Archive for investing in commercial real estate
Getting Started in Commercial Real Estate on Your Own And Without the Sales Pitch
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Greetings! My blog just got hijacked. I wonder how that happens…..well….I guess the bright side is that the “blog terrorist” felt this blog was getting enough traffic to hijack. Well….for those of you that had to endure the nonsense….I apologize. I wish I could tell you it would never happen again…but then…I am not sure how it happened in the first place.
Anyways….
One of the biggest lessons I have learned in my limited time in real estate investing is that the people to learn from are those with real experience. As with many of you, I started with books and “boot camps”….and in some cases that works well with residential investing. But with commercial real estate, the stakes are much bigger and the learning curve is much steeper. But the “gurus” don’t tell you that.
My biggest mistake was I did not research the people I was learning from. Learning how to invest from a “guru” that had limited experience with commercial real estate was a big mistake. Even more of a mistake was learning from gurus who were using other people’s experiences and successes as their own to sell their program. Yes…this happens a lot more than we think.
Luckily, I was so hardheaded and ignorant, that I took the information with confidence and pushed through. Sometimes you can push so hard that you take down a wall. Fortunately, at the time, it was the right wall. But, with that said, there were a lot of mistakes that only guidance from experience professionals could have helped me avoid.
Now…what I am NOT saying is…”it takes years of experience to start investing in commercial real estate.” That is not what I am saying at all. But….what it does take is the correct education and guidance. Honestly….this is the best way and your success can be realized much faster than you think or what others tell you.
So…you are probably expecting a sales pitch here….but on the contrary, here are some tips on how to get started on your own….that is right…. how to get started without a flashy package and a smooth talking guru….
Rob’s thoughts are ideas on getting started in commercial real estate:
1) Keep your money for now. Thinking about spending 2K, 5K, 10K on a good looking”how to invest in ……” package where the marketing says “20K in value…but for a limited time….only $4,999.00 you can have the plan to wealth…and my personal phone number.” When you hear that….tighten up…have a cup of joe….and remember my words here…KEEP YOUR MONEY.
2) Buy a good book on commercial real estate. Don’t buy a book from a “guru” where all the information in the book is to push you to a boot camp. Now…there are good books out there that are trying to sell you something, but they give you a lot of value too. One of my favorites is Investing in Commercial Real Estate for Dummies by Harris and Conti. A great book in explaining the basics. Another of my favorites but will bore you to tears is The Handbook of Commercial Real Estate Investing by John McHan. The importance of reading up on commercial real estate is to see if you even have a true interest. If the books above get you excited, you may have commercial real estate in your blood.
3) Take a Real Estate Licensing class. I recommend Kaplan based on my experience. The licensing class does not mean you have to get a license. It is a good course to get you familiar with the laws, codes, etc., in your area for not only real estate but property management as well. I learned a lot in my licensing class. More than I thought I would. But I also learned that one of my instructors had no clue about commercial real estate….just residential 
4) Take the Certified Commercial Investment Member (CCIM) courses. This is the boot camp you want to attend. Yes…it is somewhat expensive and time consuming. There are four classes and each class lasts five days. But, if commercial investing is where you want to be, this is the course you want to take. This will help you analyze projects at depths you had no idea existed. You will also learn how to do demographic studies, leases, etc. Plus the networking at these courses are invaluable. When you finish all the courses, you will have an opportunity to get certifed but you will have to meet some strict and demanding guidelines just to qualify to take the final test. But…I digress.
5) Find a friend, make a friend. Find someone in your local area that is successful at doing what you want to be doing and follow their lead (also known as modeling). This is by far the best advice I can give you. If you have a great interest in commercial real estate, finding someone who is a success at it is the best thing you can do for yourself. This may take some time and it is uncomfortable at first….but well worth it. Chances are this person/mentor will be a real estate agent/broker/CCIM investor.
If you do all the above and still want to go to a smooth talking guru…..by all means….but I definitely went full circle starting out with gurus and ending up with the “right way.” Real experience from real investor is by far the best way to find success in commercial real estate.
Until next time…..rob
Real Estate Investing: Another Apartment Purchase This Time with a Bank Approved Wrap!
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Greetings from the metropolis of Cedar Crest, NM!
The Bank Allowed What?
Wow…has is been a long time or what? I have been so busy with a real estate class (six weeks) and purchased an apartment building within the same time frame. Just plain crazy so a lot of things got neglected…especially this blog. Looks like we have another apartment building in the works (thanks to KB Realty)….things are looking busy for the next few months…at least I hope!
Anyway….
There is one thing I never heard of when it comes to investing… A Bank Approved Wrap. BUT this one thing is a HUGE deal. I have done several wraps before…..but never a bank approved wrap. Now…remember…a wrap is when you “wrap” an existing mortgage with a brand new mortgage. Read more about wraps HERE.
So what is the big deal? Well, usually on wraps, there is always a small risk that the loan can be called due to the fact that the asset has been sold yet the loan is still in place. This is a small risk because banks usually do not exercise the “due on sale” clause call if the loan is in good standing. In other words, the payments are still coming in on time. But…there is always a chance. In any case, when we first approached the seller, the seller did a “no no” and asked if the lender if it would be okay to wrap the note. Surprisingly, the lender said “yes”…..at first I thought there was a mistake….and I just felt someone misunderstood something. But….I was wrong. So, in the last week of December, we closed on an apartment building with only about 6% into the deal (commissions and closing costs). No joke!
I even talked to my lender friends….they all NEVER heard of of such a thing….especially in commercial.
The beauty of the deal was that it was 80% occupied and still cash flowing. The issue with the property was mismanagement. Bad management with out-of-town owners is a great formula for opportunity.
Now…I have to give credit where credit is due. Preston from KB Realty found this deal and made it happen. James, a.k.a. “J” our attorney, worked hard during Christmas to get things right. Having solid relationships was the only way to get this done….but I digress.
There were problems with the deal….more specifically, timing. The sellers wanted to close before December 31, 2009….which only gave less than 30 days to close. Now…. trying to close in 30 days during the holidays is impossible….so I thought. I told Preston “there was NO WAY we could do it.” Due diligence, attorneys, inspectors, banks, title companies….are hard to round up to work on a project anytime of the year….especially during the holidays….Forget about it! Well…Preston pushed and pushed and the rest is history.
My partners and I learned something…..we don’t know everything…but thinking we do can lose us opportunities.
Thanks to Preston…David….J….
On to the next project!
Partnerships – the Good And the Bad (for Some It is Horrible)
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Partners for life?
Greetings from the metropolis of Cedar Crest, NM.
Today, I was on a conference call via Skype. The meeting was in Sacramento and I was attending via video on Skype. How cool is that? I also meet with my mentor or “life coach,” Wes Roberts, over Skype video a few times a month. Just too cool….but I digress.
Anyway….
Today’s post is based on my conference call today. The call had a lot of different aspects to it but one of the topics we discussed was partnerships. Now….if you are an entrepreneur, you probably have had some experience with partnerships. Chances are, most of your experiences have not been that great. I have had some great ones and some not so great. I have heard all the horror stories….but honestly, when done right, partnerships can put you on the fast track to success. The question is how do you do it right?
We do have a free white paper available to you on just that topic. The white paper on partnerships was written by my business partner, Steve Maxwell.
So….
To give you some insight into our discussion on partnerships, I got some key points from the discussion. I will share with you three of them:
1) Build partnerships around projects: More specifically, put partnerships together to accomplish a specific project. If things go well, do another project together. At first, you may want to do a short-term project first to get a feel for your partner. Then grow from there. Imagine being in a partnership five months down the road….with no end in sight. Some of you may be in relationships like that….outside of business
Odds are against you if u put a partnership together to exist for the long haul. People change, situations change, etc. Plus….the idea of being in something for a long period of time may be exciting at first…but as time goes on…..and as things change….the thought of being in a partnership for a long time becomes a heavy load.
2) Expectations: Having everyone on the team with the same expectations is VITAL. When it comes to finances….projects….roles and responsibilities….if the partners are not on the same page…which means do not have the same expectations, bad feelings and animosity are soon to follow.
3) Experience: I think the key here is “entrepreneurial experience.” If the experience is not there…if the aptitude is not there then someone will end up leading where they did not expect to lead and doing work they did not expect to do. And in my experience, fighting battles that should not be fought. In other words, taking a non-entrepreneur to think like an entrepreneur is an exhaustive exercise. Now…I am not saying not to work with someone who is not an entrepreneur. But usually, if someone has value but does not think like an entrepreneur, you are better off hiring someone with that skill set. Which leads me to a bonus key point….
Bonus) Don’t partner with someone that you can hire. If you want to partner with your best friend ….then just hire he or she. If the reason your are partnering with someone is because he or she can do your taxes for free or is they can build your website for cheap…think again.
well…back to the conference call…break is almost over…..
Until next time……rob