Business
Phil Nelson, a die hard Thundering Herd fan, jumped into the real estate game at a young age. Phil started with a 3 plex while still in college. Phil partnered up with a friend (Jim Weiler) and grew a portfolio containing more than 125 units. Phil and Jim took a leap into commercial real estate starting with a development of an upscale unit complex. They later transitioned into doing deep rehab office building deals as well as other multi-unit commercial tenant deals! While we touch on Phil's beginnings, we dive deep into his experience with residential development and office buildings! Key TakeawaysBig lessons:- Know Your Market, Know Your Market, Know Your Market- Being slightly below market rent can lower expenses/stress and keep vacancy near 100%. - More units = more money to allocate to in-house management. - Have a great relationship with your local bank- Try to have potential commercial tenants lined up before purchase of a commercial building.- Understand potential commercial tenants needs- Opportunities are available even in less vibrant cities. - Buy for Cashflow- Renovate in pieces. Mitigate your risk. Biggest Mistake:- Trying to get the very best price. (Know when a deal is fair)Pros of development vs rehabbing existing properties:- Do not have the constraints that many older buildings have (ceiling heights, can't always knock down walls, etc)- Can develop/build for today's consumer tastesWhy Phil dove into real estate:- The attractiveness of real estate. Collecting rents from residents that pay your operating expenses, your mortgage, and you- Became too tiring to do it part-time with a small portfolio. How investing in commercial differs from small residential - Can be more difficult to fill units - much less maintenance/supervision/hands on- can be much more passiveWhy Phil doesn't hire 3rd party management:- Feels comfortable managing his own properties.- Better cashflow - Better response rate to tenantsWhat's next for Phil:- Building a house- Continue renovating commercial properties!!