Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Commercial Vs. Residential Rentals
Old 10-20-2006, 02:10 AM   #1
Full time employment: Posting here.
 
Join Date: Dec 2004
Posts: 714
Commercial Vs. Residential Rentals

Appreciation on residential property was clearly great for awhile, and helped cover the dismal rental returns.

While we have the comfort of timing the move to a better market, we're thinking strongly of doing 1031's to move from what is effectively a 3% or less cap rate on residential rentals into more likely 8.5%+ cap rates on commercial rentals.

Anyone else gone through this math / transition? Any suggestions? Easier to just cut straight to a REIT?
__________________

__________________
Craig is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Commercial Vs. Residential Rentals
Old 10-20-2006, 11:18 AM   #2
Recycles dryer sheets
 
Join Date: Aug 2006
Posts: 65
Re: Commercial Vs. Residential Rentals

I don't know what the return is for REIT, for me a 8% or more cap rate on commerical properties is a much better deal then residential.

Mach1
__________________

__________________
Dream as if you'll live forever.  Live as if you'll die today.
Mach1 is offline   Reply With Quote
Re: Commercial Vs. Residential Rentals
Old 10-20-2006, 12:39 PM   #3
Recycles dryer sheets
 
Join Date: May 2005
Posts: 228
Re: Commercial Vs. Residential Rentals

Returns on REITs are now very low (we had a discussion on that). Apart from that returns on commercial props have always been higher than on residential. NNN deals might be interesting though they most of the time require some significant investment. Being the landlord of commercial props does not relieve from problems though. One of the companies I rented a warehouse to has gone bankrupt and problems are at the size of the company (60 tons of garbagge and toxic products left behind...). But returns are higher... BTW most of my productive RE is commercial (shops, hotel and warehouses).
__________________
gnoti seauton
poyet is offline   Reply With Quote
Re: Commercial Vs. Residential Rentals
Old 10-20-2006, 01:18 PM   #4
Full time employment: Posting here.
 
Join Date: Nov 2003
Posts: 926
Re: Commercial Vs. Residential Rentals

Quote:
Originally Posted by poyet
Returns on REITs are now very low (we had a discussion on that). Apart from that returns on commercial props have always been higher than on residential. NNN deals might be interesting though they most of the time require some significant investment. Being the landlord of commercial props does not relieve from problems though. One of the companies I rented a warehouse to has gone bankrupt and problems are at the size of the company (60 tons of garbagge and toxic products left behind...). But returns are higher... BTW most of my productive RE is commercial (shops, hotel and warehouses).
__________________
Some of us have pretty stories, about good friends, good times and noodle salad.
Mr._johngalt is offline   Reply With Quote
Re: Commercial Vs. Residential Rentals
Old 10-20-2006, 01:21 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Commercial Vs. Residential Rentals

Quote:
Originally Posted by poyet
Returns on REITs are now very low (we had a discussion on that). Apart from that returns on commercial props have always been higher than on residential. NNN deals might be interesting though they most of the time require some significant investment. Being the landlord of commercial props does not relieve from problems though. One of the companies I rented a warehouse to has gone bankrupt and problems are at the size of the company (60 tons of garbagge and toxic products left behind...). But returns are higher... BTW most of my productive RE is commercial (shops, hotel and warehouses).
You can get in on NNNs on a bite size basis by buying shares in REITs that specialize in such instruments. One I know of (but haven't thoroughly researched) is SFC. No doubt there are otehrs.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Liquor commercial with Retire Early theme free4now Life after FIRE 14 08-19-2006 04:40 PM
Investing in Commercial RE - Strip Malls Craig FIRE and Money 4 09-17-2005 01:25 AM
Selling Residential Rentals, Going Liquid Craig FIRE and Money 64 09-02-2005 12:30 PM
FIRECalc and Commercial Paper Allocation Telly FIRE and Money 3 08-10-2005 12:48 AM
FIRECalc ? -  5 yr treas vs commercial Roger_R FIRE and Money 1 03-20-2005 05:45 AM

 

 
All times are GMT -6. The time now is 05:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.