Webinar from TrumpUniversity – investing in Commercial Real Estate

Just attended a webinar from TrumpUniversity on investing in Commercial Real Estate. Here are my thoughts…

The speaker (Bob Steenson) is talking about some very good points. Though the material is geared toward the inexperienced commercial real estate investor, it is valuable for someone who wants to know why to get into the business.
* Valuations based on current cash flow (great way to proceed, but doesn’t always apply)
* Long term capital gains (abso-friggin-lutely)
* Scalable (when carefully applied)
* You are more in control of the value (Assuming you are an involved investor)

Types of Commercial RE Investments
* Multi-family (I don’t play in this space – I don’t like residential tenants)
* Industrial
* Office (my favorite)
* Retail (lucrative in a good economy)
* Mixed-use (could be good if well planned in good markets)

Bob showed photos of some types of commercial space then spoke about how foot traffic & driving traffic can impact the income stream. Bob also gave an example of a 100 unit apartment building shwowing income & expenses to give an idea of expected income. He described how to calculate cap rate and determine whether the investment is attractive or not. He also gave a basic description of how to look at competitive properties to determine if there are opportunities to improve valuations and cap rate.

He gave an interesting perspective on cap rate thinking. If you think of a targeted cap rate of 9 for example, then for every dollar you add to the Net Operating Income, you increase the value of the property by $9. I like that!

He did talk about increasing value and translating that into refinance leverage. This is an idea that isn’t all that effective in the current banking environment, but has been a good tool in the past. I don’t know what banks will do going forward.

Bob did make a leap at the end from a beginners level presention to a moderate level investor by speaking about leverage and financing. It is a bit of a leap for the targeted attendee.
Obivously it is a sales pitch for Bob’s program for getting into commercial real estate. No surprise there. Not having any experience with it, I won’t comment on it, but if the target audience for this presentation is an inexperienced commercial real estate investor, then I have to believe the program would be similarly targeted.

Oh well, enough rambling. Back to work…