Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties

The Solution

The question becomes, how do you break this cycle? What is The Solution?

There is no single right answer to this question. There are several solutions to The Problem. The best solution I have found lies within the realm of real estate. You buy a value-added property, by which I mean a property that through your focused efforts can be improved and enhanced so it is worth significantly more after your efforts than when you acquired the asset. Your efforts usually revolve around increasing occupancy, but it can be a myriad of other tasks such as improving the overall appeal of the property through structural or cosmetic changes or changing the tenants by bringing in more viable businesses or more synergistic users, and so forth. Let's call your first acquisition “Property Number 1.” You then:

• Acquire Property Number 1.
• Lease up or otherwise improve Property Number 1.
• Refinance Property Number 1, pulling out monies in excess of the existing debt at least equal to the original equity invested.
• Invest the refinance proceeds into another property (Property Number 2).
• Continue to manage Property Number 1, reaping the benefit of the positive cash flow and earning a management fee.
• Lease up or otherwise improve Property Number 2.
• Refinance Property Number 2, pulling out monies in excess of the existing debt at least equal to the original equity invested.
• Invest the refinance proceeds into another property (Property Number 3).
• Continue to manage Properties Number 1 and Number ...