How passive is commercial real estate investing???
I am thinking about investing in commercial real estate in the future and I have questions:

- how passive is this type of investment? Is it more or less passive than residential?

- where can I learn more about commercial real estate?

Any info helps.
[{"id": "h1rqtfj", "text": "It\u2019s not passive. It requires hands on management. The idea of passive investing is a myth to me. If real estate was passive, then massive property and asset management firms wouldn\u2019t need to exist.", "replies": [{"id": "h1rs3sr", "text": "I think OP meant for himself personally. Of course owning real estate requires effort on somebody\u2019s part but if he/she hires a management company it can be very passive and hands off.", "replies": [], "depth": 2}], "depth": 1}, {"id": "h1rra9q", "text": "It can range from completely passive to hands on. Single tenant net leased assets such as Starbucks or fast food buildings are in general completely hands off, they have long term leases backed by credit users. The returns on these are minimal due to increased popularity and returns have continually trended down wards. The more hands on or involved assets will have high returns due to increased risk, but if you have a trusted property manager they will handle most of the day to day and only turn to you for final say. Ultimately it will depend on what your goals are for investing. As for resources there is a lot a literature available and youtube is always good if you can navigate the annoying thumbnails and gurus.", "replies": [{"id": "h1rz9ip", "text": "Reagan said it best: *\"Trust, but verify\".*\n\nPassive never means \"*hands off\"*...it means...not actively managing.\n\nReal estate is only defined as passive by the IRS for the purposes of deductibility of certain acts or expenses.\n\nAll other definitions would generally fall in to: *\"actively managing*\" or *\"not actively managing*\".\n\nEven \"*not actively managing*\" means that you've entrusted others to do the light or heavy lifting of the day to day operations but....you *still* need to actively participate in knowing every inch of your assets so you can understand when the manager is asking you to release funds (or take fewer out) to cover some unexpected expenses (or possibly give himself a raise at your behest).\n\nDo you understand what an HVAC system is? A welded roof? Do you know what a Kerb is (I have absolutely ***no*** idea why they spell it like that but...that's the way they spell it), how about the latest accessibility codes and whether they apply to your building? When was the last time your irrigation systems, elevators, soffits, outfall systems and much more were inspected?\n\nHow many people drive by your building each day?  Who are they?  Commuters?  Construction workers? Delivery vehicles? Is it a rural road?  A multimodal road? A Freeway?  Highway?\n\nAll of that will matter to some tenants and to others....not at all.\n\nAll of that may matter to your insurance company, and it may not matter to them...in the slightest\n\nWhere's the nearest fire department?  Are they volunteer, or paid?\n\nWhere's the nearest hospital?  Is it a Tier 1, 2, 3 or 4 hospital?  Does it have a helipad?\n\nSewers or septic...well or city water....megabyte speed internet or gigabyte speed?  Cell service or none?\n\nAnd about 8,000 other things that yes....if you have someone manage your assets for you....you shouldn't need to deal with...but what if the person you hire isn't as fastidious about acquiring the needed skill sets or knowledge to run and fill your building optimally? What then?\n\nIs it okay to you that he passed on 3 tenants that were looking for a building \"*just like yours\"* but they \"*had to have at least 20,000 cars a day going past your place\"* and your manager didn't even know you have 30,000 cars a day go by so....he leased to a tenant that paid $25.00 a sf when the other tenant would have paid $40.00.\n\nPassive investing may work for those who've done it for 40 years and know every detail of a base building simply by walking in the front door....but....for someone who's \"*.......thinking about investing in commercial real estate in the future\".........*\n\n......unless you're Bezos or Gates, there's no such thing.", "replies": [{"id": "h1sutl9", "text": "To summarize, if you want to be successful you should try to know as much as possible.", "replies": [{"id": "h1tqg2f", "text": "There ain't no free ride.", "replies": [], "depth": 4}], "depth": 3}, {"id": "h1u40zn", "text": "You sound like you commercial real estate. \n\nI\u2019d echo all this and also say that ultimately being a \u201cpassive\u201d (by IRS definitions) investor you are always needing to manage and supervise the property management company, leasing agent, commercial lending relationship, accountant, tax guy, bookkeeper, and a while host of other things. Including when to recapitalize, when to do capital improvements, and when to buy/sell. And finally, how to best raise capital for future acquisitions.\n\nI self-manage. Have a RE broker, builder\u2019s and law license. And I spend at least 2/3 of my active \u201cmanagement\u201d time in my home office doing strategy, bookkeeping, and exploring different structures (every time you do a deal or consider a potential deal - how is it affecting your overall portfolio structure, how does it impact estate planning, etc..). \n\nOnly 1/3 is on site. Which is why I self manage. It actually gives me a break from the monotony of office work involved and I like meeting my tenants. Plus, I like knowing and seeing what\u2019s going on with my buildings. I like meeting my subs (who I use all the time) since I feel a good relationship with the subs, and letting them know I trust their advice and recommended course of action, is the best path to having them give me their best work and prices. \n\nBut yeah - hiring a property management company doesn\u2019t put your commercial property on autopilot.", "replies": [], "depth": 3}, {"id": "h1v6e1u", "text": "Sticky this comment. Bravo.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1rs191", "text": "Multifamily syndicator here. I have had a portfolio of single family houses, small multifamily, and now large multifamily. I will answer from the perspective of commercial multifamily. I don\u2019t know about other types of commercial but the fundamentals probably follow suit. Depends on the type of asset class and how large. Generally in multifamily the larger the property the more passive the operator can be.  On larger properties the higher income supports full time professional property management and potentially asset management. Your time is spent acquiring property and managing the asset not signing leases and calling plumbers. Small multifamily properties where the income doesn\u2019t support full time management can actually be more intensive than managing single family rentals because of the tenant type that rents apartments (more turnover, not likely to do any troubleshooting etc). There are also lots of other benefits of larger properties that I won\u2019t go into here. You can also just invest in syndications of commercial properties if you want to be completely hands off and 100% passive. To tell you where to learn about commercial real estate it probably would require to know what type of commercial real estate you want to learn.", "replies": [{"id": "h1suvby", "text": "Fellow multifamily syndicator here. If OP is looking for passive investments, investing as a limited partner in a syndication is the way to go. The only active work done is to vet the deal, location and sponsor. The rest is 100% hands off.", "replies": [{"id": "h1tvr7w", "text": "Any Southern California multi family syndications you recommend?", "replies": [{"id": "h1u3yeh", "text": "Argh honestly? Nothing consistent I'm aware of. Between the tenant friendly laws and sky high valuations, you're less likely to see syndications invest there, with institutional money coming dominating. Not to say syndications don't exist there. \n\nBut that's the beauty of syndications in my mind. The ability to invest in a market you wouldn't otherwise have dabbled in had you been active in the investment itself.", "replies": [], "depth": 4}, {"id": "h57mni3", "text": "I can send you an investment deck of you're interested in Southern California Healthcare properties.", "replies": [{"id": "h57mpvf", "text": "Send it my way - ladoadryan@gmail.com", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1rt2q7", "text": "For nonresidential, turnover can be very hands on (6-24 months to lease up, and then depending on how involved you are with build out and approving expenses against Tenant Improvements allowance, etc.)\n\nVery hands off between turnover, leases last multiple years and often have renewals/extensions built in.", "replies": [], "depth": 1}, {"id": "h1rv699", "text": "Plenty of responses on activity level, I'll also add that people who reach \"passive CRE\" have invested real time up front to research and underwrite and knowing what they want, before pulling the trigger. Thats the work, its just front loaded from income earning.\n\n&amp;#x200B;\n\nThere's plenty to learn online, YouTube, AdventuresinCRE, textbooks, ebooks, etc.", "replies": [], "depth": 1}, {"id": "h1s1hp9", "text": "Like others have mentioned, how passive of an investment it is will depend on the product type. Multifamily will be the least passive, unless you have a property manager that you trust with your life to do everything for you. A NNN leased investment property will be the most passive. These are more common in retail (drive thru restaurants, national brand retail stores, etc.) although they are becoming more common in quality industrial parks as well. \n\nThere are a few other items you need to think about as well. Your return on investment (CAP rate), appreciation and monthly/annual income/expenses.", "replies": [], "depth": 1}, {"id": "h1t34b3", "text": "Good comments here. Commercial real estate can be fairly passive compared to investing in single-family homes, but nothing is truly passive. \n\nEvergreen Capital Advisors (Evergreen.Courses) has the best overall CRE training courses out there if you really want to learn CRE and financial analysis skills. Other good courses include ULI, CCIM, MIT, and Yale.", "replies": [{"id": "h1tpkga", "text": "Awesome. Thanks. Which CRE is the most passive one?", "replies": [{"id": "h1v700v", "text": "The type of property doesn\u2019t matter that much. The only way to be truly \u201cpassive\u201d is investing with a syndicator, a private investment group, crowdfunded investments, or REITs. Someone has to be the Asset Manager and someone has to be the Property Manager. You either have to pay someone to do those things or you have to do them yourself. If completely hands-off is what you want, your best route is to team up with others who are willing to handle those duties.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1t7dwq", "text": "Buy REITs", "replies": [], "depth": 1}, {"id": "h1teupp", "text": "1. It can be, with a good property manager \n2. Work for a property manager", "replies": [], "depth": 1}, {"id": "h1up7dc", "text": "If you want to be passive, then invest in REIT's and take the dividends.", "replies": [], "depth": 1}, {"id": "h23sewo", "text": "Only truly passive way to do CRE is in syndications", "replies": [], "depth": 1}, {"id": "h28c7m5", "text": "Try spocket, all you need to succeed in real estate investing. Try it today at https://spocket.grsm.io/g13", "replies": [], "depth": 1}, {"id": "h37hypz", "text": "Even when you hire a PM, it is far from passive, you must manage the manager. Investing in syndication\u2019s is the only passive form of investing in private real estate. Do your homework and find a sponsor you can trust.", "replies": [], "depth": 1}]