It Always Starts with One – Rosewood Retail, Part 1

It Always Starts with One – Rosewood Retail, Part 1

It’s embarrassing to admit, but when I was a property manager, I didn’t know how to invest in commercial real estate.  In my area, most property managers don’t own investment real estate.  I’d imagine that trend continues beyond my part of the country.  Perhaps it’s because property managers spend so much of their work time around real estate that they don’t want to do it on their personal time.  Maybe it’s an employee versus entrepreneur mindset that holds them back.  Whatever the reason, it’s a strange reality to encounter.

No one shows you how to invest while you’re working on their properties.  They don’t have to do that, now do they?  If you ask them, though, most investors would be happy to share their investing stories and insight with you.  However, when I was a property manager I didn’t have the courage to ask my own clients how they developed their portfolios.  Instead, I remained a guy collecting a check to manage other people’s properties, helping them achieve their dreams while mine seemed like a distant mirage.

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You CAN Buy Commercial Real Estate!

You CAN Buy Commercial Real Estate!

When I bought my first piece of commercial real estate, I was a property manager.  Serving various types of properties such as retail, office and apartment communities, I worked with countless clients and investors who seemed much smarter and more financially put together than me.  It was clear that they had their “stuff” together – they earned well, didn’t overspend, etc.  They also knew how to buy investment real estate.

These clients would work with the brokers in our office or other offices to purchase a property.  When the deal was done, they’d bring it to the management side of our company and the property would get assigned to me or one of the other property managers.

Even though I was around it every day, I thought investing in commercial real estate was for “rich” people.

I was wrong.

Anyone CAN purchase commercial real estate.

That is an exciting concept because a new world of opportunity will open for you when you realize it.

Now, the real question is SHOULD you purchase commercial real estate?

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Why Every House Counts

Why Every House Counts

In December of 2015, my real estate broker sent me a listing for a single-family home on the north side of town.  You may be asking yourself, “Wait, isn’t this guy a real estate broker?  Why is he working with another agent?”

Yes, I am a licensed broker, but I focus on commercial real estate, specifically retail properties.  Therefore, I’m not plugged into the residential market.  However, I do want to invest in that arena, therefore, I work with a broker who keeps an eye out for product that meets my criteria.  It’s important to work with a specialist in the market you’re targeting. 

Don’t let ego get in the way of mission.

 

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Sometimes the Only One Who Gets Paid is the Architect

Sometimes the Only One Who Gets Paid is the Architect

So, you’re interested in redeveloping a commercial building?  You want to buy a vacant property, rehab it, tenant it and then start collecting rent.  That process is called “adding value” and it’s awesome.  Congratulations!  It’s one of the most fulfilling experiences in commercial real estate investing.

Or maybe you want to go all out and develop a project.  You want to buy a piece of land and construct a new building for a prospective tenant.  Again, congratulations.  It’s going to be a challenging experience, but in the end, you’ll have done something only a few will ever accomplish.

Perhaps neither of those options is your path, and what you want to do is purchase a building with an existing tenant.  That way you can start collecting rent immediately.  Once more, hearty congratulations are due.  Welcome to the club!

As you start your journey in commercial real estate and move through the process, you need to remember one thing.  If you can understand this concept and accept it (you don’t have to like it), you’ll be one step closer to being a commercial real estate investor and/or developer:  sometimes the only one who gets paid is the architect.

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Is It Time to Keep Your Powder Dry?

Is It Time to Keep Your Powder Dry?

In the days of muskets, soldiers carried gunpowder separately.  To ensure that the powder would ignite when the need arose, the soldiers took special care to protect it from moisture.  Anything that would dampen the powder could put the soldier’s life and, the lives of those around him, at risk.

The first time I heard the phrase, “Keep your powder dry,” was immediately after the market tanked in 2008.   A real estate developer with a lot of experience said something to the effect of, “Now’s the time to keep your powder dry.  There’s going to be a lot of opportunities very soon.”

I didn’t understand what he meant at that moment.

However, I do now.

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How to Measure Your Leverage

How to Measure Your Leverage

We’ve talked a lot about debt on this site.  We can’t focus on both investment real estate and personal finance without doing so. 

Debt is a complex tool that can trigger many emotions.  However, it’s my belief that the more we understand it, and our emotions, the better we will be prepared to use it when needed to acquire a piece of real estate.

As such, I thought we’d talk about the concept of positive and negative leverage and how the loan constant can help us understand where we are.  It can be bit dry so I’ll do my best to make it interesting.

In a market of both low interest rates and low capitalization rates (the return an investor would expect), it's often critical to determine if you're really using your leverage correctly.

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A Real Rich Dad, Poor Dad Story

A Real Rich Dad, Poor Dad Story

One of the fascinating things about Robert Kiyosaki’s Rich Dad, Poor Dad was the idea that the wealthy teach their kids different things than the poor or middle class.

I’ve had the opportunity to see this up close with my investing partner, Kevin Edwards.  His father, Dick Edwards was one of the founding partners of Hawkins-Edwards, a commercial brokerage firm based out of Spokane.  Dick had been a broker for several years before starting the firm with Paul Hawkins.

Kevin is 34 years old, fourteen years younger than me yet he’s my investing mentor.  When we bought our first property together, Kevin was 26 years old.  I had just passed my 40th birthday and was looking at this young guy putting together deals in a way that totally impressed me.  He had the confidence and knowledge, not me.  What I brought to the table was a property manager skill set.  My broker skills were still in the formation stage.

I rode his coattails on our first few deals until I finally stepped up to bringing ideas and properties to the table.

I had never asked Kevin about how he got to be the guy who so confidently led me into real estate investing.

Until today.

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How Driving for Dollars Can Improve Your Wallet and Your Soul

How Driving for Dollars Can Improve Your Wallet and Your Soul

How do you get to work?

If you’re like me, you are one of the multitude who needs to get to an office via car.  I’ve taken steps to work remotely a couple days a week so those necessary trips have been reduced.

However, I’m a commercial real estate broker which requires extra driving for tours or meetings with potential clients.  Some days I’ll leave the office, drive into an area and park my car.  Then I’ll talk with the various business owners about how their businesses are doing, if they’d like to expand into a new location or relocate their existing site.  This exercise is called canvassing

I’m sure you do a fair amount of driving beyond your job as well.

Like us, you probably make frequent trips to the grocery store, the hardware store or any number of other stops. 

This isn’t an anti-car rant a la Mr. Money Mustache.  While I’m not overly excited by cars any longer, they serve a purpose.  Many of us need to get from point A to point B for business to get conducted.  I’m not going to do it on a bike.   My clients wouldn’t take too well to sitting on the handlebars of my mountain bike while we tour sites.

While it’s great to combine trips for more efficiency, saving both time and dollars, that’s not what this post is about.  It may even fly in the face of most personal finance concepts.

Here’s my advice:

Take your time getting to where you want to go.

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