Streamline your process of closing a business deal for real estate

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hello and welcome to introduction to commercial real estate sales how to double your annual income by closing your first commercial deal to start with my disclaimer I'm going to make you no promises results are not typical and we guarantee nothing the bottom line is you're gonna get out of this probably what you put into it and hopefully those of you that have taken the time to join us on today's webinar are gonna get a lot out of it I guarantee you're all going to get something at the end of this adding commercial real estate sales to your book of current business is vital you can significantly increase your income with one real estate or excuse me one commercial real estate transaction per year I want to share some stats with you now it's tax I know you're probably gonna get a little bit bored with that because everyone throws stats at you because you always never know where they come from where did they get him did they stack the deck these actually in the last two or three years these came directly from the website of the National Association of Realtors this is based on what they've tracked and when they tracked it what they found was the median income for residential real estate or was residential only print practitioners throughout the entire country so this is an average of what those people were earning per year on average across the country that were residential only practitioners when they added in a component those residential agents that do and close at least one commercial transaction a year what their average income was and do you know it went up almost two and a half times to ninety two thousand eight hundred dollars per year that's an incredible statistic that I hope really resonates and hits home with all of you now I'm gonna take the Sacramento Metropolitan Statistical Area that's MSA that is a term that you need to learn in commercial real estate and I'm going to compare that particular market now this is you're gonna find this true across the board because there's a lot more residents practitioners in the United States then there are commercial only practitioners let me show you share with you what I mean this statistic also came from I believe this the site but at the time we did this and it was probably in the last two or three years there was about 3,000 residential agents practicing in the Sacramento MSA about 3,000 residential only agents the commercial counterpart was only 64 so the real question is is do you want to be a big fish in a small pond or a small fish in a big pond what do you want to do I want to introduce myself a little bit to you my name is Steve Harper I've been practicing a real estate for almost 20 years now I'm coming up on my 20th year in 2019 started as a residential guy quit moved very quickly within the first year I moved into commercial I found a passion and a love for commercial and I was not welcomed with open arms it was a struggle I have since that time brokered purchase sold and consulted on over two billion dollars in in commercial and multifamily properties I'm formerly the managing director at kW commercial in Roseville California it's one of kws largest Franny in the entire Keller Williams franchise at one of the largest locations I'm a former radio talk show host for about a year in a house a year and a half excuse me I did a program a real estate program on the Wall Street business network out of Sacramento and I still today am a guest host on a couple of different radio talk show talk shows around the area what I want to talk to you about is what I want to do with you today and what I'm not gonna do with you today what I'm not gonna do with you today is spend a whole bunch of time teaching you commercial verbiage teaching you what a cap rate is I'm not gonna go into that there you know I'm not even going to tell you how to read a P&L hopefully you know how to do all of that or and if you don't you know what there's gonna be some things that you can do to learn it and I'm gonna offer to bribe you to teach you everything you need to know I'm gonna offer it give it away to you what I am gonna teach you today is how to find some leads right now today when you leave this webinar you're gonna know how to find some leads I'm gonna talk to you about negotiating that first commercial deal how to get it in contract I'm gonna teach you how to navigate the due diligence and some of the obstacles that are gonna be thrown up in your face and if you haven't seen it before in it again I think most of you probably have tried to do a commercial deal or - you know what obstacles that I'm talking about bottom line is every deals different so I don't know what obstacles you're gonna come across and we're gonna help you to get this first thing going first thing going in training but I'm not going to teach you any of the background I am gonna give you a shameless and blatant bribe at the end of this webinar today about giving you a complete training package that we're currently selling for nine hundred ninety seven bucks I'm gonna offer to give it to you for free with a little string or two attached a minor string I I don't know that you'll consider it major we'll see what you think at the end of this webinar if you're like me and this is probably what pulled me from residential to commercial people started coming up to me within my first few months in real estate and talking to me about commercial deals and when I first did it I had no idea what I was doing I was lucky to be surrounded by a couple of mentors if it wasn't for the mentors I have or I had and have I would not be in commercial real estate today I probably would have given up and I probably would have spent the last 20 years doing residential only real estate and I might be just as happy doing it I'm not saying one is diff you know better than the other but because I had some good mentors I had I had resources I had people that helped me without expectation it was it was pretty amazing so I was lucky if you guys give out a couple of those I would definitely latch onto those if you've got them if not we got some other stuff for you but however long you've been in this business someone has or will come up to you and they're gonna talk to you about a deal maybe it's a deal like this Denny's and they're gonna save you hey I really want to buy this Denny's I heard it was for sale down here for about 1.8 million dollars can you find out you know for me if it's available and can you represent me can you help me buy it and like you know many of us you probably looked at it and said gosh where do I start you know you you may have submitted an offer and if you did submit an offer for this particular Denny's or something like it it probably wasn't a letter of intent an LOI and I will tell you the commercial world they're used to seeing an LOI to start this thing out because they don't waste a whole bunch of time writing contracts especially when there are so many different contract forms that's another thing that you you you're gonna it's gonna be very different than residential real estate it's not a standardized contract not even in in specific areas it's not a standardized contract so you need to learn LOI so you may have submitted an offer probably you didn't submit an LOI the offer was probably rejected maybe the agent stole it from you maybe they promise to pay you a referral fee and they didn't I don't know what happened but you're on this webinar for a reason so I'd be willing to guess that a lot of the things I'm suggesting right now have happened so bottom line is you probably didn't get it closed what I want to do with you today is tell you several obstacles that you can avoid and actually get a deal close now you're gonna need some base education and training and there's a lot of different places you can get that most agents that I speak to have absolutely experienced some something when their residential agents trying to break into or or or dabble with or move into commercial real estate my business partner that today ended up his first commercial deal was a whole bunch of homes I can't remember 30 to 50 residential homes I don't remember the details on it but that guy ended up getting less than $10,000 in commission to sell you know 30 to 50 homes in California and he did it because residential and commercial work differently his eyes were not opened and it was a surprise to him he was planning on earning a big fat Commission check like one of the kinds of Commission checks that is what most people earn in a year and instead he got a few pennies because the commercial agent knew exactly what they were doing on the other side of that transit action and they patted him on the head gave him a little check and he was probably lucky to get that that was his cost into commercial real estate I'd like to save you from paying that same fee there are about three things that you need to do and do commercial real estate well number one you need training if you don't have training you're not gonna be able to do it and again the purpose of this webinar is not to train you I am NOT going to teach you about cash on cash return today or or you know any of the commercial specific details that that you're gonna need to know but there's a lot of ways to learn them you could Google if you wanted what's a cap rate and you'll learn it you could Google what's a cash on cash return and you'll learn it you can google a lot of different things and you can get some training that way you can find a mentor or you can find a training program that's been set up for commercial real estate the second thing that you're gonna need is support you have to have some support because no two deals are the same there is no simple magic bullet that's gonna teach you everything you need to know in one tidy package the bottom line is you're gonna get bass training to go into commercial real estate and then you're gonna have questions and things are gonna come up as you go depending upon what area of commercial real estate you you move down and then you're gonna really get some some additional training and experience that comes with that support and that leads me to the third thing the third thing that you have to have is practice you've got to practice your trade practice makes you better I've been doing this now for almost 20 years I don't believe any two deals I've ever done have looked the same and I've done a whole bunch of Burger Kings Taco Bell's net leased investments all with 20-year leases and do you know what not one of those two deals went exactly the same and worked exactly the same and I know all of you are shaking your head up and down right now because the same is absolutely true in residential real estate so the three things you need again training and practice now I do want to save some of you some time I'd like to there are some of you that are sitting in on this webinar maybe you shouldn't be here right now because maybe you believe that that there's a magic bullet maybe you believe that you can do this maybe you at home right now are a residential agent that this kind of takes thing as it as it comes you're a little bit disorganized and I gotta say you really should go back and fix that before you try and tackle commercial real estate because the disorganized agent is going to get chewed up and spit out in commercial real estate and it will cost you money and again it's not harder it's just different but you cannot be disorganized going into this if you're looking for that magic bullet I mentioned before it doesn't exist maybe it does but I've never found it I mean for 20 years I've been looking for the magic bullet and there isn't a magic bullet not that I found thus far as soon as I find one I'll let you know but I don't believe that it exists and the other thing is is if you're an agent that's not willing to put in the work you know what this isn't just going to happen for you if you are an agent who's extremely focused you're willing to work and I put there's hard on the screen in front of you but I don't necessarily believe in that you have two choices you can work really really hard or you can work really really smart you can work really really hard for a while and then learn to be smart there's a lot of different ways you can break this down but if you are willing to work hard and or smart you are gonna do well in commercial real estate those of you that turn that hard work into smart work sooner you're gonna do a lot better and the biggest thing which I applaud all of you thank all of you I appreciate all of you you took the first big step today you got out of your comfort zone and you attended today's webinar so by doing that you know I applaud all of you for that okay so again number one the first thing we need is training how do how do commercial real estate properties work and how are they analyzed so again no boring terminology I'm not going to teach any math I'm gonna show you how to find negotiate and close your first commercial deal now watch your email after this webinar possibly something is gonna pop up I don't know but I do have a few things for you again you have all this this is even part of my shameless bribe I've got a five-part video series on commercial real estate training it will talk to you about what a cap rate is it will talk you about a gross rent multiplier cash on cash return the basics of a 1031 exchange and probably the top seven mistakes that are made by agents specifically residential agents when they're trying to sell or negotiate a commercial deal and it's a little ebook so all that's for you it's gonna come to you at the end of this webinar via email or possibly there's a pop up I'm not sure what we're doing I'm not very technical that way more training okay so this is this is part of the shameless bribe that we're talking about I do have what I talked about or alluded to earlier currently we're selling it for about nine hundred and ninety seven dollars we've got a 50-hour comprehensive online video training course and it's all it's basically the entire thing is designed for a practicing residential agent that's wanting to move into commercial so at the end of this webinar we'll show you how to get access to that in the meantime let's talk about what we can do right now and that is and that is finding commercial real estate clients negotiating your first deal and closing on your first commercial deal so there's three things that I want to talk to you about you have everything you need right now to find your first commercial real estate deal you you do if you if you've been in this business for a year or longer and even less some of you because you've been alive you've got the the ability to find the clients right now the first place is in your phone I would argue there's at least a million dollars worth of commissions in your phone now and IA again I maybe you don't use the phone like you should if so then shame on you but you do it's your sphere of influence all you have to do is start discussing it letting the people know go through that phone go through your contact list and find the people that are already in your sphere of influence because the people that you've been selling these houses to or listing the houses for they are managers at their corporations they are business owners these are people who are leasing real estate buying real estate they're already there then another real huge place for you is in your office most of you that are in a real estate office you know that you've got a lot of residential agents in that office if you simply said you know what I'm doing apartments now you don't even have to say I'm doing all a commercial real estate pick pick the area you want to get started and get started doing it the first thing you have to do is start by saying hey I'm moving down the road for commercial real estate if any of you have any commercial needs I pay great referral fees let me know that's the next place where you're gonna find a lot of a business right now and the third place is what we call the golden referral strategy this is a strategy that we've used in my office we've used it for several years and it works something like this basically I put LinkedIn in there but it'll work for any social media whatever the case may be LinkedIn works real well for for what I'm gonna suggest so what I'm here's how it works I let's say I go in and I realize in my sphere of influence from my phone my farmers real estate agent I set an appointment to go in and see my farmers real estate agent have a cup of coffee with and maybe meet him in a Starbucks maybe meet him at his office or at mine and I'll sit down with my farmers agent and I'll say let me ask you a question Dave what is it that I need to do how can I help you expand your business what the purpose of my visit with you today is to find out how I can help get you more business and then I'll go through and I'll say he'll say great you know if you know anybody looking for insurance I'll say no here's what I want you to do I want you to go into my LinkedIn profile I want you to look at all of my connections and I want you to pick 10 or 15 of those people that you'd like an introduction to maybe they're the type of client that you're looking for in your business you let me know that what I'm gonna do in return is I'm gonna send you and the person that you said a personal email suggesting that the two of you meet that you have some benefit that you can offer each other now just by the act of me doing that is what is the entire strategy because at no point in the meeting do I ask for business at no point in the meeting do I ask for referrals number one it may come up because Dave might look at me and say Steve what can I do to help you with your business well gosh I'm glad you asked and maybe we'll go through the same process but even if nothing even if it doesn't come up make the entire unless unless it's brought up by the other party make the entire meeting about helping them the person that you've asked to see with their business and inevitably within a week or two if you will do this regularly once a week twice a week whatever the case may be depending on how jealous I suppose you want to get with it what's going to happen is your phone's gonna start ringing and they're gonna start giving you referrals because it's it's it's the law of reciprocity that's what we're talking about is the law of reciprocity and it works very well these three things will get you all of the commercial business that you need it absolutely will but again you have to put the effort out you can't just wait for it to happen you have to go through your phone you have to set the golden referral meetings you have to attend your weekly office meetings you have to go to the Association meetings whatever Association you belong to and let them know that you're dealing in commercial real estate now or in apartments only or in retail only or whatever the case may be but either way you have to get out there and you have to put it out there because the universe isn't gonna give anything to you that you don't ask for I'll tell you something else that we've done this is an actual example this is we use this as a marketing piece this isn't the entire thing but this is an actual example that we use from our office and this is a real deal we actually did this with a client the client owned those five residential properties that you can see and what those consisted of was a four-plex t duplexes and two single-family homes and a lot of these were in really really rough shape as a matter of fact the person that bought the two residential homes was an agent and a house flipper that I know that came in paid cash and flipped those two properties because they were in such bad condition and the bottom line is on this particular example this family had inherited this and there was five five siblings splitting the income from this particular portfolio of properties we were able to take that portfolio of properties we were able to sell them for two point two six million dollars by the way the cash flow that was coming out of this deal was about 80,000 a year cash flow and that's what was projected to be honest with you the number was less than that than they were actually getting because of the sheer amount of deferred maintenance on these properties it was probably closer to half that that they were really getting but it penciled out that they should have been getting before all the deferred maintenance about 80 thousand a year they were able to roll that into a 20-year triple net lease Burger King and I can't remember was a tanner of 15 year doll gen corporation nicely placed Dollar General and they were able to cash flow again out of a cat that their actual spendable income taxable return that they were getting went from a scheduled 80 closer to a 40 or 50 that they were actually getting up to a hundred and thirty one thousand six hundred and twelve dollars in the first year now there are some built-in increases in there that happened in these in these two replacement properties that they did but my point with this is is the stories excellent but if you don't know how to do commercial real estate first of all you can't do this so you got to find someone to do it and then you've got to try and coordinate it to make it happen so you need to do commercial real estate secondly what a great opportunity you should steal my ID on this you should be implementing this very same thing in your in your marketplace what if you are looking at the people who own all of these homes and rental properties that are not owner occupied you market them and you talk about doing this kind of very same thing in your marketplace this is gold what I've just given you is gold I guarantee you you can build a business with this marketing piece right here so I don't want to hear any of you say you didn't get anything from this so hopefully because I know this works we do this in our marketplace and it'll be for complete transparency my my team and I are still doing this in our marketplace all right so the next thing finding a negotiating your first commercial deal closing it so you got to know you got to know where to find it cuz cuz probably most people that do come up to you they're not gonna tell you the property that they want to buy they might say you know what my uncle has been buying these Burger King deals does he own the Burger King does is he is he just the landlord what's going on with it can you find me one like that to look at well if you don't know where to look well you're gonna have a problem right off the gate now that the beautiful part is I guess Google exists today so you can find a lot of stuff through Google but costar loopnet property line Axela gence there are commercial only sites that you can go on and belong to to find some of these commercial deals and as you get into this industry you'll start in these places and then you'll start developing relationships with the the brokers in your area or even throughout the country depending upon how far you want to take this that that working it you're gonna find other other places to find them but but trust me co-star and loop net and property line those three alone are gonna show you enough that you can get started you can find properties and get going on this and the second thing is is you need to know how to negotiate it because if you drop the ball here if you fill out one of your local boards CA R or or if you're an Alabama or if you're in Texas that you know the t the the Texas form if you start with a residential commercial form and I'm putting that in air quotes then a lot of the commercial agents that have listed these properties are not going to deal with you and I'm sorry to say that but it's a fact these people are used to people who know how to do a commercial transaction and their fear which is founded is that if they're dealing with a residential dabbler then they're gonna waste their time and their clients time and they're gonna tie up a property in a in an escrow that has no chance of succeeding and they don't they want to bypass those landmines they so they're gonna kind of filter you out if you start with a letter of intent if you know the terminology and you put it in that letter of intent by the way that little ebook that I've already given to all of you top 7 mistakes that are made by agents it talks about some of the language you're gonna use so this way you don't step on those landmines you don't alert that agent that commercial listing agent on the other side that you you know you alert them that you know what you're doing by how you act rather than letting them know that you don't know what you're doing so I want to make sure you know what you're doing so you start with a letter of intent and you always negotiate your Commission your Commission has to be put in this document you are not protected from the commercial practitioners at large in this country and in this world they're not going to protect you they're not going to look out for you and you don't have the same protections that you have as being a realtor those of you that are Realtors know you're you live under this blanket of protection that we're gonna you know that we're all gonna you know treat each other right we're gonna disclose what the Commission's gonna be and you're gonna get it at the end of the transaction what if the guy selling this property isn't a realtor and I will tell you most of the commercial practitioners aren't it's not structured for them yet they're working on it they are absolutely working on it so you need to get a commercial agreement and then you need to know how to negotiate a contract you need to know when to advise your client to have it reviewed by an attorney these are all things are in the top seven mistakes but these are these are all things that you can learn as well as you go you've got to get training on that stuff but you can do it if you stand that you have to start with a letter of intent you have to negotiate your commission and be prepared especially if it's a contract you don't recognize to advise your client to have it reviewed by an attorney because chances are the sellers attorney on that property that you called on prepared that contract and that is a time that you need to recommend having it reviewed by an attorney that's just a cost of doing business closing your first commercial deal now there's a there's a you know this is a nice snapshot of what needs to get done you start when you're representing a buyer that buys one of these probably maybe this Burger King that we talked about a few minutes ago maybe it's an industrial property maybe it's a apartment complex first thing you're gonna do and you're gonna have your client and their financial and tax advisers whoever's involved you're gonna have those people do it you're gonna have them and you're gonna review the free stuff first the pl the rent roll the preliminary title report tax records you know possibly the guarantor whoever the guarantor is on the lease you're gonna want to do some research on them so that's the stuff that you want to do first before you start getting into the to the things in commercial real estate that cost a heck of a lot more in commercial than they do in residential I'll use appraisal as the first example you're not gonna get a four five three six hundred dollar appraisal on a commercial deal it's gonna be in the thousands that's just another cost of doing business so clearly you want to make sure that you do all of the free stuff first and you want to make sure that your contract and your letter of intent allows you the time to do the free stuff then start spending your clients money on the costly stuff that's assuming they've given a YES on all the free stuff and then you want to move them through that and into discovery in closing so you've got you might have last-minute negotiations you might need to prep the client for a close of escrow prepare the clothes you're gonna want to talk to the different coordinators that are going to be involved this possibly the 1031 exchange company as well as the title company there are some states out there and some of you that might know this there are attorney States there are mortgage states there are trust deed states you'll know you'll know that kind of stuff but for those of you and there's probably a few of you that might be thinking you know what I want to do what Steve does I want to move into this thing on a retail on a national basis if that is the case if you guys want to hit that level then you will absolutely need to learn the differences in all the different states that's something else that will come to your training but this is a this is an excellent start to get you to at least know what you need to Google or what you need to ask your your broker's legal rep about as you're negotiating your first deal this is a very nice blueprint to kind of get you started now again this is my gift if it's not right it says gift on here I have to fix that it's not a gift it's a bribe this is my bribe to you my bribe is that 50-hour commercial real estate training program that we talked about first I want to tell you what's in that commercial real estate training program first of all it's online it's 24 hours a day seven days a week it's fully interactive you can do it in your underwear you can do it wherever you want to do it and I want to give this to you I don't want to charge anything for it right now I'm charging 997 to buy this thing out right online and for those of you who just want to go buy it from me by all means go ahead and buy it from me I don't have an issue with that but for the rest of you who want to be bribed by this a little bit pay attention I'll tell you what's in it and I'm gonna talk about the bribing what's in it we have a course that consists it's a five five part or five part series I guess it starts with an introduction to commercial real estate a lot of the base stuff that you need to get started it moves into the multifamily and apartment so it goes into that sector it goes into the retail then it goes into the office and then we finished the fifth and final course is a it's called commercial real estate marketing 101 the golden referral that I talked about came from that some of the other may be methods I've talked about today come from that that's more than a 101 marketing course that marketing course standalone is fantastic and it will go through the different ways to market and deal with your commercial real estate depending upon what area you want to go into for that so basically our goal when we built this was to cover the bulk of commercial real estate in a nice introduction so you have a good foundation in the bulk of all the different types of commercial real estate that are out there and then we wanted to give you a mechanism to actually implement and get that start practicing which is what the marketing does because it actually takes you through and get you started and and that's I think the most important part and again it says gift let's fix that it's not a gift it's a bribe and honestly this training program has been audited by some very smart people we put a lot into it it's it's the culmination of many years of experience by many people that have contributed to this and and I believe it's gonna I wish something like this had been available to me 20 years ago had something like this been available to me 20 years ago I would have well I certainly would have more money in my pocket because I paid my dues several times I learned that first lesson about Commission I think two different times in my life and they were they were five figure mistakes that they cost me so again the gift the gift the gift the gift the bribe I'll give you the training I'll give you all of the training all I ask you to do is sign up for what you need member we said you need three things to succeed in commercial real estate you needed training you needed support and you needed practice so I talked to you about the training that I want to give you the support I've got a program for $97 a month and by the way you could sign up for one month we had one guy actually go through all 50 hours in like two and a half weeks that's a fastest anyone's ever done it you could go get on you could just power through this thing you could pay for one month you could take the thousand dollars gift you could then cancel the support cuz you're too cheap to spend the ninety seven dollars a month on everything that this gives you which is support but you could typically if you wanted to just sign up for the one month get all the training and go on about your business I don't suggest it I think that once you get into it you're gonna find that you like it that's the way we've set it up that's the way we've designed the price point we believe you're going to want to hang around for a long time there is no minimum commitment it month to month you can quit any time you want you've got access to everything from day one our inner circle support it's a library of additional classes we we show lots of different things we have exclusive access to monthly in this industry leader interview so we'll talk with some of the top you know guys in different fields and apartments in in retail 1031 exchange we've got a private facebook support group and regular live and archived office hours so this is the office hours this alone is worth office hours if you attend the live office hours what you can what you'll be able to do is actually ask questions about your ongoing deals that you're dealing with so that you have support you have a level of support ready to help you succeed in commercial real estate now I at this point I think there's something popping up that allows you to do this will email you thank you very much for taking the time to attend today's webinar thank you for allowing me to both educate bribe and hopefully not overwhelm you thank you very much all of your questions are appreciated and let me know if I can help you in any other way