There are different kinds of buyers, and knowing what kind you are will help you get what you want.
We come across a lot of people who think they want to buy or invest in commercial real estate, but don't really know where to start. I'm writing this blog post for you! My goal is to kind of help you think through some things to figure out how to best achieve your goals. I've seen a lot of people spin their wheels because they have no clear direction. Ultimately, if you don't know where you're at and where you are going, there is no roadmap to get there. This blog is to help you think of which category you are in now, and which category you want to get to. Then I can help you lay out a very clear strategy to go from where you are at now, to where you want to be!
I always say this to people...
There are a few ways you can ADD value to a transaction.
Bring Capital
Be the Tenant
Be the one who structures the deal, secures the debt, creates and implements the business plan.
Find the deal
So I have five questions for you to ask yourself.
How much cash do I have to put into this deal?
Do I own a business that will occupy some or all of the building?
How much time do I have to invest into this? Am I looking to be active or passive?
Do I have the experience, time, and expertise to actively create and execute the business plan (fix, fill and manage the building)?
Do I have a property under contract or do I just have leads and don't know what to do with them?
Based on your answers I would put you into one of these buyer categories.
OWNER OCCUPANT - You are a business owner who has at least 20% down payment, wants a space for your business, but would not consider yourself a commercial real estate expert. We recommend you partner with a deal sponsor, someone like us, to help you find a wholesale deal and create a solid business plan. Then you can either execute that business plan yourself or let us help you with that as well (fix, fill, and manage). We partner with owner occupants because with a tenant who will occupy the space in our back pocket, we know we can buy the building at X and once you move in have it be worth Y. You have solved one of the main problems to creating value: filling the vacancies. If you have cash, you get us really excited, but if you don't, we have Limited partners we can also bring in to get a 3 way partnership going.
SPONSOR - You have the real estate experience, maybe licensed, and have the ability and the time to manage the renovation, fill the vacancies and manage the building as an ongoing ordeal or place a management company in place and manage them and the asset. You should be well experienced in these three areas: project management, leasing, and property management. These are the people who make great active partners for a joint venture. They should know wholesaler's who can find the deals for them and LIMITED PARTNERS who can bring the capital for the deals. These investors are mainly concerned with creating compounding residual cash flow and equity growth. We are sponsors mainly on our deals, and we have divisions that handle every key aspect of the business plan from finding the deal, to funding the deal, to fixing the renovations, filling the vacancies, and putting long-term passive management in place to create massive FREEDOM. If you have a deal you want another sponsor to co-sponsor, let us know. Maybe it's out of your geographic area, or maybe you just need a little extra operational capacity. Let's discuss.
WHOLESALER - You don't have the cash, but you have the time and the experience to know how to find a deal and get it under contract with enough meat on the bone for the sponsor to want to pay you a fee to buy your contract. You don't want to be a sponsor quite yet, because you need to eat today! You should be wholesaling deals until you can building up enough capital to take one down yourself. You could also find a Limited Partner for your deals. If you fall into the category above but don't have the capital, most likely we would want to see you finding the deal and bringing it to us and we can bring in a capital partner or pay you a fee for your deal. You better know how to analyze and get a deal under contract. If you are good at pounding the pavement to generate an interested seller, but have no idea where to go from there, you are not a wholesaler. You are a student, but you can be a wholesaler if you learn how to convert an "interested seller" to a signed "purchase agreement". That's where our coaching program comes in. Or you can sell your lead to a sponsor, but think $100/lead or $10,000-$100,000 wholesale fee? How does that coaching program sound now? If you are a wholesaler, we want to see deals you have under contract, your business plan, potential profit and then we can say yes or no. Bring us your deals!
STUDENT - You don't have cash. You don't have experience. You don't know how to convert a lead to a signed contract, but you're willing to generate leads. What you have is TIME and you are committed to succeed! That's awesome! But without a clear expertise for finding deals, analyzing them, making a smart offer and actually getting them under contract, you really add no value to a partnership. Your best path forward is to invest in your own development so you can move into the wholesaler or sponsor categories. I stress the word invest. Most students want an expert to show them how to be successful, but that's a one way relationship. For the investor to take time away from doing deals to teach you, you should either compensate them with cash (if you have it) or you should compensate them with sweat equity (cold calling, stuffing mailers, putting out bandit signs, etc.). It's ok to admit you fall under this category. I'm trying to save you from looking back a year from now realizing you wasted a whole year pretending you know what you are doing and still haven't bought anything! Your first deal if the hardest, so leverage someone else's experience to do your first deal! Start with our podcast. Attend a live event, and consider getting into our coaching program to have one of our expert investors who DOES have the expertise and experience teach you where to focus your action so you are not a chicken without your head cut off. Go agree to work for free or severely reduced rates for someone doing sweat equity in exchange for them teaching you the business. If you are a student and you are willing to do what it takes to roll up your sleeves, let us know and maybe we can find a home for you on our team doing something.
LIMITED PARTNER - You have cold hard cash and you want to get it put to work, but you don't want to be involved in the day-to-day operations and you don't have the experience, time, or expertise to be a deal sponsor. If you have a full time job that is not commercial real estate related, but you want to enjoy all of the benefits of real estate like residual income, low effective tax rates, and equity growth then you would make a great fit to partner with a OWNER OCCUPANT who maybe doesn't have cash, or a SPONSOR.
Need help figuring out which one you are or want to discuss how you can take the next step towards changing your life and creating the kind of freedom that only real estate can offer so you can spend your time doing the things you were called to do?
We are ready when you are. Schedule a complimentary call here.
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