How to Grow a 10 Million Dollar Portfolio with Just a Few Properties
by Mish Daniel | Free Information
Mish Daniel and Renay Thomas (industry experts here at Revolve Commercial) teamed up in our latest video to share how you can create a lucrative 10 million dollar portfolio.
With powerful strategies backed by an incredible case study – they demonstrated one client’s success after just 18 months.
Growing a 10 million dollar portfolio with commercial property investments is easier than you think. With the right advice and guidance, it can be pretty straightforward.
Listen to the full conversation below, or keep reading. 💡
Case Study: $10 Million Dollar Commercial Property Portfolio in 18 Months
When we met our client five years ago, he was in a challenging position with 18 residential properties verging on negative returns. Without the cash flow or development team to turn his potential into profitable investments, he needed help.
Investing in residential real estate comes with hidden costs that many don’t consider, and cash flow is essential for creating returns.
We suggested our approach to managing his portfolio with commercial property investments and showed him what he could potentially earn. Understandably he was sceptical at first but gave us the go-ahead after he realised commercial property investing could yield better returns than residential property investing.
Keep in mind that an uplift in a commercial property is not nearly as much work as on a residential property. Minor adjustments like adjusting the lease or putting in aircon are sometimes the only things needed to uplift a property.
To achieve the client’s goal, we purchased several properties on his behalf, which kickstarted his journey to his 10 million dollar portfolio.
The increase in value and rental income for his properties were truly remarkable and clearly demonstrated the potential of commercial property investments. Let’s have a look.
Property 1 – Zillmere:
The first property is Zillmere, which we purchased after two months of negotiations for $1,600,000.00 at a 7.28% yield at the time of sale.
After we did the uplift on the property, the yield increased to 8.28%, and the property’s value went up to $2,206,700.00 in less than twelve months.
A whopping value increase of $606,700.00 on just one property!
The initial rental income of $116,545.24 at the sale increased to an impressive $132,402.40.
Property 2 – Slacks Creek:
The second property Slacks Creek was a difficult property to negotiate on behalf of the client. Upon investigation, we found that the main problem lay with the tenants, who were unhappy because they didn’t have proper leases in place and felt they hadn’t been treated well.
Some tenants wanted to leave, so we focused on building relationships with them instead of just doing minor property renovations. We gave them new extended leases, as well as property uplifts in the form of air conditioning, paint jobs, and cleanups – which were the things they needed.
We were delighted when the valuer came along to look at the property and saw the leases as a more secure investment. This increased the value of the property ten times.
The Initial purchase price was $1,725,000.00 with a rental income of $184,127.24 (at a yield of 10.67%).
It increased to $3,239,633.00 with a rental income of $194,378.48 (at a yield of 11.27%).
As a result, the client made a chunk of cash out of this property, with the value increasing by a staggering $1,514,633.00!
The higher valuation also meant that he could return to this property, draw down the equity and do it again. And that’s exactly what he did!
Property 3 – Helensvale:
The third property was Helensvale, where we also needed to renew the leases and make small changes to uplift the property. Some of the tenants were initially not interested in renewing their leases because they were selling their businesses and wanted to run their leases out.
We showed them that keeping the leases would give their buyers more certainty, and they ended up signing a five-year lease even though they were selling their businesses. It added value by giving tenants certainty that they have got the premises for the next three to nine years at their option.
As a result, this property was re-evaluated, it was purchased for $1,250,000.00 with a net rental income of $174,975.78 (at a yield of 14%).
It increased to $3,425,717.00 with a net rental income of $205,543.26 (at a yield of 16.44%).
A massive uplift of $2,175,717.00!
Working smartly with the tenants and the building paid off!
The Best Way to Balance Your Property Portfolio for Optimum Risk and Return Ratio
The key to success with commercial property investing is understanding your tenants and the property and creating a secure environment for them.
When managing your tenant relationships, taking the time to get to know them and their businesses is important. Listening and showing empathy can go a long way in fostering trust between you and your tenants.
A common trap is spending money on things you think the tenants want but don’t need or care about. Spend money on what your tenants need that would make them better tenants, likely to stay longer.
Commercial property investing is also all about understanding business. The more you know about business, the easier it will be for you. If you’re starting out, start with a property that is easy to understand and gives you cash flow.
For a more sustainable and profitable return, diversify your investments and spread the risk across the three commercial sectors: industrial, retail, and office.
But to ensure success, you need to work with a team who can provide the expertise and knowledge you might not have. A balanced property portfolio starts with a good property manager who understands the market, works well with tenants, and can balance your portfolio with the right mix of risk and return.
How can Revolve Commercial help me at each stage along the way?
At Revolve Commercial, we help you invest in commercial property in a way that best suits your goals. We consider your financial goals, current circumstances, and risk profile to find the right assets for you.
As demonstrated in our case study, we always work to add value to your investment after the purchase.
There are many options in today’s commercial property market. We are here to guide you and take you through the process.
We surround ourselves with people who have heart and passion and do our best to find the perfect property for you. We will always give you the option that makes the most financial sense for your unique setup.
If you have any questions – book a no obligation 15-minute chat with one of our experts at Revolve Commercial. In this call, we’ll address your questions and map out what your potential next steps are to growing your wealth portfolio.
📞 Don’t wait – book your free call today.