paulmor here with bigger pockets so excited to be with you today and today we're gonna be talking about how to turn a hundred thousand dollars into four million dollars or more by investing in commercial real estate so welcome I'm glad you're here hey do me a favor if you can hear me let me know I need to know if you can hear me hey let me know where you're from as well hey Vinita hey Paul hey Joshua Gerry great to meet you glad you are here we're coming to you from bigger pockets live Facebook live and YouTube live Thank You Jeremiah okay so let me finish getting set up here and we will rock and roll so so excited that you're joining me here tonight we're gonna talk about how to turn a hundred thousand dollars into four million dollars in commercial real estate and you may think that sounds ridiculous Robert Barrett from Dallas or levees or Kenya parlez or Ryan from Louisville timber man land from Myrtle Beach hey I know people in timber but I'm gonna tell you that it's actually possible and I'm gonna tell you the exact steps how to do it but first of all tell me where you're from hey Jimmy from Southern California Myrtle Beach okay mark from Toronto are fun hey from happy lung from Toronto somebody else from Toronto that's awesome okay so what we're gonna do oh a de meu said you lost your sound I hope you can hear making everybody else hear me hey Scott from Little Rock Dallas Charleston okay we got a big crowd tonight so what we're gonna do is I'm going to give you an overview on how other people are turning a hundred thousand dollars into four million dollars or more using the commercial real estate asset class now you may wonder hey Paul how can I turn a hundred thousand dollars into four million dollars we'll start with four million dollars and then that's a joke sorry it's not even funny hey so seriously we're going to talk about this in a minute but first let's talk about ten reasons not to invest in real estate okay reason number one not to invest in real estate trading stocks reminds you of trading beanie babies which you were definitely not crazy about nor did you have a closet full of them haha number two reason not to invest in real estate you would hate it if you got a deposit of cashing your account for doing nothing number three reason not to invest in real estate you like the control of investing in stocks and being able to personally and directly influence the price of Google or Apple oh wait a minute number four you like to be able to call up the CEOs directly to ask about your stock values number five you like knowing that the moment you stop working you'll stop making money number six reason not to invest in real estate what if your tenants toilet breaks you'd have to fix it yourself because you're the only person in the world who knows how to fix toilets number seven reason everyone else seems to be investing in stocks and you like to follow the crowd number eight reason not to invest in real estate the government seems full of nice hard-working people who are doing a stellar job and you want to be sure to pay your fair share in taxes number nine you want to use you want all your money in one account because you can only remember a single username and password and number 10 reason not to invest in real estate people may suddenly decide they don't need roofs over their heads or indoor plumbing or modern appliances hey okay hey I want to thank my friends Annie and Julie over at good egg investments check them out good egg investments they gave me these top ten reasons for why you shouldn't invest in commercial or other type of real estate and somebody got it thank you Eric you actually got the joke okay seriously we're gonna talk tonight about how to invest a hundred thousand dollars and turn into four million dollars actually more than that in commercial real estate and I'll get back to that in a second first of all I'm thank BiggerPockets for putting on the first national conference if you haven't signed up yet it's gonna be in Nashville Tennessee at the Gaylord Opryland Hotel and you can invest a little bit of your time whether great articles that came out in bigger pockets this week was real estate is overheated invest here instead thank you Enrique and that article says you should invest in yourself Warren Buffett said what's the greatest investment opportunity on this planet he said invest in yourself so investing yourself come to the BiggerPockets conference I'll be speaking their brain and tournament be there others will be there mat Faircloth lots a great folks date folks David Green Mindy Jensen great crew will be speaking at the BiggerPockets conference October 6 through 8 please enjoy that with me and please come up to me and say hi also love to encourage you to enjoy to join BiggerPockets pro we'll talk a little more about that later so how can you take $100,000 and invest in real estate you probably think well I'm gonna have to build up a massive massive portfolio of single-family homes I'm gonna have to fix toilets and I'm gonna have to not hire a property manager and I'm gonna have to do all kinds of things I hate but at the end of the day when I'm 80 years old I'll finally have made my goal and I'm gonna actually recommend that you consider a strategy that I'm probably not gonna get a lot of happy people from by the way if you are happy right now please give me a thumbs up a like or a share so BiggerPockets doesn't fire me before the conference seriously we would love to get a little thumbs up from you to tell Facebook and YouTube and everybody that you like what BiggerPockets is doing thank you so much Johnny all right so let's talk about commercial real estate now if you're investing in residential real estate you are in a situation where your value is based on comps that means if your chip and Joanna Gaines jr. and you might be you can take a $300,000 house in a $300,000 neighborhood buy it for 250 and add not $50,000 but at half a million dollars in improvements putting gold-plated fixtures finish the Attic build out the back finish the basement add you know all kinds of beautiful fixtures and everything else and you've got eight hundred thousand dollars in it well you probably know this folks you're not gonna get eight hundred thousand dollars out of it in fact you'll probably get more like three hundred thousand dollars on up because residential real estate is based on comps comparable properties it's based on the other properties in the neighborhood and you're not going to get a whole lot more than that now commercial real estate is very different commercial real estate is based on a value formula which we're gonna go over and if you're gonna take notes this would be the one technical thing you want to take notes on so grab a pen commercial real estate you can actually force appreciation and this is why people like Brandon Turner have jumped from residential into commercial real estate and when I say commercial real estate I don't just mean office buildings and retail and malls I mean any larger scale real estate so that can be multifamily of you know five units or above technically it's considered small commercial mainline commercial multifamily is like 80 units or above I'm thinking of self storage I'm thinking about mobile home parks I'm thinking about senior living facilities and others so if you are investing in commercial real estate your actual value of the property is going to be based on value formula value formula is value equals net operating income divided by rate of return now more specifically it's the net operating income the income from operations not including the debt service divided by the cap rate now the cap rates also known as the capitalization rate and that is the rate of return that a typical investor expects to get for this type of asset in this market at this time and your cap rate used to be running eight nine ten percent on average right now with lower interest rates and the extreme demand for real estate it's running more on the order of about four and a half to six and a half percent these days you can sometimes get a seven or eight percent cap rate but it's hard and if you hold on till the end of the show I'll tell you how you can actually do that but anyway it's the net operating income divided by the rate of return so if you can increase the numerator and decrease or compress the denominator you can actually dramatically affect value and if you use leverage safe leverage hopefully you can actually increase the value of your equity even more okay so I'm gonna go through three examples and then I'm going to tell you how you can turn a hundred thousand dollars into five million dollars four million at least in commercial real estate so let's talk about a mobile home part now these are theoretical numbers they're actually based on all real examples that I'm very familiar with my company Wellings capital invests in self storage mobile home parks and a little bit of multifamily and so these are taken from real examples but I'm trying to keep a little bit theoretical right now because I don't want to get in any trouble for advertising something that you know that that doesn't happen because the economy can change things can change cap rates can change interest rates can change and between now and the time of sale of the property the whole situation could be different than it is now but let's take a mobile home park that was purchased for five million dollars okay five million dollar purchase price and that would be based on a sixty percent loan to value ratio you would have three million dollars in debt and two million dollars in equity okay three million in debt to a million equity sixty percent loan to value ratio I think we'd all agree that's fair safe for most properties and two million dollars in cash put into it from investors from like a syndication or your own cash okay got that all right now this operator went in there the asset manager went in after closing and he said wow there are work trailers and boats and RV's everywhere and some of these mobile homes have three or four or five or six cars parked out front some of them are on jacks we're gonna have to fix and clean up this place so he said okay we're gonna take an acre of land out front near the front of the mobile home park and we're going to pave it and then we're gonna put a nice fence around it and a nice gate with a keypad and everybody who has a boat or an RV or work trailer or a fifth or six car has to park it in there in the future and we're gonna charge rent for that not a whole lot but we're gonna charge rent and then when that's all filled up with the park people we're gonna go out to the community and advertise on Craigslist and we're going to advertise we're gonna advertise the opportunity for boat or RV storage and so that's what they're doing now it only costs $100,000 to pave that area okay remember it's a five million dollar purchase price they just spent $100,000 on this paving and fencing when this is full this lot for storage is going to be able to be rented at $10,000 a month now do the math starting to sound pretty good $10,000 a month is $120,000 a year my mama always said I was good at math and $120,000 a year is the increase in net operating income okay so remember our value formula value is net operating income divide it by cap rate $120,000 in net operating income divided by a an average cap rate of about 6% it could be better than that by the way I know it's better for the owner but 6% cap rate higher 20,000 divided by point zero six yeah is hope that came out like a drumroll two million dollars two million dollars increase value that's a 40% increase in value of this asset but it's better than that because remember there was only two million in equity and so that equity just went up from two million the bankers got none of this increase and the bank the equity went up from 2 million to 4 million the equity was doubled so doubling our equity with one change in this park but wait a minute they're doing all kinds of other things they're raising occupancy they're raising rents a little bit not too much they're bringing in decks and and sheds and they're they're renting carports they're doing other things they're they're passing back the utilities to the tenants and they're doing different things to raise income but that one change brought about a hundred percent at least on paper increase in the equity value Wow that's pretty powerful but there's lots of other things that can be done take a self storage facility imagine you are going into a self storage facility a typical mom-and-pop facility has maybe occupancy of 70 or 80 percent and the rents are maybe 25 percent below market now if you can raise the rents by 20 percent let's say you are increasing the income instantly by 20 percent okay now if you can also raise occupancy by 10 percent you're raising the income by another 10% compounded on top of that 20 so that's like 30 32 percent increase in income from raising the occupancy and the rent now let's say you're also adding ancillary stuff like you're selling LOX boxes tape scissors you're charging late fees you're charging an admin fee now you've raised the rates by an additional 5% your income by 5% you're up to 37% increase and let's see on top of all that you start a u-haul operation there it's very easy to do and you add another three thousand dollars a month to your income let's say that's another eight percent and now I lost track of where I was I think that puts us up to a forty five percent increase in net operating income that's a forty five percent increase in the value of the facility that's not including a whole lot of other things you can do like building a new climate-controlled building which is even better than that but forty five percent increase in income with very very little money spent out-of-pocket these are mostly operational and management changes okay that sounds really great forty five percent increase in income is a forty five percent increase in value but that's not all you get folks you actually get an increase in equity that's multiplied by the leverage that you put in so if your leverage is sixty percent that means you're dividing by one minus point six or you're basically multiplying by two and a half times so forty five percent increase in value of the asset multiply that by two and a half times and that is something like over a hundred percent in Qui increase in equity so the equity holders that people who invest it in the steel if those operational changes were made would have over a hundred percent increase in the value of their equity through appreciation that doesn't include the cash flow it's pretty powerful folks so what I'm saying is commercial real estate has an opportunity to force appreciation and dramatically increase the equity one more example okay now this is a little harder to get your arms around so listen up if you can compress the cap rate that has a dramatic impact on the value as well so let's say for this example you are going in and you're making this into a professional operation you're turning it from a mom-and-pop kind of a podunk place into a beautifully run well-oiled machine with systems and procedures and policies and a beautiful logo and a website and of course with all that you're gonna dramatically increase the income but I'm not arguing that right now I'm saying let's just assume you keep the income the same now remember our commercial real estate value formula value is net operating income divided by the cap rate now if you can increase a professional if you can make your operation into a professional operation and sell to a REIT like a real estate investment trust or life insurance company or a private equity group you can dramatically compress the cap rate so let's say you buy it at seven camp seven percent rate of return seven percent capitalization rate seven cap if you can compress that to the buyer to a five point four percent cap rate and folks I'm using five point four for a reason because a lot of deals that we've invested in recently with an operator we've invested in they've been getting about five point four percent average on the sale of the last twenty one assets on average they've been busy five point four percent cap rate last I checked if you can go from a seven to a five point four percent cap rate you can do the math on this holding the income constant that's a twenty eight percent increase in asset value meaning that if you can go in make this a professional operation you can turn it in to a you can increase the asset value by twenty eight percent by finding the right buyer but remember our friend leverage leverage at sixty percent means you're dividing by 0.4 percent or multiplying by two point five x twenty-eight percent increase in value times two point five x is something like sixty or seventy percent increase in equity you got seventy percent for perhaps at appreciation by this one move of compressing the cap right now what if you could do several of these well this is exactly what a lot of capital of commercial real estate investors are doing these days and this is one of the reasons the Forbes 400 the wealthiest people in America invest in commercial real estate because a great operator with a great acquisition strategy and a great pool to sell to can actually do these kind of maneuvers in fact we are seeing Wellings capital my company and that is investing with three or four operators who are doing this type of thing routinely one of them has an average if you're familiar with IR our internal rate of return their average annual return IRR in this case is literally over sixty three percent and that's documented by a third-party sixty three percent return annually okay another one of the operators has a return to investors of about forty three or forty four percent that's the one I just told you about a minute ago another operator is in the twenty twenty five percent range okay now assume you had a fund or a mixture of several of these assets and you are averaging again historically speaking you could be averaging over forty percent annual return from investing in these types of assets now I'm gonna take that number and cut it in half for our illustration here assume you could actually get a 20 percent return now 20 percent return under lots of standards is insanely high by the way that's a simple return it's not compounded annually okay Buffett has averaged warren buffett is average 19 percent annually but that's a compounded rate of return and so that makes a huge huge difference but 20 percent simple rate of return assume that and let's assume your strategy is to refinance every six years okay by the way a lot of the operators we've invested with have gotten these massive returns I just told you and they've been able to refinance or sell these assets every one of them 2.7 years on average another about three years on average okay but let's say it takes let's say your annual return is half as much as they've been getting like 20% and let's say it takes twice as long to turn an asset in other words sell it or refinance it let's say it takes six years instead of three I'm trying to be conservative folks okay so if you I told you at the beginning of the show and the title of the show was how to take a hundred thousand dollars and turn into four million dollars well if you took a hundred thousand dollars and invested it now and you were able to get these returns that I'm talking about and you know I don't have to disclaim this because it's obvious that you might not be able to get these type of returns or if you were investing historically with these guys you'd be getting much better returns if you invested $100,000 and you reinvested all of your distributions along the way assuming an average annual cash flow of two percent the first year six the second 10 the third twelve the fourth eight percent every year after that let's say you were assuming that you were going to you were going to refinance the asset and give you all your principal back in six years like I said you could do it in less than that at the end of six years if you read if you read invested all the profits along the way your hundred thousand would turn into two hundred and twenty thousand one hundred eighty one dollars using my assumptions okay now you either sell or refinance them and now you take that two hundred twenty thousand reinvest it you do it another six year cycle that turns into double that what a surprise four hundred eighty-four thousand now we're at year twelve okay now you do it again from year twelve to eighteen and that turns into a higher number of one point zero six seven million okay one point zero six seven that was more than double the first time by the way in that time as well now you do it again from their cycle from year 19 to 24 I turns into 2.3 for 9 million and by the way you're using 1031 exchanges Charles thank you all along the way I'm assuming no tax is paid along the way that's perhaps a bad assumption and if you go another six year cycle up to year 30 your total including all the reinvestment of dividends including no capital gains taxes along the way is five point one seven one million dollars folks this is simple math I've got a spreadsheet here to prove it and I can share the spreadsheet maybe if you asked me you have to go to my BiggerPockets profile to ask me about that okay now if you had to pay capital gains taxes along the way and let's just say there were no state taxes but you were paying fifteen percent capital gains at every six year increment it's gonna dramatically chop down your returns from five point one seven one million down to three point nine eight five million in folks there it is hundred thousand dollars turns into rounded off about four million dollars in 30 years now I didn't say it'll be fast I didn't say it would be easy I didn't say there wouldn't be hard times along the way but it is possible that you could do this and this is why people who have a lot of money invest in commercial real estate so I'm gonna take a quick drink of water here and I'm gonna try to get to your questions now if you've put in a question on Facebook I'm gonna need you to copy and paste and put it in again if I don't get to you because my facebook feed just drops the questions off after about five YouTube I'll do my very very best to get to as many of your questions as I can there's a lot of them and I really do appreciate this by the way if you want to learn how to save on capital gains taxes without doing a 1031 exchange we're making a recording tonight on how to do that there are about five different ways including Opportunity Zones deferred sales trusts installment sales 721 exchange in a 1031 exchange so we can talk about that I've got two tax webinars I'll share with you if you want to reach out to me at BiggerPockets so hey bruh ham from Atlanta a seam where do I find such deals that's the hardest part for you and everybody okay I don't have 20 minutes to do this whole thing right but I'll tell you uh seem the best way to do this thanks Robert that was nice you too say the best way to find these deals us seam and everybody is to find a fractured ownership base okay I'm gonna do this really quick there are 44,000 mobile home parks in the US about 39,000 or more are owned by mom-and-pop owners okay many of them most of them are probably not that well-run and they can be acquired and upgraded like we talked about self storage there are about 53,000 self storage facilities in the US that's as many as Subway McDonald's and Starbucks by the way combined but of the 53,000 well over 30 possibly up to 40,000 or run by small operators a lot of those are mom and pops and they cannot maximize nor do they care to maximize their profits they don't know how they can't and so what happens is you can acquire some of these pay them a really good price by the way and you can do the changes I just mentioned now my company Wellings capital this is what we invest in and these are the type of reasons that we love fragmented ownership a seam because the owners the owners of these properties don't care - or they don't know how to well they don't have the resources they to upgrade these properties their attitude is hey if you build it they will come and they did for years they don't even have websites lots of them I've got story after story of how this works it is possible I took a long time to answer a seams question because that's the most important question that any of you should be asking is how do you find deals like this by the way if you're in a day job you can do what I said I just talked to a doctor yesterday who doesn't want to quit his job he doesn't want to quit making his you know to three hundred thousand I would guess per year he can do this with passive by passively investing a hundred thousand dollars or hopefully a hundred thousand a year maybe and maybe you're in a position to do that as well now if you want to do it actively you need to get involved with a syndication and that's where you raise money from other investors and our friends over at good egg investments Julie and their team are actually teaching people to do that and there's other people that teach you to raise money for syndications as well Alex Anderson says biggest challenges when creating value add for multi-family Alex the biggest challenge is 93% of multifamily over 50 units right now are owned by corporations and they've already wrung out most of the value and it's really really hard to find upgrades that are meaningful to allow you to get a great return in multifamily I wrote a book called the perfect investment not arrogant title right and it's about multifamily investing it talks about how to wring out all the profits you can out of multifamily there's a better book on multifamily it's by Steve Burgess BER GES the complete guide to buying and selling apartment buildings you can get my book or Steve's on Amazon and I don't know Steve but he wrote a great book shurik says what kind of cash on cash returns do you recommend to aim for in which asset class shurik you know I really wouldn't want to c4 I wouldn't want you know Buffett Warren Buffett talks about having a margin of safety if you aim for 8% you might end up with six or seven and if there's a downturn or a softening and rents you might end up with less so I wouldn't aim for anything less than 8% in apartments right now that's really hard to get in self storage and mobile home parks it's you know again from buying from the right Celer it's not at all that hard to get and so I would recommend 8% or more maybe a little more with margin of safety okay Isaac Harris says what resource do you recommend for raising funds for syndication so there are some really good people who trained you how to raise money for syndication I was trained by a company called 37th parallel and you can reach out to me on BiggerPockets and I will make a personal introduction to their CEO there's also good egg investments which I mentioned already and they train people in this and there are other people who will train you there's great books out there my favorite book is pitch anything by Oren Klaff I don't recommend every single thing he says that's my favorite book up until recently my good friend Matt Faircloth wrote raising capital for your real estate deals Matt Faircloth wrote that book and you should check that out it's on the bigger pockets bookstore and I highly recommend you check that out Aseem says how do i watch a recording this whole video it's gonna be published right after this is over thanks les seeing z2g says can you post a link about the book and is it available in Kindle I'm sorry I pronounced your name wrong Zoo do you can get it on amazon.com it's I'm laughing because I said calm it's called the perfect investment you can reach out to me at Wellings Capital dot-com or you can actually get it on Kindle as you said DPS student says I own a 25 unit mobile home park no loans Wow good job I own a 25% share selling for $400,000 right outside the Smoky Mountains in Tennessee ok so if somebody wants to reach out to DBS student he can find out more large 28 if someone has $100,000 to lend can we contact your group to fund your projects that's really nice Lars you know reach out to us again I'm Paul more and I'm on BiggerPockets and you can check it out there you're welcome to and you know to contact me there oh geez fish room hello from New York Sophie says great video thank you it's so kind of you this doesn't help anyone who wants to start with a hundred thousand dollars says Joe hey Joe that may be true can you elaborate on what you're saying there I get it but you're okay I see what you're saying you said thumbs down because you can't get to a two or five million dollar property Joe yeah you can I have myself and I know lots and lots of people who invested $50,000 and they're part of a syndication that joins together and I wasn't going to talk a lot about that but I highly recommend that some of you guys pull your money together and invest together in a group Thanks DBS she says I high love to know your best guess for someone starting with lower startup costs can you elaborate on that a little bit I really appreciate that thanks Sophie okay aja G says just entered is he talking about syndication yeah I'm often talking about syndication and being a professional operator Sam says that's great but you're starting with 2 million of capital and adding a hundred thousand in capex to increase it you're not starting with a hundred thousand cash yes Sam that's where a syndication comes in you want to be part of a group where you may have 20 people putting in a hundred thousand each or twenty one in this case to get to 2.1 million great question thank you and Joe thank you for your comment I really appreciate you keeping me honest here man Alex says if you can't find good deals of multifamily in your areas building in creating a new multi-family a good option Alex yeah right down the road from me somebody just built a four-plex for students at Liberty University in Lynchburg so yes I would consider that for sure Sanjay bojay says I have invested in do flex properties in California how many of em do you recommend selling using a 1031 exchange in exchanging for a multi-family I don't want to be over leveraged but I certainly want to take advantage of low interest rates Sanjay I you know I don't know it like depends on the value I mean if you can embed if you can get out of California investments and into the heartland of the u.s. you might be able to trade a four cap a four percent cap rate investment which is really expensive for a six percent cap rate let's say in Kansas City I made that up because it's in the middle of the country and in that case you're buying you're selling high and you're buying low okay and that might be a good thing to do by the way that's one of the reasons I really like the deferred sales trust and if you want a copy of our video talking about why the deferred sales trust works so well then you can get that by contacting me at BiggerPockets again I'm Paul more JM says I have the cash I just have trouble finding the multifamily properties man me too we're all having trouble there's seven reasons we've identified multi families overheated and I could go through these if a you know two or three of you asked me but it's not that important the point is they're definitely overheated right now now five years from now maybe we'll think today was cheap because maybe it's gonna go up more maybe interest rates will go negative who knows Jeremy Butler says I learned a lot from this thank you closing on my first 40 unit thumbs up - Jeremy Butler a great job man closing on Friday Thrilla juice says what do you recommend for someone who's never invested where should I set my sights you know maybe get educated you're in the right place here on bigger pockets bigger pockets is the perfect place to learn about investing without the hype and if you haven't got a bigger pockets Pro membership I would recommend that you join me and my friends here Danny Ramos and others and in join get become a bigger pockets Pro member where you can get all kinds of inside information contracts legal stuff discounts all kinds of stuff it's the best investment I have ever made in my almost 30 years as an entrepreneur try Thornton says can you do this through Roth IRAs absolutely yes you can JM do you mint or Jam I am actually setting up a mentoring group and it's not going to be a long-term mentoring process I don't do you know training and education but I am gonna take on like two or three mentor students I'm actually making a decision on that this week and who that'll be if anybody's interested in applying again you can contact me at bigger pockets on my profile or at my website Wellings capital comm jiffy 7 says what do you think about crowdfunding sites such as fund rise and Realty mogul as a way to invest in commercial property folks on DBS says I wonder how I can get in a syndication well there's your answer crowdfunding folks you can crowd fund and you can get involved in some of these great deals often you have to be an accredited investor but you can get involved in a lot of these great deals that used to be reserved for just the super wealthy the JOBS Act that was passed under the Obama administration plus the tax reform act that was passed under the Trump administration combined together making real estate investing the most powerful and now finally accessible asset class that I know of on the planet and so yeah I really do like the crowdfunding websites warning Will Robinson you can't guarantee that just because they're on a crowdfunding site it's a good deal there are websites that there are crowdfunding sites where people have lost money just like anywhere else it can happen it can happen to you it could happen to me it can happen to anybody on any site it's not a guarantee but crowdfunding sites are a great place to access a lot of good deals please do your own due diligence though okay Ramos says if you had $100,000 would you try to find a storage unit operator to get these returns or did you try to purchase your own great question Matt says storage is very profitable yeah Rema unless you know self-storage really really well and I would presume that almost everybody on here doesn't I would recommend joining together with somebody else scott Meyers has a probably five times a year he does this wonderful mentoring program for self storage and I have a potential discount on that I know how to get if you want to reach out to me on bigger pockets the problem is he just finished one of his web seminars like yesterday or the day before so he'd probably be doing another one soon I do recommend you join together Remo with others invest with a great operator or invest in a great fund or partner together with others who know what they're doing I wrote a book on Self Storage it's not published yet but I wouldn't go out Rema and do my own self storage or mobile home park I would definitely partner together with other people who know more about it than I do and I wrote a book on multifamily I wrote a book on Self Storage and I have a FREE special report on mobile home park investing that I'm about to release so you can contact me for that Isaac what route would you go in Phoenix apartment or storage I would try to get a fragmented or a mom-and-pop owned storage unit hands down however I will tell you that in there's a lot of new jobs coming into Phoenix there's a certain area of Phoenix I can't remember where but there's thousands maybe over 10,000 new jobs coming hmm may want to consider that if you can find apartments or storage near there someone says how much do you charge for your mentoring group you can reach out to me on my bigger pockets profile thanks for asking Vania Kyle says if I'm not accredited but have a HELOC 460 thousand good how should I put that money to work try to find a deal that you don't have to be accredited for I know two or three myself and I recommend that you consider that thanks god I love my lamp too I got that in Marietta Georgia Cody says how would you approach the owner of an off-market multi-family property Cody try to get in front of them try to buy them lunch brought right in my handwritten letter do not don't write him a typed letter or a postcard or reach out to him through email you probably know their email anyway right Janet says does your mentor program have a price and do you need prerequisites Janet's feel free to reach out to me we can chat all about that off line cuz I'm really not like really supposed to be doing a lot of advertising here but I am trying to answer questions Scott says what do you think about investing in off-campus student housing yeah you know Scott I mean it's pretty good my one fear with that is Liberty University which is right down the road from me has like what 16 thousand students on campus and all these beautiful dorms and off-campus students but they have a hundred thousand students online if that's the trend over decades if more and more people are gonna go online I wonder if student housing could fall out of favor someday my money would be on senior housing if you're gonna do a niche and you can see why students don't have to have a place to live on or off campus but seniors do need a place to live and seniors are living longer and longer every year as you know Christopher says do you have any advice on how to underwrite a deal to see how good of a deal it is for that neighborhood yeah join BiggerPockets pro Christopher and get the neighborhood scout program neighborhood scout is a great tool and you can get a discount on it if you joined BiggerPockets Pro neighborhood scout has all kinds of data to help you scout out a neighborhood and as far as underwriting your problem gonna need to find a mentor and I don't not talk about me now I'm talking about like an apartment mentor like you know someone like Joe fearless or I'm drawing a blank 37th parallel who did my mentoring and others they will teach you how to underwrite a deal good egg investments we mentioned already today they're doing some training coming up here in the near future as well Cody Elliott says oh I'm sorry mark says if you had 80,000 in cash and a HELOC for 130,000 what would you do so if I had 210 thousand mark I would split it up if I could among four investments at fifty two thousand five hundred each I would try to spread my money out if you're accredited even if you're not accredited I would do the same thing mark I would not put it all with any one investor not with anyone's indicator I should say or any one fund even though I love having people invest with us I don't really recommend that anybody put all their money in one place that's why we diversify in the first place as a fund but I think you should go ahead and diversify month funds and operators as well to even be more safe Jordan says should you use a property manager for a small multifamily investment Jordan if you don't you might be crazy in a short time managing properties can make people nuts and if you have the temperament for it check check out the some of the personality profiles and things if you have the temperament for it you might be able to pull it off it's really really hard folks you know one way to manage property is not pay a property manager 10% but you basically say look I'll put the tenants in I'll screen them I'll take the deposits and I'll turn them over to you mister or missus property manager and you can possibly get them to do that for 5% stead of 10 it's kind of a nice mix you do a concentrated burst of effort up front then you turn over to the property manager for the long haul Eman says what do you think of commercial real estate like a gas station do you think the whole gasoline industry will be replaced with electric cars in 30 years yeah you know that's a great point I don't really have an opinion on that's not something I invest in Ahmad so I really probably shouldn't comment by the way if anybody else wants to comment like any mods question or anybody else feel free I don't have all the answers here Janice you're welcome Jordan Janice says how can a student with about 5,000 to spend start making passive income great question Janice Janice I would go to a crowdfunding site and try to find a crowdfunding opportunity where you can invest $5,000 Nathan hoo-wee says do you recommend house hacking to get started in real estate investing I'm looking at a quad absolutely I recommend house hacking if any of you don't know what that is that means you live in a unit and you rent the others the problem is you need to have a bad cop make sure Nathan that you have a bad cop somebody in your life who's holding you accountable so you can go to those tenants in fact you'd be great if your tenants don't even know you're the owner you're just another guy in unit C right ok so that's just my advice on that but yeah I recommend house hacking have a bad cop or don't even tell them here the owner better yeah mike says if you had a hundred thirty thousand to one to get a commercial would you have enough or would you have to partner Mike you probably have to partner with a hundred thirty thousand you might be able to buy a five Plex which is the smallest multifamily you know if you wanted to get into self storage or mobile home park with a hundred thirty thousand down you'd probably be a little bit on the small side and maybe you'd have to end up managing yourself which like I said can drive you crazy trust me okay Jared says have a couple large storage buildings in my yard 3,500 square feet do I need an LLC for boat storage yeah Jared I I think you should have an LLC check with Scott Smith Royal Scott Smith he wrote an article he's written articles in bigger pockets Scott royal Smith and he can talk about asset management and all of that stuff but yeah I would think you would and I yeah that's a great use for your 3,500 square foot facility might be able to park some boats outside as well you might need a business license though okay we're getting into the Far around I didn't do that as well as Brandon does but we're down to the last nine or ten minutes so I'm gonna be answering these questions really in completely and incompetently seriously pretty fast here so angel says I have a full-time job and do real estate on the side buy and hold I want to go into real estate full-time I want to get in real estate but I want to get a HELOC which is a home equity line of credit folks first should I go full-time and do the HELOC later or get the HELOC then quit my job angel the most people would say get your HELOC first and make big changes second you should run that by your banker to be sure that they're okay with that Dodd says where do I start to invest in Senior Living real estate there are some syndicators out there and some funds they're investing in senior living I don't have any I can recommend we're researching at Wellings capital for the possibility of doing that in the future your baby's daddy says I have to our thousand liquid to invest should I buy a multi-family or purchase a couple condos in Las Vegas you know Las Vegas Las Vegas has been really really high and really really low in the past and a lot of people lost money there a lot of people have quadrupled their money there consider reading the book out by Howard Marx called mastering the market cycle getting the odds in your favor Howard Marx talks about when to invest in places like Las Vegas and honestly I kind of think not right now would not be the best time that's my opinion Janna says what would you say housing for the disabled is it good would you say it's a good investment yes I would but you know again you've got to get the right deal on the right market all that howard says if you had half a million dollars what would you invest in Philadelphia Jersey I would actually go out and find somebody who's investing in storage and then again this is what I would do and because this is exactly what I am doing so I'm being super honest here Howard I would certainly go out and find somebody and diversify your money across self-storage mobile home parks and perhaps some very conservative multifamily that's what I would do Howard Gianna more says if you have 350,000 in equity what's a good way to invest in real estate Johnna again like just like I said to Howard I'd recommend that you consider being passive like doing a ton of research on the syndicator sponsor whether they're through a crowdfunding site or whoever you get but after you do that research I would invest with them passively that's what I'd recommend that's again that's what I'm doing myself Tony says is it is wholesale a good way to get into real estate with our 3,000 to invest yes it is and you may also want to consider a lease option sandwich I'm so sorry I don't have time to explain what that is but yes wholesaling is a lot of work I mean a lot of work and you're competing against the big boys but drive around and try to find your own deals and you might be able to get one or try to get one off the courthouse steps my friend in Roanoke Virginia there they went to the courthouse steps and a $200,000 plus nice home just sold for a hundred and seventeen thousand with only one bidder Wow Scott says pick the pick first pick the first area you think of as a great place to do single-family homes in a good school district somewhere in the southern smile Scott somewhere between you know like Charleston South Carolina down through Alabama Georgia Texas Nevada up to like Nevada I would avoid California actually I wouldn't even do a Nevada what do you think about austin i mean it's great what do you think about Charlotte I think it's great Reginald it's a great great city Austin's growing Charles but man it is really heated up I've been avoiding Austin for a while big well but my friends at there's a company there that is doing great in Austin and you know it could be great Miguel says if someone could go to college for free would you say they should get a bachelor's degree and get out debt-free or hot hustle just side hustle multiple jobs Miguel if you can get a free college education man you're here on BiggerPockets I would recommend that you consider trying to get a degree in real estate Jerry Keller the most famous real estate broker in history got a degree in real estate and lots of others have as well so yeah that's what I would do thanks Scott that's nice of you Abraham says I'm interested in commercial properties and especially multi-family me and my wife owned a number of them that's great Abraham it's awesome get Steve Burgesses book the complete guide to buying and selling apartment buildings like I said before it's better than my book which is the perfect investment but both are pretty helpful BiggerPockets is going to come out with a new book on multifamily investing soon so we've got five minutes left if you got one last quick question fire it off now folks okay mike says i have an opportunity to buy a 42 unit apartment near a college but it's all 1-bedroom 1-bath should I run or look into it 11.6% cap rate Mike there's an article today and I don't oh it's a national real estate investor and our a I came out today it talks about how smaller apartments are running better than larger right now so man if it's true legitimate at 11.6 percent cap rate and it's not a C minus or D property man yeah I would consider that Janice Sutton any other YouTube channels I recommend I would recommend a lot of podcast Janice I'm have a podcast called how to lose money it's a wealth building podcast but there are other real estate podcasts that are more focused on real estate than mine and I'd recommend that you do that Jarrod says who would you recommend I contact for a business license for boat rental check with your local city or county there's an office that gives out business licenses you can just call them Niecy Knight clay says aside from housing what's a major need for seniors oh you got me I don't know I'd like to get somebody else to answer that I'm sorry Michi Abraham condos yeah I think it'd be a great idea to be a member of bigger pockets bigger pockets pro I always think that's a good idea if you're interested in constructing condos that's a great idea flipping homes a bad idea no it's a great idea but it's harder than it used to be DBS where the best places to find mobile home parks for sale there are like five major websites and there are actually a hundred right at about a hundred brokers nationwide that do mobile home parks you can check out the bigger pockets podcast from I think it was July 4th where they interviewed a guy about mobile home park investing a guy named Frank Rolfe Justin Hilton says I have an opportunity to purchase some land owner financed in a rural area Ned some mobile homes Justin I would not own a single mobile home ever because I've owned four of them in the past and three of the four turned out to absolute disasters I hate to burst your bubble my friend reach out to me I can't explain more Frank we're off the guy on the BiggerPockets podcast said the same thing he's the fifth largest in mobile mobile home park owner in the US and he says never never owned a mobile home if you can help it I just read his book Trey says his wholesaling still a good start yes it is Jeremiah what seniors need flipping homes best places to find okay better invest in multifamily or single-family homes if you can get a good deal go with multifamily Tico says what do you think about Airbnb I think corporate rentals and air B&B arbitrage is a great idea I have a front another friend somebody emailed me recently who said thank you thank you Paul because of you I making I think clear said seven thousand or seventeen thousand a month him and his buddy because I gave them an idea on how to do corporate rentals and air B&B and I can give you the same information if you reach out to me on BiggerPockets it's called corporate rentals or Airbnb arbitrage you can learn more about it by reaching out to me Howard says what's the best crowdfunding Thank You Abraham thanks Perry you guys are awesome thanks Hilda Justin please give us a thumbs up a like or share we'd really appreciate that thanks Patrick so sweet of you what's the best crowdfunding site so fun rise Realty mogul one of them just went bankrupt recently or there went there about two Realty shares or you know I shouldn't say I don't know which one check it out yourself but I really like crowd Street crowd Street is awesome and I would definitely invest with deals on crowd Street Nietzsche says thanks for the insight and then I didn't answer your question Nietzsche sorry Fikri says health service okay so Fikri says health services Nietzsche thanks Chris what about using the 200,000 to put 40,000 down on for townhomes valued at 120 then refinance after six months yeah if they're appreciating your baby's daddy yeah I would consider doing that I would definitely consider it okay thanks Chris thanks Fikri thanks Howard okay you guys are awesome thank you so much I had a great time and I hope you did too hey check out the BiggerPockets pro membership check out the bigger pockets annual conference in Nashville October 6 through 8 and I hope to see you all again if you enjoyed this please give us a thumbs up a like or a share and let BiggerPockets know that you want to see more of this type of information to close out we're gonna go with Charles here who says put a cell tower on that land yes Charles I love that idea and I would do it myself someday I'll tell you how I tried anyway take care of you guys have a great day and we'll see you next time here at BiggerPockets
