I take weekly 5 to 10 minute phone calls to share wisdom and business advice with those who find me through social media and articles such as these. I attract and converse with those who are hungry to start their business journey or to drastically expand it. Although I give different advice based on the person’s goals and current circumstances – two pieces of advice are constant, and one is…
You need to think and do differently.
While growing up and all throughout college we are taught to think inside the box. There is only one right answer and if we are wrong it hurts our grade point average. In business, I’ve learned to operate outside the little black box that everyone is taught to play within. Sometimes I get laughed at, but it’s worth it as it’s also led to my best business deals with the greatest returns. Thinking outside the box is what enabled me to go from clueless college graduate to $13MM in real estate in 4 years.
There are MORE THAN A MILLION ways to structure a deal, grow your business, sell a product, etc. Period.
Here’s just one real life example of thinking outside the box from a recent real estate deal that I successfully closed in October 2016.
My college roommate and great friend is a realtor in the area of Wisconsin where we grew up. He had been on my case about checking out a storage unit property that had been on the market for 18 months. In the past, I have bought countless apartments and I have the dream of owning 50,000 of them one day – but I have ZERO interest in storage units – so I told him, “no”.
I get bored on off days. And two hours into this particular off day, I gave in. I called my buddy so we could meet the seller and other broker at the property to look at it. The moment I got out of the vehicle I realized there were 110 storage units, 5 apartments, 20,000 square feet of open bulk storage space, a billboard and a 8,000 square feet of industrial warehouse space (and at the time 4,000 of warehouse space was not generating any income and 20 storage units were vacant).
I like flexibility and options. This property has many streams of income and since there were no other interested potential buyers I knew I could aggressively negotiate, yet make it a win for everyone.
(NOTE: I always try to negotiate directly with the seller, even if there are numerous brokers. I don’t have the highest IQ, but I have solid EQ and I can get a great feel for where they are at based on body language, etc. when I talk to them.)
The property was listed at $1,600,000. My first offer was $800,000 (Hey, no one else was looking at the deal 😉 ). We had a total of 11 counter offers back and forth. We ended up coming to an agreement at $1,200,000.
The following are all the things that were done outside of the box. NO COLLEGE REAL ESTATE OR BUSINESS COURSE IN THE WORLD would have taught this!
Within 2 minutes of meeting the seller I asked if he would finance my 20% down payment that I would need for the bank so they could loan me the other 80%. (He did – we pay him back monthly).
After a few counter offers, I started putting more of my time towards the negotiation than I wanted. So on the 6th counter-offer I included a finders-fee paid to me personally. This was agreed on by the seller.
The seller would not finance more than a 20% down payment for us and the bank ended up telling us they would only loan us 75% of the purchase price. That means we had another 5% ($60,000) to put into the deal. Since I was sitting on cash for another big investment I had to make a few months later, we went out and raised money. A handful of people were not interested. My buddy’s Grandma invested $60,000 and received 15% equity. She now gets a preferred return every month since she was the only one to put hard cash into the deal.
Since there were 20 storage units empty and a 4,000 square foot warehouse empty, we put into the offer that we could market beginning immediately before we closed and if the deal were to fall through the seller would benefit off all of the work we did – (not a bad deal, right?). We ended up filling a few of the storage units and signing a 3 year lease with a large concrete company to fill that 4,000 warehouse. Their lease began once we closed the deal and they have since signed another 3 year lease on 3,300 square feet of bulk storage space we have on site!
Thinking outside the box is the fastest and strongest way you can build a business.
It’s the best way to solve problems. At closing, my realtor buddy (who also owns some equity in the deal), and I were given a check for $14,000 to buy a $1,200,000 deal. Let me state that again – because we thought outside the box, we did not have to write a check at closing to buy the property…instead, collected $14,000!
We have added significant value to this property and thanks to thinking outside of the box, we would not consider selling this deal for less than $2,000,000 just 6 months after purchasing it for $1,200,000.