One of the challenges we encounter in our local markets for example in the Phoenix AZ area is that an investor cannot find high cap-rate residential properties similar to the Midwest (IN, IL, OH, etc.)
That has been one concern of our investors who seek to buy locally. From searches on LoopNet it turns out you can actually find businesses that you can buy with the underlying real estate:
Welcome to: Assisted Living Facilities
This may be a new-found niche play in commercial real estate that we will look to enter with joint venture equity partners.
Phoenix is an area where baby-boomers are looking to retire thanks to the year-round warm weather, and senior living is getting hot.
..Senior Housing outperforms all other property types for cash on cash returns for any investment period ranging from one to ten years and private equity companies are going into this space.
You can spend $100k to acquire the business and another 25% down on a $325k residential property with 5 units at a high cap-rate.
Here’s an example of the pro-forma performance: net income.
We are always looking for new ventures in commercial real estate, and this seems to be a nice start for a game plan based on cap-rates we are used to in the Midwest with passive income from rentals.
Creating massive wealth using rentals is a slow process, however buying and/or building businesses can fast track wealth creation.