$570,000 Instant Profit on One Commercial Deal

Discover how Preston paid $530,000 for a property worth $1,100,000 and got $570,000 in instant equity! Plus, learn how he acquired it without a bank loan AND his plans to add $5 million more in value

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Look at this guy right here, handsome guy. His name was Preston. He's one of our students, and Preston just made a $570,000 instant profit on one commercial deal. Here's what he did. He purchased a 172 unit sub stores facility in his hometown. The purchase price was $530,000. The appraisal two months before he purchased it, came in at $1.1 million, giving him an instant profit day one without doing any work. Just closing on the property of $570,000. I have the appraisal right here. It says the final as is value opinion$1,183,000. Congratulations, Preston. But guess what? Everyone, it gets even better. Okay, let's discuss the financing. How the financing worked on this deal. Preston used no banks. He did not have to call the bank. Instead, he used our seller financing methods that we teach our students. Here are the terms, the down payment was a hundred thousand dollars. The balance of $430,000 was paid over the 6.37% and here's a three year balloon, but get this on year one. There are no payments. No payments, no mortgage payments, no payments to the seller for the first 12 months and years two and three, he's only making interest only payments. Incredible, right? Incredible. Guess what? It gets even better. We had Preston perform and it wasn't cheap. A feasibility study, which is basically a national company coming out to your facility, meeting with you, looking at all the competition and putting together an 80 page report on how to optimize what you currently have a picture of, an overhead picture of his property will appear right here. You can see it. Okay? Now the feasibility study is look at the entire area and they're going to put a report together and show Preston how to optimize this property based upon their 20 years experience. Here's the results. They have an after repair value of$5.85 million. I have a copy of that page. This feasibility company gives precedent value of$5,852,000. Does this sound too good to be true? Does it watch this video and you'll see exactly what Preston did. And then when we come back, I will share with you how to put yourself in Preston's shoes and do exactly what he did during this video. Do you have any questions? Text me to 8 3 3 9 4 2 45 16 and I'll answer your questions. Let's go check out the video. Welcome everyone. Thank you for joining us. I have a special guest here today. He's a special man and his name is Preston, and he is an awesome guy. He's already a real estate investor. He just took it up a notch with his commercial real estate investing and he's going to share his story today. So thank you for joining us, Preston. Thanks for having me. Appreciate it. Oh, you are so welcome. All right, let's start off with this. So Preston, share with us a little bit about yourself. Yeah, I've always been an entrepreneur and kind of a go-getter and I started getting into residential real estate and then started transferring over into commercial real estate and just loved what it can do for you, just the residual income and commercial real estate. I love being able to get into some properties that I can force the appreciation by raising the NOI. Yeah, it's been fun. So far. Okay, great, great. I've known you for years as one of our students, and during the time of you and I coaching back and forth, you're also a cancer survivor? Yeah, I am actually at the beginning of 2020, I was actually in pretty good shape working out religiously and ended up actually kind of rai my shoulder and also had a bump, a lump on my neck that I found and just thought it was tied to that injury and the injury went away and this bump kept on getting bigger, but I felt great. I ended up going in to the doctor and finding out that I had late stage three cancer, Hodgkin's lymphoma. Wow. All medically induced from taking a certain medicine. But that was the beginning of 2020, found that out. So I fought that all 2020 and yeah, I've been in remission though for years now and. Great. And here you are, full head of hair healthy, four kids and close on this one deal here. Let's jump into this deal. So big picture, self storage, 172 units, you bought it for five 70, you performed an appraisal. And an appraisal as is came in at $1.1 million. So you are walking into all this equity. So give us the story on this deal. Yeah, I bought it or for five 30 actually, but five 70 is Yeah, the instant walk away with five. That's right. So yeah, I was out at a restaurant actually talking to a relative of mine about potentially looking at a piece of land to develop some storage units. She just threw it out there. A lady overheard me talking about it and she said, yeah, by my grandma's. And so I got her number and basically just I got in touch with the grandma and it was like pulling teeth, getting information that I wanted, but I was patient, which is what they were looking for. So. Yeah. So Preston can stop right there for a second. So how you found this deal was you were sitting at a restaurant talking shop with another person, one person next to you overheard that you were in real estate and said, Hey, you should buy by my grandma's property. Yeah, yeah. It was actually the server at the restaurant. Yeah. Wow. Well, that's how it all happened. Yeah. Wow. And the rest is history. Okay. Okay, great. So please continue more about the park and how you put together the deal. Yeah, like I said, it was like pulling teeth, getting any information out of 'em, hardly any records. So I basically had to do some dig in, hunt down all the information itself as much as possible. Yeah, I remember the process, you and I going back and forth and just over the months, just gathering information little by little by little until we got to the point where we're, okay, let's make an offer. So the offer eventually became $530,000 and it was seller financing and it was seller financing because basically there were no numbers and lack of income basically. That's the reason why. Share with us. What were the terms on the seller financing? Yeah, so basically purchase price for 530,000, no payments for the first 12 months, and then just interest only payments for the second year. And then the third year there was going to be a balloon at the end of the third year. So interest only for the second and third year. Okay. And how long is this seller financing? Good for. Three years. Okay. Alright. So first year no payments, second year interest only payments. And then at the end of the third year is time to pay her the remaining balance. Which is the best solution that we could come up with because going to a bank with no numbers and no information is going to be tough to get financing. So yeah, getting creative with these sellers, that was key to it. Share with us, what do you like about the deal? What do you like about it? What's the upside? The upside plans are to develop more storage units. So I think we'll end up having 172 right now and we're going to be adding another 80 potential that could fit on this property with some spaces. So originally it was a trailer or a mobile home park, and then the city rezoned it. And so as mobile homes started moving out, the ones that there were grandfathered in, but once they moved out, then they to couldn't have any others move in. So over the years they started doing these storage units as trailers started moving out. And so there's three more mobile homes that are still left that we'll be getting out, leaving here soon. And then we'll have some vacant land that we're developing. But the upsides also, it was low occupancy, so getting the units rented out, these sellers were old school with everything that they did and there's no online presence whatsoever. So all they had is a sign. They're probably in the yellow books and there's also the ones that are rented out. All the rents could be raised for sure. So yeah, there's a lot of upside to it really. Sure. Rent raises expansion virtually. Originally I looked online when I got the address, virtually no web presence, so a lot of upside now. One thing that we told you to do is to get a feasibility study where they will come to your property, meet with you, and they will scan all the competition and they would actually tell you what you should build and what you should not build. And that's called the feasibility study. And you did that. It's not cheap, but it was very crucial in determining and assuring what you have. So talk to us a little bit about that whole process, the feasibility study. Yeah, it was definitely well worth it. I mean, it took me a few weeks to finally pull the trigger on it, but at first, because I thought this is information I could probably find, but it was a 90 some page report that had about any kind of statistic or any kind of data that you would want and just made it so much easier. And as far as my comfortability level goes with moving forward with any kind of development, future developments and just with the existing buildings that are there, the units that are there, just finding out what the demand is. And. One thing that the feasibility report mentioned is the addition of flex space because when they scan the market, there was a need for flex space. Is that right? Yep. Yes, that's part of it. The plan, the expansion plan is to add some more or some flex space as well. Sure, sure. And also too, in terms of expansion, there's also a neighboring land there that doesn't belong to you that you may purchase and build upon. So talk to us about that a little bit. So when we had the title search done before closing, a lien popped up that the sellers were unaware of, and it was just an existing agreement between this owner of the neighboring property, just a simple little utility easement, that lien that he put on the property. And so I went and met with him to start trying to get that cleared off and one thing led to the next, we kind of hit it off and he has some vacant space behind his property and next to mine, and I started talking to him about potentially buying that. So yeah, that's looking pretty good. It'll be great. And also adds access from the backside of this property. That's. Right. That's right. Yeah. Air traffic road. Anyway. Yeah. The sky's limit with this property and all started with someone eavesdropping into a conversation at a restaurant. While they're being nosy. Alright, so at the end of the day, let's exclude the potential land purchase. So you bought it for five 30 there. There's an ASIS appraisal that you performed before 1.1 million. Now that's as is. That's what it's worth today, right? So you're walking in with a half a million dollars in equity once you do all of your expansion, raise your rents. What are we talking and after? Repair of value of about what? So with the expansion plans that this lady that I had the feasibility study done from, it's looking at close to 6 million is what it'll eventually be worth. Incredible. Of course that's going to take a few years and a lot of work, but man, I always tell our students out there one deal sometimes can really just change everything. But you know what? It all wasn't roses. We had some struggles in between working on this deal, you and I, we had a bunch of phone calls. Share with us maybe the most difficult part of this deal and how you overcame it. Yeah, the most difficult part was well gathering information from the sellers. With this being my first self storage facility, I wasn't a hundred percent certain what numbers could be looking at and they themselves didn't even have that information. So that was one big challenge. But yeah, just having patients with them though and working with them. And I know in the beginning there was somebody, another investor that had already contacted them and They even gave him a price and he was impatient though, and they were turned off by that. So I just was easier to work with and I ended up creating the deal. Awesome. Well, the work continues on this property. You and I will continually meet on this. For our audience out here, give us one or two tips of how they could do exactly what you did. So give some advice and inspiration to jump in and do what you did. What would you say to them? I've always been kind of a student on self-help books and have always sought advice from other people that've been there and done that. And I've always heard from a lot of these guys that I've studied forever that if you want to learn how to do something or learn a specific field or whatever it may be, learn from ideally find somebody that'd be a good mentor. I could show you the ropes. That's. Huge. And I would say the other thing too that you and I constantly talk about is the other bit of advice to get in the best way is to do something off market, right? Yes, definitely. Yes, I've tried the on market, it's just tough. It's a lot easier going directly to the seller and there's typically no competition. Alright. Okay, Preston, thanks a lot. I appreciate your time. I'm going to wrap it up right here. Now you're a busy guy. To go from 530,000 to $6 million is going to take some time. Yep. It'll take a little while, but before I feel comfortable with it though. This commercial business, for majority of our students, this is the largest financial transaction that they've done in their lives up to this point. And you cannot fly by the seat of your pants. All of your decisions have to be data-based and or from a mentor, someone who's been there, done that to tell you what to do. And that's how you get to where you are and about to be making good decisions based on solid information. And that's what commercial is. Solid information. Yeah. Yep. Doing your due diligence. I think, I don't know how typical it is, but I can only imagine with entrepreneurs, the entrepreneur type, there's too many shiny objects out there. It's easy to get distracted and onto the next new shiny object. And that's another thing that's been huge with you all. Being able to keep you grounded, keep me focused on one thing and seeing it through and. All right. Awesome. Well, again, Preston, thank you so much for joining us today. This is very inspiring and we really appreciate you. Well, appreciate everything you guys have done for me. Welcome back. Let's do a quick summary real quick. If you can go ahead and just encourage Preston, what an incredible guy, right? Super cool guy. This is what I love about commercial real estate is about the people, right? So go ahead and give Preston a high five and tell him congratulations. Tell him to keep on keeping on. I'll do a quick here. It's about Preston because today it's about Preston, cancer survivor, husband, father of four little ones below the age of eight, real estate investor. Again, awesome guy. If Preston can do it, so can you. Right? Next, let's talk about this. This is really important how Preston found the deal. He found the deal by sitting in a restaurant and talking about real estate, about joining our program, about deals. And someone overheard 'em, they were dropping, tapped him on his shoulder and said, Hey, my grandma has a property for sale. And shared with him what it was. Guess what? You better know how to act upon these types of opportunities. I imagine some of you go out there, the same thing has happened to you, maybe not the top of the shoulder, but you heard of a deal, but you have no clue what to do. Now's the time to not let those types of opportunities escape you. Okay? Alright. Now let's jump into the deal itself. I'm going to start off by sharing with you the self store business lifecycle. Okay? It's in three phases. Phase number one is the development phase. Phase number two is the expansion operational phase. And then phase three is what we call the maturation phase, or when the property matures and stabilizes and maximizes its operations. Okay? Preston is in phase one. It's going to take us a few years to get to phase three, and it's okay because commercial real estate is a long game. By the time we reach phase three, Preston's property will be worth $6 million. So it's okay to wait that long, so long as you put in the work. Alright? Now, because the feasibility was so important, and again, Preston was reluctant at the beginning because of the cost of it, it was very important to give him confidence and assuredness that this property can succeed. Here's some highlights. The feasibility company said they recommended and the ability to add another 4,500 square feet of non climate controlled storage units plus another 13,500 in flex space. And why is that? Because there was no flex space within a 20 mile radius of this property. So in fact, it says if Preston will go ahead and make the investment of adding the additional storage units and the flex space, he would achieve a 165% ROI return on investment. Isn't that incredible? This is the beauty of commercial real estate. Why you need to jump into this is life changing here. Alright, next. Another highlight is, and we need to know this stuff, okay, the average occupancy for storage in presses market is 90%. You need to know that, okay? If it's 90%, that means the market can absorb more people needing storage. Hence this expansion potential. Okay? Next, some little things here. They want press into install property management software. Right now, none exists, so he's in the middle of doing that. Now. We're going to use a company called Storage, this awesome the property has no web or online presence, virtually zero. Okay? So we've already started on that to maximize this. So when he begins to fill up his units, people looking for storage in his city, we'll find it. Right now, you can't find anything when you Google his property. So there you go. Okay. This is what commercial real estate can do for your family, for your kids, and for your financial future. If you'd like to learn more about what we do with our students, go ahead and become a mentee of ours. The link will appear right here. Or if you just want to just read a book about commercial estate investing, the link will also appear. Go ahead and download it, have at it, and have fun. And also do me a favor. If you like this video, go ahead and click the like button. And if you want to receive more videos like this, go ahead and subscribe to our channel. Thank you everyone for watching$570,000 Instant Profit on One Commercial Deal. I'll see you at the next video.