- Feras Moussa says commercial properties offer the best return opportunities at the moment.
- He described how he sold the property for a profit of $ 12 million.
- He also shared what he thinks is the easiest way to invest in commercial real estate.
V real estate the market is hot now.
Housing prices are at an all-time high as The Federal Reserve keeps interest rates near zero, and hedge funds are buying up plots of homespays top dollar. This trend has put first-time homebuyers and real estate investors into a quandary as deals become increasingly difficult to find.
This is why Feras Moussa believes that investing in commercial real estate is the best course of action these days. Moussa, founder Violation of justicethe real estate investment company itself specializes in commercial real estate.
Commercial property prices have recently recovered to pre-pandemic levels, according to investment advisory firm Green Street. They are watching the rise in house prices, which are going up. 16% since last August alone, according to Redfin.
But Moussa said there is another reason one can make the best profit from commercial real estate: more opportunities for compulsory confession… Forced appraisal is the work that an investor can put into real estate to improve it and make it more valuable.
He gave an example of adding covered parking to a large apartment building that is considered a commercial property.
“Let’s say we set up indoor parking and charge $ 50 a month,” Moussa told Insider. “$ 50 to $ 12 means one tenant is paying about $ 600 a year for covered parking. Let’s say this is a five bet market. So by doing something like this, I actually increased the value of my property by $ 12,000. ”
He added: “You cannot do this in homes when you buy your own property.”
The term “5 cap market” refers to the cap rate. The capitalization rate is the time it takes to get the money back on the investment. Real estate is sold at different capitalization rates in different markets. In a 5-cap market, real estate typically sells for five years of return on investment.
So, as Moussa said, one such parking space that brings in $ 600 a year adds $ 12,000 to the value of a property.
Moussa recently garnered accolades with over 200 apartment buildings in Georgia, albeit not by adding income-generating features to real estate. Moussa’s firm bought the property in 2019 for $ 14.2 million and sold it this year for $ 26.3 million, according to copies of the title deed and sales agreement viewed by Insider.
Moussa said that to add value to the property, he and his team built a playground outside the building to make it more attractive to families, and refurbished the interiors of the apartments.
The easiest way to invest in commercial real estate
Moussa may be biased because this is his line of work, but he said that the easiest way to invest in commercial property carried out by syndication.
Syndication is when an investor hands over their money to an expert who then finds trades and shares possible returns with the investors. Thus, investors are promised a certain return on their investment – say, 7% – but at the same time they receive a portion of the profit. In the case of Disrupt Equity, they give investors 70% of the profit and keep 30% for themselves.
The syndication saves the new investor from day-to-day work and the need for expertise, Moussa said.
“Presumably you have someone who is an expert to help you avoid the mistakes people make, and you’ll learn a lot by connecting and participating in the deal,” Moussa said.
“An investor doesn’t have to struggle trying to find a deal like we do,” he continued. “This is where, in a hot market, a dedicated operator works full time every day – literally I talk for hours on the phone with brokers every day – I’m more likely to get a deal than someone looking for a home.”
Moussa said that usually larger investors work with Disrupt Equity, investing large amounts, such as $ 25,000 or $ 50,000. But there are firms that offer syndication opportunities in all price categories. Investors can also pool their money to earn a larger amount.