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How to Make a Million in Commercial Real Estate: A Practical Guide

So, you’re interested in commercial real estate, huh? Well, let me introduce you to Shelby Beckman, a real estate enthusiast eager to make her mark in the industry. This post will dive into her journey, from optimizing her LinkedIn profile to closing multi-million-dollar deals. Plus, we’ll reveal the secrets of making a million dollars from a single deal. Let’s get started!

First Steps: Business Cards and Brokerage Switch

Shelby’s New Business Cards

Shelby recently ordered new business cards to cement her role as a developer and investor. These cards boast a beautiful linen finish, clean design, and all the essential contact details. In commercial real estate, professional business cards aren’t just an accessory—they’re a necessity. They say, “I’m serious about this business.”

Switching to Pineapple Properties

Shelby’s transition to Pineapple Properties marks a significant milestone in her career. Pineapple Properties focuses on both commercial and residential real estate, offering Shelby a broader platform. The move promises fresh opportunities and robust support, crucial for her burgeoning career. And don’t worry, Shelby’s handling the transition smoothly, ensuring all paperwork is submitted and awaiting approval.

Optimizing LinkedIn for Maximum Impact

Reviewing Shelby’s Profile

LinkedIn is a powerhouse for building your professional network, and Shelby’s profile needed some sprucing up. We started by updating her headline to include “Commercial Real Estate Agent/Investor,” making it clear what she brings to the table.

Enhancing the Profile

  • Professional Headshot and Background Image: First impressions are everything. A clean, professional headshot and a relevant background image can work wonders.
  • Summary Section: This section should highlight Shelby’s expertise, ambitions, and how she can help others in the commercial real estate sector.
  • Posting Regular Updates: Shelby will start posting updates and videos about her work, local market insights, and any interesting properties she encounters.
  • Joining Groups: Engaging in discussions within commercial real estate groups will help Shelby expand her network and gain valuable insights.
  • Find Nearby Feature: When attending networking events or meetings, this feature will be invaluable for instantly connecting with other professionals.

Hunting for Prospects

Creating a Prospect List

Shelby shifted her focus from well-established areas to those ripe for development. Using LoopNet, she identified properties with potential, such as:

  • Areas near water features, but outside of flood zones
  • Industrial properties with the potential for rezoning
  • Redevelopment opportunities in up-and-coming neighborhoods

Property Analysis

Two properties caught our eye:

  • Industrial Property in 76107: This one had potential but required a closer look to understand its zoning and development possibilities.
  • Property on Camp Bowie Boulevard: With a prime location but a hefty price tag, we had to consider factors like traffic counts and surround area before diving in.

Always remember to physically visit properties before making any calls to brokers. It shows you’ve done your homework.

The Million-Dollar Deal

The Concept of Single-Tenant Net Lease (STNL)

Shelby was curious about making big bucks from a single deal, so we introduced her to the Single-Tenant Net Lease (STNL) model. Here’s a simplified example:

  • Property Details: One-acre property costing $1 million.
  • Ground Lease: Lease the land to a tenant (e.g., McDonald’s) for $100,000 per year.
  • Cap Rate: Sell the leased property at a 4% cap rate.

By doing this, you can potentially sell that property for $2.5 million. Subtract the initial cost, and you’re making a cool $1.5 million in profit.

Variations Depending on Tenant

  • Dollar General Example: With a 7% cap rate, the same property would only sell for about $1.4 million, making the profit $400,000. The tenant type significantly affects your returns.

Strategies for Finding Tenants and Investment Opportunities

Sourcing Tenants

  • Company Websites: Check company sites for real estate manager info.
  • Annual Reports: Public companies often disclose expansion plans in their reports.
  • LinkedIn: Connect with real estate managers directly.
  • Industry Events: Networking at events is invaluable for meeting key players.

Vacant Properties and Conversion Opportunities

Evaluating Vacant Properties

Shelby came across a vacant Pizza Hut. Properties like this are gold mines if you can convert them to another use, like a brewhouse or retail spot. Key steps include:

  1. Evaluate the Lease Terms: Understand the property’s lease terms and conditions.
  2. Explore Alternative Uses: Think outside the box—consider unique conversion opportunities.
  3. Work with Existing Tenants: If there’s still a tenant, find out their plans and any restrictions.

Six Ways to Profit from One Deal

  1. Represent the Buyer: Earn a commission from the initial property purchase.
  2. List the Property: Act as the landlord’s representative.
  3. Sell the Property: Earn a commission when the property is sold.
  4. 1031 Exchange: Help your client delay capital gains taxes by finding a replacement property.
  5. List and Lease the Replacement Property: Double-dip by listing and leasing the new property.
  6. Repeat the Cycle: Keep working with your client as they continue to buy and sell properties.

Next Steps

Shelby’s Homework

  • Current Lease Expenses: Shelby needs to detail her current lease expenses and all associated costs.
  • Driving Tour: We’ll drive around to identify potential locations for her next venture.
  • Commercial Lender Meeting: Setting up a meeting with a lender will clarify financing options.
  • Economic Development Office Visit: This can provide invaluable resources and maps.
  • NTCAR Event: Attending this event will be a fantastic networking opportunity.

Shelby’s journey is a masterclass in commercial real estate. From the basics to million-dollar deals, she’s on a path to success. Stay tuned as we drive around and find Shelby’s next big investment!

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