Getting Started in Commercial Real Estate Investing, with No Funds; Your Complete Handbook

Greetings, aspiring real estate tycoons! Are you interested in buying cash flowing rental properties so you can have passive income but find you’re not exactly sitting on a pile of cash? Can you get into commercial real estate investing with little to no money? I have some encouraging news for you; starting on your journey in commercial real estate investing is entirely feasible if your bank balance isn’t exactly brimming. 

In this guide, we’ll delve into the strategies and methods you can employ to break into commercial real estate investing, regardless of your financial position. Get ready to jot down some notes because, by the conclusion of this guide, you’ll be equipped with the mindset and mechanics of making your real estate aspirations a reality!

The Influence of Innovative Financial Approaches

Lets tackle the challenge upfront. Venturing into estate can come with a hefty price tag, and if you’re starting with little to no cash, it may appear like an insurmountable hurdle. However, here’s a little secret; getting started doesn’t always absolutely require having your own funds readily available. The trick lies in using the resources that you do have. One resource you’re about to receive is knowledge. You see, most people don’t understand that there are financing alternatives. After reading this guide, you’ll be able to capitalize on the resources you do possess – such as your time, effort, expertise, and connections.

One of the weapons at your disposal is seller financing. When the property owner agrees to a payment plan where you pay gradually over time with an initial payment, it can benefit both parties. They already have ownership of the property. Selling it to you allows them to generate income without the hassle of managing it themselves. It’s a win win situation! Especially if the property needs updating and/or improved management.

Here’s how it works; Imagine you come across an off market property with potential. The seller lives out of state. The property has some vacant units, and many units haven’t been upgraded in several years. The owner has other priorities and is open to selling if you’ll take this problem off their hands. You lack the funds to purchase it outright. Instead of giving up, you suggest a seller financing agreement. You propose making a down payment of 5-10% of the total price and then paying off the remaining amount over time along with interest. This way, the owner receives income while you start building equity in the property.

Not every seller will be open to this idea. However, there are some owners who are willing to work out a deal, particularly if the property has been underperforming.

Approaching the situation with the idea of helping solve the owner’s problem is an important lesson. You want to create a win-win scenario. You want to create the necessary cash flow to meet your financial needs while also solving whatever problem the seller has. Their problem could be the hassle of managing rental properties, wanting to retire, focusing on another business, or dealing with a health issue. It varies per owner. Your job is to figure out what the owner’s pain point is and tailor an offto take that pain away. 

Teaming Up for Success

Another way to jump into real estate investing without having your own cash is to find a partner who does have the funds. This could be a friend, family member, or private investor who sees the potential in your ideas and is willing to provide the capital to make it happen.

The great thing about partnering up is that it allows you to bring your skills and expertise to the table while still getting a piece of the action. Maybe you’re the one who finds the deals, manages the properties, and oversees the renovations, while your partner brings the financial horsepower. It’s a symbiotic relationship that can be incredibly powerful.

Of course, partnering up isn’t always a cakewalk. You’ll need to have clear agreements in place that clarify who’s responsible for what, and how you’ll split the profits. It’s crucial to work with someone who is trustworthy and who shares your vision and values. But if you can find the right partner, it can be a total game-changer.

So, how do you find these elusive partners? Network, network, network! Attend local real estate events, join online communities and Facebook groups, and provide value. You must start with a giver’s attitude. You could offer to run the numbers for people, you could offer to help take phone calls, or whatever it takes to be helpful. Then let people know what you’re looking for. You never know who might be eager to team up with a go-getter like you.

Off-Market Opportunities: Your Golden Ticket

Okay, so you’ve got some creative financing strategies in your toolkit, and you’re open to partnering up with other investors. Now what? It’s time to start hunting for those juicy off-market deals!

Here’s the thing about real estate: the best deals are often the ones that never hit the public market. These are the properties that are distressed, owned by motivated sellers, and just waiting for someone like you to scoop them up. But how do you find them? It takes a little legwork, but trust me, it’s worth it.

One of the best ways to find off-market deals is to build relationships with local property owners, brokers, and other industry folks. Let them know what you’re looking for, and ask if they know of any properties that might fit the bill. You’d be amazed at how many deals get done through word-of-mouth and personal connections.

Another strategy is to literally hit the streets. Drive around your target areas and look for properties that show signs of distress—think overgrown lawns, boarded-up windows, and “For Sale by Owner” signs. These are often owned by motivated sellers who are itching to unload the property and might be open to a creative financing deal.

You can also use online tools like property databases, public records, or Google Maps to find potential deals. Look for properties with delinquent taxes, code violations, or physical distress that might indicate a motivated seller. Then, reach out to the owner directly and see if they’re willing to play ball.

The key is to be persistent and always keep your eyes peeled for opportunities. The more deals you look at, the better you’ll get at spotting the diamonds in the rough.

Adding Value: Your Secret Sauce

Alright, so you’ve found an awesome off-market deal and negotiated a creative financing arrangement with the seller. Way to go! But now the real work begins. To make this investment really sing, you’ve got to find ways to add value to the property that will increase its cash flow and overall worth.

This is where your unique skills and expertise come into play. Maybe you’ve got a background in construction and can oversee a renovation project that will attract higher-paying tenants. Or perhaps you’re a marketing whiz who can rebrand the property and fill vacancies faster than anyone else. Whatever your superpower is, now’s the time to use it!

One of the most common ways to add value to a commercial property is through strategic improvements. This could be anything from updating the fixtures and finishes to adding amenities like a fitness center or co-working space. The key is to understand your target tenant and what they’re looking for in a property.

Another way to add value is through kick-ass property management. This means being proactive about maintenance, responding quickly to tenant requests, and always looking for ways to streamline operations and cut costs. Happy tenants are more likely to renew their leases and refer others to your property, which can have a huge impact on your bottom line.

Sure, adding value takes time and effort, but it’s what separates the successful investors from the wannabes. By constantly looking for ways to improve your properties and better serve your tenants, you’ll be able to increase your cash flow, build long-term wealth, and achieve your commercial real estate goals.

Due Diligence: Your Best Friend

I know you’re probably chomping at the bit to dive into your first deal, but hold your horses for just a second. Before you sign on the dotted line, there’s one crucial step you absolutely can’t skip: due diligence.

Due diligence is basically the process of thoroughly checking out a potential investment to make sure it’s a smart move. This means looking at everything from the property’s physical condition to its financial performance and legal status. It’s not the sexiest part of the investing process, but trust me, it’s essential.

One of the first things you’ll want to do is get a professional property inspection. This will give you a detailed report on the condition of the building, including any major repairs or upgrades that need to be made. You’ll also want to review the property’s financials, including rent rolls, operating expenses, and any existing leases.

Another important aspect of due diligence is evaluating the local market conditions. What are the vacancy rates in the area? What are the average rental rates for similar properties? Are there any major developments or economic shifts on the horizon that could impact the property’s performance?

You’ll also want to investigate the property’s legal status, including any outstanding liens, zoning issues, or pending lawsuits. The last thing you want is to inherit a legal nightmare that could cost you major time and money down the road.

I know it sounds like a lot, but believe me, due diligence is worth every minute you spend on it. By thoroughly evaluating a property before you invest, you can minimize your risk and maximize your chances of success.

Wrapping It Up

We’ve covered a ton of ground in this guide! From creative financing strategies to finding off-market deals and adding value to your properties, you now have a solid foundation for getting started in commercial real estate investing, even if you’re starting with zilch in the bank.

But here’s the thing: knowledge is only half the battle. To really crush it in this business, you’ve got to take action. That means getting out there, networking, and hunting for opportunities. It means being willing to take calculated risks and learn from your mistakes. And most importantly, it means staying laser-focused on your goals and never giving up, even when the going gets tough.

Investing in commercial real estate can be a wild ride, but it’s also one of the most rewarding and fulfilling things you can do. By following the strategies and techniques we’ve talked about in this guide and by always staying hungry and motivated, you can achieve financial freedom and build a portfolio of properties that will provide for you and your family for generations to come.

So, what are you waiting for? Go out there and make your commercial real estate dreams a reality! And remember, if you ever need a little pep talk or guidance along the way, just come back and re-read this guide. You’ve got this!  

Want to book a group coach session with me and Peter Conti? https://shorturl.at/llj6D

To CRE, 

Paul David Thompson