101: From Converted Duplex to Working With Robert Kiyosaki & Donald Trump to Multifamily Mogul

May 15, 2017bmanasseroUncategorized3 comments

SHOW NOTES FOR EPISODE 101 – FROM CONVERTED DUPLEX TO WORKING WITH ROBERT KIYOSAKI & DONALD TRUMP TO MULTIFAMILY MOGUL

Peter Harris was a single dad, trying to make ends meet and provide a good future for his son. In this episode, Peter shares how he discovered real estate investing, managed to acquire over 1,000 units, achieve his dreams and how he is now able to educate and help others to do the same.

What You Will Learn

The value of commercial properties and how they can help you achieve wealth
How to get your down payment back from a property
How a yellow corvette can help you attract investors
The importance of knowing your “Why” before you start investing in real estate
How Robert Kiyosaki calling him a “loser” gave him the motivation he needed to jump forward
What it takes to quit your W2 job and become free to be an investor
How real estate investing can help people to turn their lives around

About our Guest

Peter Harris

Peter Harris began investing in real estate in the late 1990s. He has since acquired over 1000 multifamily units, totaling over $50 million dollars. These purchases have spanned the United States, from California to New York, Ohio, Arizona, Texas and Oklahoma. His experience includes, but is not limited to, correcting management/operational issues, major renovations of commercial properties, rehabbing distressed commercial properties, re-positioning and re-branding commercial properties. He currently, owns and operates a commercial real estate consulting firm specializing in multi-family investments based in San Francisco, CA, The Apartment Consultant. www.TheApartmentConsultant.com. He is also Director of Education for a commercial real estate advisory firm based in Miami, FL, Commercial Property Advisors. www.CommercialPropertyAdvisors.com. Peter is a commercial broker and has worked for Sperry Van Ness Commercial Real Estate and Coldwell Banker previously, focusing on buying and selling commercial real estate and income property in the San Francisco Bay Area.

Peter is the author of three best-selling books, Commercial Real Estate Investing for Dummies, Commercial Real Estate for Beginners and Three Master Secrets of Real Estate Success, which he co-authored with Donald Trump. For 4 years, he has worked with Richdad’s Robert Kiyosaki Real Estate Investment Seminars, where he assisted the clients and staff for their multi-day event. Peter holds a real estate broker’s license for the state of California and holds a BS Degree in Applied Physics from Cal-State University Northridge and holds several U.S. patents.

More About Peter

In the 1990s, was an engineer, working paycheck to paycheck
Single parent
A mentor gave him a copy of “Rich Dad Poor Dad” by Robert Kiyosaki – got hooked on the message
Continued to read as many books on real estate as he could
Asked mentor to show him how real estate investing works and the mentor said “yes,” but Peter would have to help him build up his real estate portfolio
After one year, he was able to buy a single family home in San Francisco and convert it into a duplex. It cash flowed well
He wanted to buy more but wasn’t sure how he would do that while working a full-time job, plus being a single parent
Ended up buying a duplex, 2 fourplexes, a 7-unit, 21-unit, 44-unit, 80-unit, 110-unit, 200-units, 300 units

Recognized the Value of Commercial Property

Grew to appreciate the cashflow and the ability to create wealth with commercial properties
With his properties that were 5 units plus (commercial properties), as he managed the properties well and increased the NOI (net operating income), he saw the property value, and thus, equity, increase
His banker told him he could pull out his cash investment

His Lightbulb Moment

He saw how he could pull his down payment out of one property to buy another

Where to Get More Money?

Was in a focus group put on by Robert Kiyosaki with 8-10 other investors, that would meet every other month, and everyone was faced with the same challenge – how can you get more money to buy bigger and better properties
Kiyosaki said that everyone in the group had to learn how to raise more capital and told everyone to go out and raise capital
Peter had to raise $66,000 for his first syndicated deal
When he found an investor that would cover the full amount needed – $66K, he told the investor that he would get 75% of the cashflow and ownership and Peter would get 25%, just so he could say he raised the capital and syndicated his first deal
Peter found the property, did the due diligence, did the inspections, found the financing and both signed on the loan
After that deal, the same investor continued to put in the cash (Peter put in zero cash) but they split the deals 50/50

How Peter Attracted His First Investor

Peter was a young, single engineer, and bought a yellow 1969 Daytona Corvette
It was a Friday, dress-down day at work
A person at his work noticed Peter’s new car and, in a conversation, found out Peter was a real estate investor and wanted to talk more
Kiyosaki had taught Peter how to do an Executive Summary, how to make a deal attractive and how to do the “sales” part
Printed out slides and had a “pitchbook”
It was easier than he thought
Be yourself! It’s all about trust!

How Long Before he Could Quit His W2 Job?

It took Peter 4 years to generate enough income to quit his full-time job
Much hard work

Discovering His “Why”

He had to figure what his “Why” was to truly get motivated
He was struggling as a single parent
Always set goals
He wanted to provide a good life for his son – that became his “Why”
He printed out 8 happy faces with his birthday on it when he would turn 40
Put them all over his house (even in the refrigerator)
His goal was to retire from the corporate world by the time he reached 40!
His son’s best friend’s parents always took his son to school because he had two jobs, buying property, always traveling and couldn’t
He looked forward to the day he could drop off his son off at school

Reaching His Goal

When he turned 40, he was able to quit his W2 job and drive his kid to school
He had 80 units
Kiyosaki had his students come up with their “rat race number” – the bare bones amount they needed to earn to quit the rat race and work full-time in real estate – his amount was $4,200 per month

Motivation!

Kiyosaki provided the motivation for Peter to turn things around
Peter was setting only small goals because they were easier to achieve
Kiyosaki stood in front of the group, called out Peter, made the sign of an “L” on his forehead with his hand, and called Peter a loser
That devastated Peter and provided the motivation for him to get off his butt and get moving
Within a month, he had 5 deals under contract

Developed a Passion for Apartments

Started teaching classes at The Learning Annex on how to buy duplexes and fourplexes
When you are teaching your skills get sharpened
Started setting goals: this year I will buy 40 units, this year I will buy 100 units, etc.

Criteria

In the beginning bought “C” class but doesn’t have to now, so prefers “B+” class
Double digit cash-on-cash
Cap rates are relative
Very strategic value-add
No speculation
Buys for the long term
If syndicated, a 5-year exit strategy horizon for investors (7 years max)

Biggest Mistake

Selling at the wrong time
Mis-timing the real estate cycle
Left millions on the table
What he learned:
- He needs to be a student of his target market
  - No such thing as a “national” real estate market
  - Rather, our country is made of 100s of submarkets
  - You need to adjust your exit strategy according to your local market
- Focus on one asset type
  - For example, in a given market, apartments can be peaking, while office buildings are just starting a new cycle
  - Very few people are really good at knowing multiple asset types
  - You need to look at many things for each asset type (demographics, politics, supply & demand, social patterns, taxation, business growth, job and income growth)

Biggest Success

A client’s success story
- Chris & Kim
- Chris is airline pilot in his 60s
- He wants to have the income to adopt more at-risk kids
- He has 3 kids of his own, wants 3 more
- Peter knew a lender in Texas with a 90-unit distressed apartment building
  - 60% occupied
  - Only 40% paying
  - Poor on-site management
  - Got owner to carry back $1.2 million second trust deed
  - Chris put some of his own money in and some hard money
  - After 1 year, they created $2 million profit, $7,000 per month in cash flow

Advice for Old Dawg’s Looking at Real Estate Investing

For those who have had failures, never take the failure personally
Get knowledge you didn’t have before but don’t let the fear dominate you
Jump back in – “measure twice, cut once” – can’t afford to make mistakes
Only invest in cashflow – buy long-term holds – no more speculating – it’s all about capital preservation

What is the Future for Peter’s Business

He gets the privilege to helping people achieve their dreams
He seeks to do more of the same
His passion – helping people and having servant heart leadership
Success stories motivate him to do more:
- Single mom
  - Abused by her husband
  - Bought 64 unit apartment
  - Now has cashflow and $1 million in equity
- Guy over 60 with no retirement funds
  - Bought small property in Colorado
  - Created $300,000 in equity
  - Did cash-out refinance and pulled out his down payment
  - He now has retirement income

Rap-it-Up

Favorite real estate book: The Bible
Favorite business book: Start With Why by Simon Sinek
Most valuable website for success: YouTube
Favorite quote: “The mediocre teacher tells, the good teacher explains, the superior teacher demonstrates, and the great teacher inspires.”
If you lost everything and only had $1,000 in cash, how would you rebuild your business? Invest in a relationship, a mentor, someone I to serve and help out and learn from. Someone old, with gray hair and a good heart. To learn from and rebuild.

How to Reach Peter

Email: Peter@theapartmentconsultant.com
Phone: 415-657-3397
LinkedIn: https://www.linkedin.com/in/theapartmentconsultant/

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