I often get calls from people who think building or buying any kind of commercial real estate is an easy step to transition to from single family homes or flips to other forms of investing. However, commercial projects are very different from residential real estate, especially single family homes.
Why You Can’t Go Alone Into Commercial Real Estate Investing
Here’s an example… I recently got a call from a physician who has a contract for 1.5 acres in the Orlando area for $1.5M. During our call he expressed his goal of building 70,000-90,000 sq. ft. in a 3-4 story facility. He was thinking of doing all the construction for a mere $1M, on top of the original $1.5M. Interesting plan, indeed.
I asked him a few questions. I then learned that after 45 days into his 60 day due diligence allotment, he hadn’t done a feasibility study. Worst of all, he was more or less going at the whole thing alone. He was working with a broker who assured him the property was entitled for storage and was clearly trying to make the deal happen.
The obvious first red flag was his lack of a team. He’s not partnering with anyone and thinks he can do this whole thing himself! In fact, he may have a property that actually works. But without a team and the necessary due diligence, things are not looking great.
I like to take the example of pilotage. Most people, especially doctors like myself, believe that because we are intelligent in one arena, we will excel across all platforms, such as aviation. The same thing happens in real estate. You can’t expect to be great at real estate just because you’re successful in something else.
I Can’t Say It Enough: You Need A Team For Investing
For those of us in commercial real estate investing, we know you cannot build a 90,000 sq. ft., 4 story property for $1M. It’s just impossible! That comes out to a little over $11 a square foot. Folks, self storage facilities are inexpensive but they AIN’T that inexpensive.
Without a team or any other partner on the project, it’s no wonder he’s been mislead.
I want you all to remember this one key thing: Real estate is a team sport!
I consider myself a somewhat knowledgeable person on the topic and yet I will always need help. And there will always be people who can offer guidance and knowledge that I don’t have. It’s just too much information for one person to know.
Just today I was on a call with my team for nearly two hours looking at different properties, spreadsheets, reports, etc. We work together, we share and learn together, we give and receive feedback and info. It’s a collective effort. I couldn’t do it alone! (Side note: that’s one of the reasons I find it so important to highlight a team member every month!)
It’s Worth Saying Again: You Need A Tribe
But even that’s not enough. We have an additional team of individuals and advisors who are experts in their industries and work alongside our team. Engineers, architects, contractors who have been in their field for years. The work we do truly goes beyond the SAO team. It extends to other teams who are experts in their areas such as self-storage or mobile home parks.
Real estate investing is difficult even for those with some basic knowledge. Now imagine you’re working alone and you’ve gone down a rabbit hole looking at a certain opportunity only to realize you’re chasing the wrong thing.
Here’s the bottom line I’m trying to get across: you have to partner with other people in real estate.
Join a mastermind such as:
- Scott Meyers (Self Storage Academy)
- George Antone (Fynanc Academy)
- The Real Estate Guys (Robert Helms and Russell Gray)
- Freedom Founders with David Phelps
Start participating and get some skin in the game. These are all groups we’ve partnered with and continue to work with to make opportunities possible.
It’s hard getting started in real estate, but it’s always harder starting on your own. I don’t care if it’s self-storage, single family homes or mobile home parks — it’s not possible! Especially if you’re like many of our readers who are doctors and dentists working full-time. Forget it!
You’ve got to start meeting people. Get out of your tiny circle. Go find people who are already doing the kind of opportunities you want to be a part of and partner with them. Chances are, with the right attitude and work ethic, these people would love to mentor you and see what you can bring to the table that perhaps they can’t offer.
Learn and take baby steps. Get involved in opportunities with other people with experience and then start thinking about tackling your own opportunities. Think of it as testing the waters as a side “gig” before building up to bigger opportunities.
I believe this truth wholeheartedly. Here is another helpful post about why you should not invest alone.
When You’re Ready, We’re Here
We hope this post inspires you to find your tribe, to build a team and be successful. For more inspiration, contact us here. Our team has such a wealth of knowledge, and we’d love to share it.
If you have not already read about some of our amazing team, here is a recent post about us.