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SHOW NOTES FOR EPISODE 107 – MY FIRST REAL ESTATE INVESTMENT WAS AN OFFICE BUILDING
Most real estate investors start with a single family home – not Brian Murray! His first real estate investment was a 50,000 square foot office building! In this episode, author and former teacher Brian Murray explains how he sought extra income to supplement his teaching salary and how commercial real estate investing became his solution and future career.
What You Will Learn
- How it’s possible to buy an office building as your first investment property
- How you can acquire multiple commercial properties without having to rely on investors
- Why self-management is the best way to start
- Viewing your real estate investments as a tool for “community revitalization”
- How most property challenges can be overcome with a little education, expert advice and lots of persistence
- How buying smart opens the door for leverage and multiple properties
About Our Guest
Brian Murray
Brian Murray started Washington Street Properties in 2007 when he acquired his first investment property. Without raising any outside capital, Murray bootstrapped his way from newbie investor to the owner of a nationally recognized real estate investment and property management firm. He currently owns/manages over 300 doors valued at $35 million – 50 residential/50 commercial (retail and offices)
Washington Street Properties has been ranked on the Inc. 5000 list of the nation’s fastest-growing private companies for the past three years in a row. The company’s success has been achieved through a value-added approach, focusing on the turnaround of distressed and under-performing properties.
Brian Murray is the author of Crushing It in Apartments and Commercial Real Estate: How a Small Investor Can Make It Big.
More About Brian
- Ten years ago, Brian went from corporate job to full-time teacher
- Decided to do part-time real estate investing to supplement teaching salary
- His broker recommended a commercial property in his town
First Property
- Found 50,000 square foot office building in Watertown, NY
- Built in 1920s
- Well-situated in middle of town
- Plenty of parking, where parking is limited
- 20 office suites
- 3 floors
- Elevator
- Had been for sale for several years and was able to get a deduction in price
- Seller had a pre-payment penalty of more than $200,000 that had to be paid off – got great discount on price
- Bank would not lend to him
- Assumed sellers mortgage
- Received credits at closing
- Only needed less than $50,0000 to acquire
- Problems with the building
- 50% vacancy
- Neglected
- Overgrown landscaping
- Trash everywhere
- Windows left open while heat/a/c was on
- But Brian saw past the problems to see the upside
- He was convinced he could turn it around
- Spent about a year looking at the community everyday
- Studied what was happening in the community
- Talked with local brokers
- He began to see the opportunity
- Decided to self-manage
- Property had full-time superintendent but he fired him and Brian took on his job
- Came in early, cleaned, unlocked
- Came back at lunchtime
- Came back after school
- Hired contractors when he needed them
- After a few years, hired his first employee
- Met with county assessor before he bought and was able to reduce taxes by two-thirds
- Cut utility bills in half with a few simple fixes
- Everything was easier than he had thought. He found experts in each area to assist him
Second Property
- Retail building
- Storefront and offices
- Built in the 80s-90s
- 5 blocks from his first property
- Bank would not lend to him
- Put together seller-financing
Future Properties
- After he turned the properties around, he was finally able to get a bank to help him refinance both properties and pull cash out
- With the cash he was able to buy three more properties
- Has bought 2-3 properties per year after that
- He still has had no outside investors
- Has 30 properties now
- Reinvests his cash flow back into his properties
- Hired a CEO to run things but it didn’t work
- After 7 years, he quit teaching job to do real estate full-time
- He currently has 17 employees working for him
Biggest Mistake
- He says he makes lots of mistakes – considers it a learning process
- He has taken bigger and bigger chances as the company grew, with purchasing distressed properties
- Bought a property at a foreclosure auction
- Did a quick walk-through of property before purchase
- Was optimistic because they had turned around a similar property before
- But the property became known as “the money pit”
- Kept finding hidden problems that need to be repaired, environmental abatement and other problems that cost lots of money
- Had to completely gut it and re-do mechanicals
- Converted Victorian, 20 rooms
- Had carriage house that they never got to
Biggest Success
- 70-unit apartment – outlined in his book
- Criminal activities
- Pest infestations
- Great turn-around story
Advice for Old Dawgs Looking to Invest in Real Estate
- Buy commercial or residential
- Being too passive can be risky because someone else calls the shots
- By being more involved you get a lot of advantages
- Stay local
Where His Business is Going in the Future
- Loves being part of revitalizing the community and wants to continue those efforts
- Also loves mentoring others
Rap-It-Up
- Favorite real estate book: The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges
- Favorite business book: The Obstacle is the Way by Ryan Holiday
- Most valuable web site for success (other than your own): loopnet.com (educational tool – memorandum, pro formas, etc.)
- Favorite app: Apple podcast app
- Favorite quote: “The quality of a person’s life is in direct proportion to their commitment to excellence, regardless of their chosen field of endeavor.” by Vince Lombardi
- If you had to start all over, knowing what you know, and you only had $1,000 cash, what would you do to re-launch your real estate investing business? Listen to podcasts, read lots of books and learn from others. Take people to lunch. Learn creative financing techniques. Start off as a W2 employee. Don’t live off of your investment. The money you generate, put it back in the investment.
How to Reach Brian
- His book’s website: CrushingIt.info
- His book on Amazon: Crushing It in Apartments and Commercial Real Estate: How a Small Investor Can Make it Big by Brian H. Murray
- WasingtonStreetProperties.com
- LinkedIn: https://www.linkedin.com/in/bmurray/
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