I don't understand how commercial real estate making money in Houston (lease, purchase)

[detachable arm]

Originally Posted by misterno

I said AVERAGE

For the most part it seems like the Texas medical center keeps people in the hoods directly east of there out of poverty. And you can tell actually, a lot of that area has cleaned up and crossed into middle class status over the last 10 years. I'd have to agree with your statement.

[radiolibre99]

Exactly, not everyone in healthcare is working in the med center, many are working in small clinics too.

[radiolibre99]

Misterno, I agree with your assessment. Ever year I come back to Houston I'm always amazed at a new immigrant group that's arrived. I see Colombian and Venezuelans are dominating Katy right now. There are spots in Houston that seem way more diverse than LA. It's more on NYCs level. But I also questioned just what jobs will some of these people work in? Most of the good paying work is in a few sectors starting with oil n gas at the top, huge gap, then medical. Maybe shipping? Construction?

Also the burbs are crazy crowded. The inner loop is lik a ghost town by comparison to how crowded I found the outer loop suburbs.

[TexasTony]

If you have decent $$ saved up, I suggest looking into apartment complexes as compared to strip malls. As you have pointed out all different communities moving into Houston every month, they are not going to be buying houses initially. Thats the reason why you see all the apt complexes at every corner around town.

[Failed Engineer]

Apartments are a much more demanding investment property than commercial. You can of course hire a full service property manager but that's likely going to erode a massive chuck, if not all of your profit margin.

Cap rates can be very very good on multifamily, but there are a lot of complexities and you have to be street smart to manage expenses closely. You'll be paying a lot of different people to do repair and maintenance work on your property and you need to know what and when to spend money on stuff. Managing tenants can be a major pain in the you know what. Collections and evictions are other things that can hurt cash flow. Major unexpected repairs can kill you in the short term.

But if you can traverse all those issues (among others), you can make pretty good money.

[IndyRC]

Originally Posted by misterno

Houston is Houston because of oil and gas and their high salaries


In the coming years these high salaried people will vanish and will be replaced by low paying jobs like healthcare


I read in a report somewhere average salary in healthcare vs average salary in oil and gas and there was a 3x difference at the time. Healthcare pays that low in average.

O&G has lower paying jobs as well (like a roughneck or roustabout), but they might work a lot of hours and end up with a high yearly income.

Originally Posted by LocalPlanner

Health care includes a huge range of jobs, from high-skill and high-education physicians down to low-pay orderlies and nursing assistants.

Exactly. Are we talking about somebody pushing beds around, or somebody with skill?


Houston's economy is not all O&G anymore.

[detachable arm]

Commercial seems like risky business if you aren't hired by one of the big guys like CBRE. My wife knows a couple wives whose husbands are in that and they are broken men, truly living on the edge, doing their best to cast an image of material success... even though they have trouble paying the bills and can't afford health care for their kids. Seems like You have to network a lot, make strange deals with other people's money and incorporate for every new piece of real estate you pick up. I wish them the best though, for if they don't go bankrupt they will be much richer than my hard money self.

[PinkLadyK]

Originally Posted by detachable arm

Commercial seems like risky business if you aren't hired by one of the big guys like CBRE. My wife knows a couple wives whose husbands are in that and they are broken men, truly living on the edge, doing their best to cast an image of material success... even though they have trouble paying the bills and can't afford health care for their kids. Seems like You have to network a lot, make strange deals with other people's money and incorporate for every new piece of real estate you pick up. I wish them the best though, for if they don't go bankrupt they will be much richer than my hard money self.

Yeah, you sound like you wish them the best for sure.

[Dopo]

Originally Posted by misterno

I read in a report somewhere average salary in healthcare vs average salary in oil and gas and there was a 3x difference at the time. Healthcare pays that low in average.

Sounds like you don't know much about the oil industry
You are ignoring the money people make in overtime.

If a person gets $20/hr
40 hours for 4 weeks = $3200
80 hours for 4 weeks = $8000

[mcfroggin]

If it were easy, everyone would do it. Commercial RE is about finding undervalued properties in a positive growth area and having vision to convert it to a needed type of property.