September 01, 2020

How to Start Real Estate Investing & How to Determine What's a Good Project to Take On as a Solopreneur

21 minutes

How do you start your career in commercial real estate, what kind of properties should you look for, and how to manage your properties during Covid-19? Eric Wang, a commercial real estate investor shares how he started his commercial real estate investing career and how he is successfully investing as a solopreneur.

You can read this entire interview here: https://bit.ly/3lDR4j1

A lot of our listeners can relate to where you are, running your own business. I would love to hear how do you determine a good project to take on, especially in the Bay Area?

Obviously today with the Coronavirus and people moving out of the Bay Area, it’s really difficult right now, but I just don’t want to be too forgetful of the history of the Bay Area. In the past 10 years, it was undoubtedly one of the strongest markets in the world. But as far as up until today, which have been my recent projects in the past few years, my approach has very much been influenced by the value investing, the Warren Buffett approach where, I don’t need to swing at every deal, I can just take my time. I don’t have 10, 50, $100 million in equity that I need to get out of the door. I can be patient and wait. Looking back, I ended up allowing a lot of good deals pass by, but the ones that I did pursue, I felt good about.

Let’s take one or two examples from beginning to end. How did you analyze a particular commercial project? Why did you decide to take it on, what did you do with it? What were the scary parts? And how did you exit, if you have exited them?

One good example is the live work loft project I invested in. It was multiple lofts, essentially multifamily, but it’s non traditional in the sense that these weren’t little apartment boxes. They were artist lofts. And at that time in 2015, Lake Merritt in Oakland was a really booming market. More attention was coming around the lake, it was starting to already get expensive. Just east of that in this quiet neighborhood, there wasn’t yet much attention there. The reason why I was able to get it early on was because there wasn’t as much attention in that neighborhood. And now in recent years, or today, there’s been focus and investment all over the Bay Area and further deep East Oakland. But at that time, it wasn’t that clear.

So it’s this path of growth mentality, the location was in the path of growth, outside of Lake Merritt. I acquired that and the goal was to transition these very large units, these lofts from very cheap space used for artists, or for construction people, people who had all different sorts of crafts and hobbies in these spaces, and small businesses as well, to transition that into more lifestyle. We provided some of the basic things, like bike parking, put on a new roof, upgraded the kitchen interior finishes, they were just plywood type finishes. And we got a lot of great tenants.

Was it zoned live work already when you purchased it?

Yes, it was already zoned that way. And I didn’t need to change anything about the zoning. The major value add there was just upgrading the use, just making it more efficiently used and presentable for the market of people that were moving into the area at that time.

And you didn’t do a ton of construction. You did not make these lofts smaller.

No, we thought about that, but we saw the demand and we saw the rental pop already just from improvements that we made. So we didn’t feel the need to do that. It was mostly interior renovations and common area improvements and basic building upgrades.

And then you rented it out, and then you sold it?

Yes, he was another operator.

Eric Wang

[email protected]

www.revprojects.com

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