Many people see commercial real estate as an elusive field, something reserved for high-rolling investors or large corporations. Pam Goodwin, of Goodwin Commercial, wants you to think differently. With over 30 years of experience in commercial real estate, Pam has successfully navigated the industry and now helps others make the transition. This blog post dives deep into her insights on the mindset shift, practical steps, and strategies required to make a successful jump into commercial real estate.
Why Pam Goodwin Chose Commercial Real Estate
Pam started her career with a degree in interior design and had aspirations of becoming a famous hotel interior designer. She even received a job offer from Marriott Corporation in Bethesda, Maryland. However, Pam chose to stay in Omaha, Nebraska, focusing on corporate design before venturing into shopping center developments, and eventually, single-tenant sites for national chains like Chili’s. Over the years, she transitioned from design to being a commercial real estate developer and broker.
The Mindset Shift: It’s More Attainable Than You Think
Conduct Property and Market Research
The first step to getting into commercial real estate is a mindset shift; it’s more attainable than you think. Start by conducting thorough property and market research:
- Drive Around: Get in your car on a Saturday or Sunday and explore different neighborhoods. Look for vacant properties or potential opportunities.
- Use Tools: Leverage tools like LoopNet and LandGlide to identify property owners and boundaries and understand the market better.
Meet with Economic Development Directors
Economic Development Directors (EDCs) are treasure troves of information and are generally eager to help new investors.
- Prepare a List of Questions:
- Do you have an aerial map of your city?
- What retailers are you looking to bring into the community?
- Who are the primary property owners?
- What are the current and upcoming projects?
- Build Relationships: Regularly meet with EDCs—aim for once a month if possible. They can provide valuable insights into the city’s development plans and introduce you to potential property owners or sellers.
Attend Real Estate Events and Meetups
Networking is crucial. Attend commercial real estate events and meetups to connect with like-minded individuals and industry experts.
- National Events: Events like ICSC (International Council of Shopping Centers) in Las Vegas are great for meeting economic development directors and commercial real estate managers.
- Local Meetups: Use platforms like Eventbrite to find and participate in local real estate meetups.
Understanding Different Commercial Property Types
Single Tenant vs Multi-Tenant
Understanding the difference between single and multi-tenant properties is key.
- Single Tenant: These properties have one tenant, like a standalone Chili’s or Walgreens. They are simpler to manage but can be riskier if the tenant leaves.
- Multi-Tenant: Properties with multiple tenants, such as shopping centers or office complexes, spread the risk across various tenants.
Mom & Pop Tenants vs National Tenants
Who your tenants are can significantly impact your investment’s performance.
- Mom & Pop Tenants: May offer higher cap rates but are generally riskier.
- National Tenants: More stable and often offer lower cap rates but can make your property more appealing to future buyers.
Developing New Construction vs Acquiring Existing
- New Construction: Involves developing a property from scratch. It can be highly lucrative but requires more time and capital.
- Acquiring Existing: Buying and potentially redeveloping existing properties tends to be quicker and can offer immediate cash flow.
Finding Tenants for Your Properties
Post on LoopNet and Social Media
Marketing your property effectively is crucial. Post your property on LoopNet and use social media platforms to reach a broader audience.
Most national chains have real estate departments whose contact information is often listed on their websites. Reach out to them to discuss potential lease or sale opportunities.
Attend Retailer Events
Events like Retail Live in Austin offer direct access to real estate managers from national retail chains. Use these opportunities to pitch your property and forge valuable connections.
Useful Resources
- LoopNet
- LandGlide
- National Retailer Websites
- Real Estate Events
Structuring Deals
Ground Leases
A ground lease involves leasing the land to a tenant who then builds on it. It offers long-term stable income but lets the tenant control the improvements on the land.
Sale-Leasebacks
In a sale-leaseback, the property owner sells the property and leases it back from the buyer. This model provides immediate liquidity while allowing the seller to continue using the property.
Finding Equity Partners
Teaming up with equity partners can ease the financial burden. Offer clear, appealing terms to attract partners who bring more than just money—they bring credibility and networks.
Financing Commercial Deals
Conventional Loans
Traditional banks offer conventional loans, but terms may vary. Smaller local banks are often more flexible.
SBA Loans
Small Business Administration (SBA) loans can provide favorable terms and lower down payments, making them a smart choice for certain commercial projects.
Private Money
Private money lenders can be quicker but often come with higher interest rates. Balance speed with cost when considering this option.
Using Equity from Residential Deals
Leverage your existing residential property equity to fund commercial projects. Many banks allow you to use home equity as a down payment for commercial properties.
Building Your Team
Partnering with Mentors and Experienced Investors
Find mentors and experienced investors who can guide you through your first few deals. Offer sweat equity, bird-dog fees, or even equity splits to attract and retain these valuable partners.
Utilizing LinkedIn for Connections
LinkedIn is a powerful tool for building your professional network. Regularly post updates, share valuable content, and reach out to potential partners and mentors.
Pam’s First Commercial Deal: A Learning Experience
Pam’s first commercial deal involved securing a property in Copperas Cove, Texas, initially aimed for a Chili’s but eventually sold to Discount Tire. This pivot resulted in a $175,000 profit, illustrating that flexibility and persistence can pay off.
Advice for Beginners
Pam’s advice for beginners is straightforward:
- Everything is for sale: Always be on the lookout for opportunities.
- Just start taking action: Don’t let fear or inexperience hold you back.
- Use minimal funds for contracts: You can often secure a property under contract with a small amount of earnest money.
Leveraging Your Interests and Experience
Identify sectors you are passionate about or experienced in. For example, Pam worked with a woman in senior living who used her industry knowledge to successfully transition into commercial real estate.
Pam’s Books and Training Programs
Interested in diving deeper? Check out Pam’s books:
- “Just One $0.25 Lemonade to Million Dollar Deals”
- “Winning Ways in Commercial Real Estate”
Pam also offers consulting and mentoring services to guide you through your commercial real estate journey.
Potential Partnership Opportunities
Pam is currently open to bird-dogging and equity partnerships. If you have a lead on a valuable property, you could earn a significant share of the profits by collaborating with her.
Final Thoughts
Pam Goodwin’s approach to commercial real estate proves that it’s not as complex or unattainable as it might seem. With the right mindset, diligent research, and leveraging existing assets, anyone can step into the world of commercial real estate. Whether you’re eyeing that vacant corner lot or an underused retail space, take action now. The opportunities are endless, and with experts like Pam guiding newcomers, success is within reach.
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