cover of episode 47: Apartment Complexes, NNN Leases, and Commercial Real Estate with Joel Owens

47: Apartment Complexes, NNN Leases, and Commercial Real Estate with Joel Owens

Publish Date: 2013/12/5
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BiggerPockets Real Estate Podcast
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Shownotes Transcript

    <p>How do you like the idea of making double digit returns while not needing to lift a finger with your investments? If so – this is the show for you. On this 47th episode of the <a href="https://www.biggerpockets.com/podcast">BiggerPockets Podcast</a> we sit down with commercial real estate investor and broker Joel Owens to learn strategies for getting started with commercial real estate investing. From apartment complexes to NNN lease investing and a lot more, this show is packed full of tips for investors in all walks of life.</p><p>In This Show, We Cover:</p><ul>
  • How Joel got his start… from Pizza Owner to Apartment Broker/Buyer
  • Joel’s first investment… that turned bad quickly
  • What makes an A, B, C, and D neighborhood
  • How much does it really cost to buy commercial real estate?
  • Should someone start with apartments or single family properties?
  • Where to find apartment complexes and other commercial properties
  • How to determine the value of an apartment
  • How to carry out the “Value Add” strategy
  • No money down commercial investing?
  • Carrying a second mortgage when selling real estate
  • NNN Lease Investing – How to get started with this passive investments
  • And a LOT more

    • Links from the Show

    Books Mentioned in the Show

    Dealmaker’s Guide to Commercial Real Estate: Strategy and Practice for the Intelligent Investor by Ray Alcorn

    Tweetable Topics

    • “You have to have a certain mentality to live next to your tenants… I don’t have that personality.” (Tweet This!)
    • “If you are used to buying houses, apartment investing is the easiest to get into.” (Tweet This!)
    • “Real estate is like a roller coaster – fast lows and fast highs…with a lot of coasting in the middle.” (Tweet This!)
    • “Run your real estate like a business, not a hobby.” (Tweet This!)
    • “Small steps lead to big results.” (Tweet This!)

    Connect with Joel

    Example of Income Approach Math

    • Property Type: 4 Plex
    • Income Per Unit: $400
    • Gross Monthly Income: $1600
    • Gross Expected Income: $19200
    • Subtract out all operating expenses (60%) $19,200 x .4 = $7,680
    • Net Operating Income: $7,680
    • Divide by Purchase Price to get Cap Rate: $7,680/100,000 = 7.68%
    • Cap Rate: 7.68%

    Example of How to Determine How Much You Can Afford

    • Cash Down Payment, 10%: $300,000
    • Seller held back a 15% second mortgage: $450,000
    • Total Purchase Price: $3,000,000
    • First Mortgage: $2,250,000

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