From the introduction
Congratulations! If you are reading this book, you are a very lucky person. If you are already investing in commercial real estate, thinking about it, or working in this field, you are a member of a very exclusive group. According to the IRS, less than 8% of all Americans who file tax returns get to invest in income property and under 3% own commercial investment real estate. And if you work in this industry like I do (I do commercial mortgages), well, I hope you think it’s fun, as I do, and, might I add, never boring.
As an investor in commercial property, you get to wake up in the morning and say to yourself, “What can I do to this property to add value?” Maybe you have found a Class C minus apartment complex in an up-and-coming neighborhood. Yes, get rid of the slow-paying and no-paying renters, and the ones who have rusty bikes and junk on their patios. Then do about $4,500 per unit in cosmetic upgrades and the rents can be raised $100 per month. Just with those ideas you can be on your way to increasing the property value by 20% or more in five years. I know of no other investment opportunity that is designed like commercial real estate—one where you can choose the right property, add value, and be rewarded with a pay raise, increased equity, and amazing tax benefits.
Remember when you just had a day job? You only had one source of income—the paycheck. With commercial real estate, you get to have four sources of income: rental income, rental increases, appreciation, and depreciation (I know, how can something appreciate and depreciate at the same time? Only in America.) Oh, but wait! There is actually a fifth one—leveraging your equity tax free into a larger, more profitable property by doing a cash-out refinance or a 1031 tax-deferred exchange. These are covered in detail in Chapter 5.
