How to Flip Commercial Real Estate | The STNL Secret | Wholesaling Commercial Real Estate. http://HowToFlipCommercial.com | How to Flip Commercial Real Estate | single Tenant Leases | Wholesaling Commercial Real Estate
How to Flip Commercial Real Estate? As you know there are a lot of ways to make money with real estate. From residential to commercial real estate you can make money with income and cash flow producing properties to simply flipping or wholesaling residential or commercial real estate. The title of this video is How To Flip Commercial Real Estate which I will discuss the method of wholesaling or flipping Single Tenant Net Leases.
Most real estate investors get started buying single-family houses, probably because it's what we're the most familiar with. But whether you're going straight to the big time or are ready to advance from houses to larger (and more profitable) deals, here are 10 time-tested guidelines to follow that will help you have more success.
There is practically an unlimited amount of money available to those who wish to borrow it. There is so much money, in fact, that you can literally buy commercial property worth millions of dollars without having to use any of your own money. It doesn’t matter if you don’t come from wealth, and many multi-millionaire commercial real estate investors make their money by not using their own!
Consider these three strategies:
Subordination, also known as creative financing, occurs when the current property owner takes out a second mortgage on the property to cover funds that the purchaser is not capable of raising him or herself. If you are lucky enough to find a seller who is willing to subordinate a second mortgage to cover what you cannot pay, then the only money spent from your own pocket will be a down payment. When using this method, it is a good idea to have the owner subordinate only for a short period of time -- just until you can take the money generated from the commercial property and pay off the second mortgage, leaving the owner free of the property. At this point, payment for the property can be transacted because you will have generated cash through the commercial property. This situation may seem backward at first, but it works rather well if you find an owner who is very motivated to sell and he or she understands this method of investing. In the end, you will have purchased your money-generating property with none of your own money, and the previous owner will get paid for their property.
Beware that the property must support the debt, as you do not want the owner getting into financial trouble with the second mortgage. Some owners are wary of this type of investing because purchasers may break agreements, and problems occur. Try to be an investor of integrity in order to maintain a reputation of acting in the ways in which you and the seller agreed.
Use partners. If you are willing to do the work, there are experienced builders, investors and developers who will find the financing you need. The agreements can greatly differ, but your partner(s) will finance the deal and take a piece of the return that you create. Partners can offer invaluable experience and insight so that you can learn more about a specific type of property, and even the industry itself.
If you cannot secure a loan to purchase a large property, try buying a piece of it. From there, you can borrow money against that piece in order to purchase the entire lot. This strategy works especially well with raw land, but it can be used in many different situations. Owners may not be aware that this option exists, so be sure to mention it to them, especially when purchasing many acres of land.
Commercial deals take longer than single-family houses do. They take longer to purchase, renovate, and get sold. This is not necessarily a bad thing, but something to keep in mind so that you don't get impatient or rush into a bad decision. Think of commercial deals as big bonuses or your retirement vehicle, not a way to create quick cash to pay the bills.
There's nothing wrong with investing in residential apartments per se. I'm just pointing out that since most investors are already comfortable with residential property, they tend to look for apartments without considering the other types of commercial property, such as office buildings, industrial, mobile home parks, land, etc. Weigh all of these property types and choose your own niche based on whatever will help you reach your unique goals, regardless of your comfort zone.
Fight the temptation to get discouraged if you haven't done your first deal yet, or if you are spending more time per deal than your previous ones. Houses are so similar that it's easy to make a cookie-cutter system for buying and selling them. When I begin looking for commercial properties, I was surprised at how long it took me in the beginning to screen deals and make offers.
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