JF3295: Jorge Abreu - Breaking Ground: Unveiling the Secrets of Lucrative Commercial Real Estate Development

Risk and Reward in Development: Jorge emphasizes the increased risk associated with commercial real estate development, from the entitlement stage to construction. However, with the right approach and a low basis, the potential rewards can be substantial. A lower basis ensures more room for profit, making the risk worthwhile.

City Approvals and Entitlements: Developing commercial real estate involves navigating complex city approval processes. Jorge discusses the importance of securing approvals from city officials, zoning, and city councils. These stages can be time-consuming and challenging, requiring patience and expertise.

Comparing Development vs. Value-Add: Jorge sheds light on the differences in returns between development and value-add projects. While both target a 15-16% IRR, ground-up development projects generally offer higher returns on equity multiples. Understanding these variations is crucial for investors when choosing their investment strategy.