How Chris Became a Millionaire in 1 Year (True Story)

can you become a millionaire with just one commercial real estate deal the answer is yes can you do it with no experience of course you can now can you be done in this crazy real estate market we have today of course it can I'm going to share with you a short video interview of one such student named Chris who accomplished all the above but before I do that allow me to introduce myself I'm Peter Harris with commercial property advisers I am author of this book commercial real estate investing for dummies I also have my new bestseller called commercial real estate for beginners we also have very proud to say that we have the number one rated most watch YouTube channel of all time on commercial real estate investing and that's because of you so thank you very much I've also a coach and mentor to many commercial real estate investors all across this great country of ours in today's video you're gonna learn how Chris became a millionaire a multimillionaire with just one deal in one year and it was his very first deal I will also give you proof through the interview that the great deals and big markets are still out there if you know how to find them it's a mindset thing and thirdly you'll see from the video interview that what Chris did it's not rocket science you need our process in a company like ours to help you accomplish your goals so let's go to the video now when we come back I will do a short summary for you let's go there now alright welcome everyone and that welcome Chris thank you for joining us this morning and does everyone know Chris is one of our protege students did an awesome deal and welcome Chris thank you for joining us today I'm Peter it's great to be with you thanks for inviting me you are so welcome I want to jump right into it Chris many people say that there are any good deals left in Texas or in other major cities what can you say about that well I think that the market is definitely a little bit slower than before but as with the deal that I was able to get there are people that are motivated to sell their off market mm-hmm if you can go out and find them and plow that field they will pop up and they will talk to you and they will they will sell to you good I think that you know the economics might on the outside look like it's down but there's a lot of motivated sellers out there and some of them just need to be asked that's right that's right good job thanks Chris so Chris real quick tell us something about yourself what do you do for a living and we do for fun well I started flying back in 1977 with the Navy and then I went in the airline's a little bit later so I'm still with a major airline and I have a rather large family Peter as you know seven children some marry grandkids so basically my life is my family and of course I'm flying for the airline and then managing the managers of my property there you go great huh all right so let's jump into the deal Chris so tell us something about the deal how many units and how did you find it well when I went with you back in March of 2016 I was interested in getting into commercial property and I knew nothing about it so I figured well with flying you get the very best instruction you can and you do your very best all the time and so here I was knowing nothing so I scoured the web and found you you interviewed me I interviewed you and here we are so that's how the deal started and I anticipated getting at the time this deal came in I had found three properties that you had helped me write contra for that we're very close to being signed by the owners one was a four-plex one was a 16 Plex one was like 26 bucks and so I was thinking that that was a good place to start smaller properties and you you were encouraging me to go after anything that came up and as you said in your book you want to have probably 12 contracts and development three signed and you're working to close so we were basically almost closing these three properties the owners were about to sign and then I had none like you it also encouraged me at that point to find lenders okay and so I had scoured the the horizon here in Houston found a lot of lenders lot of brokers bankers mortgages mortgage companies and so I was getting familiar and they were very good with me encouraged me to find property so I felt like I had some resources about you added a resource to that portfolio of finance years here in Houston a broker a mortgage company that you knew and so I had contacted then talked with em and had a relationship knowing and asked them to send any properties in heard about and lo and behold about two weeks later they called me and said we've got a property it's a large property for a new person in the business it's a ninety unit property here in downtown Houston so that started the ball rolling and I contacted you and you said okay are you sure you want to start a property of this size out of the chucks for the first time and I said well let's look at it let's see how it goes I can always pull out before I sign any contracts so that's how it started I started with you in March 2016 this came out in mid-april and so we contacted the owner and through the broker and the owner said well I'm not interested I've changed my mind so it was on the back burner I kept the other properties that we had going using your system and by the way your system provided an overwhelming number of responses so I was very busy so about I think it was the second week of May about eight weeks after you and I began our relationship the owner called back instead I want to sell so that's when I started getting busy that's how it came about it was actually through a broker mortgage company that as you had encouraged in your text and in your training make relationships with brokers mortgage companies have asked them to send you off market properties and remind them occasionally in every few months that you're still there so that's exactly what happened okay great great so for those of you in the audience Chris and one year created about two million dollars in equity and but it didn't start off that great I mean Chris had some challenges so Chris walking into the deal what were some of the challenges there were great right they were great the background was that like you said in your materials and verbally to me unless you want to find deals where everybody has the opportunity to win to come out of it feeling better and that's what happened here I had good people surrounding me especially you and so the very beginning it looked extremely positive the owner wanted to sell because it had been under managed actually by him the broker who sent us the property had financed this property for him years before and so they were motivated to help him sell before he went bankrupt on this hmm or so they got foreclosed on that I should say and of course I was interested because they were selling it for a good price right so it looked really good in the beginning but like you just said some big things that came out was the first day we visited and we started doing the due diligence checklist you provide I found a management company that was recommended by some people and they went with me and the first thing that hit me Peter was we walked in to one of the sections and it smelled like a sewer hmm that's not a good sign mm-hmm it started raining while we were in the office and there was water but up to the floor of the office from the patio up front that was number two number three there was no computer-generated retros or profit/loss statements which gets back to under management so basically and I looked at the roofs obviously they hadn't been repaired we could think for maybe not replaced for 25-30 years they had small repairs everywhere it looked really modeled and looking into the maintenance records they had written down a lot of people were having leaks etc so it was definitely an acquisition rehab from the very beginning yeah it kind of overwhelmed me in the sense that okay I've never paid this much for the property what's gonna cost me so that was the problems the big problems I saw the first time I went to properties you encouraged me you said Chris you gotta go now they're probably every week watch it and talk to the owner as much as you can the people that are managing it and really watch this thing as you're developing you're getting close to your contract and having to close on this so those were just some of the things great so of course where did you see the opportunity to turn around the property increase the rents increase the property value where were the opportunities well when I went into a partner and you said Chris you know before we really go too far we've got to get this the reality put down here is what they're actually doing and then put our pro forma together so the first thing that was really positive about it was when we looked at the red that were being commanded by the average market within like three miles it's C property C neighborhood we saw that basically we were 200 dollars behind per month on the ones and the two bedrooms and when you put that in the pro forma even having to do what we found out would be a $600,000 rehab we came up with a really good pro forma and looking at the cap rates talking to local brokers and some banks we found out that this was a very good deal so with all the challenges Chris the property not being stabilized needing repairs under managed how did you manage to finance the property close on a deal so what did that look like as I said before the first good thing was the owner was motivated so basically it was gonna cost I think about 3.1 million he would take interest only for a year himself on a million dollars of that roughly a third yep well I went to the mortgage broker that brought me the property and they would not help me finance it because it didn't meet their criteria obviously it wouldn't because the rehab was so great and the 1/3 of the units of the 90 in of 60 were occupied so they wanted me to have a lot of skin in the game they wanted me to have you know to bring to this deal 20% of the 3.1 million dollars and I didn't have it so we talked your materials talked about it and you said Chris go find money somewhere look on the web look for mortgage companies broker dealers and you mentioned hard money so I found to make a long story short I spent probably I don't know eight hours a day for three or four days doing this next found seven hard money providers in Texas I found one in Dallas they paid attention to me wanted to talk to me and they ended up lending me the money but it was at 13% 13% for the other two million yep but they added to that Peter the rehab money of course though I ended up alright for them I think 2.6 million roughly yeah at 13 percent interest only for one year so we basically took Christopher there so just to clarify the purchase price was around 3.1 million the celery carried back a a mortgage in amount of about a million and then you went out and fought and filed a hard money for the remaining at thirteen percent correct and that included the acquisition plus rehab correct they would not lend me the money unless they knew I had the money to replace the roofs to do all the general contracting work on the sewer system and the storm drains great that was six hundred grand yep great great okay and so fast for today how long did this process take you from taking over to stabilizing the property where you don't get a good hold on it we bought it in June of 2016 mm-hmm in June of 2017 about a year and a half ago we had had it a year and with the original management company mm-hmm okay and that was when I had to refinance okay so the property was not quite stable but it was stable enough to get refinanced by a lender out of California okay they liked what they saw and the funny thing was it was supposed to refinance on August 29th of 2017 mm-hmm that was a day hurricane Harvey hit oh wow so yeah Murphy's Law was at work so I had to hurry up and call the owner and the hard money lender get an extension for a month yep but yeah we were stabilized enough to get refinanced Peter one year into it and in one year basically you were able to get out of the hard money and into a long-term loan right yes and that loan was a was a Fannie Mae product Fannie Mae loan yes okay Fannie Mae loan 30-year amortization what was the interest rate 4.1 4.1 fantastic and that they require you to come out of pocket with any other down payment money besides openpaas okay great so they they went from the hard money from the seller carry second mortgage to the hard money which included acquisition plus or innovations into the long-term mortgage right so now we have a four point one percent two year interest only great great it's four point one percent I think it's three point five excuse me three point five million yeah that's great and at that point I know the property wasn't fully stabilized what what what did the appraisal come back at at that point oh I think it was up in the high 33.8 okay and then today what is it worth a few months later once it's fully stabilized it's funny should ask that I probably have three or four calls a month from brokers that have people that want to buy it and then I get calls and letters from people that want to buy it at six point three to six point five nine okay Wow so yeah so let's do the quick math if you were to sell it today you would pocket after closing costs after commissions about two million dollars so yes yeah that's awesome that wraps yeah good job Chris well thank you for your mentoring it was awesome yeah when you said good job I want to say to to to your current students and future students that I never made a decision that conflicted with your voice not once I don't plan to for my next project okay great it's a quick question Chris is it better to do a bunch of small deals or one large one like yours I believe that it depends on your personality what you want to deal with for me in retrospect the large deal the efficiencies of scale be a lessening of the risk for for instance vacancies can be spread out to the rest of the property things like that I think that going with the larger property for me would be better um so it just depends on thinking on the personality on the person I will say this Peter that um I was kind of owned by this deal for those first few months when we were putting it together and getting it signed and then clothes and then spending a lot of time the first year each day managing the managers yep yeah there might be more time involved in a larger deal over the first year so for me definitely efficiencies of scale risk management say the larger the property on one site the better great great so in a nutshell you went you bought the property about 3.1 and how much what am I to rehab you should put into it approximately was it I think you know it was around five or six hundred thousand okay yeah I think it was six hundred thousand so you bought it for three point one you put in three you put in six hundred thousand so you're all-in is about three point seven and about it a little more than a year later now it's pushing six million dollars in value so right oh yeah way over that square with that okay that's great so Chris good job so where do you go from here what do you want to do next getting back to your earlier question about stabilization working with some lenders right now I want to borrow against it when I can and so we think it'll be fully cured you might say and really by April of 2019 I want to borrow against it okay so figuring you know the appraisal value and the loan-to-value type of blending I can get I'm thinking maybe we could get a million and a half out of it to buy another property yep so currently I'm visiting looking at properties that come my way as you know a couple weeks ago we talked about a property that was off market that a broker brought to us before they put it on the market which was very kind of them and we didn't go through with it but it got me back into the groove of the whole procedures for acquiring another property so I would like this time next year I'll be talking to you having bought another property and I'm looking for a hundred and fifty units good two fifty that's kind of the sweet spot as you taught me for efficiencies with costs of management and maintenance so that's what I'm looking at is next April pulling the trigger having refinanced and now able to borrow against it okay great great great strategy and finally Chris could you end it here with encouraging some of them bachelors out there or potential investors out there encouraging them of orders were to begin or whether start if they want to do what you do because you went from basically just a single-family home your house to getting knowledge joining a program now this is what you have so how would you encourage a person wanting to jump into the business but they're just not sure what our start well where to start is you have to decide whether or not you have the knowledge and the experience to get involved in one of the most difficult businesses out there that you could own and operate and so I would encourage people to look for the very best trainer mentor that's not only going to give you the information they're going to trade you in information and they're going to be with you every step of the way like you were with me and I would say I looked at probably gosh nine or ten people that wanted to mentor me and they the problem was with the information the background your resume the books you've written all those sorts of things spoke volumes to me and then access I can always find you get you on the phone or get you helping me on the coaching calls you're always there and you you own many properties all over the country so you're speaking from experience and I would say to people out there make the decision whether or not you think you have the knowledge to do it if you don't don't if you want to do this and you want the knowledge and you want to get the experience with someone at your side go with be your hairs go with Peter Harris great thank you guys yeah and you're gonna pay very little to Peter Harris over time compared to the benefits and you're going to have a great professional relationship with them a great guy Peter Harris so and like I told you Peter get ready I'm going to be bugging you a lot in several months as we start project number two and one thing you told me way back is in your materials you said look Chris commercial property you've got appraisal working for you it's the best tax business Haven in the country you can get income from it and number four which I'm about to do it'll bankroll your next project and all of those things that come through and you told me one time don't give up don't give up don't give up so I kept sending the letters out and kept calling people to see if they want us in their property and they responded and I was really really busy about to work on closing these three deals I had but then I had to call them off when the 90 unit came up so your your procedures work and your there force and your alongside of us you know I don't I don't think it can be beat with your professionalism and your your ability to be there for us all right right thanks Chris hey Chris cells thank you so much for joining us today this is wonderful I'm sure all so many Nuggets here yes again it's one it thank you so much for joining us and sharing your wisdom and your deal and I look forward to working with you on the next deal yes sir I look forward to it also thanks for being a part of my commercial business you're welcome Chris okay thanks Peter okay bye-bye all right welcome back I hope you enjoy Christian of you can you see yourself in Christian shoes I'm sure you can he didn't come from a wealthy family he didn't have a whole lot of experience he didn't have a whole lot of money but he has a desire and he put in the work and he follow up direction so I'm sure you could do the same too let's summarize real quick what just happened in that short interview number one is Christmas property was the main unit property in downtown Houston it was 60% occupied at the time the property was distressed right so he had some drainage issues needed new roofs and several other things and very important the owner was distressed so because he was distressed and needed to get out of their property to fulfill some other financial commitments we were able to use seller financing in a great way to leverage christen so so because of this were able to leverage ourself in guess what there were no income statements to be had on the property and what that means is if you were to ask for a schedule of how the property performed financially over the last three years that you typically would need in any commercial meal that did not exist that's a huge obstacle so that really pretty from going through with conditional financing so we have to look at hard money to get the loan done all right we saw that the property had good bones what I mean by that that the structure was sound it wasn't a great area and we saw the huge potential the huge upside potential in the steel that we could buy it we had the vision for this property right next is as I mentioned before Chris did not have the money for the conventional financing they probably wanted 40 or 50 percent down which wasn't going to work Chris didn't have the type of money so we had to use a hard money lender who gave Chris money to acquire the property and given money to conduct the rehab and over the next 12 months crystals able to finish up the the rehab stabilized the property make it look good and he was able to refi this property into a Fannie Mae loans well within 12 months it appraised for 3.8 million you fast forward maybe maybe four to five months later when the prop is completely stabilized it was worth six point three million dollars right so Chris bought it for three point one and now was worth six point three a little more than a year plus hard work and Chris would have sell today after paying the Commission's and closing costs he will pocket over two million dollars in profits so so congratulations Chris so what I would like you to do after this video if you don't mind could you just put in a comment box just give a high-five for Chris little chill just tell Chris congratulations he's a subscriber to this channel and let's encourage them and let's just say good job Chris all right so thanks for watching this video today if you want more videos like this please subscribe to our youtube channel but simply click Subscribe or go onto our website commercial property Jews calm again thank you for watching how Chris became a millionaire and just with just one deal to start I'll see you the next video thank you very much

Channel: Commercial Property Advisors

Views: 55,276

Rating: 4.9561644 out of 5

Keywords: Commercial Real Estate Investing, Peter Harris Real Estate, Commercial Property Advisors, Apartment Investing, Multi Family Real Estate Investing, Multi Family Property Investing

Id: jm8m2fU7Hzc

Length: 28min 35sec (1715 seconds)

Published: Wed Jan 16 2019