Expert: Brian Bocchieri - 11/30/2009

Question
QUESTION: brian, is there such a thing of really buying comm'l income producing prpty with NO MONEY??????? we have the motivation, and are willing to work and learn , but we have NO MONEY right now. i see, hear and read lots of things on the subject. but i really have to know, we live on long island, NY. if so, WHERE do we start to find this "needle in the haystack" kinda deal????? we are willing to do what ever leg work is necessary.we are desperate right now. please help us

ANSWER: Hello Darlene

Yes you are right there is a lot of hype, is it possible yes, how difficult is it quite.  Before the meltdown it was a bit easier money was easier to get.  

That was the bad news, now how to do it.  The first is to assemble a group of investors to either front the down payment money or be able to qualify for the mortgage ( when they say no money they mean not your money) money is still needed. You can then create relationships with the commercial banks in your area and get to  know the REO department.  You will need to show them proof of funds so that they know you are a serious investor.  

The commercial market at this time is in turmoil due to the inability to refinance on their mortgages the values of the properties have declined in value and many of the rents have decreased.  These problems have created an increase in foreclosures in the commercial arena.  For the savvy investor it can create tremendous opportunity for the novice it can be dangerous. The tenant closes up, goes bankrupt, the bank still needs to be paid.  You will need cash reserves to cover any unexpected problems such as these.  Should you venture into this market you will need to do your homework on your tenants, market rental trends are they increasing or decreasing?  What market are you in? retail, office, warehousing... It is difficult to time a market meaning when to start purchasing certain types of properties you can try by tracking vacancies rates, and absorption rates.

Personally I do not feel this is an area to venture into without experience.  There are courses  out there that teach master leasing which is a fairly straight forward way to get started in commercial real estate with minimal risk.  

I hope this has helped please feel free to contact me with any additional questions you may have.

Wishing you all the best.
Brian Bocchieri  



---------- FOLLOW-UP ----------

QUESTION: well thanks for all your information and your honesty. BUT there HAS to be a way to make profits. what about small multi families. we NEED an income producing investment. BUT we have NO MONEY!!!!! just a VERY STRONG DRIVE to find something, somehow, someway to make money. we tried out of state pre construction investment, timing was all wrong, we've been carring it in the NEGATIVE for years, trying to do a short sale, to get the heck out. any other suggestions for options we could/should consider? i try READING any and ALL books on the subject, but i NEVER seem to find any answers. can you help??
thanks

Answer
Yes you can start with small multi family deals.  The best no money down strategy is to find burned out out of state landlords.  You can find them at the county courthouse, title agencies, and local banks.  Once you have located them you can work a deal with them either a no money down deal or a master lease on the property.  You can then negotiate a lease for the entire property ( at a lower rate then you can rent it for)your job now is to improve the cash flow of the property by improvements, better cash management, better tenants,... whatever you need to do to create the cash flow you want.  Within the master lease you will include the time frame of the lease and the purchase price at the end of the lease term.  During the lease term you will collect the difference between the master lease and the actual rent you are collecting.  You will also have a built in profit on the purchase price you have negotiated with the owner.  This will be a good start for you.  There is more to a master lease you will need to investigate but it is possible to make it all work.  I hope this has helped

Wishing you all the best
Brian Bocchieri