How to Go From Residential to Commercial Properties

In this episode we learn how to move from residential investing to commercial / mixed use investing. Hanna Azar has been an investor since 2012 and currently manages a family portfolio of approximately 91 units, of which he co-owns 50.



You can read this episode here: https://montecarlorei.com/how-to-go-from-residential-investing-to-commercial-properties/



What was your first deal like, and how did you transition to value add properties?

Luckily for me I was in college in 2008 during the recession, and decided to buy a single family home in Palo Alto. I was a senior in college, I was 20, 21 years old, and that was my first investment in real estate. I bought it mainly for cashflow purposes when I underwrote the deal and I thought of appreciation as a bonus. But I quickly realized that appreciation in real estate is really what drives most of the value and most of the investment. And that's where I started shifting gears. I read a book by Manny Khoshbin, who is also a value investor developer, called How to Build Your Hundred Million Dollar Real Estate Portfolio. It definitely changed my mindset of what real estate is, what you can do with it, and how you should focus your investments and time.



What drove you to move from residential properties into mixed use?

I basically got the idea from the book, a lot of it just looking at the market, looking at where people were moving in the city and knowing that the scalability will eventually be the best strategy in the long run.



Do you have any particular tips for people that are getting into real estate or that are beginners? What should they be doing and looking at?

I think everyone's path in real estate is definitely different. I would say, all else being equal, I would start small, get your hands dirty, assess risks as much as you can before jumping into a deal. Go to meetups, listen to podcasts like yours as well, and try digging deep as much as you can before pulling the trigger. I would read as many books as possible look into ways that you could add value and find a niche.



And I think that's sort of what we created in San Francisco with the properties that we've been buying, which most of them are in the Mission District. So we kind of felt like we have local knowledge. We know the buildings better, we know ways of adding value that works for our business model. I would say just try adding value, locate niches as much as possible, and try to force appreciation as much as you can, which is something I hope I illustrated. You should never wait to buy real estate, and just hope something will go up and buying it at risky prices.



I would say look for properties, try to force appreciation through some kind of value add mechanism which in commercial real estate is obviously increasing NOI and look for scalability as much as possible. There are a lot of inefficiencies in real estate, which is the reason why I like it so much. There's all kinds of information gaps. There are ways that you can locate a seller before it hits the market. The pricing on the real estate is not efficient as well like the stock market, a broker might price something high on because he is out of the area, or he might price it too low, and it might be during the holiday season like it is now and not too many buyers show up because they're traveling. If you dig deeper, you'll definitely be able to find the inefficiencies.



How to Build Your $100M Real Estate Portfolio: https://tinyurl.com/rgtyvmg

Confessions of a Real Estate Entrepreneur: https://tinyurl.com/ufp73vv



Hanna Azar

[email protected]
...

In this episode we learn how to move from residential investing to commercial / mixed use investing. Hanna Azar has been an investor since 2012 and currently manages a family portfolio of approximately 91 units, of which he co-owns 50.



You can read this episode here: https://montecarlorei.com/how-to-go-from-residential-investing-to-commercial-properties/



What was your first deal like, and how did you transition to value add properties?

Luckily for me I was in college in 2008 during the recession, and decided to buy a single family home in Palo Alto. I was a senior in college, I was 20, 21 years old, and that was my first investment in real estate. I bought it mainly for cashflow purposes when I underwrote the deal and I thought of appreciation as a bonus. But I quickly realized that appreciation in real estate is really what drives most of the value and most of the investment. And that's where I started shifting gears. I read a book by Manny Khoshbin, who is also a value investor developer, called How to Build Your Hundred Million Dollar Real Estate Portfolio. It definitely changed my mindset of what real estate is, what you can do with it, and how you should focus your investments and time.



What drove you to move from residential properties into mixed use?

I basically got the idea from the book, a lot of it just looking at the market, looking at where people were moving in the city and knowing that the scalability will eventually be the best strategy in the long run.



Do you have any particular tips for people that are getting into real estate or that are beginners? What should they be doing and looking at?

I think everyone's path in real estate is definitely different. I would say, all else being equal, I would start small, get your hands dirty, assess risks as much as you can before jumping into a deal. Go to meetups, listen to podcasts like yours as well, and try digging deep as much as you can before pulling the trigger. I would read as many books as possible look into ways that you could add value and find a niche.



And I think that's sort of what we created in San Francisco with the properties that we've been buying, which most of them are in the Mission District. So we kind of felt like we have local knowledge. We know the buildings better, we know ways of adding value that works for our business model. I would say just try adding value, locate niches as much as possible, and try to force appreciation as much as you can, which is something I hope I illustrated. You should never wait to buy real estate, and just hope something will go up and buying it at risky prices.



I would say look for properties, try to force appreciation through some kind of value add mechanism which in commercial real estate is obviously increasing NOI and look for scalability as much as possible. There are a lot of inefficiencies in real estate, which is the reason why I like it so much. There's all kinds of information gaps. There are ways that you can locate a seller before it hits the market. The pricing on the real estate is not efficient as well like the stock market, a broker might price something high on because he is out of the area, or he might price it too low, and it might be during the holiday season like it is now and not too many buyers show up because they're traveling. If you dig deeper, you'll definitely be able to find the inefficiencies.



How to Build Your $100M Real Estate Portfolio: https://tinyurl.com/rgtyvmg

Confessions of a Real Estate Entrepreneur: https://tinyurl.com/ufp73vv



Hanna Azar

[email protected]

415-875-0177

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