Hey, everyone! I’m Ryan with Propelio. I’m thrilled to introduce a new show on Propelio TV, featuring Pam Goodwin and Shelby Beckman. Pam is a seasoned expert in commercial real estate, while Shelby is a newbie eager to learn all the ins and outs. This show will be your gateway to understanding commercial real estate through their mentorship sessions. Let’s dive into what you can expect and how you can start your journey in commercial real estate.
Finding Your First Commercial Real Estate Deal
Write Down Everyone You Know
One of the first steps in commercial real estate is networking. Write down every single person you know. This list could include:
- Dry cleaners
- Doctors
- Dentists
- Churches
- Professional services (lawyers, accountants, etc.)
These contacts can potentially lead you to your first deal or even become investors in your projects.
Use Apps to Identify Potential Properties
Technology can be your best friend in this industry. Use apps like LoopNet and LandGlide to identify potential properties. Take screenshots and gather information about these properties.
- LoopNet offers listings for commercial properties.
- LandGlide provides property boundary lines and tax information.
Drive Around Neighborhoods
Spend some time driving around your neighborhoods. Look for:
- Dilapidated buildings that could be rehabbed.
- Vacant lots or corner properties perfect for new development.
- Areas with high growth potential.
Keep an eye out for properties that catch your interest and could be great investments.
Approach Owners
Once you find a property of interest, approach the owners with your “real estate investor/developer” business card. Hand them your card and express your interest in buying or redeveloping their property.
Build Relationships
Building relationships with property owners can take time. Be persistent and consistent. Some deals might take years to finalize, but patience pays off.
Putting a Property Under Contract
Get the Property Under Contract
When an owner is ready to sell, get the property under contract. Negotiate a minimal earnest money deposit, typically around $500 to $5,000. Ensure the deposit is refundable in case the deal falls through.
Control of the Property
Once under contract, you have control of the property to conduct your due diligence. This period allows you to inspect the property, evaluate its potential, and finalize your investment strategy.
Finding Investment Partners and Financing
Compile a Prospect List
Create a list of potential investors, including equity partners and lenders. Use your initial list of contacts and expand it through networking.
Prepare Investment Presentations
Prepare a solid investment presentation with pro forma financials. This document should include:
- A detailed summary of the project.
- Financial projections.
- Potential returns for investors.
Pitch the Deal
Pitch your deal to potential investors. Highlight the benefits and expected returns to attract the right partners.
Specializing in a Niche
Find Your Specialization
Successful developers often specialize in a particular niche. Consider:
- Retail
- Multifamily
- Medical
- Mixed-use developments
Think about what excites you and fits your vision. For instance, Shelby is interested in mixed-use developments, combining retail, residential, and entertainment.
Create a Vision Board
Create a vision board for your ideal development project. Include images, sketches, and notes about what you want to achieve. This visual guide will help you stay focused and motivated.
Setting Goals and Timelines
Set Realistic Goals
Set achievable goals for finding your first property, raising funds, and completing development. Create a timeline to keep you on track.
Five-Year and Ten-Year Plans
Establish long-term plans for your real estate business. Where do you see yourself in five years? Ten years? These plans will guide your decisions and growth.
Transitioning from Residential to Commercial Real Estate
Leverage Your Residential Knowledge
If you have a background in residential real estate, use that knowledge to your advantage. The fundamentals of real estate apply across the board.
Start With Brokerage Deals
Consider starting with commercial brokerage deals to gain experience and earn commissions. This step will help you understand the market and build a network.
Look for Opportunities to Buy
Always be on the lookout for opportunities to buy your own commercial property. Owning property provides cash flow and long-term wealth.
Understanding Commercial Real Estate Commissions
Sale Commissions
Typically, sale commissions are 6%, split between the buyer’s and seller’s agents (3% each).
Lease Commissions
Lease commissions vary. For example, tenant representatives might earn 4%, while landlord representatives get 2%.
Commissions Are Negotiable
Remember, commissions are negotiable, especially on larger deals. Don’t hesitate to discuss terms and find what works best for you.
Creating Your Real Estate Investing Brand
Update your LinkedIn profile and social media to reflect your new status as an investor/developer. Highlight your skills and focus areas.
Order New Business Cards
Get new business cards that clearly state you are a real estate investor/developer. This small step adds credibility when you approach potential deals.
Start a Real Estate Journal
Start a “Million Dollar Real Estate Journal” to document your journey. Include:
- Notes from meetings.
- Ideas for projects.
- Lessons learned.
This journal will serve as a valuable resource as you grow your business.
Conclusion
The path to success in commercial real estate starts with taking the first step, whether it’s writing down your contacts or driving around your neighborhood. With guidance from experts like Pam and the drive Shelby demonstrates, you’ll soon be on your way to making impactful deals. Stay consistent, be patient, and keep learning. Your commercial real estate empire is just around the corner!
For more tips and insights, connect with experts and dive deep into the world of commercial real estate. Your dream project awaits!
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