Commercial Real Estate Investing for Beginners

You'll hear an introduction to this Section involving how to invest in Apartment Buildings, a great place for beginners to get started with commercial real estate investment.

You'll discover why starting off in Apartments is good for beginner commercial investors.

• Demand is High
• Availability is Plentiful
• Easy to Understand
• Banks Love to Lend on Apartments

Learn the 7 main things to look out for when investing in apartments, including:

• Have a Goal
• Area/Location
• The Property
• Numbers
• Management Strategy
• Exit Strategy
• Ask Tough Questions

You're about to find out the 3 major areas that beginners go wrong with Apartments:

1. They believe the property financials in brochures
2. They underestimate property expenses
3. Property Management Oversight

Here's a step by step complete breakdown of Peter Harris' first ever apartment deal, including all the numbers in great detail.

Here's your action plan on getting started with Apartment Investing

1. Get Educated
2. Find a Friendly Broker Who Sells Apartments
3. Start Visiting Apartments
4. Get Your Financing in Order
5. Create Relationship with Property Manager
6. Get Your Mindset Right
7. Don't Give Up

Introduction to this Section on step by step, how to buy your first multi family apartment building.

You'll discover both the personal and investment benefits of investing in small multi family apartments.

Personal Benefits

• You Can Wrap Your Mind Around It
• Less Equity
• Creative Financing
• Single Investor
• Small Property

Investment Benefits

• Less Competition
• Less Sophisticated Owners
• No Corporate Ownership Approval
• Higher Cash on Cash, IRR
• Easier to Wholesale

You'll discover how to find good multi family apartment deals.

Real Estate Agents

• Defining what you are looking for
• LoopNet.com
• Make the Call
• Thank/Exchange/Follow Up
• Your Goal

Advantages of Direct Mail

• No real estate agents
• Off market deal perception
• Simpler to Wholesale

3 Keys to Direct Mail

• Target Absentee / Out of State Owners
• Use Fresh List from Reliable Source
• Send multiple letters to each contact record

You'll discover why you should start your multi family investing with 5 units as opposed to 4 units.

Here are the 5 ways to finance your first deal.

(1) Conventional

• Local Banks
• Loan Brokers

(2) Creative

• Seller Finance
• Seller Carry
• Master Lease
• Wholesale

This is an introduction to this section on Self Storage Investing for Beginners.

Discover 7 reasons why some invest in Self Storage Facilities

• 1 out of 10 people in the United States use Self Storage
• 50,000 Self Storage Facilities in the United States
• It is a $220B Industry
• 80% are Owned by Mom and Pop Businesses
• No Toilets, No Trash, No Tenants
• SFR vs Self Storage

Discover the 3 main ways to find the best Self Storage deals:

(1) Internet

• LoopNet.com
• CoStar.com
• SelfStorages.com
• BizBuySell.com
• Argus-SelfStorage.com
• SelfStorageBrokersofAmerica.com

(2) Broker Community

(3) Direct Mail

You'll discover the 3 main types of Self Storage facilities as well as the 2 main types of deals.

3 Main Types of Facilities

• Class A: Year Built 2000 - Present (Prime Retail Location)
• Class B: Year Built 1980 - 1999 (Mom and Pop)
• Class C: Year Built 1960 - 1979 (Caution)

2 Main Types of Deals

• Turnkey (stable)
• Turnaround (distressed)

Discover the 2 biggest myths of Self Storage Investing

1. It's a hands-off, passive income business
2. It's a quick turnaround business

Discover exactly how the funding works with Self Storage deals

3 Basics

• Income/Expense
• Condition/Location
• You/Partners

Sources

• Local Banks
• Credit Unions
• SBA Loans
• Seller Financing
• Master Lease

Here are the 7 things to look for in a Self Storage property you are considering purchasing:

1. Size
2. Unit Mix
3. Location: 1-3-5 mile radius, area growing or shrinking, path of progress, competition
4. Traffic Count
5. Signage & Visibility
6. Management
7. Drainage

You'll watch a detailed analysis of a real world Self Storage deal complete with all the important numbers.

Introduction to this Section on Investing in Shopping Centers for Beginners.

You'll discover the 2 configurations of Shopping Centers, the 8 different Types and the key term of shopping center investing.

2 Configurations of Shopping Centers

• Mall
• Strip Center

8 Types of Shopping Centers

• Neighborhood Center
• Community Center
• Regional Center
• Sub Regional Center
• Fashion/Specialty Center
• Power Center
• Theme Center
• Outlet Center

Key Term: Anchor Store

Here are the 4 things you must know about investing in Shopping Centers:

(1) Grocery Anchored Will Perform Better

• Attracts visitors 2-3 times per week
• Non-cyclical business
• Less Sales leakage from Internet

(2) Buy Centers with multiple stores/tenants

(3) Leases can be more valuable that property itself

(4) Size does not equate to risk

You'll learn about the 3 most common leases in shopping center deals as well as the definition of expenses for these types of commercial real estate:

1. Gross Lease
2. Modified Gross Lease
3. Triple Net Lease

Expenses

• Maintenance
• Insurance
• Taxes

Discover why many investors love triple net leases and who they are ideal for.

• New/Newly Built
• Strong Tenants
• No Management Responsibility
• Stable Cash Flow
• Long Term Lease
• Low Turnover
• Attractive Financing
• Corporate Rent Guarantee

NNN are Ideal For:

• Retired, Hands Off
• Long Term Income
• OK with Your Cash Tied Up
• Protection Against Inflation

Here are 7 foundational investment guidelines for shopping center investor beginners:

1. Stabilized, Street Appeal, Strong Anchor
2. Demographics: Metro, Strong Income, Population Growth
3. Occupancy: At least 80%
4. Buy Below Replacement Cost
5. Lease Terms: 5 year or more
6. Diverse Mix of Tenants
7. Leverage: 50-65% Loan to Value

Introduction to Mobile Home Park Investing for Beginners

Discover the 2 Types of Mobile Home Parks and the 4 Keys to Mobile Home Park Demand.

2 Types of Mobile Home Parks

• You Own the Land, Lease the Lots and the Tenants Own the Mobile Homes
• You Own the Land and the Mobile Homes and Lease the Lots and the Homes

5 Keys to Mobile Home Park Demand

• 8.6 Million Mobile Homes in the United States
• 50,000 Mobile Home Parks
• 60 Million People Earn $20,000 per Year
• Average Apartment Rent in United States: $1,000
• 8% of the United States Population live in Mobile Home Parks

You're going to discover 4 compelling reasons why you should invest in Mobile Home Parks and the Top 3 Misconceptions of owning Mobile Home Parks.

4 Reasons Why Invest in Mobile Home Parks

• Growing demand for affordable housing
• Stable/Predictable
• Limited Competition for New Parks
• Potentially Higher Returns

Top 3 Misconceptions

• Crazy Lazy People
• Mobile Homes Can Pull Out Anytime
• You Can't Get Loans on Mobile Home Parks

Learn 5 important tips on what to look for in a Mobile Home Park as well as 3 Big No-Nos on what to avoid.

5 Tips on What to Look Out For

• Areas with Increasing Population
• Stay Away from High Star
• Seek Out Mom and Pop Owned Parks
• Minimum CAP Rate of 10%
• Easy Rent Increase and Cost Reduction Option Opportunities

3 Big No-Nos

• Hurricane Zones
• Park-Owned Homes
• Operating Permit Status

Here's how and where to find good Mobile Home Park deals:

• LoopNet.com
• CIMLS.com
• MobileHomeParkStore.com
• 1031CommercialProperties.com
• Direct Mail

TIP: 20/30/50 Rule

Discover 3 most common ways to finance Mobile Home Parks:

• Bank financing
• Seller financing
• Seller financing with Note Assumption

Introduction to investing in Office Buildings

Discover 4 compelling reasons why you may want to invest in Office Buildings

• Long Term Income
• Triple Net Leases (NNN)
• Depreciation Tax Shelter
• Strategic Location

Discover the one big difference between office buildings and residential.

The value of Office Buildings are determined based on Income which can be improved by Tenant selection, Leases, Reduced Expenses, etc.

The value of Residential Real Estate are determined based on comparable sales.

Discover 3 very important Office Building basics 20% of all Commercial Real Estate in the United States are Office Buildings but it is the most volatile property type of all commercial properties.

(1) Economy

• White Collar Job Growth: To get job data, go to the United States Bureau of Labor Statistics
• Economic Growth: to get local economic data, go to the Local Chamber of Commerce Business Development Department

(2) Supply and Demand

• Vacancy Rate for the Area
• Absorption Rate for the Area
• Local Market Supply

(3) Real Estate Cycle

• Office cycle mirrors the economic cycle but lags by 4-5 months

Discover the difference types of office buildings

3 Main Different Types

• High-Rise: Skyscrapers
• Mid-Rise: 3- 24 floors
• Low-Rise: 1 - 3 Floors

Types of Tenants/Properties

• Government
• Medical
• Business Park
• Research and Development
• Office Condo

Office Building Classes

• A Class: Trophy, High Rents (Not for us individual investors)
• B Class: Older, Good Quality Tenants (Ideal for individual investors like us)
• C Class: Oldest, Least Desirable (Not for Beginners, Ideal for Value Add Investors)

Discover 10 key Office Building terms that you must understand prior to Investing

1. Gross Area
2. Rentable Area / Gross Leasable Area (GLA)
3. Price Per Square Foot
4. Gross Rent
5. Lease Type (Gross Lease, Modified Gross Lease, Triple Net Lease)
6. Reimbursments
7. Common Area Maintenance (CAM) Charge: Repairs, Hallways, Cleanings, etc,
8. Tenant Improvements (TI): Allowance landlord gives the Tenant
9. Operating Expenses: Insurance, Taxes, Repairs, Roof, etc.
10. Capitalization (CAP) Rate: Net Operating Income / Sales Price

Discover the basics of Office Building leases, the lifeblood of this property type.

• Gross Lease: Benefits Tenant the most.
• Triple Net Lease (NNN): Benefits Landlord the most
• Modified Gross Lease: Somewhere in between Gross Lease and NNN

2 Quick Tips

• Hire a professional when negotiating a lease
• Everything in a lease is negotiable

Learn about things to watch out for and possible pitfalls of investing in office buildings.

• Rental rates go up and down significantly with the economy.
• Tenants with the Largest Square Footage
• Expiring Leases
• Obsolescence

Discover possibly the most important thing when choosing a tenant...credit worthiness.

Business Credit Check

• DnB.com
• StandardandPoor.com

Discover the top 3 trends that will affect the future of office buildings.

1. Workplace Density: Today companies allot 185 sq ft per office worker, 10 years ago, it was 250 sq ft per office worker.
2. Untethering of Office Workers: 30-40% of dedicated workspace is vacant in a given day.
3. Telecommuting is OUT and Colloboration is IN: Yahoo! nearly stopped all telecommuting and wanted everyone not only in the office but in rooms together to give a start up small company feel.

Introduction to what you will learn in this section about finding and hiring property managers

Discover the main goals of a property manager so that you can better understand what you are looking for and how to find the best ones.

Learn the 3 biggest advantages of having the RIGHT property manager managing your commercial properties.

Find out the single most important thing to look for when hiring a property manager.

Discover the 3 best ways to find a terrific property manager