How Can An Active Investor First Get Started? – How Important Is It To Focus On One Niche Area?

The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful:

While one may wish to expand into many different commercial real estate realms, it really pays to find your niche and stick with it at least for a time. Various differences make different types of properties successful, and stretching yourself too thin could harm your active investment. The more you stick with one niche, the quicker you’ll become an expert on that niche. 

Richard Wilson: My last question here is – how can an active investor, someone who wants to actively be allocated into commercial real estate, first get started? And part of my question is about how important is it for them to focus on one niche area? You know, you’re very focused on retail, some investors invest in all types of real estate, I’ve got one client who’s done 150 hard money loans, all they do is hard money, residential, fix and flip type loans, very specialized, and sometimes there’s money all over the place – what’s your suggestions to someone getting started in investing in commercial real estate actively? 

S.L. Van Der Zanden: I try to limit the different product types that you’re going to look at. Ideally, you’re only looking at one. The more specific you can be, the quicker and better of an expert you can become about that. That doesn’t mean you can’t change and expand over time, but if one day you’re looking at an office building, and the next day you’re looking at a warehouse. I mean, people do it, and usually they’re more financially focused because they all look the same on a spreadsheet, but real estate investors really need to learn a lot about the product. The properties vary dramatically in what makes them successful is different. So I would recommend sticking with one property type. 

Richard: Sure, yeah, makes sense.