Looking for the best business advice around? What about tips on how to get money and how to invest in commercial real estate? We’ve got that and more on Slidin’ in the DMs, a.k.a. Ask Philip with Bold Business host Philip Michael.
Q. I need help getting money for my business.
A. Let’s say you want to start a graphic design, photography or any other type of service business. Anything that you’re trying to get out there is a hypothesis. With any hypothesis, you have to either validate it or reject it. You have to test if there’s a market for it, basically. So, you have an idea, and you’re trying to get money. The best proof of concept is when people pay out of their pocket and hand it over to you, and then, they come back to do it again. Once you have that, people will be more inclined to invest in you. But you have to figure out how to get it yourself. If you’re not able to even save up a few bucks to start, why would somebody else bet on you?
Q. I have $200,000 cash, and I’m looking for an ideal commercial residential land. How do I get the needed capital to build and sell the units and do the process all over again?
A. Honestly, you have more than enough to get five or six buildings. Just chop that up and do down payments on several buildings. You can start with one, also, if that’s what you want to do. Let’s do the math: $200,000 or 20% down gives you $1 million of buying power. So, you can use that as a downpayment to get a building with $1 million in Atlanta. I’ve seen duplexes go for $100,000; obviously, it depends on the neighborhood. But if you have a long-term hat on, Atlanta is a booming market.
Q. If you had $1 million and were just starting out in commercial real estate, would you buy existing buildings or development projects first?
A. Look, this is one of those flawed loaded questions that has a lot of built-in hypotheticals and variables and scenarios … But that said, I’ll attempt to answer the best way that I can. In terms of existing buildings vs. building ground-up, it really depends on the opportunity and the market … If I were you and just suddenly had $1 million and no experience, I’d go to somebody with experience and say, “Hey, I have $1 million; can you do this with me and let me shadow you?” Because when you have $1 million, you open a lot of doors.
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Want more money knowledge from Philip? Check this out.