Real Estate Investing is a continuum. The market goes up and down. In order to stay profitable, your real estate investment strategy must adjust to reflect the market.
Mark Ferguson is an experienced real estate investor. He has gone from flipping to buying single rentals to flipping to most recently acquiring commercial real estate properties. His success is directly related to his ability to make changes as the market changes.
He started as a realtor focused on working with short sales and foreclosures that provided multiple flipping opportunities.
Mark’s original real estate investing plan was to buy 100 single family rentals. As the market improved, retail sale prices outpaced market rents. When he realized that rentals could no longer cash flow, he changed back to single family flips.
At the time of our interview, he had 22 flips underway. In order to manage this many projects, Mark has systems and a trusted team that helps him find, acquire and renovate each project. Mark’s Investfourmore.com blog, podcast and Facebook group provide the details each of his deals.
Recently, he acquired four commercial properties. The first is one that he found on the Multiple Listing Service. It had IRS tax liens and took eleven months to close. The property is a single tenant, 3,000 square feet building he purchased for $110,000. The seller will remain as a tenant for 6 months paying $1,500 / month rent.
The second is a small warehouse a friend wanted to sell. Mark needed a place to store the materials for his multiple flips and his growing car collection.
The third is a 7,500 sq foot office building that was previously a medical office. It was listed on the MLS for $500,000 with several price reductions. He purchased it for $292,000. This is currently vacant.
The 4th is a 1600 sq foot single story cinder block building he found on Facebook marketplace for $101,000. This is currently vacant with expected rents $1300 - $1500 per month.
Keeping with his “as they come” strategy, he has a $2.1M, 70,000 square foot retail strip mall with a grocery store anchor under contract due to close in January 2018. The numbers reflect a 9 cap with 8000 sq ft of vacant space!
The two markets, residential and commercial are very different. One thing that Mark has recognized that is different between residential and commercial is the amount of effort spent to make a property appealing to a buyer or potential tenant.
Most residential properties need to be spruced up to attract potential buyers or tenants. However, most commercial properties are left just as the last tenant left it; water stains on the ceiling from past roof leaks, stained carpet, etc. He has taken his residential experience to the commercial and done minor things that can take away the negatives and leave the space clean and inviting.
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