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Three Levels of Commercial Real Estate Investing

By Brian Kline | February 19, 2018

A successful real estate  investor graduates through at least three levels during his or her career. Level 1 is the entry level and typically the most difficult to complete. The good news, if you are just getting started, is that is does get easier. And as it gets easier, you have more time to spend away from work doing things that you enjoy even more than work.

I bring up the different levels of real estate investors because commercial back flips might be more appropriate for those at level 2 or 3. Not that a level 1 can't or should do it but the amounts of money involved typically intimidate a beginner with little experience. A back flip is similar to flipping a property but it typically doesn't involve rehabbing the property. Commercial property may be on a 30-year amortization schedule but reality it has a balloon payment that comes due in 5, 7, or 10 years. If refinancing can't be found, the buyer risks losing the property. A back flip is when an investor comes in to pay off the balloon payment and then finance it back to the original buyer. The point is creative real estate investing is only limited by your imagination.

Starting at Level   1

Obviously, level 1 is about getting started. It's about getting the first few deals under your belt and gaining some confidence. An amazing number of people look at real estate investing and get really excited when they see the amount of money that can be made compared to the amount of work they put in. The problem is they never pull the trigger on the first deal.

He or she may have bought 4, 5, or more books and courses explaining different strategies and techniques for making money. But eventually the books and courses end up collecting dust on a bookshelf. People at level 1 often tell themselves they'll just wait until everything is perfect and the time is right to do a deal. Of course, that perfect time never comes. On the other hand, those in the know realize that you can make money in real estate regardless of what is going on in the market. You only need a strategy that works in that particular market. Commercial back flips are a good strategy for today's market.

The best thing a level 1 can do is get out there and complete a deal. It can be low cost and low risk but get one done. After a few deals, you'll gain the confidence to move on to the more advanced levels.

Moving to Level 2

Level 2 is about leverage. This when you take what you learned in level 1 and start applying it to several deals simultaneously. You start growing your business. You stop trying to do everything yourself and get others involved helping get deals done - networking. This is where it becomes obvious that you need processes and organization to seriously ramp up your business. This is when you've become convinced you can make it in real estate and know how successful you want to become.

There is more than enough information available for level 2 people to succeed. However, it's very important that these people carefully consider what strategy he or she pursues. You want to progress with a highly structured process that keeps the pipeline full and money coming out the end in large amounts. Once you have a system in place you'll be amazed at how successful you can become.

Reaching Level 3

Level 3 really is the pinnacle of success. This is where you really don't need to work much any more. This is where you are paid for ideas. At Level 3, you're going to have ideas that attract money and it's pretty cool to see that when it happens.

Other people become excited about investing in your ideas. They start bringing their great deals and sharing them with you. As a level 3, you make 100, 200, and 500 times more money that you did as a level 1. And you work much less than you did at level 1. This is where the "less you do, the more you make" kicks in.

Please leave a comment if this article was helpful or if you have a question.

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. In the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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