I like to keep up with commercial real estate. Mostly, I read about it. Ask questions about it. On very rare occasions I actually get to partake in a commercial real estate transaction. But commercial real estate investing and residential real estate investing are two completely different animals. The Kansas City Star has an excellent write-up today on the state of the commercial market today.
First, let’s remember who I am. I’m a residential real estate agent that works a whole lot with residential investment property owners and would-be owners. Also, I rent commercial space for my own use in an entirely different arena that my wife and I also enjoy. So I do have experience with both. My thoughts;
Residential Investment Property Investing In Kansas City Today
While there are definitely areas to avoid, I can say with a straight face that if you have cash you should be buying. Now. Not later. The money is currently in single family homes, not multi-family homes. There are more reasons for this than I want to discuss here. But that’s the way it is.
Commercial Real Estate Investing In Kansas City Today
Oy. Read the article and look around. In the retail strip center I lease property in we currently had 100% occupancy for the first time in a decade. The strip center is run down and well-below the standards of other Olathe strip retail centers. But one of the largest tenants will be closing it’s doors on May 23rd. (The owner told me he just isn’t able to make it with his limited customer base cutting back.)
About a mile from my center I’ve had another retail center talking to me about moving up there when my current lease is up. They took a previously run-down center and gave it a new face lift. Looks good. But they also tripled their lease rates. And it sits about 35%-45% occupied.
BBQCapital has a reader that goes by the name of Another Investor. And AI once said that she didn’t understand the fascination with commercial real estate investing because of the capital and risk involved. (If I’m too far off what you said AI, please correct me!) And that it was her feeling that a commercial tenant will quit paying their rent before a residential tenant would. After all, would they rather have a home to live in if they cannot make their store payments? Probably.
I think for large capital investors commercial is an excellent way to go. And there are hundreds of reasons for this. But for 99.9% of our readership here you’re probably better off with 10-12 homes than one small, run-down strip center. (Not saying you need 10-12. But at that point you are probably thinking about going commercial.)
Just my thoughts for the day.