Commercial Real Estate Investing - A Step-by-Step Guide to Finding and Funding Your First Deal

Introduction

I have a secret for you.

All these years you’ve spent investing in residential properties, you could have been making ten times more. It doesn’t matter if you are wholesaling, flipping, buying junior liens, or doing rentals, the process for commercial investing is almost identical to residential, but the returns are exponentially higher.

I know what you’re thinking: the process might be the same, but it’s still a change.

I’m willing to bet you haven’t gotten into commercial because:

• You don’t have enough cash or credit.
• You don’t know how to raise capital from other people.
• You don’t know where to find a good deal.
• You can’t figure out how much you should pay for a property.
• You don’t know how to lease commercial spaces.
• You believe commercial is too risky.

Here’s what you may not realize: These are beliefs that are not real. They are just fears that stem from a lack of understanding. How do I know this?

Because I had all of the same fears keeping me in my comfort zone doing residential deals, until one day I unlocked a secret that changed my investing strategy for good.

With this secret, I jumped from averaging $50,000 per flip to doing deals where I was making several million dollars per deal. The best part is, it allowed me to do an unlimited number of these deals and turn up the faucet as high as I wanted to go, and it didn’t require any more work than flipping a house did.

The secret is simple: You can partner with other people who have good credit and lots of cash to fund your deals. If done properly, you can scale up exponentially, taking on no more risk than residential, getting ten times the results with the same amount of effort.

I know what you’re thinking: why would anyone ever want to partner with me? To be honest, maybe they wouldn’t. But that’s only because you don’t have a strategy or an investing system yet—and that’s what you bought this book for. Stick with me to the end, and you are going to be able to bring quality deals to them that give them better risk-adjusted returns than they would ever get anywhere else. In return, they will compensate you greatly for doing all of the work, allowing them to remain passive in the investment. That’s it. No gimmicks, no missing pieces. Just a complete investing system that you can put into use right away.

Who This System Is For

You don’t have to stop doing what you’re doing to implement this system. In fact, maybe your residential investing system is working fine right now. But let’s face it: you’re getting bored. You can’t do this transactional stuff forever. You fantasize about being able to do one large deal per year to make your entire year’s income instead of having to crank out the numbers, over and over again. You’re getting outbid on properties by rookies who watched an HGTV show, attended a seminar, and overbid because they were so desperate to do a deal.

Guess what! These rookies don’t exist in the commercial game.

Maybe you’re sick of dealing with unreliable contractors and deadbeat tenants and are ready to spend your time interacting with business owners and entrepreneurs all day.

Maybe you just want the prestige of getting into the big leagues and being able to cash your first million-dollar check. You know you need a new strategy for that, because the only way to scale up with your current system would be to take on more headaches.

Maybe you are working as a real estate agent or contractor for other people who are investing in real estate. Why are you working for the tip, when you could be sitting down and eating the meal? Making a commission or a contractor fee is nice, but the real profits are made by the investor.

Maybe you own a successful business and have lots of capital you want to smartly put to work. You understand marketing, sales, and operations, but you haven’t figured out how to use those skills to get your cash working for you, earning double-digit returns.

Maybe you’ve never invested before, but you know you can’t keep doing what you’re doing. You have wanted to get into real estate for a while, but you can’t figure out how to get started. You know there is a better life out there for you, but you don’t know how to obtain it.

No matter what your background or current situation, the first thing you need to do is retire the idea of retirement.

Let it go. Even though our society is built around it, the human spirit is not designed to retire. To retire is to die. Sometimes literally. Death rates in the early years of retirement are staggering. We are not meant to stop providing value to society, and retirement should not be your goal.

Your goal should be FREEDOM.

Imagine your life with complete freedom over time because your residual income exceeds your cost of living. You could travel the world with your family and return home with more money in your bank account than when you left. You could wake up Monday morning and decide whether you want to go to the lake, play with your kids, or work on your business.

You’d feel excited to get out of bed again—to have a real challenge that forces you to stretch your abilities, without consuming every waking hour. You would only have to do one deal a year, and each year your residual income would snowball. You only need to do a few commercial deals to be set for life. In this book, I give you the exact recipe so you can buy back your time and focus on the things that truly matter to you.

If you implement the steps in this book, you will buy your first commercial property in the next twelve months, with about the same amount of capital that you would need for the down payment on a house.

The best part is, this system will only add to what you are already doing.

If you can only invest part time, don’t worry. You don’t have to quit your day job. This system only takes about ten hours per week to implement.

You don’t need to sell your other investments either. You’ll only need enough working capital to fund your marketing system and the due diligence on your first deal—$20,000 to $60,000 in total capital to get your first deal done. Some people take it out of their IRA or borrow it from a family member. Others just use what they set aside to invest in their next rental property and decide to buy a commercial property instead.

What You’ll Learn

This book is divided into two parts—strategy and systems.

In the first half, you will form your strategy and create a plan. You’ll shed your limiting beliefs that have been holding you back and open your eyes to why commercial is so much better than residential. Then you will learn all of the different ways to make money in this business, but you’ll learn how to do it in a way that reduces or eliminates risk. We will end the first part of the book by choosing what types of properties to target and where to target them.

In the second half, you will learn the system—the 7 Steps to Freedom—which gives you a roadmap to doing your first deal and implementing the plan you put into place in the first half of the book.

With this information, you will be able to duplicate my success in your market. With a winning strategy and a proven system to implement it, you can maximize profit while minimizing the amount of risk you will take to earn it.

Here’s a summary of what you will learn in each of the seven steps.

The 7 Steps to Freedom

STEP 1—FIND: Learn how to find and focus on properties that have problems you can solve. This includes creating a list of prospective properties and rolling out a proven marketing strategy to get brokers and property owners calling you. You’ll learn how to pre-qualify the deal and schedule the tour.

STEP 2—FIGURE: Learn to figure out exactly how much you can pay for a property to achieve your desired cash flow and equity growth. To accomplish this, you will tour the property, do market research, review the seller documents, and calculate your Max Allowable Cash Offer. You’ll be able to present three different offers, negotiate the deal, and determine exactly how much profit you will make on the deal.

STEP 3—FUND: Learn to fund a deal by partnering with other investors. You will learn exactly how to find and secure equity partners and split the profit with them. You’ll be able to secure bank financing, even if you have no credit, and properly underwrite the deal to structure away the risk.

STEP 4—FIX: Learn to fix a property up to make it shine like a new coin. You’ll be able to evaluate what repairs make sense and what ones don’t. You’ll learn how to use our renovation cost worksheet to estimate the cost of those repairs, then find good contractors to verify your assumptions and get the updates in motion.

STEP 5—FILL: Learn to fill the property with quality tenants. You’ll know how to create a world-class listing and deploy a marketing strategy to generate leads. You’ll be able to conduct showings, screen tenants, and structure...