Though the headline of this article will deliver on it’s promise, it’s also true that becoming a successful commercial real estate investor on your own can be extremely complicated and difficult work.
Part of that is because becoming successful in any worthwhile endeavor is always going to be difficult, but the other part is due to the nature of our industry itself.
It’s just … complex. There are a lot of moving parts.
From legal, to architectural, to construction, to negotiation, to everything else, it can take years of study and experience to get this thing right.
To give you the full idea, I’m going to take a snapshot of the work it takes to build a flourishing commercial real estate investment portfolio on your own.
Then, I’m going to show you another way …
99 Things You Need To Know (And Master) In Order To Become A Successful Commercial Real Estate Investor
Let me be clear, there are a lot more than “99” things you need to know in order to kill it in the commercial real estate game, but for the purposes of this article, I like that nice, round number.
The point is, if you’re going to DIY it in our industry, prepare yourself for one of the most difficult and rewarding learning curves I can think of. This will not be an overnight thing for you.
Let’s do a quick laundry list of the major areas you’ll need to understand – on a deep level – in order to become a commercial real estate investor on your own.
And understand, this is just a list, each one of these items could be expanded into an article (or five) of their own …
1. You’ll Need To Prepare For Your Deal
Just like any other pursuit in life, the lasting success of it often comes down to preparation, preparation, preparation.
Before you jump into this world of commercial real estate investing, you’ll need to prepare yourself by:
- Educating yourself on commercial real estate
- Building a team of professionals
- Choosing your property type
- Choosing your investment strategy
2. You’ll Need To Find Your Deal
If you can’t find the deal, nothing happens. And if you don’t find the right deal for you and your goals, you’ll be sunk even before you begin.
Here’s what you’ll need to know (as well as the many details within each) in order to find those deals …
- The strategies for finding your deal
- Evaluating your deal
- Understanding the operating expenses
- Preparing an offering memorandum
- Performing extensive due diligence
3. You’ll Need To Fund Your Deal
In the case of commercial real estate, most times you need to raise money in order to make money.
Yes, there is absolutely risk involved in raising, borrowing, and/or deploying capital as an investment. Anyone who tells you it’s not is lying.
Here are the basics you’ll need to grasp in order to profitably fund your deal:
- Understand the pros and cons of leverage
- Understand the different types of funding
- Become a master at pitching lenders
- Get good at raising capital
4. You’ll Need To Operate Your Deal
Now it’s time to become a commercial real estate operator. After you’ve put all the pieces in place to make your first investment, it’s time to take over the asset and manage it like a pro.
Whether you’re buying and holding, or looking for a shorter term flip, operating your deal is just as important as everything else we’ve already covered.
Ready to become a first class operator? Here’s a few of the things you’ll need:
- The ability to take over operations
- Hire a management company
- Manage construction and renovations
- Manage the asset
- Understand tax requirements and strategies
5. You’ll Need To Exit Your Deal
Well, technically, you don’t need to exit, but let’s say that, at this point, a nice chunk of cash sounds nice right about now …
You’ve done all the hard work of researching, acquiring, and maybe even improving your asset. If you’re not holding long term, it may be time to sell.
But what does that look like, how do you think about it in a way that will actually make you a profit, and what about taxes?!
These are some of the major areas you’ll need to understand and master, in order to successfully exit your deal:
- Options for selling your property
- Marketing the sale of your property
- Performing a 1031 exchange
- The buy, finance, and hold strategy
- And much more
Are you still here?
Like I said in the beginning, it’s a lot of moving parts. And the list above only scratches the surface of the knowledge and experience you’ll need to possess in order to do well in commercial real estate.
Now, I will say that if you do want to go this “DIY” way, it’s highly rewarding. If you’ve read the section above and haven’t closed this tab in fear, I have something cooking right now that will, very soon, be ready for public consumption and can help you to kick start your commercial real estate investing career, so sign up for the newsletter and stay tuned!
But what if you don’t want to do all of that work yourself?
Glad you asked …
The ONLY Thing You Actually Need To Know To Become A Successful Commercial Real Estate Investor
In a word? Syndication.
You don’t really need to understand and master the 99+ disciplines I alluded to in the section above, the ONLY thing you really need is a trusted, experienced operator of a commercial real estate syndication.
When I first got started in commercial real estate, I thought there was only one way to go: You save money for years and years until you finally have enough to do a deal on your own. And for some people, that’s certainly a good way to go.
I thought the same way until I learned about syndicating real estate.
It completely opened my eyes to how I could grow my investment portfolio bigger and faster while having less of my own cash, which we all know is a finite resource, in each deal.
OK, so what is commercial real estate syndication?
In short, it’s a way for investors to pool their funds together in order to buy a larger and more stable asset than any of them could on their own.
Since they are an investment offering, real estate syndications are governed by the Securities and Exchange Commission (SEC), so each offering must file documentation with and report to the SEC.
Now, syndications are not limited to just commercial real estate. You could syndicate nearly anything you want, like a private jet or a professional sports team.
Some of the pros of real estate syndication include:
- Access to larger assets and projects
- More stability due to higher unit counts and / or location
- Completely passive real estate investing and cash flow if you invest with a sponsor
- They can support onsite, professional management
- And, all of the tax benefits, forced appreciation, and write offs just like any real estate investment
And this isn’t only about money … a professional syndication will also take care of all of the administrative headaches for you as well!
That’s right, in the right situation, the operator/sponsor of the syndication manages all of the various team members, permitting, timelines, construction (if part of the deal), accounting, and everything else … on behalf of the syndication members.
Essentially, you’re buying a completely managed slice of a commercial real estate investment and watching it grow.
In the best cases, this is what passive income actually looks like.
But here’s the catch: as I said in the beginning of this section, you need to find the right trustworthy operator, for the sake of both your risk and reward.
Make no mistake, like any other investment vehicle, there is risk involved. But, placing your investment with an operator who has the right referrals and track record can be – I believe – one of the best investments a person can make.
An excellent syndication is actually the ONLY thing you need to become a successful commercial real estate investor!
Ready To Start Creating Truly Passive Investment Income?
We hear it all the time … passive income is the best income.
The only problem is, there are very few investment vehicles that are truly passive AND that have a realistic shot at making you serious money (or, at the very least, protecting your money) over the long term.
I get it, you’re already incredibly busy with your life and your work, you don’t have the time to figure out this real estate stuff, much less become a pro at it.
So why not let us handle all of those headaches for you?