What's going on everybody.
So, today's video, I'm gonna be going over five different lessons I learned from purchasing
my first commercial property.
This was a deal that just recently closed.
It took a little while to close.
In this video I'm going to give you five valuable lessons that I learned along the way.
Lesson number one, and this is a pretty simply analogy, but it's practical and it makes sense.
When you're going fishing ... and I'm not an expert fisherman or survivor man, or anything
like that ... but when you're going fishing, the very first thing I would assume you probably
do is do a little bit of research as to where all the fish are.
You're probably not just going out in the middle of the ocean, and just putting your
lines down there.
You're probably saying, "Okay, let's go by the reef.
Let's go by the cove.
Let's find out where all the good fish are ... where everybody's fishing.
The same is true with real estate investing.
If you're fishing, or essentially marketing to just everybody, you're going to have a
pretty low response rate.
That's why when you're looking for, whether it's commercial or residential deals, you
need to target your marketing, or your fishing, essentially, to a very select group of people.
You're gonna be marketing to, maybe, two or three percent of the sellers out there.
You're not gonna be marketing to the overwhelming majority of sellers.
The motivated sellers are the people you're marketing to.
That's like absentee, pre-foreclosure, probate, tax liens, things like that.
If you just market to the general population, you're response ... if you market enough,
you'll probably get a deal, but you're response rate is gonna be very low.
To add on to this fishing analogy, you always want to have multiple lines out there.
That means you wanna be doing tons and tons of marketing, because you never know what
you could bring in.
Maybe you catch the whale.
Maybe you catch the shark.
Try to do as much marketing as possible, only to the motivated sellers.
Okay, lesson number two, and this is actually something I learned recently from a mentor
of mine, Tai Lopez, and he was talking about, you always need to have $100,000 on hand for
different opportunities that might come up.
I know $100,000 cash is like, "Okay, yeah, just easier said than done.
Just have $100,000.
Why not just have a million?"
There's actually some creative ways that you can get $100,000.
One of those would be, let's say you have ten or $20,000 cash in the bank account right
now, and you don't have a ton of debt.
You could go to your local banks, and ask them for a personal credit line.
They're not gonna scrutinize it too much.
Just say you might need to make a large purchase soon, which is totally reasonable.
They might not give you $100,000, but you could at least get started with asking for
like a $20,000, $30,000, $50,000 line of credit.
If you have good credit, you have some cash in the bank, you've been a member for a little
bit, they'll probably give you some amount ... probably a pretty significant amount.
You need to really think creatively, as to how you can get $100,000 cash available, because
for this commercial real estate deal, for example, I could come up with $100,000 in
two days, basically.
Luckily I have that on hand.
When you're flush with cash, or you have a good paying job, try to increase your credit
lines, and personal credit lines, as much as possible.
There's also a quote by Robert Kiyosaki, he said, "Rich people think about how they can
afford something, and poor people just think that they can't afford something."
Anytime you're presented with a huge buy in opportunity, you think it's a pretty good
deal, think of different ways where you could afford it.
Maybe you have to get a loan from a friend.
Maybe you have to get a loan from a peer to peer lending site.
Maybe you have to increase your personal credit line.
You should never just completely say, "Okay, I can't afford it."
That's basically how poor people think.
Okay, the next lesson I learned when it comes to commercial real estate, is you need to
know the zoning laws.
You need to know the zoning codes.
You don't have to be a city expert or anything, but there's so much freely available information.
Look up the top three or four zoning variances and zoning codes in your area.
There's plenty of articles, as well, as you can read the legal tax description, where
they can be used for.
Sometimes you might ... one type of zoning, you might be able to build five condos.
Another type of zoning, you might not be able to build anything.
I remember, I passed up on a deal one time, I thought it was just an old row house.
In reality I could've turned it into a five or six unit condo building, 'cause I didn't
know the zoning code.
I know one investor, he actually bought a piece of land thinking they were gonna build
a million dollar house, it turned ... they spent four or 500,000, and turned around,
they couldn't build at all.
You really need to understand your zoning laws, read the code, read articles, and ask
other investors, ask lenders what they think about it.
You'll quickly gain a big advantage over other investors, and other real estate agents.
Okay, the next lesson I learned, is that with commercial deals, and really any type of bigger
deal, you just have to be patient.
Bigger deals just, in general, seem to take longer, especially if they're commercial,
and there's just more things involved.
You have to be patient.
A good way to be patient, and not so desperate for one deal, is have multiple things going
on.
Have some other deals going on, be working on projects.
It shouldn't occupy your time 100% of the time, where you're just thinking about this
deal.
Every day you're like, "When is it gonna close?
When is it gonna close?"
Because that can, also, just put you at a weaker negotiation point, and if the deal
turns out not to close, then, you're whole year, or your whole month is completely devastated.
Be patient and always try to have multiple different things going on, that excite you,
that have possibilities of being another big deal.
Okay, the fourth lesson is called the Rule of a Hundred.
I think I heard Grant Cardone talked about this, or one of those guys.
Before you're even buying any type of property, you should have had evaluated at least 100
different properties.
By evaluate, I don't mean you need to go out to 100 different houses, and take notes or
anything like that.
When you're evaluating different deals, you should just have a general awareness of what
a good deals is, so you can jump on it quickly.
With this commercial deal, I just knew based on that area, and this price.
I was like, "This thing could be fire damage, and I might even still be a good deal."
You need to have a general awareness.
Look at the comps.
Research comps on Zillow, Redfin, places like that.
Just so you can get a good idea of exactly what prices are going for, whether it's commercial,
residential.
Also, a good tip is, if you're looking at comps for commercial properties, they're not
always gonna fall under the residential section.
You need to look at the commercial comps, which is gonna be a totally different section
the MOS, as well as the residential comps.
Then, come up with your after renovated value from there.
Okay, that was five tips, but I'm actually gonna give you one more.
You need to have a good title company.
I'll tell you this, from this deal in particular.
If you're not working with a good title company, they could sabotage your deal.
Make sure you have a well respected company, that has a ton of reviews.
You want them to be local.
You want them to have a lot of reviews.
You want of have them, like, referrals from them with commercial deals or any type of
bigger deal where there's more at stake, you just want to have every possible advantage
working for you.
Make sure you have a good title company.
Okay.
There you have it, five different lessons I learned from buying my first commercial
property.
Hopefully it's the first of many.
Just to recap this video: number one is the fishing analogy.
You need to be fishing in the right place.
You need to be marketing to the motivated sellers ... absentee, pre-foreclosure, probate,
tax lien, things like that.
If you just spread your marketing around everywhere, you're just not gonna be that effective.
Lesson number two, you always wanna have $100,000 cash on hand for different buying opportunities.
For example, this real estate deal, I needed $100,000 cash.
It turned out, everything went smoothly.
If I didn't have that, I would've been out of luck.
I would've had to try to partner with the deal, or sell it off.
Assign it, whole sale it.
Do something else.
I wouldn't be able to make as much if I didn't have that amount available.
There's other buying opportunities too, not just real estate.
For example, in my area there was a Frisbee team that was for sale.
In my area there's actually professional Frisbee.
I don't know how much a Frisbee team costs, but they get on ESPN sometimes, so, could've
been a good buying opportunity.
I would've had to analyze the deal a little bit more.
Do you just buy them jerseys and bus tickets and happy hours every now and then?
Or, is it much more involved than that?
If you're out there networking, if you're motivated, there's always gonna be different
buying opportunities that come along.
Lesson number three is just be a zoning expert.
Read every article.
Read the government official zoning paperwork, which they have publicly and freely available
online.
Just know the zoning.
Know the highest and best use of the types of properties you're looking at.
Next, you gotta be patient with big deals.
You always have to be patient.
Just hang in there.
Have other things you're working on.
You don't wanna be so desperate that you're just thinking about it all the time.
Always have a couple different projects you're working on.
Lesson number four, just keep in mind the Rule of a Hundred.
Make sure you've evaluated at least 100 deals, before you start making offers.
You don't wanna just start putting every single property you get under contract, just because
you think it's undervalued.
You should know exactly what a good deal is.
Lastly, make sure you get a good title company.
Get referrals.
Look online.
Check reviews.
Call the attorneys there, if you want.
That's gonna be key with a commercial deal, or really, any type of deal.
Thanks for watching.
I hope you enjoyed this video.
Please like.
Please subscribe.
I'll see you on the next one.
All right.
Bye.