Follow The Big Dogs

By:  Jeff Shiller, Esq.

There seems to be a natural progression for a real estate investor:

–          First, he gets some education, overcomes his fear, and nervously buys his first residential investment property;

–          After gaining some confidence and doing a few deals, he moves up in volume, gets a web presence, and starts talking to his wife about leaving his day job;

–          Inevitably, he hits a few road bumps – trouble with financing or a deal that goes sour. But the true entrepreneur makes it through, continues to learn and hone his craft, and ultimately creates a profitable life as a residential investor.

Many investors accept this as the end of the road.  And, truthfully, it’s a good one.  Many a fortune’s been made in residential real estate.  But there is another extremely profitable road to travel, and only a few select entrepreneurs seem to follow it. Of course, I’m speaking of commercial investing – apartment buildings, self-storage, strip centers, hotels, etc.  Most of my truly wealthy business acquaintances play in the commercial arena.  I call them “Big Dogs,” and for good reason.  Through one acquisition, they can generate cash flow similar to an average person’s annual salary, or more.

I believe most investors never venture into commercial investing simply out of fear.  Fear of the size of the deal – it’s too big and their afraid of dealing with banks or getting financing.  Or fear of all the different lingo – cap rates, debt service coverage ratios.  Or fear of creating business plans and pro-forma financial statements for banks and investors.  Or fear of networking to find the money to do the deals or the deals themselves.  Or, worst of all, fear of success.  Many of us just don’t want to believe we can generate that kind of opportunity for ourselves, so we don’t let our brains even consider it.

The message I want to get across today is, DON’T BE AFRAID.  When you first started residential investing, you were probably afraid.  I know I was nervous as hell on my first deal.  But you got educated, learned the lingo and the process, and started making money.  Commercial investing is the same.  And what makes commercial investing so appealing is that very few people step up to the plate to swing at the big deals, so there is much less competition.

Of course, this does not mean commercial investing is easy, or doesn’t have risk.  It may have a bigger reward but, to get that big reward, you will have to be smarter, work harder, and be willing to take bigger risks.

I have a lot of information upcoming in the next few weeks through hmbcribs.com about commercial investing.  I will discuss with industry experts:

–          How to get started in commercial real estate;

–          What are the biggest pitfalls of commercial real estate;

–          What’s the easiest way to buy your first commercial property;

–          How to get investors/financing for your commercial deals

I will even give you some tools so you can get started right away.

In my next blog, I will tell you the 5 fastest ways to lose all your money in a commercial deal.

Til next time, Jeff