Hunter Thompson began his commercial real estate investing career after he woke up in 2008 to find his U.S. stock portfolio was dependent on sinking Greek government bonds. This led him to search for an asset class that would generate attractive returns, but have risk factors he could identify and control. He found real estate. He began by lending money privately for others to flip homes before founding Cash Flow Connections. Cash Flow Connections helps private investors put money into best-in-class deals for mobile home parks and self-storage units. Listen in to this episode of Real Estate Launchpad to hear Hunter share more on why commercial real estate investing works, advantages of commercial real estate investing, his journey from single family investing to investing in mobile home parks and self-storage units, how his business model works, what deals he is looking at, and so much more! This is an episode you don’t want to miss!
The path to commercial real estate investing
On Hunter’s search for a new investment opportunity, he found real estate. Though the current housing market was not performing well in his home state of California, he began his real estate career by attending networking events to gain knowledge. He met other investors, and realized they all had something in common: they had created systems to weather economic challenges.
Hunter identified opportunities to invest and brought friends and family in as his first investors. He then began recruiting other investors. He started with single-family homes and flippers and then moved to commercial real estate. Throughout the process, Hunter kept the thought in mind that his investments needed to be able to perform even during hard economic times, which is what led him to mobile home parks and self-storage units.
Why commercial real estate investing works
Hunter says that there are many reasons commercial real estate investing works.
- He says that the simplicity of single family does not allow for the differentiation between the best-in-class operators from mom-and-pop operators. That is different for commercial real estate. With commercial real estate, there are many ways to add value to a property. Each of those ways can be tweaked and optimized from property to property, so you get an exponential difference between someone who owns one property compared to someone who owns many. Being a best-in-class operator matters, and that is possible with commercial real estate.
- He notes that there are monetary benefits to commercial real estate investing like depreciation and financing, but that you can apply management strategies like running a business to commercial real estate. You can use these strategies to add value without taking on proportional risk. Listen to hear Hunter’s example of how his self-storage units do this with truck rentals.
- There are also a limited number of moving parts in commercial real estate investing compared to other types of investments, so a small firm can achieve success. It is not as complex as trying to identify how many iPads Apple will sell in the next quarter or predicting what the stock market will do.
Cash Flow Connections’ business model explained
Hunter shares that Cash Flow Connections leverages preexisting relationships with sponsors and connects them to their investor database. His company will create a fund where only one type of assets is included. Cash Flow Connections can conduct due diligence, and then share the investing opportunity with investors. His company allows its investors more quality access to investments because it allows them to buy in with a minimum of $30-50k instead of a million. They do not need as much money to get a good product to invest in. Hunter says that he invests personally in each deal and that his company is compensated almost exclusively based on the performance of a preferred return. This ensures that the deals that are presented are beneficial to the investor.
Why mobile home parks and self-storage units are good commercial real estate investments
Hunter’s company, Cash Flow Connections, focuses on mobile home parks and self-storage unit deals. He notes that the worse the economy is, the better the mobile home parks perform. This protects this commercial real estate investment throughout hard economic times. People tend to use self-storage during periods of change or transition. Whether this be downsizing due to a loss of a job or moving home from college, the demand for storage units can also stay stable even through a recession. Both of these asset classes are able to weather the storm and continue to be profitable, independent of the current economy.
In This Episode Hunter Thompson says…
- [2:04] Who he is
- [6:09] How Hunter got where he is today
- [8:32] Why commercial real estate works
- [11:32] The journey from single family to self storage units
- [12:38] Hunter’s business model explained
- [18:08] What he does vs. crowdfunding
- [25:26] What kind of deals Hunter is looking at
- [28:38] Why 2018 has been good for business
- [35:51] How privatized real estate investing has gotten where it is
- [40:29] Hunter’s take on the current commercial real estate market
Resources Mentioned In The Episode
- Multifamily Launchpad Membership Community– Join the waitlist for 1 of 100 discounted charter memberships available January of 2019
- Bellwether Enterprise(sponsor) – contact Will Oldham firstname.lastname@example.org
- Book: Self Storage Almanac
Connect with Hunter Thompson
- Info (at) CashFlowConnections.com