RG 078 – Pitfalls to avoid when investing in commercial real estate with Paul Moore
About Paul
- Paul has an engineering degree and an MBA
- He was a finalist for the Michigan Entrepreneur of the Year.
- He sold his first business for $2.9million
Nuts and Bolts
Paul Moore in an entrepreneur, investor and author who sold his first business in staffing for $2.9 million. He’s also been a finalist in Michigan Entrepreneur of the Year 2 years in a row. He now invests in real estate and focuses on multifamily but has also invested in high end properties and a Hyatt House Hotel. He’s the author of “The Perfect Investment” and has a podcast called “How to lose money”. When Paul graduated from college he went to work for the Ford Motor Company in detroit however he quickly became bored and after 4 years he started a company with his friend in professional employer organization. These companies supply offsite HR to other companies. Soon after Wall Street became interested and they sold their company when Paul was 35 years old. Paul puts this early success down to their obsession with customer service and anticipating a customer problem before it arises.
Since Paul sold his first business he has invested in other businesses as well as real estate. For example he has invested in oil and gas, wireless internet and a website that generates leads for residential investment. When he first started investing in real estate he started fixing and flipping and sold his first house within a couple of hours. One of Paul’s main developments has been the water front lots in the Blue Mountain area of Virginia around the Smith Mountain Lake. In the 1970’s these properties were being sold cheaply for a few thousand dollars, but by 2004 they were rising in value to $50-$100,000. The properties were overgrown had fallen into disrepair so Paul offered a fair price to the owners and cleared the lots, got dog permits and was able to sell them on for $100,000 of profit. He did this repeatedly with the properties around the lake until the property bubble burst in 2008 and he found himself in $2.5million of debt.
To recover from his debt he made a decision with his family to act charitably, so they took a charitable path and gave away money from assets to the church and to charities. 4 weeks later he ran into a developer who gave him an idea, then 13 months later he was debt free. Since then Paul has developed a Hyatt Hotel in Minot which he struggled to make money with as the area suffered from the coldest winter in memory when he was trying to do the redevelopment. The property suffered from a range of problems and then the local oil price dropped and as a result the hotel never recovered. This whole experience taught Paul to focus more on multifamily property. Paul explains the other things he’s learnt on his real estate journey; firstly the importance of market selection. Always chose a market that has a diverse economic and employment factors, for example don’t pick an area that relies exclusively on oil. Also look for a growing population, low unemployment, diverse populations and a high proportion of renters. The Office of Federal Housing Enterprise Oversight and Bureau of Labour Statistics publish the affordability index showing the percentage of people in an area that could afford to buy a home. Paul looks at this figure and aims for a market with lower numbers in the 60’s.
Top tips
- Most important habit – Meditation each morning
- Most influential person – His father
- Most important tool – Hubspot which is a database allowing Paul to keep online records of potential clients, properties and investments.
- Most important mistake – When he became bankrupt in 2008
Contact – https://www.wellingscapital.com/contact