Building your Texas commercial real estate portfolio can lead to tremendous wealth or increasing stress and financial hardships. Here, then, are a few tips to help you fall into the first category.
You probably have a friend that made it big in the world of real estate investment. Or, maybe that’s had a friend—it’s difficult to catch up with each other when he’s off on yet another around-the-world excursion or Caribbean island hopping cruise. But you can almost always be guaranteed that no matter how easy his life may appear now, there was a time when his nose was to the grindstone and properties that broke even where as numerous as those that made a nice ROI. He learned a lot along the way—if you’re successful as a Texas commercial real estate investor, you have to. Here, then, are a few tips he might share with you if he wasn’t so darn busy jet-setting.
Know Thy Market. This is probably the number one rule when it comes to real estate investment strategies. It’s similar to digital marketing and the number one rule of knowing who your target client is—it’s difficult to know what to pitch if you don’t know who you’re pitching to. To this end, know the demographics. Is this a town of families with young children or up-and-coming professionals? How has the market and rentals vacillated as far as pricing and demand over the years? What percentage of the homes in the area are owned and how many are rented? What is the occupancy and rate rent for the multifamily units? You can save yourself a lot of headaches and start growing your portfolio the right way by understanding the market you’re getting into. Key components include strong job growth, low vacancy rates, a growing population, and affordability. If the thought of researching these important considerations has you looking longingly at the great outdoors, consider getting a real estate agent on your team who can do the dirty work for you and knows the ins and outs of that end of the business.
Budget and Plan. While you would think these two factors would be first on the list when considering developing or purchasing a rental property, you’d be surprised at how often they fall by the wayside. It could be due to the tug of your heartstrings as you look longingly at the property you know you can renovate and turn from a broken down heap of a once-was to a country cabin trimmed in pine with flower boxes overflowing with petunias and a comfortable porch that gleams in the sun. It’s just a shame that when all the numbers are finally crunched, you can’t seem to sell it for the amount you require to make a profit. You outpriced yourself by putting too much money into the property—so much so that the current market cannot sustain it. Before plunking down your recently Texas commercial real estate loaned money, make sure to have the home inspected and, if you won’t be doing the work yourself, get some bids from the local general contractors when laying out the budget.
Additional Considerations when Building your Texas Commercial Real Estate Portfolio
What’s your profit margin and are you looking for cash flow from a rental or a rapid ROI from fixing and flipping? And just as important, if not more so, is the type of funding you secure for the property. Is there a penalty for early payoff? What are your terms and exit strategies?
At Level 4 Funding, we offer construction loans, bridge loans and private hard money loans, all designed to get you the funds you need when you need them so that you can start your project with little worries.
We work with hundreds of private hard money lenders in order to find the right funding for your project at the best possible rate. Call us today for a no-obligation quote.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.