Andrew makes the case for why commercial real estate became his focus: the combination of recurring cash flow, long-term appreciation, the leverage the asset class supports, and the tax treatment that comes with owning income property.
It is an introductory, motivational take aimed at investors weighing whether CRE belongs in their plan, and why the people who build real wealth in it tend to start before they feel ready.
Transcript
hey I'm Andrew Dunn with vac development if this is our first time meeting I'm a real estate investor and operator here based in Las Vegas and I'm here to teach you how can commercial real estate change your life well to answer that question I'm going to tell you how it changed my life I got into this industry working for a family office a family office is typically a collection of high net worth individuals and so when I got in with this family office I saw how they were living their life they were able to go on trips you know I saw them making phone calls doing several emails talking about all these different deals but they were still able to do this while in foreign countries or all over the U.S and they didn't really have to adapt their life so much around their business their business was more adapted around their personal lives so the flexibility that commercial real estate can give an individual is really hard to compare to any other industry for me I looked at that flexibility and I saw that to huge value proposition in my life and I wanted to do what these guys do over the longevity of my life so how do they do it basically going out into these different markets sourcing deals and sourcing these different opportunities I think it's also a cool thing that commercial real estate allows you to do is you don't have to be in one specific Market the most successful companies and groups that I've seen in the commercial real estate industry operate in several markets because these different markets give you different ideas what works in Las Vegas might not work in Phoenix but you might see stuff that works in Phoenix that would definitely survive and thrive in Las Vegas so for me I work in several different markets I work in Hawaii Southern California Las Vegas Reno Utah looking to go into Idaho Colorado and also I've done stuff in Florida I've liked how going all these different markets and meeting all these different people have given me these great ideas these great memories and let me tell you when you go through all this work and you see that first check it changes your life it's not necessarily about the hours you put in it's the value that you bring to the table that's where the beauty of commercial real estate if I have somebody that I know in my network with vacant building and I also have somebody in my network that I know who has a tenant looking for a building that matches the person who just told me they had a vacant building and I match those two people together on a deal I brought that value of making being that Matchmaker together I go and raise the money I go to the bank I go and execute a business plan I'm on calls writing emails negotiating contracts but at the end of the day the hours that I put into that deal aren't quantitative like a lawyer or a doctor or somebody who's paid by the hour I'm paid by the value that I bring to the table I think a lot of Industries and a lot of careers don't reflect that but the entire commercial real estate industry really does reflect that your work that you put into this industry you will get out of and that's my favorite thing about commercial real estate because for hard-working individuals who are creative and Innovative get rewarded so how can commercial real estate change your life not just by the wealth that it brings to you not by just the flexibility but also just from the opportunities of increasing your network and the great people that you get to meet in this industry commercial real estate can do a lot of different things but it does take a lot of work I'm not going to shy away from it it's a process problems come up but they're rewarding commercial real estate is everywhere The Office Buildings that you work in the retail shopping centers that you shop in the apartments that some people live in these storage units that a lot of people store their stuff in these industrial warehouses where all your Amazon packages come through commercial real estate is ingrained in every part of an average person's life so how can you capitalize on these various opportunities that are ingrained in our society the key to Building Wealth is finding these investment opportunities to put the hard earned dollars that you've worked worked for and put them in a passive income asset to make money while you sleep you got to ask yourself this question do you want to be the person managing the property and using your own funds to buy the property or do you just want to give somebody your money and they're going to go do all the work for you I'm an active investor this is where I'm an operator I go and Source deals I manage the property I lease the property I Market the property for sale and I do everything that has to do with the property you have to find your Niche and my Niche is really just the southwestern Mountain West markets I don't chase a specific asset I look at Office Buildings retail shopping centers Apartments storage facilities industrial properties anything that is a real estate asset that can produce a source of income I take a look at but I do have a perceived amount of risk I am responsible for other people's money as a fiduciary and I have to go out and Source these opportunities that mitigate that risk so that I make sure my investors money is safe if you give me a hundred dollars and I say hey I'm going to get you 15 a year over three years each year you're going to get fifteen dollars back so at the end of the three years on your hundred dollars I give you your hundred dollars back I give you fifteen dollars each year that you invested with me so you get 45 dollars back on your hundred dollars in a three year period you didn't have to lift a finger you read my reports you get updates on the deal and I go and raise 90 of the money that I need and I go and charge fees for my operation and my expertise and the deal and I go and execute my business plan on the real estate asset sometimes that's taking a vacant building and putting a tendon inside of it or it could just be as simple as hey I see these rents are below Market by 10 or 20 percent and as each of these tenants roll their leases I bring their rents up to Market so if these rents are 10 to 20 below Market I slowly raise the rents which then increases the value because I'm getting more money every year and because I'm getting more money in every year the net operating income which is the money that I get which from my Revenue minus the expenses every year I then increase the value of my building because a higher noi net operating income increases the value of my building now on the passive investor side if you want your money to work for you go invest with a group like ourself at back development go to a crowdfunding platform like Realty Mogul crowd Street or some of these other Capital companies that you see pop up on your social media feed and what this can do is typically you have have to be an accredited investor now the question you're asking yourself probably what the heck is an accredited investor an accredited investor is somebody who has a million dollar or more net worth excluding their primary residence or somebody who has a licensed security license so they have a license given to them by the Securities and Exchange Commission that allows them to have this investment background so they can make these investment decisions on their own and then the third qualification is you have to make in excess of two hundred thousand dollars per year for the last five years once you pass that qualification as an accredited investor you can invest in these private Capital deals which is what we do you can either go and buy an asset that already has a long-term lease in place a long-term lease is something over five years so basically if it's a credit lease it's going to be more cost and value which means you're going to pay a premium for it because it's less risky meaning that if I bought a Starbucks that's a risk premium lease because there's 20 000 Starbucks across the country and they're always going to pay their rent but by you buying a Starbucks lease Starbucks is going to be paying you every single month on your money so basically when I buy a Starbucks they're gonna be paying me money every month for 10 years the price that they're paying you is fixed it goes with inflation and you don't have to really think about it until that lease comes up and that's the only work you really have to do now those are the two different ways that you can make money in real estate either being an operator or a passive investor but there's also different ways to get yourself into the commercial real estate field if you don't have money my two favorite ways are either working for a commercial real estate brokerage like a CBRE a jll a Cushman Wakefield a Marcus and Miller chap these are National brokerage firms and the commercial real estate industry or you can become a commercial lender which these other brokerage firms have they have Capital markets firms which is people who go and work with different lenders and different funds to help operators like myself for the deals that I have that I need funded not just with equity but with debt get funded so these guys go out they think like a bank they work with these Banks and these various institutions and family offices and other people who have money that need to invest in real estate but they don't want to do the work they just want to lend on the real estate asset itself and this gives you a way to understand how these people work and how you when you're mature enough in the real estate industry and you understand the process a lot more that you can also yourself go out and get this money so my two favorite ways to get into the commercial real estate industry if you don't have the operational experience and you don't necessarily have the income to be a passive investor you go get your real estate license go work for a commercial real estate broker as an analyst or you get your lending license and go work for a capital markets division of these commercial real estate firms and that's how you can penetrate the field without having to take on a lot of risk the deals that I'm all talking about are private Capital deals meaning that when you invest in them either as an active or a passive investor your money is locked up so you can't take you're like hey I want to get out I need my money back I gotta go pay for something that happened in my life or I want to go invest another deal it's not simple you have to get bought out of that deal another way to invest in real estate but not be locked in because real estate is in a liquid asset class you can invest in a real estate investment trust or commonly known as a Reit these are listed on the stock exchanges like NASDAQ or a New York Stock Exchange and you can go and buy and sell these just like a regular stock like an apple Amazon or a Tesla now if you continue to invest in these deals you start to gain experience you start to learn more about real estate because these companies and these private Capital deals are sending you reports on their operations and the execution of their business plan which then you'll understand a little bit more about real estate and as you continue to invest in these deals and continue to build up your net worth you can then leverage this experience and also your balance sheet because you have increased net worth to start doing your own deals and we'll talk about how you can start doing your own deals in another video and a lot more of a detailed fashion so in summary whichever route you choose understand that real estate is a patient way to build wealth it's not going to happen overnight but it's a great tool to build your wealth build your net worth gives you a lot of flexibility gives you a lot of time back gives you value for your work and just know that if you're going to be an active investor you're going to run into problems look at the market today a lot of things are out of your control and you're just going to have to go and adapt with those and realize that every single real estate deal that you invest in has some perceived amount of risk so as long as you understand that do what works best for you there is no one size fits all in this industry the beauty of this industry is there's a variety of ways to make money but if you want to invest in our deals please click on one of the links below if you have any comments please shoot them in the comments below looking forward to hearing from you guys and looking forward to working with you guys further