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

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 BiggerPockets Podcast 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.

In This Show, We Cover:

• 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

• Costar
• Loopnet
• BiggerPockets.com/calc
• BiggerPockets.com/meet
• Introduction to Real Estate Investment Deal Analysis by J Scott – (Great blog post about analyzing properties)

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

• Joel’s BiggerPockets Profile
• Joel’s Website: AWCommercial.com

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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