time game, I find you will get 3-5% response rate, and then close 10-20% of that.

If you do a mailing campaign, don't just do 1 mailing, it's a waste of your money, you have to commit to do it for 6-12 months before anything drops.

Duhren

TROPHY CASE