As I write this in mid-January 2023, the economy is shaky, and some real estate investments are headed for trouble. There’s already public reporting about a few large portfolios facing problems, and we’re sure there are many smaller properties and portfolios across the country with similar situations.

I am in my third decade as a professional real estate investor. Even before I started down this path, I noticed that most of the wealthiest and most successful investors gravitated away from residential and toward commercial real estate.

What’s all the fuss about RV park and campground investing? I’m in my third decade as a professional real estate investor. And I’ve rarely been more excited about a commercial real estate asset class. Our firm, Wellings Capital, has been intrigued with RV parks for years, but we didn’t locate a suitable operating partner until earlier this year.

It's the elephant in the room in many conversations now. The question about interest rate increases comes from new investor prospects, seasoned Wellings Capital investors, and colleagues at masterminds and cocktail parties.

In two previous blog articles, I made a lot of noise about inflation. In the first post, I talked about how to grow wealth through real estate investing in this historically unique time of low interest rates and increasing inflation. In the second post, I discussed some specific ways to implement this wealth-building strategy. But that’s not all.

“Isn’t self-storage overbuilt?”

YES!

I get this question from investors and prospective investors all the time. And I often say “Yes” in reply. So, their next question should be obvious:

“Ummm…so why do you invest tens of millions in it?”

Wellings Capital just wrapped up our worst self-storage deal. We thought you might want to hear about the process and lessons learned along the way these past 3.5 years.

Spoiler alert…

Though it’s tempting to surprise readers at the end, I don’t want you to get to the conclusion of this article and feel tricked when you realize the deal finished successfully.

This is a big deal for me. It’s my third book on real estate investing. (Many of us got acquainted through my second book.) But it’s my first book released by a significant publisher. Or any publisher. (I self-published the first two.)

I’ve honestly been a bit disappointed in the timing of this book. I wrote the majority of it quite a while ago. But publishing delays from COVID and more pushed it back.

Can you invest in real estate with your IRA or 401(k)?

YES! Well…maybe.

This question turns on the word “you.” Because I can confidently tell you the answer completely depends on “you.”

Here’s what I mean. The tax code definitely allows you to make these investments. But many investors, through ignorance of the tax code, don’t take advantage of this opportunity.

“Come on. It sounds too good to be true!

You can’t tell me it’s this good. There must be some downsides.”

There are.

And don’t let anyone tell you there aren’t! Like every other investment, real estate syndications have potential pitfalls that you need to look out for before investing.

Have you ever read the Constitution? I remembered the We The People part. Being an American citizen without reading a detailed publication of our fundamental rights and privileges seems quite foolish.

Similarly, investing in a private real estate deal without reading the Private Placement Memorandum – the PPM – seems quite foolish as well.

Are you ready to graduate?

I’m not talking about school. I’m talking about moving up from residential to commercial real estate investing.

Now some of you didn’t invest in residential real estate in the first place. But many of us have. And most others inherently understand it. We’ve watched the HGTV shows. We know that lady from work or that college friend who flipped that house.

People fly across borders to stare at them. Tourists pay big money to fly over them in helicopters. And a few daring souls have even built tightropes to walk across them.

Waterfalls.

Honestly, I was a bit perplexed the first time I read about one in an investment context. Then I realized almost every commercial real estate and private equity deal out there has what's known as a waterfall structure.

One of my new investors, Bill, left me a voicemail yesterday.

“Hey, uhh, Paul, I’ve got a question on my distribution. Can you call me?”

I knew what exactly what Bill wanted to discuss. If I didn’t care about Bill personally, I could have copied and pasted another email to reply to him before he asked his question. Of course, I didn’t do that. I called Bill back after lunch, and it was precisely as I had predicted.

An experienced residential real estate investor called me the other day. He was a bit new to commercial real estate and he had a question:

“I thought I heard you say that a lower cap rate means a higher price. Did I hear you right? What do you mean?”

Depreciation Schedules. IRS codes. Accounting. Paperwork. The very thought of these concepts is enough to put me to sleep at my desk. Well, they used to be.