How to Start Small and Scale Into Commercial Real Estate

Dawn Mister (00:00)
So you wanna try and give the homeowners something.

So that you can get the house and cause most of them have a lot of equity. You put maybe those kind of houses, sometimes you don’t have to put that much into them, no more than between 20 and 40 grand. And the the ARV is really well with those. So it just depends on the niche. It’s so many different niches in real estate, but there is nothing new under the sun.

So what you do is you try and find your niche under the sun and perfect that because you’re not gonna make something up or find something new.

Dylan Silver (02:08)
Hey folks, welcome back to the show. Today we’re joined by Dawn Mister, the owner and operator of Ameridream, a family owned real estate company in Illinois, active since 2006. She’s focused on commercial and multifamily investing and has a background as a single family investor. Dawn, thanks for taking the time today.

Dawn Mister (02:28)
Thank you for having me.

Dylan Silver (02:29)
Now we were talking in the green room about the financing required to get these deals done. And of course there’s a larger capital stack involved in these commercial deals. When folks are just getting started, where can they start?

Dawn Mister (02:44)
In the beginning, I will recommend maybe if they have their own capital, maybe they can raise capital from family friends. And if not, if they own their if they’re first time home buyers, maybe they can pull some of the money out of their home just to have some cushion and to get started. Once they have about 50K in the bank, I will recommend them going to a hard money lender, but

⁓ one that has ⁓ good interest rates and good for them in their situation as far as how long they need the loan for and how much capital they they have to put down and to rehab with. I will recommend starting small and then taking and progressing from from there. Not trying to jump in so fast and go so big because

Real estate has ups and downs and you need to know the market. You need to know when, when to buy, when to hold, and when to fold with real estate. So with real estate, you want to take your time and you wanna go small and then you want to end up in a place where you’re buying ⁓ multifamily homes and commercial property.

Dylan Silver (03:55)
Now, ⁓ would you recommend for folks to start in the single family space before going into commercial?

Dawn Mister (04:01)
I would. I would recommend starting in a single family space. I would recommend starting there, even if if you’re not interested in flipping and you want to become a landlord, because ⁓ it’s a trend, it’s been a trend for the last couple of years where everybody is holding. ⁓ most people are not trying to sell right away. They’re ⁓ renting out their properties and they’re holding their properties, which is a good thing to do.

I like to do both. It just depends on where I’m at and what area I’m dealing with. So ⁓ I would recommend ⁓ trying to maybe ⁓ the first flip maybe sell so they can get an idea of how to how it goes and ⁓ they can have a cushion of money. Then the second one I would recommend that they will have maybe a tenant so that they can get familiar s with both flipping.

and tenants because with tenants you have those up and downs with your tenants. Sometimes you have good tenants and sometimes you have, you know, tenants from, you know, so it just all depends on, you know, the tenant. But I will recommend that they start with single family homes. It’s not too big. It’s not too small. And ⁓ it gives them a chance to grasp and understand if this is something they really want to do.

Because I’ve been through all kinds of markets with real estate s since 2006. Got in in 06, the market crashed, I believe. In ⁓ eight, I lost a lot of properties and then we went back at it again. So you wanna you wanna kinda start small so you can understand the market.

Dylan Silver (05:38)
Now you mentioned flips as a way for folks to potentially get started. What degree of distress is acceptable for someone’s first flip? You know, roof to stud seems ambitious, but is that okay? Or is it something more cosmetic that you would recommend for someone’s first flip?

Dawn Mister (06:42)
I would recommend more cosmetic. The reason for it being is because most of the time when you’re doing your first flip, you’re you’re strapped for cash, you don’t have a lot. And so I wouldn’t recommend you getting right into ⁓ gutting the whole property out and starting from the bones. I would recommend just a little cosmetic work, ⁓ maybe just some upgrading, you know, but not anything too big.

Not anything you may need a new roof, but I don’t recommend a gut out.

Dylan Silver (07:15)
Now when we talk about the more ambitious projects, that’s gonna be, you know, longer timelines, you know, of course a bigger price tag, contractors become so critical. How have you been able to manage crews?

Dawn Mister (07:29)
Well, what happens is you treat your crew good, you pay them well, and they like to stick around. I’ve known some of my crew since 2006. And ⁓ what you want to do is you wanna have a tight budget and you want to have ⁓ a manager who is on top of things every day. So you want someone who’s gonna be

at the property making sure that I have a rule where I need them out four weeks and something big eight weeks. I don’t have time to be in a property past four to eight weeks.

Dylan Silver (08:06)
Now, when we talk specifically about managing these projects, it typically requires someone who’s got a background in, you know, c contracting or construction and the ability to manage these crews. Did you have someone like that in your team or did you have a background, you know, with ⁓ construction?

Dawn Mister (08:24)
Well, what happens is my mom was into real estate. So the reason why I got into real estate is because I went to a closing with my mom when I was 15 years old. And she walked away with, I think, a little bit over $80,000. She refinanced one of her properties. And it was a no-brainer for me at that point. And then my

My first husband, my ex-husband, who I started real estate with, whom him and I are still very good friends and still do deals together today. I I he went to Score, a school called SCORE, downtown Chicago. And the school ⁓ helped him understand the beginning stages of ⁓ flipping and

put him in ⁓ position with different ⁓ banks that give loans to investors and ⁓ score ⁓ also helped him understand ⁓ just some of the basic things of real estate, right? Being a landlord, the tenant thing, and all of that. So then I had already was familiar with real estate, but but he wanted to get familiar with going with to the school to the school score downtown Chicago.

So then after he went there, we just took refinanced his mom’s house. We were fresh home owners. I was 24 years old, 25 years old when I started real estate. So we ⁓ refinanced his mom house. She refinanced, she believed in us, and she gave us fifty thousand dollars. And that was the beginning of something big for us today.

Dylan Silver (10:00)
Now tapping into that equity in you know s a homestead is a huge move for folks, right? Do you think that you recommend that strategy today if so if someone has, you know, equity in their home, should they refi or take out a HELOC in order to finance their first investment property?

Dawn Mister (10:17)
Recommend that they do it that way. I recommend that they do it just to have the cushion, not to use it all, but to have a cushion up under their belt because no investor is gonna probably invest in you if you don’t have anything. So they most of them recommend 50K in the bank, right? I recommend them have 50K in the bank, and then they can with the 50k.

It’s so many different lenders out here that will help them where they they’ll the lender will give them 80% down and a hundred percent rehab costs. But they have to have that 50K in the bank.

Dylan Silver (10:53)
These days, pivoting here, Dawn, what types of deals are you looking at these days?

Dawn Mister (11:33)
These days I am looking at ⁓ still the same thing, my bread and butter, single family homes. I love the single family homes because right now, as I said, it’s been a long-term game in the real estate market lately. And for the last couple of years, people have been holding. So I’ve been buying a lot of single family homes and holding, but I am also ⁓ into commercial. I like to go to the distressed areas.

and ⁓ get the commercial buildings and rehab up in the areas in Chicago.

Dylan Silver (12:06)
Now when you’re looking for a distress commercial deal, what are some signs that you’re looking for of distress? Is it strictly, you know, the the physical appearance or might you be able to deduce, you know, operator distress or someone who is looking to sell because they’re, you know, a tired commercial landlord?

Dawn Mister (12:24)
Both. I’m interested in both.

Dylan Silver (12:26)
And you know, when you’re finding these deals, is this a situation where it’s through your sphere, you know, and the people in your network? Or is there some cases where you might find a a property through a different channel and it’s a more of a cold interaction?

Dawn Mister (12:40)
Well, a lot of times I find the properties on my own, believe it or not. I know I’m I’m an expert in them. So after a while, you just have a certain gnat, a certain niche for the properties. Most of the properties I find on my own, believe it or not, and I give them to my realtor. So a lot of times my realtor don’t even have to send me anything. They do, but a lot of my properties I already have sought them out and know what I want, know what I want to bid on it.

And I send it over to my realtor to get the contract together. So ⁓ the best way to do real estate is ⁓ especially when you’re first getting started, is to drive, go through neighborhoods, neighborhoods and just look around and see for yourself and look at ones that appear to be vacant and because you wanna you wanna get a foreclosure or pre foreclosure. ⁓ or you wanna get ⁓

somebody that’s just tired of their their mortgage and you know, they don’t owe much and you can square them away and get in there and rehab. The house is still pretty sturdy and you just need to rehab it up. You have that all the time. So I would I would just ⁓ recommend going, you know, that way.

Dylan Silver (13:57)
You mentioned ⁓ pre foreclosure and foreclosure properties, different segment of the space, right? So these are people that either have a need to sell their home because they’re gonna be losing it anyhow, or you know, the home’s already at the foreclosure auction, you know, you’re bidding at it. or some cases, right, it gets returned depending on where you’re at. And it maybe it doesn’t sell at the foreclosure auction, so then it becomes bank owned or something similar. These are different type of properties, right? Because there is a time deadline typically attached to it. What’s your approach when

acquiring properties through pre foreclosure and foreclosure.

Dawn Mister (14:30)
⁓ well, the bank owned properties. ⁓ I just put a contract in. I bid very I start real low and let them counter. Sometimes they let it go, sometimes they counter back, but I always getting in the get in the middle where I really want to be. So that’s why I go real low. So if the bank wants 80,000 for a foreclosure property, I’m gonna start bidding at around 60 grand. So that way I don’t pay 80K for it.

Once they counter, they’ll probably counter me back between seventy sixty-nine and seventy-two. So then I’ll go with the seventy-two because that’s where I wanted to be in the beginning. That’s why I bid it so low. So I’ll get it for the 72,000 and and I’ll go from there. And then, you know, with the rehab and everything else. But I I I will recommend that.

When people start flipping houses, ⁓ I would recommend that they go through ⁓ hard money lending.

The reason why, and just use their money for capital. The reason why, especially if it’s your first time, you don’t know how it’s gonna end up. And you don’t wanna use all your money and you don’t have any money. And then the second thing is with the foreclosure.

I will recommend also going when you when when the property is going into foreclosure, you have a chance to go and speak with the homeowner. And you have a chance to help the homeowner and help yourself as well. Do your homework, make sure that after rehab value is something good for you. And then you go and you try and speak to the homeowner. You even can put stuff in the mailbox, send them something in the mail.

And and cause sometimes they have a lot of equity in these houses. So you want to give the homeowner something to talk about. So you want to present them some type of ⁓ payment that that you can put in their pocket to to to to satisfy them so that because some of them know they have equity but they can’t afford to pay and they won’t let that house go, they’ll let it go into foreclosure.

So you wanna try and give the homeowners something.

So that you can get the house and cause most of them have a lot of equity. You put maybe those kind of houses, sometimes you don’t have to put that much into them, no more than between 20 and 40 grand. And the the ARV is really well with those. So it just depends on the niche. It’s so many different niches in real estate, but there is nothing new under the sun.

So what you do is you try and find your niche under the sun and perfect that because you’re not gonna make something up or find something new.

Dylan Silver (17:59)
Now you mentioned ⁓ earlier your realtor and you mentioned also counter offers that you might get from submitting offers on these properties. So I would imagine you’ve got a real strong relationship with your realtor, and that’s frankly uncommon. I’ve seen a lot of investors who seems like a a good realtor is something that they don’t have. And in a lot of cases this is because people don’t want to pay real estate commissions. What’s been your approach to, you know, finding a good realtor and then nurturing that relationship?

Dawn Mister (18:28)
I’ve known I’ve known my realtor for maybe 10 plus years. And before then, my other realtor, she retired. But what happened was when I purchased my first home, ⁓ I had two homes before I purchased my first home that I purchased. My my grand my grandmother and my mother gave me two houses, right? But the house that I purchased for myself, I think I was 24 to 26 years old. And ⁓

The realtor ⁓ who helped me, her name was Donna Anthony and David Bourne. This was when I think it was ⁓ home mortgage or something like that in Homewood, Illinois. And I’m still friends with David Bourne today. He’s at Lone Depot. Lone Depot is a good place too in Tilly Park, Illinois for first time home buyers and investors. So

Donna Anthony was my first realtor. And she and I done business together ⁓ for maybe 10 years or so. She retired, but I still do business with David Boyne. He was the finance guru. He was the guy who was my my loan officer back then when I in 2004.

When I purchased my first home and him and I are still doing business together to this day. And so I keep my crew tight. You wanna keep your you wanna keep your relationships intact. And you want people to believe in your vision and you want to show them that you can take this vision that you’re talking about and make it come to life.

Dylan Silver (20:11)
Now you’ve mentioned the longevity of these relationships. When you’re approaching new deals, is this something where you’ll approach them even potentially before running the numbers on it yourself? Or once you’ve already run the numbers, then you’re reaching out to them and saying, Hey, can we potentially put an offer on this property?

Dawn Mister (20:29)
Yeah, my first thing is location. ⁓ and then after rehab value. So I don’t want to talk unless I really know what I’m about to get into.

Dylan Silver (20:42)
We are coming up on time here, Dawn. Any new projects that you’re working on? And then also anything you’d like to mention directly to our audience?

Dawn Mister (20:50)
Okay, well I’m from the old school. So I’ve been doing real estate before the big internet and the big Instagram. So if anyone wants to get in contact with me and I can maybe help them or they can use some of my financing connects, they can call me at 708 438 1064. And once they call me, ⁓ someone to get them in contact with me, I’m Dawn Mister.

And just let them know that they saw me on the podcast and I’ll be glad to give them any tips or help them ⁓ get some financing going for their next project. But right now I’m doing some big things in Chicago and Indiana. And so ⁓ I have Chris, my guy Chris with Blue Capital, he’s there in Texas.

He’s done so much financing for me and helps me with different investors and he brings them on to my projects with me. So ⁓ yeah, I’m just all all up and down real estate. I have so much going on with real estate until it’s just ending up. I own a cleaning company as well that does post construction and so and we clean ⁓ commercial so to keep my money in-house ⁓ for my projects.

⁓ so I’m all over the place with real estate.

Dylan Silver (22:11)
Well done. It was a pleasure having you on the show today. Thank you so much for your time.

Dawn Mister (22:16)
Thank you for having me.