Last month we began talking about commercial properties. This month we will continue talking about opportunities you can find with small apartments, self-storage, large apartments, shopping centers, office buildings and industrial.
I think of my friend, Lance Edwards, who specializes in small apartments. Small apartments meaning anything from 4 to 100 units. In fact, Lance will be at our upcoming boot camp in August, and he will be at the summit in February. Lance is very successful in that small apartment niche.
And there’s self-storage. My friend, Scott Myers, is the king of self-storage, he has hundreds of units starting from scratch with no money or credit and has built an empire by buying and redeveloping or by buying land and building self-storage units on it, which has always been a hot commercial component in the market because even when people use their homes, they still need a place to store their Junk. Did you know that self-storage is the only type that you can literally get 100% financing on? That’s how much the banks think of self-storage. Scott will also be at my commercial boot camp, and he is a wealth of information when it comes to the self-storage business.
Most people who enter the apartment business start with small apartments and work their way up to large apartments. However, I have seen many people do the opposite and start with large apartments. There is plenty of money available for larger apartments, including HUD money. There is a program called the HUD 221 D that’s available to buy and renovate apartment projects, and if done correctly can be done with as little as 7% of the total capital needed coming from you or your equity partners.
Then there are small shopping centers, which I also kind of favor because once they’re rented the tenants don’t tend to move very quickly. Shopping centers can be bought all over the country at reasonable prices depending on where they are, especially if there is a management issue and/or a repair issue because the management is not taking care of the property correctly. Once you learn how to finance these shopping centers without having to come out of pocket, they may very well become your new niche. I know several developers who do nothing but shopping centers, and some of them have as many as 25 centers that they have accumulated over the years.
Then of course, there are always office buildings. This is a great time to buy office buildings because they seem to be at the bottom now, nowhere near the top. As long as you can construct the financing on these office buildings so that the cash flow can take care of them until you can turn them around and get them occupied they can become cash cows.
I even like closed-up, single-use buildings, like restaurants, that you’ll sometimes see free standing if you’re looking. Of course, if you’re not looking you won’t see any of these opportunities. Sometimes these free standing buildings are owned by individuals and great financing can be created on them since they are sitting there vacant and probably need some renovations, just like we do on houses. The worse condition of the property, the lower the price and the better the financing we can get from the sellers. These are also out there as bank-owned all over the place. If they are bank-owned, quite often we can get a really deeply discounted price because the last thing the bank wants is a closed-up restaurant sitting there. Sometimes they’ve been sitting there for one, two or three years with nobody taking them to the next level, so these become good opportunities for people who can see the future for these properties.
Then there is an opportunity that very few people are actually able to see: small tracks of land dead center of civilization. I mean tiny pieces of land located between two buildings or near a highly developed area that can be rezoned and converted to a much higher and better use. Maybe it’s an old building sitting in the middle of, or right near, new buildings that hasn’t been developed yet that needs demolished and or rezoned to a higher density. For example, an old building on a single level that has rezoned to a high-rise of six levels will literally take that piece of land and multiply its value by 10, 15, 20 times what you pay for it. Any time you can create more density on a track of land, you’ve drastically increased its value. And again, the good thing about rezoning a property is you hire other people to do the work for a very small amount of money. You do not have to be an expert or know the zoning department or even know anybody there.
I could go on for hours about the opportunities available in commercial property, and in fact I will in August. I will spend four days on it, and we will cover everything there is to cover about it. You can get information on that event from us if commercial property interests you. I will have some time to go through a lot of different types of projects, the good, the bad, and the ugly, because we will be working on projects that you bring to class after I train you on what to look for and what to bring.
Many of the deals we do don’t require money or credit. Some will, but if you don’t want to use your money or credit then I will show you how to get other people to put up the money, or credit, or both and you still get a big upfront payment from the deal as well as a piece of the action all the way through to the end. And in fact, I’ll even provide you with the contracts to make that applicable.
The ability to see the opportunity is the valuable piece. If a deal is good money, it’s easy to find, and that assumes that you are going to stay in the deal and care about raising the money to fund the project. Some of the biggest money I’ve seen made right now is made by flipping projects, many times without doing anything to them, like the rezoning we discussed earlier. They’re just like houses. When you can find them undervalued, you can put them under contract and flip them for their value. One good commercial deal can set you up for life. When you become a player the deals seem to come to you. I can help you become that player.