Hey, friends on Limitless Wealth TV. It's Steven Michael Miller and Kris Krohn and
I'm here today to talk about Kris's biggest deal yet. It just happened this
morning.
So today's the day telling them why Kris. So today's the big day because
after six months of working on my SBA loan, I just closed on our commercial
convention. Oh that's exciting. Dude, seriously it's the first real commercial
deal that I've led strung out of the gate on. Because I do so much single family
around here. And you know one of the things that we're always telling our
viewers is you should be careful on commercial because it requires more
money. It has more debt, it has more guarantees. But if you do it right, it can
have way more upside than single family. So I thought we'd chat about it little
bit. Yeah. Let's talk about this because I know there's a lot of people, we've
actually had a lot of questions in the past of, "hey, should I do commercials?
Should I do residential?" We've got Grant Cardone and other people talking about
these massive commercial deals that they're doing. But I'm just a small
little investor you know. I'm just getting started. How do I really get
going and here we are to talk about your commercial deal that you're doing.
And you know obviously like you just said, you've done we've done hundreds of
hundreds of deals. Thousands of deals over the last many, many years in the
residential realm. But I guess first of all, what was the impetus for you to
start in this whole commercial deal with this whole event center that you're
doing? So Steven for me, it's interesting. Commercial space whether you're doing
retail or you have a box store, you need a warehouse, you know commercial is
always specific to a business. Residential, rental real estate is always
specific to just renting out a house and putting up a family in there that wants
to live there. But commercial is specific. It's like, "well what's your business and
what are you doing?" So, I haven't really done anything in the commercial space
because I haven't found businesses that I can securitize, homogenized and lineup
the way I can in single-family homes. Yeah. But you know in the last 10 years
you and I, we've put on a lot of events in the event space. A lot of events. And
when you rent out the Provo Marriott for four freaking days, like this twenty to
eight thousand dollars. It's a lot of money right? And you know after a while, I
get sick of buying $13 cookies and $500 water service. Take that. They don't taste
any better. And get the water boy... You know, they charge you know...
It's like, "oh, our projector broke no problem you can rent ours for two
thousand. Like you can buy one for 2,000 sake. I know you can rent ours for two thousand.
I'm like mom! So I've always wanted to keep it on the other side of that fence
and you know about 18 months ago with all the events that we put on because
many of you actually YouTubers from around the world,
you guys actually come out. You don't notice but you can actually come out.
Go to the website and check out some of the ways that you can actually come out
to our events. We have events that teach about money and finance of real estate.
But we have these ninja mindset courses. They're life-changing and
transformational and so people are always coming out to our events. And
you know what, it's crazy Steven last year I spent $400,000 renting event
space. Yeah. So, I started saying what would happen if I actually rented an
event center as in like let's go get a commercial lease on a big space or a
warehouse for 10 years. Yeah. And as I started crunching the numbers, I'm like,
"dude, I can cut 40 grand a month down to like 20 grand a month." And when
you go from 40,000 a month to 20,000 a month, it's not just half as
much but I'm only renting it for three or five days. I can rent it out the rest
I make money. Well for 18 months I've been trying to search for a place that
had ample parking, that was the hard challenge. Two storeys and would work. So
I finally found the one that I wanted to do and when I got there, I put in my
offer and the landlord came back and he said, "well, we don't want to rent it. We
just want to sell it to you." I'm like well, what would you sell for? And they
gave me a crazy good price. It was like a million bucks. A million thirty thousand
for 17,000 square feet of really great commercial space. And so when I crunched
the numbers, I'm like wait a second, if I buy it then in ten years, I don't have to
renegotiate. I don't have a landlord for ten years. But also, it's even cheaper
than renting it. So literally buying it, my payment is under $15,000 a month. But
here's the cool part. I can now rent it out for my needs for
you know three four or five days a month. But in renting it out, it has the ability
to grow somewhere between 150 and 200 grand a month. So this is what's weird on
this deal. The reason why it's not a bad cash flow. Well, on most real estate you
spend the first 85% of the time renting it out to cover your debts and your
liabilities and the last 15% is profit. This is the opposite. The
15% is covering all bases and the other 85% is all profit. Yeah.
So it's interesting. I'll be the fourth largest event center in our County.
Servicing a half a million people that can actually put 500 plus people in a
room. Yeah. So the numbers worked out you know the next big hurdle was SBA trying
to get the loan as a six month loan process. Talk about that process a little
bit. I mean because there are other people that are trying to start
businesses, do more in real estate, do other things. Talk about the process a
little bit for those that may want to go down this road. So an SBA is basically
government-sponsored lending and what they're this is the government's way of
saying we want to support business. And so you can apply for an SBA loan but you
know they want you to put a healthy downpayment. I had to put down four
hundred and forty thousand dollars today to actually make this deal work. But
then they financed everything else at basically prime plus two and a quarter.
So right around I think seven percent or seven and a half percent and you know
the reason why? It took so long, part of it is because I got complicated finances.
I have all my business entities and so they had to like round up financials
from all the different things that I do. And I also had to sign a personal
guarantee that this was going down. So they made me put more on the line than
my credit. They wanted me to put my credit on the line and something that
said if anything ever goes south, you ain't getting out of this, alive. But you
know I look at it and I say, "well, I'm already renting you know, I I need 45
days a year. It only needs 38 and a half days rented an entire year for it to
break even. Right. So it's cool, right? Right. So the numbers worked out. We're
closing on it and now we're going to spend the SBA loan got done and now it's going to
be 90 to 120 days to do all of the build-out, select all the furnishings, get
it all put together and SBA is kind of cool they gave me nine months, ten months
before they actually start charging payments in case it takes longer. But no
it's cool. We signed on the deal and got a little video clip here of what the
signing looked like. Hey, gang how we doing? So, I'm sitting here at the closing
table with these fine gentlemen that represent the Bank of Rock Canyon and
they've been super helpful the last couple of months in helping
get to the closing table. I'm actually signing on a commercial deal that I'm
going to be using as an event center. This is like 18 months in the works. It's
been really challenging to find a place either in Salt Lake or Utah County that
had you know a surplus of parking, had the high ceilings, pretty much like the
perfect arrangement. You know I'd spent over a million
dollars renting out spaces. The Marriott's, the hotels, the convention
centers to put on events over all these years and so it's kind of cool. This is a
little bit of a different kind of deal where I get a chance to actually own the
event center and then I can charge someone else nine dollars for a cookie.
So anyway, it's a kind of sweet. I actually called on this place. It's
just got a great location and good energy. We're going to be renovating the
whole place. It's going to be perfect for our events. I get to do events the way that I
want and doesn't mean that I don't have to you know worry about other landlords
in our owners telling me that I can't stand on chairs or do some of the other
totally ridiculous and dangerous things that I sometimes do. And I'm just
super excited actually closing on this and having this whole opportunity.
But I went to the owner of the building I said I want to rent your place and
they said, "well just kidding we've been listing it for rent for three
years now we just want to sell it" And when they told me what they're selling
it for, I ran the numbers I said wow that's a really, really,really low price.
And they said, "have you seen the building? It's in bad shape." No, other true story is
the large conglomerate out of California consolidating their assets the only
skyscrapers and this was just kind of a little bit of a... it was an asset that
really wasn't working for them. So, I'm super excited to be able to take their
rotten apple. Have an opportunity to turn it, we hope into something really good in
the community that creates a great value for people. Yeah, you know I spend 40 to
60 days a year putting on events and creating value from people all over the
world that fly in town. This gives me an opportunity to do it on my terms the way
that I want and it's just an exciting opportunity. Having done hundreds of
single-family homes, having facilitated thousands of homes for my clients over
the years. It's kind of cool to actually get into commercial for the very first
time and so this is a multi-million dollar closing and it's
just a good step. It's a good opportunity. So something that I'm excited about. Just
want to share that update to you. So remember you're out there doing
your do your deals, do due diligence and go fund the deals that make sense
out there. Crunch the numbers and then get out there and go after it.
Awesome Kris. So talk to me. So you've just finalized the deal. We've
talked about the numbers of what it's going to be like. What would
you recommend to anybody who's looking to maybe get into the commercial space?
What's your biggest maybe advice that what you've learned from this experience?
You know Steven for me I would say that for and I don't know if I'm about to get
bad advice or not. So I just want to frame up that for me I did this deal
because I understand the business and I have my team that will run the business
and that creates a lot of... I have confidence in my abilities and what we
can do. So for me this was a no-brainer. This was a very easy deal to do. But the
deal has such a high ROI that now I can bring a couple of small-time investors
in. They can pop in a few hundred thousand dollars. They can take a sliver
of that equity to get a piece of the action.
And if I wanted to, I could probably bring in a total of three million
dollars for just selling the entire opportunity away. But the reality is it
has the ability to make one and a half a million dollars a year or a million
dollars a year. So you get into real estate long enough and eventually you
find a deal that's a cash cow and there's no way you would sell it unless
you can trade it for a bigger ROI. This thing really stamps out at you know a
couple hundred percent per year. So it's just one of those deals
that you work hard at and eventually you get one of them and then you hold on to
it and you keep it. So I would say to answer your question that if you're
getting owned in the commercial space make sure that you have a good
degree of comfort and knowledge and hopefully experience of the business
that you're going to be supporting. Because commercial is all about business
not about real estate. Right. It's just necessary evil to actually make your
business roll and go. Sure. Awesome. Love it. Thanks. Everybody celebrate yeah! You know
it's amazing Steven. I spent 15 years and it all culminates in a moment like
this and it just feels good right? Yeah. And the exciting thing is you just got
to keep growing. You got to keep pushing yourself. So make sure you subscribe. You
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