Commercial real estate investing for dummies as described by the author himself. You’re about to discover why commercial real estate is so powerful, what types of real estate are defined as commercial as well as a simple 3 step process for evaluating any commercial property quickly and easily. Although some are intimidated by commercial real estate, let Peter Harris “dumb it down” for you.
For those who have read Commercial Real Estate Investing for Dummies, in the book it is mentioned a special gift in the form of an Addendum. Here is a link to download that document:
Here’s a summary of what you learned in the video above:
Commercial Real Estate Investing For Dummies
WHAT is Commercial Real Estate? (0:43)
- Commercial real estate is anything other than a house
- Office building
- Shopping center
- Apartment building with 5 or more units
- Apartments are easiest for the beginner
WHY Should You Consider Investing in Commercial Real Estate? (1:41)
- Cash flow and the potential to create long-term wealth
- Commercial real estate is a lot less emotional then residential
- In commercial real estate you fall in love with the deal not the property
- One building with 20 units is a lot easier to tend to then 20 residential homes.
HOW Do You Evaluate a Commercial Real Estate Deal? (4:10)
- For a 20 unit apartment building with an asking price of $550,000.
- Each units rent is $525 a month
Step 1) Get the Income:
- $525 rent x 20 apartment units x 12 months = $126,000 a year
- There will be vacancies so enter a 10% vacancy factor of $12,600
- Total income is $113,400 per a year
Step 2) Get the Expenses
- (Repairs, Utilities, Taxes)
- $57,170 is the total I added up for the years’ worth of expenses
Step 3) Get the Mortgage
- Minimum down payment of 20%
- $550,000 asking price x 20% is $110,00 down payment
- $550,000 – down payment= $440,000
- Conservative mortgage interest rate is 6.5% for 30 years
- Mortgage Payments a month come out to be $2748 x 12 months =$33,372
Now all you have to do is subtract the expenses and mortgage from your income and you have your cash flow.
- $113,400 – $57,170 – $33,372=$22,858
- $22,858 is what goes in your pocket every year
- To find your return investment you divide your cash flow by your down payment and it comes out to be over 20% return
Evaluation made easy. Nice job
Hi, very nice video. great lecture
THANKS VERY MUCH PETER,I’M STILL SLOWLY PROCESSING ALL THE CRITICAL INFORMATION YOU’VE SUPPLIED ME WITH AND I FIND IT VERY INTERESTING AND INFORMATIVE, HOWEVER IVE YET TO MASTER THE CALCULATION NECCESSARY TO EVALUATE A DEAL BUT IM NOT GOING TO QUIT, ONCE AGAIN, THANKS FOR THIS WONDERFUL OPPORTUNITY AND GOD BLESS.
Hello Peter, this video was basically a recap of your e-book which is more detailed and informative: Commercial Real Estate for Beginners. I’ve not yet learned to do these 3 steps in my sleep, but I’m still working at it. I’m not sure I would be able to express to you in words my gratitude if you were to accept me as a protégé of your mentorship, which I feel would result in a mutually beneficial success, but I will definitely put forth the effort.
Thx for sharing your knowledge I have learned so much from you already.
Great information and easy to follow.
As always, a great presentation. Keep them coming!
Thanks for the gift Mr. Harris.
Mr. Harris, excellent explanation. When I found the subject “simple” I know that the teacher is superb. Thanks and congrats.
This was awesome. .. Thank you for all your training videos.
That was very informative Peter. I’m going to check out your protege program.
Thank you Peter for your Intro Video into Commercial Real Estate Investing. Very informative.
Regarding your suggestion to start off where you are living. As I live Milpitas, California in the Bay area. My research indicates that I am living in the most expensive area of California and possibly the Nation. Any suggestions on how I should proceed in choosing a more affordable area to start out with? Thank you.
Affordability is relative. In the Bay Area, we commercial real estate investors focus on Value Add opportunities.
Excellent video! Very clear and easy to understand. I’m very interested in learning more and moving forward. This is a great way to change the trajectory of my future. I am all in with you Peter. What’s next?
Apply to my Protege Program
Hi Peter,
Base on 5 times annual cap rate there is over 20% cash on cash return, can this deals can be found in NYC or outside the big cities.
Thanks,
Daniel
Hi Peter. Great information. What I need and I am sure other people need is a way to raise the down payment money for properties. Down payments are a lot more expensive with commercial properties vs. residential properties. Do you have sources that you can share with me?
Raise Private Money
Trying to master investing for years. Need mentoring, can’t afford it. I highly recommend this program to everyone. I have paid for and seen the worst. I will become a protege as soon as I can swing it.
Perfect Mentor! Thanks Peter.
Hi Peter, I listen to a lot of your videos, I like the way you explain real estate step by step,thats what caught my attention, I talked with one of your team members, I just have to get my resources together then I’m ready to get started. I will keep in touch because this is really what I’ve been wanting for some time now. But anyway I will keep in touch until I am ready to take off.Thanks for sharing your real estate info.
I love the way you write! Keep bringing us fresh content.
Great information
Thank you So much for the Stella intro. I have no exp. Nowhere is my total liquidity close to the $110000 down payment. That’s my biggest obstacle. My question is how wouldsomeone like myself get over this hump. Plz advice soonest.Thank you
I love the way you explain commercial Realestate investment .
How do i find out more about mentoring
You can learn more about it here: Protege Program
It is always a great source of information watching Peter Harris’ videos. He is really a blessing. I look forward to applying the practical concepts contained in his videos.
You have really peeked my interest in commercial real-estate. I am more interested now than I ever was.
I believe that we could work well together. I have been trying for the longest time for your reply.
very nicely explained Peter. I cannot wait to learn more.
Great video Peter! There’s one expense I’m not sure you added and I think is pretty important, which is the property management company expense. I think that will effect the cash flow greatly. Let me know your thoughts on this please. Thank you very much for the video.
-George Smith
Commercial Associate
Isn’t the property management company expense included in the $57,170 total? I have never invested. I live in Long Island New York. Would love to have an apartment building in Florida where I would like to spend my winters. I need a mentor. How much does a mentor charge? How much do I need to get started with a 5 to 10 unit building? Where do I begin to look for a seniors ranch home for my resididence in a nice neighborhood?
Hi Peter I’m a residential realtor mostly REO’s looking to create a niche for myself in commercial real estate other than purchasing your book is there any other training or advice you could share.
I am interested in becoming a commercial investor, I would like you to mentor me.
Please Mentor me too!
Dear Peter,
hank you for the training in CRE. I have been in real estate over the years, but the investing aspect, Iam still learning. Your explanation/training is one which will hel me to elvaluate CRE better! Still working to complete that first big deal..more scure about it now!
Thank you,
Valerie Robinson