How to buy Commercial Real Estate Property Regardless of Credit, Income or Assets
June 29th, 2009
If you are a real estate investor or you’ve long wanted to become one there has never been a better time to get started. The good news is while 98% of investors are running after single family homes there are less than 2% of investors going after the real money. The easy and real money is in commercial real estate.
The common belief is that you have to have a large network and lots of cash to get into commercial real estate. Almost everyone who now owns real estate in the commercial property industry who started with nothing was shown the ropes from those who already had done it.
I managed to get an interview with one of the top real estate coaches in commercial real estate to find out more about it. Austin Davis is known in commercial real estate circles for being one of the top investors who came from nothing and his holdings over the past 30-40 years have grown alot. While using hardly any of his own money and keeping his own assets protected with trusts, corporations and keeping things out of his own name.
When I asked him about how hard it is to get started he replied, “It’s much easier to get started in commercial than it is in residential since the property and funding for it is based on the ability of the property to generate income and not you personally it is a lot easier to get started. You do not have to have a large sum of cash. You just have to know how to get your feet in the door. After you get your first deal and can show lenders you have property - it’s much easier to get funding for the new deals you find with little cash out of pocket.”
I was very curious about this and so I started looking into it. I found that there are really few books or programs or coaches in the commercial property industry to give any insight on how to get started. I asked Austin to comment on this and he responded “Yes, the public and more out spoke investors in our country are known for doing deals with no cash out of pocket, but they don’t really share how we do it. Honestly we don’t want a lot of new people coming in our niche and getting in to it.. that’s what I hear a lot from other investors.. I think it is only going to help us long term. There is a very real fear it could hurt the industry if some how a lot of new people go in to this industry and make no mistake about it the old money does not want to share the pie.” This made since to me and I wondered how credit, income, job status and assets would come into play on commercial real estate.
Austin replied “All of that stuff doesn’t matter a lot while investors, banks and lenders are going to look at that what they really are looking for and wanting is to see you have skin in the game.” I had myself heard that before and it made since. After all if a bunch of newbie’s had nothing in a deal and the investor or bank had all of its money in a deal - that’s a lot of risk. I asked Austin to expand on that and he explained “If you can get a large cash down payment put in escrow for the deal the bank or investor is very likely to give you funding if the deal cash flows well and they know a cash down payment is being put up on the deal. The kicker is when you find the ones who don’t care where the down payment comes from. Many investors and banks will want you to put the money down out of your own pocket or to put a lien on other property you own. Those are the bankers and conservative lenders. There are investor s and lenders though who just want their equity protected and if the down payment comes from a hard money lender, a private lender, etc. they just dont honestly care. Of course they are not going to fund deals that do not cash flow and that can support the debt payments.”
I asked Austin how I could learn more about this and he actually has a very easy program, it’s very short and to the point and explained the process and he even did all my home work for me in it with vendor contacts! You can check out his program as well at http://www.CREprogram.com/austin