Category: Taylor Equities

Taylor Equities is a privately-run boutique real estate investment firm founded by Steven Taylor. The company specializes in distressed and/or dilapidated apartment buildings in the greater Los Angeles area. Our acquisition process is detailed and thorough; our due diligence allows us to mitigate downside risks while optimizing the reposition for each property.  Having multiple partnerships with local 3rd party property management companies enables us to match the strengths of each management company with the unique demands of each sub-market.

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Steven Taylor Taylor Equities on 3 Different Ways of Investing in Apartment Complexes

Steven Taylor Taylor Equities on 3 Different Ways to Invest in Apartment Complexes
Steven Taylor Taylor Equities on 3 Different Ways of Investing in Apartment Complexes

Investing in multi-family units can be a fantastic way to add to your portfolio and earn passive income.  According to Steven Taylor Taylor Equities, there are many different ways to invest in apartment complexes. The strategy you use will depend on your desired level of involvement, your available capital, and other factors.

Here are 4 different ways of investing in apartment complexes:

1. Purchase units yourself.

The first way of investing in apartment complexes is the most simple – buy the building yourself. This would require extensive upfront capital. For many, this method might sound impossible. You would need to do extensive research and the responsibility of the deal would fall on you alone. In order to purchase multi-family units on your own, you would need to first save the proper amount of funds, and come up with a clear picture of your budget. Research the market and examine different deals. You may choose to take out a loan. This method requires you to later find property management and other decisions in regards to handling the property.

Purchasing on your own requires more work, but also has many benefits. As the sole owner, you get to choose your investment strategy, how you would like to run your property, and when you would like to sell.

2. Purchase with a partner. 

For many new real estate investors, it is easier to purchase for the first time with a partner. If you don’t have all of the funds you need to get started, partnering up with someone you trust can be a great way to pool capital. Another advantage of buying with a partner is that you can learn and grow in your strategy together. Having someone to discuss a deal with can be valuable. 

The negative aspect of purchasing with a partner is that you will not get to make decisions on your own. For this reason, I only recommend going into business with a partner if you are someone who can handle compromise. Before you get in too deep, make sure you are on the same page about your strategy, vision for the building, and what you are hoping to achieve. Document everything, and get anything important in writing. Working with the right partner can be a rewarding experience, but communication is key.

3. Purchase by Syndication

A syndication is a group pool of funds used to purchase a property, usually run by one person (the syndicator). In this case, the syndicator, or general partner, is running the investment. As an investor, or limited partner, you would be joining in to purchase a small stake of the property. Usually, general partners make decisions, run the property, and follow their own strategy. As a limited partner, you are a passive investor. But, you still collect a share of the profit when the property is sold. This option can be a good way to invest in apartment complexes without spending a lot of time or getting extensively involved.

There are many other ways to invest in apartment complexes, but these three options are some of the most common ways to get started. If you’re interested in learning more about how to invest in multi-family real estate, consult a professional or mentor like Steven Taylor Taylor Equities.

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What Is Commercial Real Estate? – Steven Taylor, Taylor Equities

Apartment Steven Taylor Taylor Equities
Steven Taylor, Taylor Equities – “What Is Commercial Real Estate? “

If you’re interested in buying into the real estate industry, it is important to start with the basics of buying and selling property. This includes topics you may find boring, such as classifications and zoning restrictions. Even if you have no intention of owning a strip mall or office building, you should have a full understanding of the industry, including commercial real estate. 

Commercial Real Estate (CRE) a property type and zoning restriction. There are three basic property types – residential, industrial, and commercial. While there are more than three forms of zoning, most properties in a highly populated area will fall under commercial or residential. Today we are going to focus on commercial real estate as a property type.

Commercial Real Estate is defined as “any property owned to produce income.” Obviously, a lot can fall under that umbrella. Here are a few examples:

  • Convenience stores
  • Apartment complexes
  • Office Buildings
  • Car Washes
  • Malls
  • Restaurants
  • Theatres
  • Gas stations
  • Theme parks
  • Hotels

CRE properties can be broken down into several categories. Here are three common categories to invest in:

Office Property

CRE office properties can include anything from small buildings for professional use by a single tenant to skyscrapers full of offices. These properties are classified by categories A, B, and C.

Class A: These buildings are at the top of the food chain. Class A properties are often new but could include older buildings if they have been renovated extensively. They are generally in great locations and are managed professionally.

Class B: These properties are highly sought out by investors due to their potential for a high ROI. Class B buildings are often older, but able to be renovated and improved. Infrastructure often requires investment, but in general Class B buildings are well-taken care of and well-managed.

Class C: If you invest in Class C, know that the buildings will most likely be older, in a bad location, and need major renovations to infrastructure. These properties often have lower occupancies due to the office space’s lower quality. Class C buildings can remain vacant for longer periods of time and often are used for redevelopment.

Retail and Restaurant Property

Retail and restaurant properties can either be stand-alone buildings or a larger structure encompassing multiple businesses, such as a strip mall or office building. Real estate investors are usually drawn to properties that can encompass many businesses and tenants. These properties often include malls and other large retail centers, because with multiple occupants, there is less risk. Strip centers, community retail centers, power centers, and regional malls are a few types of property you may want to research if you are interested in investing in this category.

Multi-family Units

While many people think of apartments, like those owned by Taylor Equities, as a residential property, any apartment building that is a fourplex or larger can be considered commercial real estate when investing.  Apartment buildings, extensive complexes, condominiums, and even smaller multi-family buildings all fall under the category of commercial real estate. This type of property can offer less stability long-term but is always in demand and offers high returns. Multi-family real estate is personally my favorite type of investment, and a topic worthy of extensive research. Check out my blog for insights into the multi-family real estate market, and to learn why I choose to invest in apartment buildings as part of my commercial real estate strategy. –Steven Taylor, Taylor Equities

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Steven Taylor of Taylor Equities on Understanding Real Estate Investing

Steven Taylor of Taylor Equities with his wife Natalie
Steven Taylor of Taylor Equities with his wife Natalie

While it is technically possible to profit from a deal without thoroughly understanding real estate investing, those stories are often the exception to the rule. If you want to succeed at building wealth through real estate, it is vital that you do your research and build your knowledge of the industry first. Real estate investing can be a very profitable business, but only if you have a solid understanding of the market and do your diligence before purchasing properties.

Steven Taylor of Taylor Equities has compiled a checklist below of a few aspects of real estate that everyone should have a solid understanding of before entering the business. If any of these concepts seem foreign to you, you should consult with a mentor or expert before investing.

Learn how to evaluate potential properties.

The most important aspect of understanding real estate investing is knowing how to evaluate a property you are considering investing in. Before you enter the real estate industry, take the time to study evaluation techniques for acquiring buildings. As you build your investments, it will be important that you only add assets that contribute to the big-picture of your portfolio. There are many resources that can teach you how to inspect properties, research potential areas, consider neighborhoods, and integrate comparative market analyses with your plan. Ultimately, you will want to determine a property’s profit potential before buying in.

Understand the many ways in which you can profit.

Before investing in real estate, you should be aware of the different types of cash flow that come with real estate investing. The most common way to profit from a real estate investment is known as flipping – owners fix up investment properties and then sell them at a higher price. But, there other factors to consider when looking at cash-flow, such as your annual income, taxes, tenants, and vacancies. To understand real estate investing, you must understand the plethora of ways that your cash flow could be affected.

Be aware of the reality of leverage.

For many new investors, purchasing a property without a down payment can sound very appealing. But, this real estate investment strategy can come with many risks. When an investor doesn’t have enough capital available to purchase a property outright, they may borrow money to acquire the asset. In some instances, investors can utilize financing as leverage in order to purchase a unit or building. It is extremely important that investors have a solid understanding of the risks that come with using leverage before taking on any debt.

Understand the many types of mortgages available.

To have a full understanding of real estate investing, you must understand the many different types of mortgages available. By taking the time to research the variety of mortgages on the market and the pro’s and con’s of each, you can secure your investment from the beginning. Take the time to shop for the best mortgage with the interest rates that will benefit you the most. Always be careful with mortgage deals that sound too good to be true – if there is zero down, and adjustable rate, or a deal that just sounds unrealistic, take a second look. There should never be a rush to invest in real estate. Take your time, and consider all of your options carefully.

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Steven Taylor of Taylor Equities – The role of a Real Estate Private Equity Firm

Steven Taylor Taylor Equities
Steven Taylor of Taylor Equities

According to Steven Taylor of Taylor, Equities a real estate private equity firm raises capital from investors. These investors are called Limited Partners. They then use the capital to obtain and develop real estate properties.  The firm can also be involved in operating, improving, and reselling the properties in order to see a return. Firms use an active management strategy and take a diversified approach to owning properties.

There are many different types of outside investors or Limited Partners. A few examples are insurance firms, high-net-worth individuals, pension funds, family offices, and endowments.

Real estate private equity firms most commonly focus on commercial properties such as offices, retail, industrial, multifamily, and other properties, although it is possible for a REPE firm to purchase residential buildings.

Who can participate in private equity real estate?

If you’re interested in getting involved in private equity, there are a few things to consider. Your ability to take part in investing in private equity real estate will be determined by the amount of money you have available to invest. A traditional private-equity fund requires partners to invest a minimum of $250,000. In general, firm managers prefer institutions and individuals who can contribute above $25 million in a long-term investment collective in combination with other investors. 

Individuals who are interested in getting involved in real estate private equity should examine their options of firms, and further their options of funds within that firm.

How do you examine a private equity fund’s investment structure?

To take part in most private equity funds, you must pay a number of fees for management and performance. Many REPE funds include annual fees in order to pay for legal services, data costs, firm salaries, deal sourcing, research, marketing, and other variable and fixed costs. If you are considering getting involved in private equity real estate, it is essential that you understand these fees before investing.

Most REPE managers also collect “carry.” A “carry” is a fee based on performance that is typically 20% of excess gross profits of the fund. 

Individuals should also examine what would happen in the case that they fail to meet a capital call. In some cases, a fund may force and individual or institution to default and forfeit their ownership shares.

What types of strategy does private equity real estate employ?

In PERE, there are a few main strategy types:

  1. Core PERE strategy: Core strategy is generally the most conservative strategy. This method sometimes only includes properties that offer low risk and therefore lower potential returns. These types of properties usually exist in popular and high traffic locations. Core strategy may focus on high-value properties that don’t require much development or upkeep.
  2. Core-plus strategy: Core plus strategy requires more of a gamble, but can also offer a higher ROI than a core method strategy. These properties usually require more modest amounts of upgrades and improvements.
  3. Value added strategy: Value added is a moderate risk method with a medium-to-high-return. This approach is more focused on property development and working the market. Managers often purchase properties, redevelopment them for improvement, and then resell at the right time with added value.
  4. Opportunistic strategy: An opportunistic strategy returns the highest amount but assumes the most risk. Managers usually purchase properties that involve undeveloped land, or properties that are in markets with low traffic that typically don’t perform well. – Steven Taylor, Taylor Equities
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Steven Taylor of Taylor Equities – Red Flags to Look Out for When Buying Commercial Real Estate

Steven Taylor of Taylor Equities Commercial Property picture

All real estate investment comes with risk, but commercial real estate in particular requires that liquid assets be readily available. As an investor, it is essential that you are careful about the properties you invest in – you don’t want all of your capital tied up in a building with a high risk of failure. If you are diligent about research and observant in your showings, you can pick up on red flags that could keep you from getting involved in a bad deal.

But how do you know when a commercial property is a major risk? If you look out for these warning signs, you can avoid signing a deal for a property that won’t serve your goals.

Red Flags to Look Out for When Buying Commercial Real Estate

The neighborhood is going down hill

It can sometimes be difficult to tell the difference between an area that is on it’s way up and one that is going downhill. Low value can be an opportunity to get in before prices skyrocket. But this only works if the surrounding area is growing steadily, experiencing job growth, and bringing in new people.

If a neighborhood is on the decline, with businesses closing and residents moving out, think twice. The best way to assess the status of an area is to spend time in the neighborhood and talk to local business owners and residents directly. While the goal is to acquire a commercial property in a booming area, accidentally purchasing a building in a declining part of town can be a major loss.

The property needs major repairs to be usable

It is common for real estate investors to purchase properties that need fixing up or redevelopment. There is a difference between adding value to a property by improving its appearance or conditions and needing a complete overhaul. Some repairs will be more expensive than you imagined and could take your deal south. Take the time to research what repairs or improvements will cost you before you purchase a money pit.

            Here are just a few signs I look out for:

  1. Low ceilings: Many users of commercial spaces require high ceilings for their business to function. It is essential that you ensure your ceilings fits the needs of those you are hoping to rent it to, without major construction.
  2. Damaged roof: Repairing the roof of a commercial building is much more costly than a single-family home. Be on the look-out for leaks or damage.
  3. Cracks and settling: Walk through the interior and exterior of a commercial property to check for cracks or signs of settling in the walls or floor. If you find a large crack, it could be a flag for a larger issue.
  4. Environmental contamination: If you are purchasing a property in an industrial area, there is always a chance that you will find contamination. Environmental contamination can affect your property and cost you. Watch out for chemicals and items that are stored improperly and may be damaging to the living conditions.

The numbers don’t add up

You can’t always accept the value the seller tells you to be the truth. Evaluating a commercial property requires a lot of research and appraisal beyond the physical conditions. Assess financial projections. You don’t want to purchase a commercial property where rental vacancies are projected to increase in the coming years. Look at any documents such as loss/profit statements that you can get your hands on. Never trust the seller’s estimates.

As with any investment, purchasing commercial real estate is a gamble. While risk is always going to be part of buying a property, the goal is to acquire a profitable building. If you know what red flags to look out for when buying a commercial property, you can save significant energy, time, and money. – Steven Taylor of Taylor Equities