Discover how you can afford to buy your first commercial property without a hefty down payment or prior experience.
Can You Afford to Buy Commercial Property?
Do you have the down payment? Do you have the experience needed to invest in a commercial deal? For many of you, the answer is a resounding “No.” Perhaps you’ve even had disheartening conversations with real estate agents sizing you up over the phone, making you believe that commercial real estate is out of reach. Well, I have good news! You can afford to buy a commercial property, and you may not need extensive experience to do it. Let me explain how by shifting your perspective from on-market deals to off-market deals can make this possible for you!
On-Market vs. Off-Market Deals
There are two different perspectives; one is of on-market properties and the other is properties that are off-market.
On-Market Perspective:
Most new investors have an on-market perspective and initially only look at on-market deals. These are the properties you’ll find listed on platforms like LoopNet, Crexi, and MLS. These deals are broker-controlled, require a hefty down payment, usually around 25-30%, as well as experience, which you may not have. From this common perspective, buying commercial real estate seems out of reach, which leads people to abandon their dream of ever owning a commercial property.
Off-Market Perspective:
However, there is another world of opportunities in off-market deals. This is the playground where our students thrive, and where I believe we excel in finding opportunities. While off-market deals still require money, it doesn’t necessarily have to be your own. You can use investor money or creative financing methods, strategies we specialize in teaching. And off-market deals usually have more flexible terms. For instance, experience may not be necessary for off-market deals. By following a set of guidelines we’ve honed over time, even beginners can break into the commercial real estate market. Take for example our mentees, Craig and Michael, who were novices with limited capital and no prior experience. With our guidance, they started buying commercial property and building their portfolio using key techniques from our playbook.
Craig’s Success Story
Craig started with very little money and absolutely no experience in commercial real estate. After acquiring a few single-family homes, he wanted to take it to the next level. Using our methods, Craig found a small multifamily property off-market for $280,000 and sold it for $557,000 two and a half years later, making a $277,000 profit! How did he do that?
Key to Craig’s Success
Seller Financing: Key to Craig’s success was seller financing, where the seller acted as the bank and held the mortgage.
Seller Situation: The seller inherited the property and was motivated to sell as she was not a real estate investor, and the property was poorly managed and had fallen into disrepair. Since the property needed some work, Craig acquired it at a lower price and turned it around.
Asset Management: He followed our asset management plan, receiving guidance monthly from our coaches on money, management, and marketing. We teach all our students how to establish an asset management system so that they can scale. Now on his fourth deal, Craig continues to scale up.
Starting Small: Finally, Craig started small, which is fine. In fact, his story shows that starting small and using creative techniques such as seller financing can yield massive profits. Like Craig, you can start with a smaller property to get your foot in the door and then with our guidance build your portfolio from there.
Michael’s Success Story
Unlike Craig, Michael opted to go for larger deals right from the start. With a little money and no more experience than Craig, he bought three off-market deals: a 12-unit, a 20-unit, and a 22-unit property. How did he do this? By mastering syndication to raise capital. When Michael came to us, he was ambitious, but he didn’t have the capital he needed for the down payments. To overcome his lack of money, we taught him syndication: how to use other people’s money to fund his deals. So, Michael leveraged his newly acquired syndication skills to get investors on board.
Keys to Michael’s Success
Off-Market Syndicated Deals: Michael’s success stemmed from leveraging new skills to attract investors. He learned to offer compelling returns, convincing investors to join him. For on-market deals, the numbers wouldn’t have worked because brokers ask top dollar for listed properties and the return on investment isn’t high enough to pay Michael and his investors. Michael’s deals were successful because he targeted off-market properties, where prices are lower, and returns are higher.
Creative Financing: He also utilized creative financing, including a seller carry second mortgage, where the seller held a second mortgage for him to help with the down payment.
Secured a Commercial Loan: Despite having to approach multiple banks, Michael managed to obtain a commercial loan, proving that even new investors can secure commercial lending if they have a good deal.
Established a Track Record: Finally, all it took was one good deal for Michael to establish a track record to get additional investors. Michael proved with his first deal that he was successful as a syndicator, and investors that initially were uncertain because of his lack of experience, are now funding Michael’s deals.
You Can Afford Commercial Property!
Whether you choose to start small like Craig or think big like Michael, shifting your focus to off-market deals is the key to getting started in commercial real estate. Their stories prove that you can afford your first commercial property! With the right guidance and strategies, you too can overcome the hurdles of limited funds and lack of experience.
Questions or Comments? Text PETER to 833-942-4516.
Every Successful Commercial Real Estate Investor Has a Mentor
Every successful commercial real estate investor has a mentor. Get your mentor here: Commercial Property Advisors Protege Program
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