Leslie Quinsay, director of Coridian Capital, explains what you need to know to make the move from residential to commercial investing.
Video transcript below:
Leslie Quinsay, Director, Coridian Capital
Leslie Quinsay: Yes, well my past experience with residential real estate really comes from managing my family portfolio. We’ve got approximately 40 properties within our portfolio and most of the lessons I’ve learned in real estate investing came from the hands on experience I put into it. So it’s really the tales from the trenches, my own personal story and experiences in managing and overseeing and acquiring these properties and analysing them.
I just moved from residential to commercial investing because it’s like a game of monopoly where you start off buying a few houses here and there and you eventually move into larger projects. So you move from the houses to a hotel for example and the thing with it is, with many properties, I have got a portfolio now that spans 40 individual properties, you are managing many things day to day. You are running around, you are dealing with multiple tenants and multiple managers. When I moved to commercial, now I have been dealing with a smaller number of properties, things are a little bit easier and my cash flow is a lot better. So from an economies of scale perspective, I have reduced my time, but I have increased my revenues.
If I could give individuals two key pieces of advice in terms of moving from residential to commercial, it would be number one, build a strong team. Surround yourself with the people that you need to support you through this and number two, take the time to really understand the financing and how it’s obtained, what the requirements are from your lenders. As far as building a team goes, it’s very important to make sure that when you switch from residential to commercial, you are really focusing on individuals who are reputable and credible in the commercial field. You will need a strong realtor to negotiate on your behalf, you will need a strong lender who understands your financial situation and how the properties perform and you will need a variety of different professionals such as lawyers and accountants to make sure that you are structured correctly in terms of how you hold these properties.
In terms of getting financing for commercial properties, there are two key things you have to keep in mind. Number one, the lenders are going to give you a much lower loan to value, which means you need more cash and if you don’t have that cash, you’ve got partner with someone who does. The second part of it is although the properties are performing and they’ve got their own track record on financials, the lender will often ask you for a personal guarantee. So again keep in mind, you need to have your finances in order if you are going to move forward to add commercial property to your portfolio.