How do I get started in commerical real estate?
So living in California, we all know real estate is not cheap. How does one move up the chain working with commerical real estate? I have thought about looking out of state towards the midwest but that requires a bit of a move as well. 

Another big factor I've been told is cap rates. I believe the average cap rate is around about 7%-8%. Is it possible to achieve 10%+? 

Any advice is appreciated. Just looking to start somewhere. Nothing expensive at first but something very doable. I'm also open to ideas within and outside of  California. Thanks
[{"id": "eew8xs6", "text": "[r/realestateinvesting ](https://www.reddit.com/r/realestateinvesting/?st=JRBFQ1GF&amp;sh=95dfeec5) ", "replies": [], "depth": 1}, {"id": "eew9jys", "text": "If you\u2019re looking to pack up and move into an industry you have little experience in, then don\u2019t quit your day job. ", "replies": [], "depth": 1}, {"id": "eewbh3w", "text": "I started off in residential for a number of years. Worked my way up. I eventually left because I wanted more of a challenge. I then transitioned to the near bottom and started in lease administration, worked my way up within a private company, and now currently work with a public one that I\u2019m beyond happy with. \n\nLots to learn and I continue to, I find it very rewarding in multiple ways. ", "replies": [{"id": "eewg21e", "text": "I know there are a lot of variables, but do you make more money doing commercial properties?", "replies": [{"id": "eewh28j", "text": "In terms of property management on the LL side or lease administration on the tenant/client side, investments.. or?", "replies": [{"id": "eewxo9q", "text": "I'm curious about tenant/client side. Having commercial properties rented out to businesses and making a decent return on your money. ", "replies": [], "depth": 4}], "depth": 3}, {"id": "eff9ags", "text": "Theres more potential money to be made but it really depends on which job you're better at. Both jobs have near unlimited income at the top producer level.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eewn03q", "text": "You'll need a lot of money, or at least be partnered with someone who does. What exactly are you trying to do? I work in cre development and know quite a bit about the leasing and management side as well. I think you need to narrow down what you're trying to do. Commercial is a whole different game and takes time and knowledge. Shoot some questions out and I'll try my best to answer. ", "replies": [{"id": "eewxyok", "text": "Basically looking to invest in commercial properties such as strip malls, plazas, etc. Buying it rather than building for ground up UNLESS I'm in a state where labor is relatively cheaper than California. Then leasing out those units to tenants as an investment. But an investment with good return. Something that doesnt require too much presence such as owning gas stations or liquor stores. \n\nCurrently I'm investing in building a truck stop plaza with multiple upcoming phases with 2 other partners in 2 different cities. The projects are on going and will take time to complete and will take time till we start seeing some cash flows. But later on, I'm wanting to move onto something of my own like I mentioned above. Or cut it down to just 1 partner instead of 2. Been thinking of that or putting up some hotels. Because my partner has experience in hotels. I want to have something small on the side such dealing with commercial real estate as well. Is that a good idea? I know it requires money but over the next couple years there will be money to reinvest. ", "replies": [{"id": "eex1ir3", "text": "&gt; Currently I'm investing in building a truck stop plaza with multiple upcoming phases with 2 other partners in 2 different cities.\n\nHave you thought about how driverless vehicles and trucks will effect your investment? ", "replies": [{"id": "eexpvy5", "text": "That won't be coming around for a while ", "replies": [{"id": "eexq2f6", "text": "Famous last words ", "replies": [{"id": "eexqlvm", "text": "Look at Warren Buffet. By 2023 he will acquire 41.4% of Flying J. He obviously doesnt believe autonomous trucks are close to becoming a reality. Too many factors. ", "replies": [], "depth": 6}], "depth": 5}, {"id": "eexr4cj", "text": "Ok, thanks for the downvote. Good luck to you and your investments.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "eexbi9d", "text": "Strip malls? Retail is one of the hardest areas right now and several banks don\u2019t want to even touch it for financing. Strip malls can be really hit or miss. \n\nAre you looking at small stuff with mom and pop tenants? Do you have experience or understand various lease types and co tenancy clauses? Are you also going to hire someone to mange or try and do this yourself?\n\nYou talked about moving. You don\u2019t need to move to own something in a different state. Several investors that I\u2019ve worked with are not in the same state as the asset. ", "replies": [{"id": "eexqc1l", "text": "Hmm I see. I mean strip malls was on my mind but I'm open to any advice out there. \n\nAnd yes I'm open to this idea but I do not have experience just yet. That's why I want to get into something small first and move up from there. I'd like to stay where I am and own something in another state. I wouldnt mind flying out when needed. So how do your investors manage their assets while being in a different state? I know its possible but just curious how. \n\nI rather not hire someone. If there is a way for me  to learn this and do this on my own, I would do that. What kind of property are you recommending? Residential?", "replies": [{"id": "eexyow3", "text": "The smaller investors own NNN leased stores such as Walgreens, CVS etc. these are pretty much a non -labor intensive property seeing the tenant is mainly responsible for items. They\u2019ll typically go out once to twice a year to visit the store, get updates etc. they stay in touch often with management there to check in from time to time or obtain financials (if in lease agreement). \n\nOther times investors just want to be passive. Hire an outside company. That\u2019s fine too but extra cost. Depends on the asset and how much your time is worth to you. \n\nPersonally I\u2019d rather do residential or even mini storage. It\u2019s easier IMO to start out as you don\u2019t need a deep Rolodex of replacement tenants as you may need with retail or industrial. With retail and strip centers are you also going to handle leasing or let a broker deal? You\u2019d have to budget in TI/LCs to your cash flow as well and depending on the center could get costly if lots of turnover. \n\nI also find it easier with apartments as you don\u2019t need to know as much about each business that occupies your center or industrial space. For example while they may have good financials who are the competitors to your tenant? What happens if they get bought out or they buy someone and shut down your location? Bankruptcy? Client base? Just a lot of factors. \n\nWhile there are a lot too that go into apartments it\u2019s typically easier to see and understand. What\u2019s the markets long term vacancy rate? What is effective rent growth? Demand drivers of location? Sometimes a bit easier to understand when starting out. ", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "eezfq62", "text": "If you simply just want to invest in commercial property my company develops retail buildings, raises capital from individual investors and gives them an ownership percentage of the company with quarterly dividends, although you have to be an accredited investor. From the way you are talking, I am assuming that you may be. If you're looking to do something on your own I'd get in touch with a broker and start shopping around. If you choose a vacant space you'll get it significantly cheaper than if it is leased already. Don't listen to any cap rate the broker gives you. Ask to see the financials and find the cap with your own calculations. Get the leases from all tenants, see when their expiration is up/how many options they have. You'll want to do a significant amount of due diligence with any property you're considering. Things to strongly consider in any retail environment is anchors, signage, and traffic. If you need further help or would even like to contract work from me, shoot me a message in my inbox and try my best. I'm somewhat of an expert in demographic analysis and could maybe point you in the right direction. \n\nEdit: typos ", "replies": [{"id": "eezfxu5", "text": "That was great advice. I really appreciated it. I'm hoping to go this route in a couple years since there are currently investments going on that we are doing. But its something I really want to get involved in. Do you contract work here in California? What about out of state?", "replies": [{"id": "ef01t12", "text": "Yes we develope in southern California and the inland empire as well as the rest of the country. California is expensive but not impossible. The rents are high in CA, which makes development worth it as opposed to buying a fully improved property. If you're just starting out, I'd maybe look into other places that are cheaper and growing like Las Vegas, Dallas, and Florida. ", "replies": [{"id": "ef1tydg", "text": "Can you show me some other cheaper places that you are talking about? Are there any online listings ?", "replies": [{"id": "ef599tz", "text": "Check out loopnet.com. Although, most good deals never make it to the site. I would advise you to get a broker if you are truly serious. ", "replies": [{"id": "efkqg4h", "text": "Where do you find the good deals then?", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eewqlo6", "text": "Just a note: Cap rate is not the same thing as rate of return. Start reading a lot of the books on the subject before you jump in.   When ready FHA has a 4 unit product where you only put 3.5% down and you can get qualified based on not just your income but the income of the units in the building.", "replies": [{"id": "eewy12w", "text": "I see. Yea definitely will read up on these things. Thanks for the note!", "replies": [{"id": "eextgb9", "text": "Np. There are tons of books on multifamily investments you can download from Amazon. Just pick a few with some high ratings, the content should be somewhat similar: \n1) how to find deals\n2) how to value deals\n3) how to manage deals\n4) how to profit from deals", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eewzojt", "text": "Work for commercial underwriting in a bank", "replies": [], "depth": 1}, {"id": "eexsogv", "text": "It's certainly possible to achieve 10%, but harder. There are more headaches. You'll have to decide whether it's worth your time or not. Do you want to spend your time managing and dealing with clogged toilets, etc., or buy something at 6-8% where you get a check in the mail every month and that's it?   \n\n\nThe main thing is you need to have enough for a down payment. Say you want to purchase a $500k 8% CAP investment property, you'll need \\~$100k (more with closing costs) to buy it. That said, the rent is still significantly more than your mortgage payments.   \n\n\nAnother thing to read up on is Return on Equity vs Return on Investment. It's actually quite possible you're making less money in years 2-3 of owning a property than you were initially, in which case you want to sell the property and 1031 exchange (while you still can and the government still allows it), into something else.   \n\n\nFind a CRE broker who specializes in investment property sales, but isn't too busy to help you get started on smaller projects. If you need help finding someone just let me know and I can get you in touch with someone in our CA offices. I am a CRE agent but we have a referral network nation wide. ", "replies": [], "depth": 1}, {"id": "eeyeogt", "text": "You're trying to do brokerage? Or you want to Invest?", "replies": [{"id": "eeyhv5h", "text": "Invest", "replies": [{"id": "eeytqpp", "text": "I work in CRE brokerage right now. I\u2019m personally getting into residential investing with rental houses and small multifamily deals. \n\nI personally would not try to invest in CRE without 500k. I might be looking at a possible equity in a purchase for my company I\u2019ve got on the line. I\u2019ll receive a small equity percentage for sourcing the deal. Other than that I don\u2019t plan on owning any CRE assets for awhile. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "el3389m", "text": "Keep a Record of All Your Finances. It is simple; you just need to keep track of your total income and similarly, enlist all your expenses.", "replies": [], "depth": 1}, {"id": "eufke6g", "text": " **Getting** **Started in** [Commercial Real Estate](https://www.esconarena.com/)\n\n1. A Sample Residential Transaction: Agent sells $275,000 home.\n2. A Sample Commercial Transaction\n3. General Brokerage. \n4. Development.\n5. Property Management. \n6. List everyone you know in commercial real estate.\n7. Call all of your relatives and closest friends and list everyone they know in commercial real estate.\n8. Start calling.", "replies": [], "depth": 1}]