All Forum Posts by: Cason Acor

Without knowing anymore about your friends situation, if I were him I would rather put my money into a TIC (tenant in common) interest or DST (deferred sales trust). That way he'd still be purchasing real estate, but with the same level of involvement as just leaving the money in stocks. The returns are usually a little better in TICs and DSTs as well.

I’ll invite an accountant or tax attorney to correct me if I’m wrong, but I’m pretty sure he can still write off his mortgage interest whether or not he reinvests the cash out money in the property. 

A years old listing and sky high asking price are common signs of an unmotivated seller. I wouldn’t be surprised if the seller didn’t accept any offer that wasn’t full price. I would call the listing agent and ask what the situation is before running any numbers.

Seller’s motivation aside, there’s a reason it’s sat on the market so long. 

HELOCs don't exist for commercial properties, but you can get a line of credit against your equity. Those terms are never as good as a conventional mortgage, but they're something that might work for you. Most any lender that offers commercial loans should be able to do a line of credit for you. So are you going to be occupying the retail space yourself?

The local lenders you've spoken to, are they actual banks? Or credit unions? It's not always the case, but typically local credit unions will have better rates than banks. I would start connecting with more lenders and maybe even find a local commercial mortgage broker that can shop the deal for you too.

But you're right, if you can't beat the 4% rate you have now and you don't want to take the risk of selling, then I would sit tight.

You might look into getting a line of credit against your equity that you can use to help you take advantage of your increased value, but those loan terms won't be great either.

If the buildings haven't been maintained very well, you're going to have to spend a lot of money updating them. My market has quite a few repurposed 100+ year old buildings in the CBD with national tenants, but they look like new construction on the inside.

Bottom line is you're going to have to spend big money to attract big tenants to old buildings.

Does your owner financed loan not have a balloon payment? If not, there's definitely no urgency to refinance. But if you've improved the property as much as you have, I wouldn't be surprised if you could get an interest rate better than 4%. I've seen similar sized self storage deals in my market get mid 3% rates.

From a brokerage perspective, I wouldn't say it's any harder to start in commercial real estate. But the biggest difference is going to be your ramp up to consistent earnings. Really anywhere you go, you're going to have to make a lot of cold calls. And the typical sales cycle is much, much longer than residential. So I would plan on at least a year without any earnings.

The key is finding the right brokerage and mentor to give you the best support and path to success. If you're not a "lone wolf" type of self starter, your mentor can make or break your career.

Are you asking about being a commercial broker, or commercial investor?

Network, network, network. 

Breaking into commercial real estate is all about who you know. Brokers, lenders, investors-the more people you know, the more deals and opportunities you will have.

With regard to "tricks" to get started, you'll most likely want to look at smaller, more rural deals to get your feet wet. I highly recommend finding a few partners with experience in the product type that you want to pursue, and start investing with them. They'll be able to show you the ropes while still taking on most of the equity responsibility. 

Look for properties where the seller is willing to carry the note. You can usually negotiate much lower down payments for deals like that compared to traditional financing. You can also get an SBA loan on self-storage facilities. But I would only recommend starting in self-storage with an experienced partner, as those properties can be pretty management intensive.

Google "commercial real estate agents+your market" and "commercial mortgage lenders+your market" and start making a list of those people that you want to connect with. Most major markets will have commercial investor meetups as well. Investor meetups is where you'll be able to find partners.

What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli is a good book to get started. Frank was a guest on one of the first ever podcast episodes.

Browse the websites of the major national brokerages, CBRE, Colliers, Newmark, Cushman, Marcus and Millichap; all of them will have free research reports that you can access and get up to speed pretty quickly.

Hotels are usually valued by a gross revenue multiplier.