When was the last time you reviewed your due diligence process?
Too many real estate investors are so eager to do a deal that they cut corners on due diligence and hope for the best. But a robust due diligence checklist is essential to your success.
Jake Harris uses his superpower of methodically sorting through data to make real-world decisions on real estate, and his private equity firm has acquired more than $200M in assets in the last five years alone.
Jake is extremely detail-oriented in conducting due diligence, and he shares that expertise in his new book, Catching Knives: A Guide to Investing in Distressed Commercial Real Estate.
On this episode of Financial Freedom with Real Estate Investing, Jake joins cohost Garrett Lynch and me to discuss how he hit rock bottom during the recession and describe his transition from single family flips to commercial real estate.
Jake explores how to use deep knowledge of a given real estate market to your advantage and explains how due diligence can uncover significant downside risk in a commercial deal.
Listen in for Jake’s no-stone-unturned approach to due diligence and learn how to decide when a deal is worth the risk—and when to walk away.
Key Takeaways
How Jake got his butt kicked in the recession
- Reached goal to be millionaire by 30 with SFH rentals
- Portfolio worth less than owed when market tanked
How Jake’s rock bottom experience changed him
- Shift from goals to systems for repeatable success
- Served as foundation for next iteration of life
What steps Jake took to get back into real estate
- Flipped 1200 SFHs in 23 states for family office
- Sell rental portfolios to institutional investors
What inspired Jake’s transition to commercial investing
- Making money for others but owned no real estate
- Wanted cashflow from passive income
How Jake got his start investing in commercial real estate
- Worked for construction company to build self-belief
- Started doing value-add syndications, development
How Jake uses deep knowledge of a market to his advantage
- Identify 5 groups that own 90% of real estate
- Find opportunities that those 5 don’t do
The key principles in Jake’s book on distressed properties
- Develop systems for investing in commercial property
- Research market BEFORE opportunities arise
- Assemble team of experts
Jake’s insight around the importance of due diligence
- Identifies potential risks to deal
- Example—multimillion-dollar environmental cleanup
Jake’s no-stone-unturned approach to due diligence
- Open walls, dig holes to uncover contaminants
- Look into financials of current tenant
How to avoid analysis paralysis as a real estate investor
- Use checklist to look for asymmetric risk profile
- Restructure deal based on potential problems
Connect with Jake Harris
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Winchester Apartments Due Diligence
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Resources
Purchase Michael’s Syndicated Deal Analyzer
Learn More About Michael’s Mentoring Program
Register for Michael’s Deal Maker Certification
Join the Nighthawk Equity Investor Club
Access Michael’s Free Resources in the Freedom Vault
Financial Freedom with Real Estate Investing by Michael Blank
Catching Knives: A Guide to Investing in Distressed Commercial Real Estate by Jake Harris
The 4-Hour Workweek: Escape 9-5, Live Anywhere and Join the New Rich by Timothy Ferriss
Apartment Investor Network Facebook Group
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