The Peter Harris Story
I was born, raised and currently reside in the Bay Area of Northern California. After graduating from college with a degree in Applied Physics, I went straight to work as an engineer in Silicon Valley. Thanks to my “safe, secure” job, I was able to purchase a few single family homes using conventional mortgages that I would hold as long term rentals. This was back in the early 90s. As my fledgling portfolio grew, the hassles of juggling different properties scattered across the Bay Area began to wear on me. I started seeking a better way to build wealth with real estate. My search led me to Multi Family Apartments. Instead of several residential units spread miles apart in all different directions, they could all be grouped together into one place AND I could hire a property manager to manage them.
The Wake Up Call That Changed My Life
Although the idea of owning commercial real estate intrigued me, it was also very intimidating and so rather than make the leap, I remained stuck in my somewhat comfortable position of owning single family homes. Then a wake up call shoved me out of my comfort zone. It became the catalyst behind my switch to commercial real estate investing and the subsequent chain of events that led to me coaching and mentoring others on the subject.
My boss at the engineering firm I worked for had been fired but he didn’t know it yet. The reason I knew before he did was because the higher ups at my company wanted to promote me into his position! Many refer to this as “climbing the corporate ladder” and are excited about moving onward and upward. But I took it as an indication that if they could do that to him, they certainly could do that to me! So much for my “safe and secure” job. That was the wake up call that changed my life.
Mentorship
Immediately after this incident, I sought out mentorship to teach me what I didn’t know about business and investing. Up to that point in my life, I hadn’t sought out coaching in my investing endeavors because buying a few single family homes the traditional way didn’t require much intelligence. Commercial real estate was much more complicated and the stakes were higher so I located the best commercial real estate mentorship that I could find, back in those days.
My First Commercial Deal
Motivated to make something happen sooner rather than later so that I didn’t experience the same fate as my previous boss, I put two of my rentals up for sale, which was a real leap of faith since they were bringing in a combined $1200-$1400 per month. Thanks to a strong California real estate market at the time, I had $144,000 available for a down payment on what I was planning to be my first big commercial deal. I reviewed nearly 70 available properties before finding a 45-unit apartment building a block away from a major university that seemed to fit my goals.
The asking price was $775,000 and I ended up with a final price of $720,000 after two weeks of negotiating along with a $45,000 credit for renovations. The real estate broker that listed the property introduced me to several local banks, but since I was a first-time commercial real estate borrower in that city, I was declined by several of them. It was quite frustrating, but I eventually secured financing with a 20% down payment. Persistence and a nice-looking suit paid off! The down payment requirement of $144,000 emptied my bank accounts. But the property still needed some fix up work so I asked the seller for cash rather than a $45,000 credit at closing. And I was able to get the work done for only $15,000 so that left me with $30,000 as cash reserves. Once the renovations were done and the vacancy rates were decreased, it cash flowed $6,500 per month!
Financially Free
With just my first deal, I technically became financially free because the positive cashflow was more than my monthly expenses. But living off of $6,500 in the Bay Area of California was not exactly living in the lap of luxury. So I sold the rest of my single family homes and bought a second commercial property, bringing my cash flow well above my original goals and allowing me to easily and comfortably quit my job for good and officially claim the status of financial independence. And then I was able to spend all the time I wanted with my son. What a blessing that was!
How I Got Into Commercial Real Estate Coaching and Mentoring
After I quit my job, a fellow engineer at the same firm I used to work at asked me to help him buy his first commercial property. I coached him through his first deal and that property allowed him to stop working for someone else and start his own engineering company. And soon others began asking me for help too. One thing led to another and before long, I was mentoring commercial real estate investors all across the United States. Which led to a call from the marketing department of Donald Trump asking me to co-author a program with the Donald himself, “Three Master Secrets of Real Estate Success“. Soon after my work with Trump, Wiley Publishing was looking for a commercial real estate book in their For Dummies series. They reached out to me and that’s how Commercial Real Estate Investing For Dummies was born. It went on to become the best selling commercial real estate investing book of all time. And that led to the formation of Commercial Property Advisors where for more than 10 years, I have mentored our Proteges to financial freedom you can see from the case studies of Real Deals.
That’s the Peter Harris Story.
