In a recent episode of the Commercial Real Estate Investor Podcast, host Tyler Cauble delves into the three critical missteps that novice commercial real estate investors often encounter. Curious to learn more? Read on for insights, and be sure to check the link below for the full podcast, where Tyler addresses a host of other compelling CRE topics.
Top 3 Mistakes Made by Novice CRE Investors:
Understanding the Capital Stack: Unlike residential real estate, where down payments can be as low as 10-20%, commercial transactions typically require 20-30% upfront. This shift can be a significant adjustment for new investors as they begin to build their portfolios.
Managing Operations: Many first-time investors mistakenly believe that the sole avenue for increasing their Net Operating Income (NOI) is to raise rental rates immediately. In reality, there are numerous strategies to optimize operational efficiency, which can lead to the NOI growth they desire.
Rigidity in Knowledge and Expertise: While some new investors may come from a background in residential real estate, assuming that commercial and residential sectors operate similarly can be a major pitfall. Cauble advises newcomers to approach CRE as if they are starting from scratch—immerse yourself in learning the intricacies of this asset class.
Cauble also emphasizes that while it is important to do things right, when starting off in CRE investing, it's even more important not to do things wrong.
For the full episode, click here. If you’re new to CRE investing and seeking guidance, don’t hesitate to reach out to us at ARC Properties to help you navigate your journey.
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