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- 8 Fundamentals of Commercial Property Investing for Beginners
Together, they went on to grow the small firm into a vast enterprise, until Lurie's death in With their entry onto the public markets in the s, Zell became recognized as a founding father of the modern real estate industry. Blackstone then sold many of the portfolio's properties for record amounts.enter
It will be tough to be wealth adviser, when above-market returns dry up
Zell affiliates owned the Schwinn Bicycle Company ,  the drugstore Revco ,  department store chain Broadway Stores ,  energy company Santa Fe Energy Resources  and mattress company Sealy. The company was sold to Clear Channel Communications in Under the burden of the debt incurred as part of Zell's leveraged buyout and in context of the unexpected severity of the Great Recession, the Tribune Co. In January , Zell bought a controlling share in the Tribune Company , owner of the Chicago Tribune , among other newspapers.
His decision to put Randy Michaels in charge was one of several moves that were sharply criticized by the employees. Besides creating a hostile workplace [ citation needed ] , Michaels laid off several employees while giving large bonuses to the executives. More than 4, people have lost jobs since the purchase, while resources for the Tribune newspapers and television stations have been slashed. Zell and his wife, Helen, are active philanthropists who focus heavily on education and the arts.
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Zell, according to The Forward ,  is also "a major donor to causes in Israel. Zell is known for using "salty" language in the newsroom. Times' Human Wrecking Ball", veteran Los Angeles-based editor and columnist Harold Meyerson took Zell to task for "taking bean counting to a whole new level", asserting that "he's well on his way to In , Zell confirmed a plan to place the Chicago Cubs and Wrigley Field up for sale separately in order to maximize profits.
He also announced he would consider selling naming rights to Wrigley Field. In June , at a conference organized by Nareit, Sam Zell stated "I don't think there's ever been a 'We gotta get more pussy on the block'" when explaining his views of women discrimination on the workplace. Zell has been married three times and divorced twice; he has three children:  son, Matthew and daughter, JoAnn, from his first marriage; and an adopted daughter, Kellie, from his second marriage.
But what about home value appreciation — does that make your primary residence an asset? It can if the purchase is timed just right, but most times it is not. What a great investment, right?
To answer, we must look beyond just the mortgage payment. What about ongoing maintenance and repairs? So how is purchasing an investment property different? There are still expenses that must be paid — the difference is you are not the one making the payments. Your tenant makes those payments. You increased your rent to stay ahead of inflation and property tax increases each year. Assuming you invested in a good cash flowing home, your tenant gives you more each month than what it takes to own the home. But you still need to live somewhere!
Take a look at your life and ask yourself: are you are going to be living in this same area five or ten years from now? The US Department of Labor says workers are with their current employer for a median of 4. Members of the Millennial generation move around more than their parents did and certainly much more than their grandparents. The world is evolving into a more global society and many people do not want to feel locked down to one area. Sometimes it just makes sense to live in a rental.
In that case, you can still live in your dream home, just as a renter.
Not every financial decision has to be based on what is best financially. Owning a home has plenty of intangible benefits. Pride of ownership, the freedom to customize with renovations, putting down roots for your family.
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Those are all valid reasons to own a home. Math, specifically the opportunity cost of your down payment, says to invest in a rental property. Not your personal residence every time. Some personal finance gurus like Dave Ramsey advise you to buy your personal residence and pay it off as fast as you can.
In fact, Ramsey wants you to get a year mortgage, live below your means, pay off all your debt. Paying down your mortgage might preserve wealth but it will not create wealth. It appeals to a need for security and the satisfaction of being debt free. People say homeownership is an excellent path to build wealth. I would change that to say rental property ownership is an excellent path to build wealth.
Ramsey has valid points though. If you have extra money each month and are trying to decide between paying off your mortgage and buying a new expensive car, please pay your mortgage. But if the decision is between paying off your mortgage and investing your money in the stock market or in a new investment property, I would disagree with Ramsey and tell you to invest first.
No one can retire on paying off a mortgage alone — you need to create monthly retirement income to replace your current job income. Try not paying your property taxes and see who really owns your paid off house. Retirement income might come from investments like dividends, IRA withdrawals or rental properties. Once you create enough passive income streams, you can travel, work, or fish all day while money comes to you.
8 Fundamentals of Commercial Property Investing for Beginners
Your tenants are working to pay your bills for you. You have all the intangibles of homeownership with all the financial benefits of owning a rental property, either immediately or down the line. Since all three options involve initially living in the home, the interest rate on the mortgage will be lower than the interest rate you would get on an investment property.
First Option — Buy your new home, live in it for a few years and then when you move out, you rent it and buy your next new home. Second Option — Buy your first home and rent out the extra rooms to your friends so that they cover all your monthly expenses. Third Option — Buy a small multi-family property Duplex or Triplex , live in one unit while renting out the other units. All of these options are great ways to both put a roof over your head and diversify your investments into real estate.