Seven Years to Real Wealth

You have to be rich first in order to make money in commercial investing, right?

Can an average Joe or Josephine start with nothing and create enough wealth through income property investing to be financially independent in today’s economy? The short answer is, “Yes, what are you waiting for?” But since we like our blog posts to be longer than an average Tweet, let’s go into more detail about how you can do this. There’s no magic to the number three but studies have shown that our human brains like to think in triplicate, so here’s a three step process to follow and grow wealthy with property investing.

1. Get Educated
This one is important enough that Jason Hartman lists it first in his 10 Commandments of Successful Investing. Note that this DOESN’T say you need to spend a zillion dollars on every get rich quick guru’s seminar, book, or video series. With the amazing amount of free information available on the internet, it’s simply not necessary to spend a single red cent in order to develop a basic level of competence in regard to investing. Hopefully, you’re already aware that the blog and podcast archives at JasonHartman.com are the literal mother lode of information for the budding property investor. Don’t be stingy! Learn all you can.

2. Get Started
One of Jason’s favorite sayings is, “Don’t wait to buy real estate. Buy real estate and then wait.” This is a catchy way of reminding new investors that history has already proven real estate to be the best investment you can make. That issue is settled, so what are you waiting for? Once you have achieved a certain level of knowledge on the subject, it’s time to get busy and buy your first property. Don’t wait for the perfect time to pull the trigger. Perfect doesn’t exist. It doesn’t matter who’s president or what the weather is like outside. YOU control your own destiny and success and the sooner you get proactive about doing that, the better.

3. Get Diversified
One thing income property investing has in common with the stock market is the need to diversify as quickly as possible. In a perfect world, you would begin by buying four different properties in four diverse geographical areas. This offers financial protection against the possibility that one property doesn’t generate the kind of cash you planned for. At the Commercial Investing Center, we realize not every investor is in the position to buy four properties right off the bat. That’s okay. It doesn’t mean you should wait. Just make sure that the property you’re contemplating buying makes financial sense from day one.

If you’re not excited about the possibilities of becoming wealthy in the next seven to ten years through real estate investing, you should be. Head over to JasonHartman.com to get busy learning the exact strategies he used to become a multi-millionaire before the age of 30. (Top image: Flickr | Eric Marttinen)

The Commercial Investing Center Team


Commercial Real Estate Isn’t Just Apartments

We’re going to be talking about different types of commercial real estate investments here but keep in mind we do NOT suggest you collect all your spare change and put it down on a multi-million dollar property. At Commercial Investing Center, we’re still not too excited about returns in commercial property except for perhaps mobile home parks and self-storage facilities. Having said that, let’s take a look at the various types of commercial options available if you were in the market.

Apartment Buildings – Many people associate commercial property investing with apartment buildings, and for good reason. When the market is right, this can be a highly lucrative way to go. Properties run the gamut from small five unit buildings to multi-story behemoths. Banks love to lend on them and the cash flow potential is excellent.

Office Space – Office space isn’t only a brilliant little movie about the drudgery of cubicle life. It is also an alternative form of commercial investing that allows the landlord to profit on something called triple net lease. This simply means the tenant pays you rent plus:

1. All maintenance and repairs
2. Real estate taxes
3. Insurance on the property

Triple net leases are often characterized by long term agreements, anywhere from 5 to 20 years, and normally come with scheduled rate increases – sometimes pegged to inflation – as time goes on. Commercial warehouse space also falls into this category.

Retail Shopping Centers – If we can say anything with certainty about America, it’s that we like to shop. In fact, urban sprawl can be easily traced by following the line of strip malls down Mainstreet, USA. Shopping center leases are usually constructed similarly to those for office space, notably on a long-term, triple net basis, and increased rental rates as time goes on. A quick note about long term leases. They can be a double-edged sword. What if the area where your property is located suddenly experiences a surge in growth, sending real estate values through the roof? There you are with ten more years on your lease. Oops. No, you can’t throw the tenants out into the street unless you have some kind of language in the contract that retains the right of sale for the landlord.

Lodging – First of all, the area of hotel and motel investing can be very tricky. It’s not recommended for most investors to start with. Sure there’s lots of money to be made. There’s also plenty to be lost. The fact most often overlooked is that buying a hotel goes beyond simple investing. You’re actually buying a business, and not an easy one to run at that. In modern day America, owning a business means rules, regulations, and the accompanying headaches. If you’re intensely interested in investing in the hospitality industry, consider buying the property and hiring an experienced company to run it. Just a bit of advice from your friends at CIC, because there are horror stories of naïve investors who find financial ruin with hotels. If that’s your dream, don’t be dissuaded. Just be very, very careful.

Raw Land Development – There are thousands of major building projects under development at any one time in the United States and around the world. If you figure somebody’s making some money off all that construction, you’re right. The downside is that, like lodging, land development from the ground up is not a rookie’s game. It can make you wealthy or send you straight to skid row without even collecting a stale cheeseburger. With land development, it’s a good idea to start small and build your way up into larger deals. Who knows, some day it might be you erecting the next Destin, Florida, condo complex that blocks the view of the sun and beach to the rest of the world. Just kidding. There’s probably not enough space left in Destin to build anything larger than a birdhouse.

That about wraps it up on our quick tour through the various types of commercial property investments. Remember, in our opinion, it’s NOT a good idea to get into commercial real estate right now, with the possible exception of trailer parks and self-storage facilities. But like it always does, the market will turn at some point, and when it does, stay tuned to the Commercial Investing Center to find out how you can learn to generate healthy profits. For now, single-family residential homes are probably the best bet for property buyers. Find more information on this wealth creation strategy at our affiliate JasonHartman.com.

The Commercial Investing Center Team

 

 

 

 

Flickr / compujeramey