In a previous article, I pointed out that coming up with the funding to support commercial real estate purchases may be both intimidating and even prohibitive for many real estate investors.

If this scenario rings true for you, then you might consider something a little more basic to help build some investing momentum and to also put some cash in your pocket as you’re doing so. One of the best ways to make some big bucks in the current real estate market is by flipping REO properties.

Just so we’re all on the same page, REO properties are those that have been foreclosed on, and are now back in the hands of the bank. There is no homeowner to negotiate with, properties generally have clear title, they are often discounted, and investing in them is very much a repeatable process.

Now that you may very well be seeing how REO properties can fit into your investment arsenal, how do you still keep your eye on the bigger prize, commercial properties with great cash flow?
I think you can look at the two forms of real estate investing hand in hand. Let’s use some numbers to illustrate what I mean here.

You are interested in commercial properties that have values around $1 million. With current lending trends what they are, this means you will likely need around $300,000 to purchase a property like this. Can REO flip profits help you come up with this? Let’s see.

Your current market is fraught with single-family homes that are available as REOs. With an average purchase price of $100,000 and an average sales price of $175,000 after minor fix up, you end up with an average net profit of $50,000 per deal. This is entirely reasonable in the current market and it would only take six such deals to come up with the down payment you need for your larger commercial property! Would your interest be piqued if you knew a large commercial property was only a year or two away (or even less)? I thought you might.

Naturally, one consideration that still needs to be made is where the funds will come from to put this plan into action. I’ve written before about the value of attracting private lenders for your deals and I think REO flips can provide a great private lender segue to support your commercial ventures down the road. How to do this will be the subject of an upcoming article so stay tuned!

Author's Bio: 

David Lindahl, also known as the "Apartment King" has been successfully investing in single-family homes and apartments for the last 14 years and currently owns over 7,400 units around the US. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump! To discover more go to