My First Commercial Building Investment: A Personal Success Story
Some of you may know that for the past few years I have been into buying smaller 1 - 4 Unit Apartment buildings. However, below is my personal success story on purchasing an 8 unit apartment building on Somerset Ave - my first Commercial level investment!
Like in many businesses, Real Estate investing is about economies of scale. Smaller buildings are known to be as much work, but for less cash flow. So two years ago, I started getting in my head, I had to get the unit count up. That was it for that year--just in my head. This year, I set out to take steps on how to achieve a 5 unit plus in 2021. Three measures I see as vital in getting me here today:
1. Not backing down to the steep learning curve and challenge.
2. Finding good professional guidance.
3. Deciding to partner, and not go at it alone.
Let me breakdown those three measures I took to succeed:
Taking on a challenge:
It was last fall 2020 and I was needing a project for trying to get out the other end of what was in my personal life a really hard time. There was so much I didn’t know, where the larger 35% down payment money was to be found, would “faking it till I made” it work with the industry experts, and how can I make any deals pencil. It all took work. Time to constantly analyze deals. Drive the good ones. Make the calls. Getting knocked down, hit dead ends but realize you just keep going, was the simple way to overcome.
2. Professional Guidance:
The first was the Loan stuff. Real Estate is all about leverage, and on bigger assets, all about debt. Commercial Lending was a new language to me filled with foreign acronyms, numbers, and criteria. If I was looking for others to invest with, and in me, I needed to know how I could guarantee it’s safely. I needed advice on how the Returns, GP fees, and Vesting, etc could all work. Many calls, reworking, not getting it. But again mainly good advisory. In every industry there are experts. If you are a newbie, there will be mentors, service providers, and people you need to seek out to help you get where you are needing to go.
3. Partnering:
In my office at Sotheby’s we say you can try and get 100% of nothing, or a smaller percent of something. Not getting anywhere too fast, I was wise to bring in a partner, and then later on, another. We all have our skill set and where we are strongest. You cannot get as far and as fast as a Lone Ranger. Partnering here rounded me out. What might have been a wobbly table when I was pitching alone, was now stable. A stronger pitch deck could be shared with bigger fish. And when I finally had a good deal in Escrow, to get it to the finish line, having a viable channel to Capital was vital. You can try and take the world on alone, or you can go at it with a team. Succeeding here had so much to do with my willingness to partne
Stay tuned to see how 3400 Somerset Drive transforms this next year, into what I think may be the coolest apartment building in all of West Adams.