The commercial real estate market is an estimated $4 trillion market in the United States alone composed of various asset classes: multifamily, office, hotel, industrial and retail. Each asset class requires a different set of skills, conceptual framework and analysis tools to become a success. Becoming an expert in any one asset class is a lifelong struggle of learning and knowledge accretion. Given the dizzying amount information out on the Internet , I wanted to give a simple overall framework for each of the major asset classes that I have used when I have analyzed investment opportunities.
I call these the KISS Guides.
I did not take the name from the band as some of you maybe thinking. I am a fairly analytical person and I have been accused of getting lost in the “trees” when I have been analyzing new investment opportunities. On more than one occasion, more experienced investment directors have advised me to KISS (Keep It Simple Stupid) especially with doing preliminary investment analysis. Hence I am going to share my KISS guide for each of the major asset classes over the next few weeks to help provide a framework that is useful to readers as you approach your next investment opportunity.
Multifamily or Apartment asset make up almost 25% of the $4 trillion commercial market size and are the most prevalent commercial investment asset class.
The multifamily asset class is composed of apartment properties that are usually 5 units and greater. To start investing into the multifamily asset class, an investor needs to work their way down the investment analysis framework/funnel. The funnel starts with the Market Analysis and works itself down to the Investment Analysis.
Market Supply-Demand Analysis
Demographic …read more