How to Catch Up on Your Lack of Retirement Savings

do you have retirement savings built up and if so is it going to last all the way through to the end are you getting older and we're just unable to save enough for retirement or did like zoom by and you forgot or perhaps you lost your retirement savings and you're starting over whatever the case retirement savings I recently watched an ESPN episode called 34:30 where I was titled broke and detailed the lives of professional athletes who made tens and millions of dollars in their playing career and when the career ended or they got cut or released they had no money they were flat broke how sad but it really didn't have to end that way now in certain investing in cars and jewelry and restaurants and their cousins business idea or far-fetched startups they should have invested in something safe secure growing but also tangible meaning that something they can measure the value of in a very real time way but also to invest in something that puts money into your pocket on a monthly basis where you can buy groceries support your family pay the mortgage things like that in this video I'm gonna share with you how commercial real estate can be that vehicle and also can help you catch up with your savings I'll also share with you one of our students named Jim who is it at sixty s in your process and said Peter I have a little bit of money but not enough for retirement in three years what do I do well fast forward in twelve months of hard work the focus and coaching Jim was able to create a four hundred thousand dollar nest egg that's growing and cash flowing my question to you is how's your retirement savings situation I hope in this video it will help you but also open your eyes up to the possibilities all right hi everyone I'm Peter Harris with commercial property advisors I am author of this book commercial estate thing for dummies I also have my new bestseller called commercial real estate for beginners and now we can probably say that we have the number one rated YouTube channel on commercial estate investing thanks to you so thank you very much everyone I'm also a coach and mentor to many commercial listed investors all across America the title and subject of today's video is going to be how to catch up on your lack of retirement savings using commercial real estate let's get started here's the big question can you save up enough for a comfortable retirement that's the question let me answer by sharing with you a recent New York Times article I found right so this article says that if you are in your 60s and you saved up 1 million dollars and you invested it into with this low bonds right pretty conservative investment and then you retired and you would true it at a rate of 4% per year there is a 72% possibility or probability that you exhaust your savings before you die now I'm sure you all agree that we need a better plan than this retirement plan my solution is commercial real estate now if you recall when I refer to the ESPN episode of 30 for 30 that those rich athletes that went broke well that's because that in my opinion they didn't have what we have as commercial estate investors we have these six investor controls if they knew about this or implemented this into their into their investment plans most likely then wouldn't I have gone broke let me share with you what these are these 60 investor controls I believe are afforded to you in commercial real estate and not in other investments so what I want you to do is on this side of your brain envision and invest you have right now stocks or mutual funds or whatever and in this side ambition that you have a nice cash flowing commercial set alright so number one the first investor control you get with commercial real estate is management control you get to decide on a day-to-day actions that happens on the property you get to decide who's in charge right so if someone is in charge who's week you can replace them if there is a controversy with the management the management staff on your property you can make a decision to get rid of them if you owned a company or stock you can do that it's really up to the board to do that right so no fake news can really affect you and cost your property to die down in value overnight like you would have if you had a company or stock right number two's insurance insurance is a great investor control because imagine if you owned a commercial property and it burned down to the ground with insurance here you can build it from the ground up into a better higher cash flowing producing property at someone else's cost what other investment will do that for you the third investor control is predictability you get to see volatility ahead of time and react to it that's the great thing about commercial real estate let's say you own a commercial property and the company large company around your building around your property and that's going to expand to and build more factories space more jobs you get to react to that and likewise if it comes planning on shutting now you get to react to that if you had a stock or any other investment and negative news come out guess what happens almost overnight you value a drop but in commercial it takes a while for the value to go up or down it's not overnight okay the fourth investor control is leverage this is a beautiful because these guys over here they took their 1 million dollars in savings and they put it into most municipal bonds and they were drawing on it at 4 percent per year on this side US commercial ascent ventures with that million dollars we would buy a 4 to 5 million dollar commercial real estate property that doubles or sometimes triple this this cash flow also increase in equity over a year also you get the amazing tax advantages right so imagine a company like Amazon huge company why don't they pay income taxes at the end of the year it's because it's a business right they own quite a few properties and they maximize all the legal tax loopholes available to them the same with commercial estate investors many of the the world's richest people who own commercial estate do not pay income taxes why be it's legal and there's loopholes and have done well and strategize well you pay no taxes so tremendous advantage here that you get as a submission control lastly the number six investor control you get is cash flow you can control the cash flow the cash flow is the ultimate goal in commercial right so because cash flow is a lifeblood of the business and guess what you are the business right so you get to control all these things again I'm not sure what other investment will afford you all these wonderful things that commercial estate would do now what that said what I like to do now is jump into a real deal example as I mentioned earlier just an example of a real student named Jim who was in his 60s and you approached us and said Peter I have a little bit of money saved up I have no plan and I want to retire in three years what do we do so fast forward 12 months of hard work focus and coaching he was able to create a nest egg of $400,000 that's growing but also great cast let me serve that example with you next because it is repeatable I'll see you there let's jump right into Jim's deal and I will share Jim's ill in a story format in the form of the problem the solution and then the execution let's get started here's the problem Jim's in his 60s he has some money saved up but not enough for retirement again no retirement plan so you approached us what with that situation and we decide to help here's a solution what we have Jim do is to focus on on the state commercial estate owners we believe they are the more motivated of the two in state and other states we focus on that and it's something we're really good at in our company in locating those type of owners now but the kid is not only on locating them but knowing what to do once you do locate them and that's where a coaching comes into play second is Jim end up finding and it unit property that's listed for $500,000 so you found the property that owner was distressed right both financially and physically the property was and there was a really bad property management on their property not taking care of the grounds keeping her and having really really super cheap rents and so what happened was because of the distress of the property the price was reduced from 500,000 to 450 so we went under contract okay and we realized so once we're under contract we put together some detail contractor quotes and it came up to be about $65,000 so we realized that we couldn't even paying for a 50 so Jim we decided couldn't pay more than three hundred eighty-five thousand dollars for the property so we went back to the seller and trying to renegotiate the deal the seller ends up disappearing for about three months on us right in contact but just not responding to our con your offer of 385 but finally did so we amended the contract to be 385 Jim end up finding a local lender that's gonna lend him 80% of the acquisition price and the rehab cost of $65,000 pretty good deal I thought financing lights so Jim proceeded with the bank that they did an appraisal and then the appraisal came in at 350 not 385 as per the contract price so we came up $35,000 short so at this point Jim and I thought the deal was dead so all we can do was go back to the seller shall heard the appraisal and say the appraisers came up with 350 that's our final offer take it or leave it so surprisingly I guess at this point because of everything going on with the property she accepted the 350 offer so we went ahead and proceeded we end up doing research during our due diligence we found by similar properties that were eight units in this town that were selling for about a million dollars so we knew that if we can buy it 350 put the $65,000 into it we would end up with a pretty good deal secondly in our due diligence we found out that the Rick comparables prove that the Ritz that they were charging currently are well below the market so we have some great upside in the rents as well so two good things good enough for us to proceed with this deal so Jim went ahead and closed the deal so this was probably close to three to four the five month process probably from probably closer to five months in a day of finding it to actually close it now that's what happens in a commercial commercial can take a long time but it's worth it all right so we discussed the problem we discussed the solution now let's talk over the execution all right let's start here I'm gonna start with a and they'll call it the four imps now the 4ms comes from a lot from doing lots of deals all over the country and finding out what works and what doesn't work so what we have discovered was every distressed commercial deal or let me say this every every distress income-producing property is distressed because of one or more of the four imps the four ms are money management maintenance or marketing so what we have found is that if their profit is not performing if it's doing horribly if it's going horribly wrong it's probably well it is because what one or more these four imps in this case for this property these first three the money the management and the maintenance were it was a four legged stool so this property is sitting on one leg so it's horribly failing for names so just in that consideration when you're looking for properties out there and you see something distress go about these four M's and you will locate the problem if you focus on these four got it okay that's what Jim did that's what we tell them to do now the real work begins all right you can find the property negotiate a great price but in commercial you have to execute to create the value to create the cash flow right now what we did we focus on these three things we focus on the evictions because of the poor management how people were not paying rent or it was late and lots of things going on the copies that we didn't approve of that were actually illegal we focus on the renovations putting the money back in the property of beautify it to bring in to better tenants and then getting their rents up right so that took us a little more than six months to do from the date we closed so a lot of work a lot of focus Jim and I met probably fifteen times in these six months to go over the progress and make sure we were hitting key benchmarks to make sure this project was successful right so in the end here's what happened Jim start off with the net operating income of $26,000 so when he took over I imagine it was even lower than this I have enough paper that's what it should be well at the end of the project we were producing and in a way that was that was in the neighborhood of fifty seven thousand dollars per year so Jim more than double to in Hawaii now as you know from my previous videos as the Noy goes up for a fixed cap rate so does the property value right okay you guys know that from my other videos all right secondly Jim was able to increase the cash flow from several hundred dollars a month I don't even think it was that right but - - now we're producing twenty six seven dollars a month so Jim has increased Hawaii thereby increasing the cash flow - great things were commercial right so before I get to the ending in I'm going to show this so Jim's all-in so the acquisition price renovations so the dollars only dollars only was $415,000 so you bought it for a fit three to fifty thousand dollars and he put in sixty five so that's about four hundred and fifteen thousand dollars all in right so now as I mentioned before earlier in this video Jim produced a nest egg of four hundred thousand dollars how does that equate to this deal because this is the deal wanting to share that with you I gave for my previous videos you know that as the Noy goes up so does a property value so how we can show what the new value is going to be you know use my calculator to show it to you so with an Noi of fifty seven thousand dollars and I divide that by a several percent cap rate the market cap rate where this property is located everything sells for some percent or below so we'll stick with seven percent so fifty seven thousand divided by seven percent is eight hundred and fourteen thousand dollars okay so Jim's new value in the properties is a $14,000 is all in this for 15 insults about the $400,000 increase in equity he created by doing these three things all right so that's the power of commercial estate is we get to force the equity we get to force up not only the cash flow but also that value in the equity of the property that's exactly what Jim did here so that's where he is $400,000 nest egg comes from its from creating the value here now Jim's exit strategy right so Jim's extra strategy was to do this all over again with another property but here's the problem where would he get the money from since he sucked all his money here well the in commercial there's a process called cash out refinance that's exactly what Jim's doing at this moment he's waiting for his innovative season abit so Leonard she improved the lender that his aunt ally is actually this amount per year right so do that for a few months and the lender is gonna value his property at the higher level and allow him to pull out some equity for the property in this case he's gonna pull out his entire down payment right so were the goals achieved here right yes they were right so we need one to create the next egg here create cash flow and also - this is repeatable Jim is going to do this deal with another nine unit in a neighboring town that he knows about which he found by the way using this these methods as well all right so just to show you that this property is nothing special right in terms of the way it looks I'm gonna including real quick pic here so you can see the property is nothing special here you can see that it's just a normal everyday property yeah what's not normal everyday is the way Jim went about it so Jim was a great student he was focused and he persevered through this distress owner and here are the results all right all right so now the next thing I want to do is I want to share with you real quick just more a minute with three questions right that's really gonna help you I'll see you there let's wrap up this video with three really important questions these important questions are good for you to ask yourself but also good for me to know how I can serve you more and better alright so a B and C question is do you have money today working towards your retirement that's a B is are you playing catch-up are you behind in your retirement savings that's B C is are you willing to play a bigger game that bigger game is commercial real estate of course and because I believe that all it takes is one good commercial deal to financially impact your life for the rest of your life right so in the comments below real quick could you let me know what's one applies to you a B or C all right thank you very much thank you very much for watching the video if you want more videos like this check out our website commercial property advisors comm or simply subscribe to this YouTube channel again thanks for watching everyone and I'll see you at the next video

Channel: Commercial Property Advisors

Views: 11,547

Keywords: Peter Harris Real Estate, Commercial Property Advisors, Commercial Real Estate, Saving for Retirement, Retirement Savings, Commercial Real Estate Investing

Id: osiMLXqjf_8

Length: 20min 38sec (1238 seconds)

Published: Tue Jun 19 2018