Commercial real-estate resources for the small investor?
I'm a computer nerd, not a real-estate guy, but I'm looking at investing for retirement, and along with a stock portfolio, I'm looking at commercial realestate.  I'm in my mid-30s.

Now, my family has owned residential rentals, so I have people I can talk to for advice in that area, but I think I'd like to look at commercial real-estate instead, because I've run a business for most of my life, and I've rented a fair bit of commercial real-estate.

As a tenant, I'm more comfortable renting commercial real-estate than renting residential real-estate.    I can talk with small business owners, and I think I understand their needs in ways that I don't really understand the needs of the renters of residential real-estate.  

I'm looking in the pacific northwest.  I'm in silicon valley now, but I plan on moving up that direction later on. 

I'm looking for smallish properties; the sort that I can rent to smallish businesses, so we're talking $70K-$300K deal sizes...  I'm trying to keep things small enough that even if I screw it up, it won't swamp my financial boat.  

My assumption here is that "screw it up" usually means that the place sits empty for a while. My plan is to buy and rent the place out, unless someone makes me a crazy good offer.

What are some current-ish resources for learning about this sort of thing?   Some of my questions follow:

- What does the "standard" bank loan look like here?   20% down, then 15 or 30 years like residential?     (is it "standard" to always use SBA loans for this?)

- Where do I go to look for listings?   What's the Zillow of commercial real-estate?  the craigslist?

- What is the standard way to pay agents and brokers?  is it the same standard deal as residential, where the seller pays 3% each to the buying and selling agent?  

- I'm very low-end;  how do I go about finding a decent agent who is interested in that sort of deal size?   I understand that I'm going to have to do a lot of it myself, but having someone that knows the local market is a big deal. 

- how important is zoning?   My impression is that at my size, it's not that big of a deal;  as a renter, I haven't seen much difference between 'commercial' and 'industrial'  space.   Either way, I've got my workbench and I've got my office.  

- how are small properties usually owned?  Larger properties are usually owned by a corp or LLC that only owns the property in question, but how does that work with the little stuff?  




[{"id": "cnuctxt", "text": "Talk to a real estate agent immediately to see if there is anything on the market that would fit your budget.  I don't know what it is like in the PNW, but in my market, $300k would barely get you a single tenant industrial condo (and you would need to be able to put down $120k).  Current market rents would probably just barely cover your loan payment before property taxes and insurance. \n\nAnswers to your questions:\n\n* You need to put down 35-40% for an investment property.  Most loans are amortized over 25 years, due in 10.  You can do 10% down with SBA if you occupy 51% or more of the property\n* Loopnet.com, but you should call a commercial real estate firm that is local to where you want to purchase\n* In my market the standard fee on a sale has been 2.5% of the purchase price to each party\n* Call a firm and talk to a few people.  Tell them how much capital you have to invest and what type of property you are looking for. Someone will be able to tell you if they can find anything for you.  If they don't want to work on such a small deal, they will kick it down to a young broker if they think you are qualified\n* Zoning is important.  If you are doing woodworking on your workbench, but the building isn't zoned industrial to allow woodworking, the City can kick you out.\n* You don't have to be a certain size to create a corporation or LLC.  Most people hold real estate in an LLC or a trust.  Talk to an accountant or lawyer.\n", "replies": [{"id": "cnuibea", "text": "Thanks.  Good information.   35-40% is probably my biggest takeaway, as it changes how much money I've gotta come up with, if I want to go through with it.  I could probably stand to sit and wait for a bigger nest egg anyhow.   \n\n\n\n", "replies": [], "depth": 2}], "depth": 1}, {"id": "cnudrqt", "text": "That small stuff is usually on MLS.  Honestly, with deals that small you're better off investing in a REIT to balance your portfolio.  The small stuff takes a lot of hands on management to make money.", "replies": [{"id": "cnufr4g", "text": "&gt; Honestly, with deals that small you're better off investing in a REIT to balance your portfolio. The small stuff takes a lot of hands on management to make money.\n\nMy impression was that commercial stuff required less care and feeding than residential, because the tenant had to deal with more stuff in a commercial situation.\n\nBut yeah, point taken.   \n", "replies": [{"id": "cnulvsw", "text": "The small stuff is going to be local tenants.  They might stay 6 months, might stay 6 years, but leasing and turnover is a pain.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cnuig1r", "text": "I suppose another question here is:\n\nwhy go into commercial real-estate rather than residential?   Do those reasons hold on the low end as well as on the high end?   Is it just what you know?  or was my assertion that it's less work than residential generally true?   ", "replies": [{"id": "cnuvt33", "text": "Returns are typically better, it can be less management intensive, and a lot of people really rather deal with business type tenants.  When you tenant issues they can be more expensive to resolve, but a lot of the pettyness of residential issues are gone.  \n\nAlso having a higher asset size is a good thing to a lot of investors.  I'm lumping multi family in with commercial here, but think if you have $5 mil you want to invest.  Think of the cost of finding and transacting (not to mention managing) however many houses you'd have to buy in your market to place all that.  \n\nOn smaller properties these things may or may not be true.  It really just depends.  \n\nAlso I wanted to stress the zoning thing.  That is pretty important.  Look up the use classifications in the building code too and be aware of how properties fit into that.  At the size range you are talking if you have to redo spaces to make them code compliant due to a change of use it will probably be prohibitively expensive.  \n\nIf you were figuring 20% down and 300 was you max I'm guessing you have at most 60k to invest here?  I'd agree with the other guy to look at reits or other real estate backed investments that will be more liquid, have less transaction costs, and less up front capital required to get into.  When you've saved more you can pull out and purchase a property.  There is no harm is finding an agent though and seeing whats out there.", "replies": [{"id": "cnzxsea", "text": "Part of why I want to start small is that I've been in business for a while;  I know that when you start a new business?  Or, at least, when *I* start a new business, I usually make mistakes.   Usually the mistakes are proportional in size to the business.    I've made seventy thousand dollar mistakes before, and that is a painful, but not end of the world kind of experience.   If you own a million dollar warehouse, I imagine that it isn't too hard to blow more than that.   \n\nNow, real-estate is fundamentally different from selling internet infrastructure;  but I imagine the \"you screw it up the first time\"  bit holds true either way, so *if* i want to go into real-estate in a big way, I want to start in a small way.   \n\nYeah, otherwise I should probably look at index funds that buy up REITs.  \n\nCode seems to be one of those big 'gotchas'  -  my computer club lost a lot of money because they signed a lease before they figured out how much it would cost to bring the place up to code, and then they invited the city inspectors to one of our parties.  oh boy.    The place wasn't any more dangerous than any other silicon valley warehouse-turned-office,  but they got shut down and had to pay rent on the lease without being able to use the space.   (They ended up subletting it to someone else who used it as office space, but did so in a more discrete sort of way.)  \n\nBut on the other hand, all of the small operators I know are in violation of something or other, and they get away with it 90% of the time.   And certainly for residential, the actual rules are way looser if you own the place and are doing work on it.   \n\nI'm asking, mostly, because part of me suspects that part of the reason why small operators can compete is regulatory arbitrage.  \n\n", "replies": [], "depth": 3}], "depth": 2}, {"id": "cnv4djo", "text": "You should just invest in a REIT if you're worried about how much work it will be. Unless you are merely an equity partner and you have someone else taking care of the deal and then tenants, you're going to have to put in some work for residential or commercial. ", "replies": [], "depth": 2}], "depth": 1}]