Peter Harris - Commercial Real Estate Investing For Dummies

Why go it alone when we’re here to help you? As a reader of this book, you get additional free purchase contracts, handouts, and property evaluation software. This is all included in a fun 5 Day Challenge Masterclass where you’ll discover how to Find, Analyze, and Make Offers on Commercial Properties That Get Accepted. See the About the Authors section for details, or go to CommercialQuickStart.com.

Chapter 2

IN THIS CHAPTER

Understanding the basics of commercial real estate

Surveying the types of investments available

Discovering the tools you need to get started

Debunking the myths of investing in commercial real estate

Keeping timing in mind when selling, buying, and holding

What comes to mind when you think of commercial real estate? Downtown skyscrapers? Corner strip malls? Apartment complexes? Okay, that’s a good start. But have you thought about being the owner of one? You may assume it’d be too complex or too expensive, but jumping into commercial real estate investing could be the wisest and most lucrative investment you ever make. To us, the benefits outweigh the risks. But find out for yourself.

In this chapter, you find out what commercial real estate is, and you discover the different types available. We break down the big world of commercial investing into easy-to-follow categories so that you can pick and choose your favorites. We also uncover the five biggest myths that stop people from investing and understanding commercial real estate. Because the value of commercial real estate depends on the cash flow that it produces, we show you how cash flow is made on a monthly basis, and we help you discover the steps to building long-term wealth. We also tell you when it’s the most profitable time to buy, hold, sell, or bail (we even share with you ways of predicting the future!). By the end of this chapter, you’re sure to be convinced that commercial real estate is, by far, the best way to produce true and lasting wealth.

Here’s our definition of commercial real estate: It’s any piece of real estate that’s bigger than one house on one lot. So, commercial real estate includes everything from small apartment buildings (five or more units) and large office buildings to shopping centers, to industrial parks, and even land development.

The three biggest differences between commercial real estate and residential real estate include the following:

Commercial real estate projects are passive investments only after they’re up and running. Remember that unless you have a ton of money and don’t care about getting huge returns, commercial real estate will take a lot of your time and effort to get started. After all, you have to deal with many things, including the learning process, finding the right mentors or teachers, searching for the right deal, financing your investment, picking management teams, protecting it from lawsuits, and overseeing the project. The good news is that after you have a commercial project off the ground, it’s usually big enough that it allows you to pay other people to take care of it. So, it won’t take much of your time at all — and that’s why it’s called a passive investment . Compare this to a single-family home that may require collecting rents and making repairs for many years to come.

All it takes is one big commercial deal for you to be set for life. Doing one commercial deal the right way can generate you a profit several times your yearly salary in addition to providing you sizable monthly income as long as you own the property. Residential real estate can produce a sizable profit as well, but it will not generate anywhere near the cash flow that a commercial property will. You’ll receive one check per month from a single-family residence, but you can receive several hundred checks per month from a commercial property.If you don’t believe us yet, consider this: Our clients shared how they got started in commercial real estate. We found out that one of them is in a project that already has a profit of $10 million or more. Another one bought a piece of land near their home for $1.5 million, and it has jumped in value over the past two years to $9 million (and they didn’t even have to use their own money).

The people that you meet who invest in commercial real estate are all big thinkers. They’re people who have decided that they want to think big, live big, and hang around other people who are just as passionate about life as they are. Until you get involved, it’s difficult to really understand just what your life could look like. Investors of residential real estate think of one monthly check and one tenant; they wait for appreciation (which may never come); and they’re limited in ways of creating massive value for their property.

We think commercial real estate investing is a great way to generate wealth, and the main reason we like it so much can be boiled down to one word: leverage. Leverage is what allows you to use a small amount of your time and money to bring you a magnified return. Commercial properties are usually bigger and more valuable than other types of real estate, such as houses. What this means to you is that after you figure out how to find, negotiate, and buy commercial property without using much of your own money, you’ll be able to sit back and watch the magic of leverage work wonders for your financial future. Your family will thank you for generations to come.

When people get started with their investing, most of them dream of creating a six-figure annual income stream so that they can quit the rat race. However, deep down many of them have doubts that they can actually make it happen. But never fear. The goal of this book is to give you the starting steps and specific know-how to help you realize that you really can live the life of your dreams. And we want you to do it in a way that creates the lifestyle you want without years of hard work. We’ve helped other clients do it, and we know you can do it, too.

Understand that there are still going to be naysayers out there who say you can’t invest in commercial real estate in today’s market, in today’s economy, or in today’s cosmic layering of celestial occurrences. But you have a choice. You can either buy into what these financially stressed-out individuals are desperately clinging to, or you can let go of everything that’s been holding you back and go after the future that you want and deserve.

Morgan was the kind of teenager who struggled in high school. He didn’t get good grades, and he didn’t earn a college degree. He worked a variety of jobs until he found himself working as a bouncer in a bar and surviving on 69-cent cans of beans. Financially, he had a pretty bleak-looking future.