Have you been busy with a career, making money for someone else while neglecting your own goals to secure your financial future? It's not too late! You'll meet Monica in this training; she is a busy professional herself and she achieved her goal of purchasing 12 units in just 8 months. In this video you'll discover how you too can take action and start creating passive income investing in commercial real estate while being a busy professional.
Create Passive Income with Commercial Investing
There is no better way to share with you how to create passive income as a busy professional then with a real deal from one of our students. Monica is a first-generation college graduate whose career as a traveling optometrist requires her to travel to three states. She certainly qualifies as a certified busy professional! She is also a self-confessed introvert. I mention that because introverts are sometimes the best real estate investors due to their ability to have a relationship one-on-one with a person, which ends up being a real asset when negotiating this deal.
Monica dreamed and thought about owning commercial real estate for seven years. And after only eight months in the Protege Program, we were able to show her how to realize that dream, closing two deals with us in just eight months.
Deal #1: Duplex
The property required a lot of work. In fact, it was so bad the inspector called her and told her not to buy it. He didn't even complete the inspection or charge her the inspection fee. However, instead of walking away from the property she did a wholesale deal.
Deal #2: 12-unit Apartment Complex
It's an ugly property in a great location between the historical district and downtown. As Monica says, “It’s the ugly duckling on the block”. But that is to her advantage. You want a C class property in a B class neighborhood because you can fix a property, but you can't fix a location. The goal is to bring the property up to the standards of the neighborhood so you can realize the benefits of more cashflow.
The asking price was $540,000, but we showed her how to work with the seller and she got the price reduced to $500,000. A purchase price of $500,000 for 12 units equals $41,000 per unit. Since there is a comparable property across the street that sold for a $100,000 per unit, she bought the complex significantly below market.
How did she get such a great deal?
First, we showed her how to go direct to the property owner. Secondly, she understands that the commercial real estate business is a relationship-based business. Opportunities are had through relationships, problems solved, and monies raised. Opportunities come to you because of your ability to nurture relationships and Monica was good at that with the seller.
Her current rents are averaging $600 a month, which is low because it's an ugly property. However, other comparable properties in her neighborhood are renting for $900. Bringing the property up to the standards of the neighborhood by giving it a facelift will increase her rents from $600 to $900 a month. And as you know, as the NOI goes up so does the property value.
A higher rent and a higher NOI will take her $41,000 per unit property up to a $100,000 per unit property, increasing the value of her 12-unit complex from $500,00 to $1.2 million. That’s the power of investing in commercial real estate.
- She had good credit but no experience, which is why she came to us.
- She had a little bit of money, but not enough to close on this deal.
Since she had little money, she wondered how she would get funding. Also, because she had no experience, she struggled with the confidence to go to a lender and share with them her plan. Despite these challenges, she put on her Sunday best and went to two banks. To her surprise both banks approved her. One bank gave her an 85% loan-to-value loan, meaning that she must come up with 15% as a down payment. This loan would take care of the acquisition plus the renovation costs.
How did she overcome these challenges?
She was able to successfully get a loan because we showed her how to create a good story surrounding the property. When you show the banks how you can mitigate their risk, they are more likely to lend you money. So that's exactly what we did. And wouldn't you agree that this property has a great story?
Having an exit strategy is crucial in any commercial real estate deal. Monica’s exit strategy is:
- Give the property a facelift.
- Raise the rents, and thereby raise the value.
- Add four additional units: a building in the back is already plumbed and wired and when finished out we have two more units. There is a vacant attic area big enough to add two studio apartments. Four more units of income, giving more cashflow and increasing the property value.
“I've been interested in commercial real estate for probably about seven years, seeing it as a pillar of wealth and something to help me solidify my retirement in the future. I was curious which part of real estate I wanted to get into, and I always came back to apartment complexes. This brought me to Peter's YouTube videos. After following him, I decided to move forward and apply to his Protege Program. He turned my dream and desire into a reality and for that I am grateful.
From beginning to end it's been very easy to work with everyone in the program. If I ever have a problem, there's always someone at the office picking up the phone, walking me through problems. The level of access to Peter and his mentorship has been great. The program provides all the tools you need to be successful in this industry.
At the very beginning, they provided coursework with follow ups and accountability to make sure that you're retaining the information, answer questions and provide clarification. I found that very helpful. It increased my confidence in the industry because it taught me the language, how to analyze properties, and basically how to handle myself when I started going to real estate meetups.
All of that has just been very helpful and it's allowed me to get from not knowing how to start to actually closing on two deals. It's definitely been a huge boost of confidence for me. Like I said, I've wanted to do this for over seven years and Peter was able to make it happen in less than a year. It has been such a great journey. I highly recommend the program for anyone who's ready to take it to the next level in the commercial real estate industry.”
Check out the video at the top of the page to hear more about what Monica had to say about her deal and the Protege Program.
3 Steps to Passive Income for Certified Busy Professionals:
- Stop and acknowledge that what you are doing today is not helping your reach your goal of passive income. Can you see yourself doing what Monica’s doing? Of course, but it starts with this first step.
- Find a new way of reaching your passive income goals by learning commercial real estate. This can be achieved 3 ways. You can download my free book free book , enroll in my free course Commercial Real Estate Investing for Beginners or you can follow Monica’s path and join our Protege mentorship program.
- Un-certify yourself as a certified Busy Professional by taking action.