YOU BUY COMMERCIAL REAL ESTATE FOR CASH FLOW…

PART I…

As we begin our journey, we look at the three main reasons you would buy or purchase commercial real estate.? The first reason is Cash Flow.? You must remember that when buying Commercial Real Estate, you are also buying a business.? There are as many different kinds of Commercial Real Estate as a business.? In fact, as your mind has imagination and someone has a need for a service or a product, there are businesses that can be set up to make those products, meet those needs, and make money doing it.

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The first reason anyone starts a business and seeks to fulfill any of those needs is to make money on a daily or monthly basis so that they can put a roof over their heads and the heads of their families and have food to eat and clothing to wear.? Cash flow is usually the first reason that investors purchase commercial real estate.? And this comes down to the most basic principles: how do we make money?? It has been said millions of times that “the greater the risk, the greater the reward.”? That goes for every business, and Real Estate is no different.

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There are as many different kinds of Real Estate businesses and investments as your imagination will allow.? EVERYONE has basic needs, and if you fulfill those needs, you can charge money for those goods and services and have cash flow.? Real estate is no different.? For a low risk, you could sign a NNN Lease with a huge giant of a company like McDonalds.? NNN stands for a Triple Net Lease, when the owner just collects a rent check and pays the mortgage, if there is one.? The lessee pays the rent, the real estate taxes, the insurance, and the repairs and maintenance.? Everyone has to eat and the lower the price, the easier it is to purchase that food and the convenience it affords helps you sell many items.? So many years ago, the McDonald brothers started the now famous hamburger chain and sold it to Ray Crock in the early 1960s he set the wheels in motion making the hamburger chain what it is today.? He made McDonalds a fast-food hamburger stand that sold hamburgers, French fries, drinks and other things at a very low price and you did not have to wait around while they cooked your order to your specifications.

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That company became one of the giants of business and tomorrow we are going to talk about the greatest of the first fast food giants.? Many, if not most of the NNN leases are for fast food and fast coffee outlets like McDonalds, Wendys, Burger King, Starbucks, etc.? You will notice that Starbuck’s biggest competitor, Coffee Bean and Tea Leaf, is not on my list. Their stores are not free standing and are not drive through.? And the best fast-food burger, in my humble opinion, and I’m not really humble, is In ‘n Out Burger.? But the mother company owns those, and they just broke the mold of the fast-food burger model.? They are also very successful as every time I go there, there is a line around the block.? So, there are different ways to be successful in real estate, and you don’t have to do it like it was done before.? By the way, “doing it the way it was done before “are my least favorite words in business.? They exclude creativity, and I HATE that!!!

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Finally, the greatest cash flow real estate investment is the Adult Care Facility; I will cover that in great detail later.? The Adult Care Facility is the best real estate investment that gives you the best cash flow, or cash cow, as the expression goes that I know of now.? I don’t know how many investments there are that I am unaware of.? I just learned about adult care facilities in the last couple of years.? So, even though I know a lot, I know that there is so much that I have no knowledge of, and I am willing and anxious to learn about these other opportunities.