“Why Bigger IS Better: 7 Ways to Make Money in Commercial Real Estate” (Part 3)

Real Estate, but I’ve compiled seven of my favorites along with some real-world examples to help you better understand how to apply them to your deals.

Please study each of these strategies carefully, and think about how they could relate to the properties you are looking to acquire (or to the properties already in your portfolio).  By applying these strategies to actual deals, you can discover several ways you can make those deals much more profitable, or even how to take a deal that seems like a loser and turn it into a winner.

[NOTE:  In Part 1 of this article, we talked about how commercial property is valued, and on two of my favorite techniques, quick-turning and optioning commercial deals.  In Part 2, we talked about getting cash when you buy, and how to increase the cash flow.  Read on for additional strategies you can start to use immediately.]

# 5:  Reduce Expenses

I have many strategies for minimizing and practically eliminating the risk involved in buying Commercial Real Estate.  I cover these strategies in depth at my live event, The Commercial Property Academy, and also in my Home Study Course, but for the purposes of this section on reducing expenses, I will share with you my basic philosophy on how to minimize your risk:  Buy Commercial Property so far UNDER market value that the only direction for the value to go is UP.

One advantage of buying way under market value is that you can often get your property tax expenses reduced.

For example, I purchased a 4-story, 45,000-square-foot office building at an auction for $551,000.  The property was valued at around $3 Million just two years earlier.  The property taxes, based on the previous valuation, were $98,000 per year.  Because I bought the property so cheaply, I was able to show the current value was much less than what it used to be worth (at least, until I finished turning the property around).  We wrote a single letter to the county that reduced our property taxes from $98,000 to $18,000 per year.

That’s $80,000 less PER YEAR in property tax expenses.  That increased our Net Operating Income (“NOI”, which is basically the income on the property minus the expenses), by $80,000, which, divided by a 10% cap rate, increased the value of the property by $800,000!

[NOTE:  The flip side to that coin is that if you are buying Commercial Real Estate at a HIGHER price than the previous owner acquired it at, be prepared for your property taxes to go UP, not down.  A potential increase in property taxes is not necessarily bad if you keep that in mind when you are evaluating the property and if the property still makes sense even if the taxes do go up.]

In many of the Commercial Properties you will be evaluating, you will find that the current owner is responsible for some or all of the utilities (gas, electric, water).  Another great way to reduce your expenses is to pass along those utility expenses to your tenants by sub-metering.

In office and retail buildings, it is common for tenants to pay their own expenses, and sub-meters are commonly found.  In apartment buildings, however, sub-metering is not always common, and paying professionals to install meters for each unit can sometimes be expensive.  Again, you have to evaluate the merits of sub-metering (the cost to do it versus the resulting increase in cash flow and thus increased value of the property) on a deal-by-deal basis.

Here is a creative way to pass on water utility expenses to your tenants if you find is too expensive to sub-meter:  Install flow meters on the main water line to each unit.  You can then have your property manager check each flow meter once a month (or have it done electronically), and divide up the single water bill from the utility company amongst your tenants based on usage.

This is a low-cost and fair way to keep the water utility costs down, because it will motivate tenants not to waste water, and because without dividing the costs fairly, some tenants end up paying higher rents than they might otherwise have to because of other tenants’ extravagant water usage.

# 6:  Increase Value (Renovate)

As you learned in Part 1 of this article (when I discussed “Sorting The Treasure From The Trash”), Commercial Property is generally valued by the Net Operating Income (NOI) it generates.  By increasing the NOI on a Commercial Property, you can increase the VALUE of that property TIMES TEN (sometimes less, sometimes more, depending on the area).

Now, put yourself in the shoes of a tenant.  Let’s pretend you own a retail store and are looking to rent 2,000 square feet in a shopping center or strip mall.  You would probably evaluate many different potential locations for your store.  Let’s say you have narrowed your search down to two choices.

You like the location of the first property, which is asking $12 per square foot in annual rent (or $2,000 per month).  However, the parking lot is filled with potholes, the landscaping is filled with dying plants and brown patches of grass, many of the lights on the exterior of the building (including on the signs) have burnt out and have not been replaced, and the building itself looks like it hasn’t been updated in 30 years.

You also like the location of the second property, but the rent is much higher.  They are asking $15 per square foot (or $2,500 per month).  At this property, though, the parking lot was repaved last year, the lighting and signage look relatively new, the landscaping is well maintained, and the building was recently remodeled five years ago.

Which property would you choose?

If you feel the second location will draw more customers because of the new, clean look of the property, and that the profit on the additional sales will more than offset the extra $500 per month in rent, you would probably choose the second building.

Now let’s look at that first property from the owner’s point of view.  By doing some repairs and renovations to clean up and modernize the look of the building, the owner may be able to increase the rent from $12 to $15 per square foot to match the competition.  An additional $3 per square foot in annual rent may not seem like much, but if you are the owner of a 20,000-sq.ft. shopping center, that is an additional $60,000 in annual rent, which, according to our earlier example, means an additional $600,000 in the value of the property (at a 10% cap rate).

If you had to pay $60,000 ONCE (from a loan or from reinvesting the positive monthly rental income) to fix up a property and repave the parking lot to create $60,000 in additional annual income (year after year) and $600,000 in additional value, would you do it?  Increasing the cash flow and value of a property by renovating it is a great strategy that I have used successfully over and over again.

The obvious caveat of this strategy is that you have to make sure not to price yourself out of the market.  If your property is already commanding rents at or near the top of the market, all the renovation in the world may not convince tenants they should be willing to pay a lot more in rent.  You must evaluate what the market will bear, what the return will be, and then invest in your property accordingly.

“Why Bigger IS Better: 7 Ways to Make Money in Commercial Real Estate” (Part 2)

There are countless ways to make money in Commercial Real Estate, but I’ve compiled seven of my favorites along with some real-world examples to help you better understand how to apply them to your deals.

Please study each of these strategies carefully, and think about how they could relate to the properties you are looking to acquire (or to the properties already in your portfolio).  By applying these strategies to actual deals, you can discover several ways you can make those deals much more profitable, or even how to take a deal that seems like a loser and turn it into a winner.

[NOTE:  In Part 1 of this article, we talked about how commercial property is valued, and on two of my favorite techniques, quick-turning and optioning commercial deals.  Read on for additional strategies you can start to use immediately.]

# 3:  Get Cash When You Buy

One of the best ways to make money in commercial real estate is to get cash at closing.  There are many ways to accomplish this, but two of my favorites are (1) repair credits, and (2) immediate positive cash flow.

Repair Credits

When I bought my first Commercial Property, a 24-unit apartment building that I acquired without a penny out of my pocket, I did many things wrong.  However, I also did several things right.  The first thing I did right was that I got into the game.  Taking action on buying that property was one of the best decisions I ever made.  Getting into the game and buying your first property can also be one of the best decisions you make, if you learn how to invest in such a way that you have very little risk and very high rewards.

Another thing I did right when I bought that property was making sure I received repair credits for deficiencies I discovered immediately after taking possession of the property.  You see, when I was first evaluating that apartment building, the owner would only show me two out of the twenty-four units, and told me those two units represented the condition of ALL the units in the property.  This is typical when buying Commercial Property.  The owner could not upset all 24 residents every time a prospective buyer wanted to “kick the tires” and look at the property, so he made an arrangement with two tenants to let prospective buyers into their units.

As you can imagine, the two units the seller chose were among the best of all the units in the building.  I was prepared for that probability and made sure to include a contingency in my purchase contract that basically said:  “The condition of all unseen units in the building, including appliances, must be the same as the two units shown in respect to condition, age, and functionality.  If not, a repair credit will be given equal to the amount needed to bring each unit up to the standards of the two units shown.”

After taking possession of the building, I was able to inspect all 24 units, and discovered that it would take close to $80,000 in repairs and updates to bring the other 22 units up to the standard of the two I had been shown.  When I brought my detailed list to the seller two weeks after closing, he was surprised I had inspected the property so thoroughly.  He offered me $50,000 for the repairs.  I accepted without hesitation, and expected him to give me a discount on the price.  Instead, he wrote me a check for $50,000!

As another real-world example of receiving cash back at closing, I recently acquired a 106-unit apartment building that I planned on converting to condos.  At the closing table, I received a check for $272,320 in rent and other credits.  That’s NOT $272,000 when I SOLD the property — I received that when I BOUGHT it!

Immediate Positive Cash Flow

One of the great benefits of buying Commercial Real Estate is the MASSIVE, passive income it generates.  Remember that 83-unit apartment building I mentioned earlier?  (See Part 1 of this article, under “Quick Turn”.)  The day I acquired the property, it has had a positive cash flow of about $7,000 per month!  Immediate positive cash flow is very common when you know how to evaluate properties and how to buy them at deep discounts.

# 4:  Increase Income

Another strategy for increasing the Net Operating Income (NOI), and thus the value, of a Commercial Property is to look for opportunities to create some “non-rent” sources of revenue.

For example, one of my properties is located next to a major interstate highway.  I am in the process of adding a two-sided “tri-vision” billboard in my parking lot, where it would overlook the highway.  “Tri-vision” means that there are three ads that rotate, so the marketing message you see is constantly changing to one of three messages.

There are two sides to the billboard, times three ads per side, or six total ad spaces.  Currently, the market rates for billboard ads with such a high traffic count are $1,000 per ad per month.  Take that times six ad spaces and you get $6,000 additional PASSIVE rental income per month, or $72,000 per year.  The expenses for leasing and maintaining the billboard are only $10,000 per year, which means I will increase the NOI on the property by $62,000 per year.  Based on our value calculation at a 10% cap rate, that adds an additional $620,000 to the value of the property.  All from installing a billboard!

There are many other ways to increase the income for a Commercial Property.  Some other examples include adding laundry facilities, vending machines, and charging for parking spaces.  Since each additional increase in net income affects the value of your property substantially (up to 10 times at a 10% cap rate), it behooves you to find as many ways as you can (both traditional and creative) to generate more income from your properties.

(TO BE CONTINUED…)
 

“Why Bigger IS Better: 7 Ways to Make Money in Commercial Real Estate” (Part 1)

There are countless ways to make money in Commercial Real Estate, but I’ve compiled seven of my favorites along with some real-world examples to help you better understand how to apply them to your deals.

Please study each of these strategies carefully, and think about how they could relate to the properties you are looking to acquire (or to the properties already in your portfolio).  By applying these strategies to actual deals, you can discover several ways you can make those deals much more profitable, or even how to take a deal that seems like a loser and turn it into a winner.

Sorting The Treasure From The Trash: How Commercial Property Is Valued

Before we can start discussing these “7 Ways To Make Money In Commercial Real Estate”, it is important to understand how commercial property is valued.  After all, how do we know if we are REALLY making money on a commercial property if we don’t know how much the property was worth in the first place?

Single family houses are generally assigned a value based on the recent sales prices of similar houses nearby (sometimes known as “comps” or “market comparables”).

With commercial property, however, it can be extremely difficult to find a similar property nearby.  For example, if you came across a 24,000-square-foot, 3-story building with retail on the first floor, offices on the second floor, and apartments and storage on the third floor, your chances of finding another building with the same layout and use next door, or even in the same city, might be close to impossible.  Similarly, it’s difficult to compare a 40-unit apartment high-rise building (with all the units in one tall building) with a 40-unit apartment garden-style complex (where you might have 10 one-story buildings with four units each spread out over a much larger area).

Thus, commercial property is best valued by the NET OPERATING INCOME (aka “NOI”) it produces.  Figuring out the NOI is very simple when you have all the numbers:  you simply take the actual income of the property (all the rental and non-rental income combined) and subtract the operating expenses, and you get the Net Operating Income.  The NOI is the income the property produces BEFORE paying any mortgages.  Market comps and replacement value do play a part in valuing commercial property, but the TRUE value is found by determining the NOI.

Many investors would be very happy with a 10% return on their money.  For example, let’s say a property generates $100,000 in NOI.  Investors in most parts of the country would gladly pay $1 Million to buy a property with a $100,000 annual income stream (a 10% return).  This desired return on investment is also known as a “cap rate”.

Thus, as a (very general) rule of thumb, you can take the NOI of a property and divide by 10% to determine the value of the property.  If you were able to find a way to increase the NOI on that same property from $100,000 to $150,000, the property would rise in value from $1 Million to $1.5 Million (based on a 10% cap rate).

[NOTE:  I realize that in some areas of the country, 5% cap rates are common, in which case you would take the NOI and divide by 5% to determine the value.  For the sake of this article and for easy math, I will use a 10% cap rate.  You should contact a local banker or broker to find out the actual cap rates for your specific area.]

So, now that you understand how commercial property is valued, let’s talk about how to make HUGE PROFIT$™.

# 1:  Quick Turn

What if you just don’t want to own or manage a commercial property right now?  Should you still learn how to find and evaluate deals?  Absolutely!

Recently, I bought an 83-unit apartment building for about $600,000.  It will be worth over $3 Million when I am finished rehabbing it and increasing the occupancy.  When I first got that property under contract, I sent out an e-mail to six commercial brokers letting them know about the opportunity.  Within 30 days, I received an offer for $900,000, which means I could have made a quick $300,000 on the deal.

I turned down that offer.  Two weeks later, I received ANOTHER offer for $1,150,000 — I could have made $550,000 on a property that I didn’t even own yet!  But…  I also turned down that offer.  Why?

My exit strategy for that property is to rehab it and get it fully occupied within 18 to 24 months, then refinance it to pull out $1.4 Million in cash, while holding onto the property for a $240,000 annual positive cash flow.  What would you have done?

As another example, I recently acquired a 106-unit apartment building that I planned on converting to condos.  The potential profit after the conversion is over $4 Million.  Before I closed on that property, I got an offer for $400,000 MORE than I was buying it for.  I turned down that offer, too, because I would prefer to make $4 Million (even if it does take an extra 24 to 36 months), but I could easily have taken it.

You can see from these experiences how much profit potential there is in quick-turning commercial real estate!

When you learn how to create lead generating pipelines that bring you deal after deal after deal, and you can sort the treasure from the trash quickly, you will find that many other investors are willing to reward you handsomely for your efforts.

Getting a property under contract then letting others know of the opportunity does not require any money or credit, and is a great strategy for making big chunks of cash.  Even though the profits can be HUGE, however, keep in mind that it does not create any passive income, which should be one of your primary investment goals.

# 2:  Option

A strategy similar to quick-turning is to get an option on a property.  An option is a legally binding contract between you and a seller that basically states you are not buying the property now, but you are locking in a specific price and have the option (but not obligation) to purchase the property within a specified time period.  Usually, that time period would be between 30 days and 12 months.  With vacant land, however, five to ten years would not be unreasonable.

There can be many different terms and conditions in an option contract (in all cases I strongly recommend you have an experienced commercial real estate attorney prepare any and all contracts for you when dealing with commercial property).  Two main types of options are exclusive and non-exclusive.

An exclusive option is one where the seller cannot sell to anyone else (even if they find a buyer who is willing to pay much more than you are) until the option period expires.  Since you are effectively taking the property off the market with this type of option, the seller will usually want a non-refundable “option fee” from you (which can come from a partner or private investor).

A NON-exclusive option allows the seller to sell to any other buyer at any price the seller can get.  If you decide to buy the property, however, the seller MUST honor the price agreed to on the option.  In this case, you are NOT taking the property off the market; you are just agreeing to a price so that you can do your homework and try to put a deal together.  Because you are not taking the property off the market, you can usually obtain an option for a very small fee (again, check with your commercial real estate attorney to find out what is the minimum requirement for a legally binding option in your area).

Using a non-exclusive option is a great strategy for you as the buyer because it doesn’t require a large amount of your money.  You can then try to find another investor who is interested in buying your option at a higher price than you have locked in.  It is also low-risk for the seller, since it doesn’t take the property off the market, and the option holder (you) will spend time and resources to help market the property.  If the seller finds another buyer without your help, he/she can sell the property at any price.

(TO BE CONTINUED…)

“Is the Pot at the End of Your Rainbow Filled with Fool’s Gold?” (Part 1)

People often ask me how I got started in commercial real estate, and I tell them that it was a conscious decision for me.

Most people who begin investing in real estate start off with single family residential properties because that is what they are most comfortable with.  They tell themselves, “All I need to do is a couple of deals a month.  I’ll make myself five or ten thousand dollars, then at the end of a very few months most of my problems will be taken care of.”  They do not really understand everything that is involved in getting these properties going.

They think they are going to be making big money, but before long, oftentimes they end up with a lot of problems and a lot of headaches.  They might have traded in their job for a perceived higher paying job, but find that it is really taking a toll on their lives.

If you belong to a real estate investment group, take a look around you.  Look at the people who have done twenty-five to fifty houses or more.  Are they living the life of their dreams?  More importantly, are they living the life of your dreams?  They may be better off than you are now, but is this really what you want to work towards?

I know so many people who have a large portfolio of properties but really haven’t achieved the type of freedom, success, and wealth that they truly desire.

How can you change this?  In my opinion, the answer is commercial real estate.

When I decided to start investing in real estate, I stopped and took a look around.  I realized that the people who were making the big money in real estate were the people who owned buildings not houses.  People who owned the large apartment buildings, the large office buildings, the large warehouse and industrial space – those are the ones who really seemed to be living a lifestyle that I wanted.

They didn’t have to be there tending to their properties; they had property managers who took care of that for them.  Yet, they were the ones spending the checks, catching planes to exotic locations and destinations, and living the lifestyle that I desired so much.

After looking at this for quite a while, I decided that there must be a way of getting this done.  They couldn’t have been much smarter, have learned much more, or have had access to more resources then I could.  Even though I didn’t know how immediately, I knew I could figure out a way to do it.

I sat down and took the time to learn how to invest in commercial real estate, which is what I would recommend that you do.  I studied and figured out exactly what it would take, and as I learned, commercial real estate became less and less of a mystery to me.

How can you start?  First of all, let’s talk about why you would want to do it.

What are the benefits of commercial real estate?  First of all, one of the biggest benefits is that commercial real estate is valued differently.  By “valued differently”, I mean the amount of income that a property produces is directly proportionate to its worth.  So if a property produces more income, then it is worth more.  It has very little to do with “market comps”.

Second, along the way you are going to get a far greater cash flow.  Imagine if you were to buy a $300,000 single-family home as a rental property.  That $300,000 house may rent for somewhere in the neighborhood of $2,500 per month.  The underlying mortgage on that home may be somewhere between $2,000 and $2,400 per month.  So you end up struggling to gain between $100 and $500 per month in positive cash flow.  That’s not a very high number for the amount of work you have to put in, and it certainly is not going to get you on the jet set.

Now, let’s take a look at a similar investment from a commercial standpoint.  That same $300,000 investment may end up yielding you a 10-unit apartment complex, based on $30,000 per unit to acquire the property.

Let’s say each of those units were two-bedroom units, which could rent in most areas of the United States anywhere between $500 and $700 per month.  For simplicity’s sake, let’s use an average of $600 per month.  At $600 per month times ten units, you’re bringing in $6,000 per month – more than double the rent that you could expect to get from that same $300,000 single-family home.  Your underlying mortgage payment would be very similar to what you would expect on a residential property; for this example, let’s use $2,200 per month.  Finally, let’s suppose one of your tenants also helped manage the property and your additional operating expenses were about $1,200 per month.

Your cash flow on this 10-unit apartment building would be $2,600 per month ($6,000 per month income, minus a $2,200 mortgage payment, minus $1,200 in operating expenses).  Now that will make a difference in just about anyone’s life.

Third, and most essentially, you’re now spreading out the risk over ten tenants, as opposed to one.  If your single-family home goes vacant, you’re on the hook for the entire mortgage.  Every penny of that mortgage, all of the maintenance, and everything that goes along with it is now your responsibility.  If the house is vacant for two months, you’d better be planning on spending a minimum of $4,800 to cover that mortgage plus miscellaneous expenses including maintenance, utilities, taxes, and insurance.  Potentially, you’re looking at a very heavy negative cash flow.

On the commercial property, however, if one of your ten units goes vacant at $600 per unit, you’re still bringing in $5,400.  So you get slightly less positive cash flow but you’re certainly not experiencing negative cash flow.  Say three units go vacant – you’re still covering your mortgage and experiencing positive cash flow.

For the fourth and fifth reasons why to invest in commercial real estate, and how you can get started, see Part 2 of this article in next month’s newsletter.  Make sure your “pot of gold” is filled with the real stuff!!

“Is the Pot at the End of Your Rainbow Filled With Fool’s Gold?” (Part 2)

Most people start investing in real estate because they view it as a path to wealth and freedom.  What they don’t realize is that if they are only investing in single family homes, they are trading in one job for a perceived higher-paying job, but they will not necessarily find the freedom they are looking for.

As we discussed in part one of this article, the people that are making the “big money” in real estate are the ones that own the buildings, not the houses – the people who own the large apartment buildings, the large office buildings, the large warehouses.  These are the people who have attained true freedom and are living the lives of their dreams.

There are at least five great reasons why commercial real estate should be a major part of your overall investing strategy.  In part one of this article, we talked about the first three reasons.  Here’s a quick refresher:

First, because it’s valued differently than residential properties.  The more income your commercial building brings in, the more it is worth.  It has very little to do with “market comps”.

Second, commercial properties bring you far greater cash flow than single-family homes.  Remember our example of investing $300,000 on a single-family home to make hundreds per month versus investing the same $300,000 on a 10-unit apartment building to make thousands per month?

Third, because in a commercial property, you’re spreading out the risk among multiple tenants.  You can have several units of an apartment building or office building go vacant and still make positive cash flow.

The fourth reason you should be investing in commercial real estate is because of a concept called “forced appreciation”.  Forced appreciation means doing things with your property that will increase your income and decrease your expenses.  Remember that the more income your commercial property brings in, the more it is worth.

As an example, let’s go back to our 10-unit apartment building.  Let’s say we plan on improving the quality of each apartment unit by replacing the flooring, upgrading to nicer doorknobs and bathroom fixtures and lighting fixtures, perhaps even adding some ceiling fans – all relatively inexpensive fix-ups.  As a result, we can now raise the rents by $50 per month per unit.  That’s $600 more income per year times 10 units, or $6,000 more per year total (which will also recapture all the costs of the fix-ups).

Next, let’s decrease our expenses by $100 per month by passing on a portion of the utilities to the tenants, or by doing some competitive shopping for our lawn-care service and finding a company that does the same great job for less money per month.  Times 12 months, we’ve just saved ourselves $1,200 per year.

The total increase in annual income is $7,200 ($6,000 plus $1,200).  By increasing our income by $7,200 per year, we’ve increased the value of the property by $72,000 or more.  That’s the power of forced appreciation.

There are a lot of strategies that you can use to force appreciation and these are just some of the simplest.  But needless to say when you’re dealing with 10 units in one building, for instance in our small example, you’ve got an opportunity to improve many things that will help you justify the increased rents.  Also, you’ll be seeing yourself dealing with a better tenant mix.  Higher-quality properties tend to bring more stable tenants. 

All of this leads us to the fifth reason why you should be investing in commercial real estate and that is the passive income.  Passive income is the key to commercial real estate.  The way that commercial properties are managed and the way they allow for a concentration of efforts lets you to put someone in place to manage those properties. 

In the beginning, on the smaller 10-unit buildings, you’ll probably need to manage them yourself.  But as you climb your way up the ladder, and you start dealing with 20-units or above, you can then offer free rent on one of the units to someone in return for managing the rest of the units for you.  As we discussed earlier, even with 10 units you can still make a monthly profit if a couple of the units are vacant, so giving away one unit is certainly a small price to pay in return for the freedom it gives you.

Now you’ve got an on-site building manager who handles all of the tenant problems, tenant issues, tenant improvements, cleaning, and trash removal – all in return for free rent in your two bedroom, $550-per-month unit.  Usually these people have other jobs, so you’re not their sole source of income.  If your buildings are large enough to keep them busy full-time, however, you will probably have to pay them an hourly wage in addition to the free rent, but that will only be a small portion of your total monthly profits.

Meanwhile, all the checks come directly to you.  You deposit them, you pay the bills, you keep the difference – and believe me, that difference can be substantial.  Even on the small 10-unit buildings that we’ve talked about, it’s easy to generate $2,000 to $3,000 dollars per month in positive cash flow, over and above your expenses.  On larger, 20+ unit buildings, it’s not difficult to create positive cash flows in excess of $5,000 to $10,000 per month if these properties are acquired properly.  And since someone else is managing the properties for you, all this money flows to you passively, while you are spending time with your family, or traveling, or looking for exciting, new opportunities.

Obviously there are many more great reasons to invest in commercial real estate than these five that I’ve given you – in fact, I could easily list another thirty: cost recovery, how it’s financed, management opportunities, scales of economy, and so on. 

So, how do you get started?

Just as you would get started investing in residential real estate by getting your education first (either “the easy way”, through books and courses and investor group meetings, or “the hard way”, through the school of hard knocks), the place to get started with commercial real estate is by getting your education and learning the terminology.  It’s not that different from residential real estate, and it’s not that difficult to understand.

Next, look around – see what’s going on in your market place.  Find several small apartment buildings for sale, get the financial information on them, and learn how they work – what they rent for, how full they are, how the utilities are split up, what the expenses are, and so on.  Start doing some “practice” deals – go through the motions of buying the property with as much diligence as you would if you were buying a single-family home.  Once you understand what the income is and what the expenses are, you can start to figure out how you would acquire that property. 

The sooner you get this process going, the sooner I guarantee that you will be an apartment owner.  Don’t wait to get started – now is the time!  This is the best commercial market in the last 50 years.  Properties are available extremely inexpensively, and there are many distressed properties just waiting to be picked up with millions of dollars in equity in all of them.  The bank rates right now for commercial property are extremely low.  These factors combine to offer you an incredible opportunity.  Do not let this market place pass you by, or you may very well regret it. 

Can you imagine buying five 10-unit apartment buildings in the next 12 to 24 months?  At the end of that time, you’d have 50 units, managed by someone else, and generating six figures of annual passive income.  The exciting part is that apartment buildings are just the tip of the iceberg, and in my opinion, not even my favorite investments.  I personally prefer office and retail space, which have a much higher profit potential.  Apartment buildings are nice but office space and retail space generate the really big money. 

I can promise you that if you start following these simple strategies, you’ll generate more than enough gold to fill up the pots for yourself as well as your family and loved ones.  The sooner you get started, the sooner you’ll see your first $1 Million check!