Commercial Dream Partner founder Peter Conti says there are 7 steps to success when it comes to investing in commercial real estate. Step 1: find deals. Pretty self-explanatory. Step 2: quickly review potential deals. “One of the things you’ll see, especially with commercial real estate,” Peter says, “is people will spend way too much time analyzing these deals. They don’t realize that any given property is just one of thousands out there to invest in.”
“If you don’t have the ability to do a quick review and see where you’re at,” Peter continues, “you could end up spending way too much time on a property where the owner isn’t flexible or they’re not gonna come down to a reasonable number as far as pricing goes. And there’s a lot of situations out there like that. People paid too much for properties, they’re getting in situations where they can’t refinance those properties, and so you’re better off just waiting and seeing what happens.”
Step 3: coming up with different funding options. Many of which have dried up in this market. Peter thinks that’s a good thing. If the owner has to sell or maybe they died and you’re dealing with the heirs of the estate, and there’s not all these big shot investors ready to make a 20% down payment, this gives you—the little guy—a shot. Nowadays, there’s more creative financing going on. Perhaps you can get the owner to finance the deal; or you could lease it from them with the option to buy it down the road.
“The other part of Step 3,” Peter adds, “in addition to knowing your funding strategy, is thinking through your exit strategy as well. How are you gonna get outta the property? How long are you gonna be in the property? And then Step 4 is something we call the Instant Offer System. It’s just a 5-part framework we use when talking to the owner or the broker of a property that, on average, allows us to do a better job of getting the deal put in place. It’s not a magic wand but it does increase your odds of getting deals accepted.”
What’s next? Step 5: doing your due diligence and closing on the property. “Very important to do,” Peter says. “Frustrating at times because you go out and you look and look and look, and think you’ve got a great deal, and then you go through the due diligence process and you find out that their numbers don’t really match up. Which, we expect that, but it can be a little disappointing at times. The upside of course is you’d much rather find that out ahead of time than find out after you buy the property.”
Step 6: adding value. One of Peter’s all-time favorite ways to do that is to simply find a commercial building where the rents are low and going in and raising ’em up to match the market. By doing that, you’re instantly upping the income of the property—and more income means more value, right? Step 7: convert to cash or passive income. Depending on the project and where you’re at in life, you either flip for a profit and use that money to take the fam on a nice cruise or roll it into the next deal; or you hold for the monthly cash flow.
There you have it. Those 7 steps took Peter from mechanic to millionaire in just three and a half years. He would go on to coauthor the Commercial Real Estate Investing for Dummies book and mentor hundreds of other aspiring investors eager to do their first commercial deal. If you’d like help finding, structuring and funding commercial investment opportunities, check out his Commercial Dream Partner program. Which I’ve been critical of before because it seems like you’re paying Peter for the privilege of bringing him deals, but whatever.