The common belief is that you have to have a large network and lots of cash to get into commercial real estate. Nearly everyone who has bought commercial real estate who didn’t come from money has stumbled upon it or been shown the ropes on how to do it from those who already have it.

I managed to get an interview with one of the top real estate coaches in commercial real estate to find out more about it. Austin Davis is well known in old real estate circles of commercial real estate and for good reason – he started with very little and has built a large portfolio of commercial real estate in the United States over the past 30-40 years. While using hardly any of his own money and keeping his own assets protected with trusts, corporations and keeping things out of his own name.

When I asked him about how hard it is to get started he replied, “It’s much easier to get started in commercial than it is in residential since the property and funding for it is based on the ability of the property to generate income and not you personally it is a lot easier to get started. You do not have to have a large sum of cash. You just have to know how to get your feet in the door. Once you have property and can show investors and lenders you do – it’s very easy to get funding for deals with little or no cash out of your pocket.”

I was very curious about this and so I started looking into it. When I went looking I could find very few books or coaches in the commercial industry giving any direction on how to get started. I asked Austin about this and he replied “While many of the more public real estate investors are known for investing with little down in commercial real estate – they don’t really share it with people because honestly most investor’s in this niche don’t want more people getting into it. There is a fear it will hurt the industry if a bunch of newbie’s get into it a lot of “old money” that doesn’t like the idea of sharing the pie.” This of course makes since and yet I was curious how income, job, credit and assets would play into commercial real estate.

Austin replied “All of that stuff doesn’t matter a lot while investors, banks and lenders are going to look at that what they really are looking for and wanting is to see you have skin in the game.” I had myself heard that before and it made since. After all if a bunch of newbie’s had nothing in a deal and the investor or bank had all of its money in a deal – that’s a lot of risk. I asked Austin to expand on that and he explained “If you can get a large cash down payment put in escrow for the deal the bank or investor is very likely to give you funding if the deal cash flows well and they know a cash down payment is being put up on the deal. The kicker is when you find the ones who don’t care where the down payment comes from. Many investors and banks will want you to put the money down out of your own pocket or to put a lien on other property you own. Those are the bankers and conservative lenders. There are many lenders who just want their equity protected and are alright with the down payment coming from hard money or private lenders. they really are not that concerned. Of course they are not going to fund deals that do not cash flow and that can support the debt payments.”