Investing in Commercial Property

General Real Estate Investing
1

Hello all!

I’m a newbie to real estate investing, but I have over 7 years experience in managing apartments ranging from 125 units to my biggest of 640 units. Although I’ve been managing these assets I want to invest and own apartment buildings as well as Self Storage and small office buildings. My question to everyone is how are you getting your deals financed? Of course I know the traditional ways the big boys use through institutional lenders, but I’m wanting to know if there is anyone who finances their deals through non-traditional lenders and maybe uses some creative financing? It doesn’t have to be the big deals. I’m open to hearing about any size deal you put together.

Of course I am always available to anyone who has questions about managing a property. I’ve pretty much seen and experienced it all during my short career. Let me rephrase, I’ve seen a lot up to this point. One thing about managing apartments is once you think you’ve seen it all something happens that blows your mind. You would be amazed at how some people live their lives.

2

Leverage your management skills into a property where your management skills will relieve the most emotional pain for a seller that has no management skills.

Sounds easy, and it is if you know what to look for.

I’m sure you already know an apartment building that is being mismanaged. Talk to the owners and offer them a deal.

Here’s what I’ve done:

I found a seller who couldn’t manage his way through an open door, much less his apartment building. Half the tenants were paying late, and the other half weren’t paying at all. He was sucking drain water.

I offered to take over his property as is, for the same price he paid eight months earlier (when the project was performing (allegedly)). He could barely believe someone would offer him the same price he paid, after he’d run the building immediately into the ground.

In this case, I traded a cash flowing house with equity for his apartments, with no equity, but I didn’t have to get a new loan, borrow down payment money, or have my credit checked, pay for appraisals, or pull my pants down so a bank could ‘examinate my anals’ as one guy put it. It was a subject to deal. We traded titles subject to his existing loans.

You can do the same thing. Sell your management skills. That’s what I did. If I hadn’t been able to prove that I could manage property better than he could, he would probably been reluctant to do the trade, even though he was ‘going under’ otherwise.

On another non-performing project that a seller couldn’t manage properly I offered the seller 30% down in return for 70% seller financing. The terms were stiff, but the upside cash flow potential (and the price) were outstanding.

I look for properties with lots of trash around them, sheets over the windows, ‘alligatored’ asphalt driveways and parking lots, and/or crap hanging off the railings. The more unkempt the more likely you’ll find a motivated seller and less investor competition. Most amateur competitors want “pretty” deals. You want ugly ones YOU can ‘make’ pretty.

OK, that’s all I got for now. :beer

3

javipa,

Awesome advice and something I had not thought of. Thanks!

4

Very useful advices thanks for sharing friends…

5

Hmm. I bet the best property type to invest on these days are in the residential properties - wherein the multifamily housing market is seeing some good improvements in their sector.