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own it—except, perhaps, for their headquarters building.
Knowing this, getting your long-term first-mortgage is easy!
Consider Making Your Fortune in Stores and Malls
Many stores today are in small groups—formerly called strip malls. Today such malls are called mini-malls. A mini-mall might have as few as four small stores—or as many as 20. If you’re interested in owning
stores as your way to real estate wealth, the mini-mall is the best starter property. Why? Because:
• There are many lenders that will finance mini-malls.
• You can begin with little experience and learn fast.
• If you run into trouble, your losses won’t be great.
Some commercial lenders will consider financing mini-malls. Why? Because the mini-mall is usually on well-located land in a city or town. Such land rises in value over time. So it is a valuable asset that is good collateral for a loan.
Mini-malls usually cater to smaller stores than larger shopping malls. While your anchor tenant—your largest tenant—may be a big company, its store will usually be smaller than in a large shopping mall.
With smaller and fewer stores, your operating challenges are simpler. So if you want to own this type of real estate, start with a mini-mall. After a few years you can “graduate” to a full-blown shopping mall with large parking fields and a major anchor tenant.
Who Funds Mini- and Shopping Malls?
Shopping malls require experience for their financing, purchase, and operation. You’ll get this either as an owner of mini-malls or as an employee of a large shopping mall. Just be sure you know what you’re doing before you buy a large shopping mall.
Funding for mini-malls and shopping malls often comes from local banks near the facility. Why is this? Because local banks:
• Feel safer with property near their own.
• Understand nearby property values better than distant ones.
• Have personnel who shop locally and want to see the area grow.
So your best opportunity for mini- and shopping mall financing is often at your local commercial bank. Check your local Yellow Pages under “Mortgages” and “Loans” for banks that might want to work with you. You will also find lenders for mini- and shopping malls in the lender list in Chapter 6.
Find and Use Unique and Unusual Funding Sources
Wait Before Investing in Industrial Properties
Industrial properties—factories, storage buildings, warehouses, or others —are not for beginners. It takes experience and know-how to make it big on zero cash in these properties. So for now, I suggest that you get experience in other types of properties before investing in industrial projects.
When you’re ready to take on industrial properties, you can call me and we’ll meet for lunch to discuss your plans. And I’ll pay for lunch— that I guarantee!
Unique Funding You Can Do Yourself
Today is the age of the do-it-yourselfer. Thousands of people rebuild houses, construct their own home, build walls, or other projects. So why not expand this to do-it-yourself financing? Thousands of BWBs are doing just that. You, too, can do the same. Let’s see how—right now.
Two Quick Unique Ways to Raise Money Yourself
There are two quick unique ways you can raise money for real estate yourself at low cost. These ways are:
1. Limited partnership to raise $500,000 to $50 million.
2. Real Estate Investment Trust (REIT) for $5 million to $100+ million.
Of these two methods, the Limited Partnership (LP) is the easiest for BWBs and has been used much more often than the REIT. However, we do have REITs being formed almost every day of the year to raise big money for real estate investment. Let’s look at each unique funding method to see how you might use it today.
Use a Limited Partnership to Raise the Money You Need
In Chapter 6, you learned how to raise money from a Limited Partnership. Now you’ll learn how to form your own Limited Partnership to raise money directly from investors in your partnership.
A Limited Partnership (can raise money for real estate investment at little cost. In a typical real estate limited partnership, you, as the general partner, work with limited partners who invest their money in some aspect of income real estate.
As general partner, you invite limited partners to put money into the partnership in the form of participations. Each participation can be priced at anywhere from $5,000 to $50,000 or more. Thus, if you get 20 limited partners to invest, say $50,000 each, you’ll raise 20 x $50,000 = $1,000,000 to invest in income real estate.
As general partner, you have control of the investment funds. You can use them in any way you believe will earn a profit for the Limited Partners. And your Limited Partners are limited in their liability in the partnership to the amount of money they originally put into the partnership.
Thus, if a Limited Partner put $15,000 into your real estate LP, that partner is limited to no more than the $15,000 if an outsider sues the LP and is awarded money for damages or other charges.