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 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 immediate 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.
My First Mentor
Immediately after this incident, I sought out a mentor 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. But now I was planning on getting rid of my job altogether and becoming a financially free business owner and investor. That was different level and I knew I needed help. He wasn’t well known back then (this was before his books went on to sell a combined 30 million copies) but Robert Kiyosaki was my first business and investing mentor. He wasn’t specifically a commercial real estate mentor, but he helped me tremendously with the fundamentals of thinking like a rich person and how a successful business man and investor makes decisions and operates.
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!
Out of the Rat Race
With just my first deal, I was technically out of the rat race 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 exit the rat race. 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
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 it was that individual who encouraged me to coach others and help them reach their financial goals. 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 then I was asked to join the Commercial Property Advisors organization as their Director of Education where my Proteges and I invest in commercial real estate all across the United States and Canada.
That’s the Peter Harris Story.