Read the entire interview here: https://tinyurl.com/ymukzsfn

How do you decide what to invest in next, and what are you working on right now?

The biggest factor for me is that I’ve had over 25 one-on-one phone calls with high-net-worth investors. A lot of times on these calls, I’ll ask, “What are your goals? What are you trying to accomplish?” And most investors don’t know. Then, I’ll ask, “Do you want cash flow? Do you want tax benefits? Do you want appreciation?” And they’ll usually say, “Yes, I want all of them.” And I get that; I want all of them too. But the real question is, what’s most important right now? The challenge for many of us is that we don’t know what we want. For investors, it’s really important to get a clear idea.

Today, a lot of people say, “Real estate used to produce cash flow, but it’s really hard to find now.” So, the question becomes: what assets are producing cash flow today? Once I identify that my main goal is cash flow, there are a few areas I look at.

Real estate debt funds. There are partners and funds out there that typically provide monthly cash flow, and these days we’re seeing annual returns in the 10–15% range, paid monthly. This is usually a lower-risk position, especially when you’re in the first position or senior debt, meaning there are no other creditors ahead of you. Low leverage makes it even better—around 50–60% loan-to-value. That makes a very safe, real-estate-backed asset where you’re basically becoming the bank, or part of a pool of loans providing lending for people buying properties.

What's something that you learned in the last year, maybe in real estate or in owning your own business, that you think is important for people to also learn from your experience, not their own?

Reinvention is really important to be able and willing to learn and try new things. As a passive investor, sometimes it's great to be a certain type of investor, and other times it's great to do something different. Like in our business, we've continued to reinvent where this multifamily worked well for us for a while, and then we were raising capital and doing deals, and then we just realized that we're just not seeing the cash flow there. And also, a lot of investors have lost their appetite for doing lots of family stuff. We're doing different things that actually we find exciting, and that we feel like a lot of investors are there just wanting to try to find ways to make it work.

Being willing to look at new things like the chat GPT is amazing just to ideate, to come up with ideas. Somebody said, if you were to write down what the biggest goals are in your life? Personally, your legacy with your kids, with your spiritual life, your health, and then you had somebody sitting right next to you that had a one in 10,000 person IQ, and they were helping you to solve these problems. That's what ChatGPT is. It doesn't always get it right. It does hallucinate. You've got to filter everything. But in a way, I get that the ideation is huge. A lot of times, we fail because we're not willing to keep coming up with new ideas and keep trying new things, and I think Chad is really great at helping with that.

Bronson Hill

Bronson Equity

Text Cashflow to 33777 to get his Favorite Cashflow Investments Guide

Join our investor club here: www.montecarlorei.com/investors

Read the entire interview here: https://tinyurl.com/4pver7wk

There have been some updates this year with the Big Beautiful Bill. Let’s start with Section 1709.

The biggest one, as far as the Big Beautiful Bill, is a 100% bonus depreciation, which means anything less than a 20-year asset can be written off 100% of its value right now. That was in place from 2017 to the end of 2022, and it started dropping by 20% a year. This bill brought that back. The current tax law was going to phase it out by 2026. It was 20% starting after 2022. It was 100% in the drop, 20% a year, which was going to be gone. They brought that back with the bill, which is significant.

The other thing is that Section 179 was an energy-efficiency tax deduction. You give some, and you take some. By bringing back the 100% bonus, they’re going to phase out Section 1709(d) in 2026, where this is really beneficial. If someone built a larger building, for example, 40,000 square feet, there is a dollar value per square foot that you can claim as a deduction if your building is more energy-efficient than the building standard from 2007. Anything built in the last 5 to 6 years, or even maybe longer, is going to be more energy-efficient than something from 2007. That is all found money because all you have to do is engage us to have a study done, and we can get you a deduction.

What is the difference between bonus depreciation and accelerated depreciation?

Accelerated depreciation differs from what most CPAs do today. Typically, they depreciate a building over its full economic life. For example, the economic life of an office building is 39 years. With accelerated depreciation, we break the building down into its realistic economic life. That can be 5, 7, or 15 years, while the structure itself is 39 years old. When you break it down into those component pieces, you’re accelerating the depreciation, which is a misnomer. In my world, you’re actually depreciating it correctly. If you’re depreciating something over 39 years, it’s not going to last only five years. That’s wrong. The IRS has accepted this method. To differentiate it from what’s happening now, and what most CPAs do, they call it accelerated.

What bonus depreciation does is it takes the 5, 7, and 15 years and says: if you’re eligible for 100% bonus, you can write off the total cost of those assets right now. That’s what 100% bonus depreciation is. It’s looking at everything that’s not structural and writing that off.

Cost segregation is the study that breaks down a building’s assets into their component parts. Once the assets are broken down, you can apply bonus depreciation or use accelerated depreciation based on the economic life units.

Tell us about the green zip drywall tape.

It's a green mesh tape is a type of drywall tape that can be removed. You apply it like regular drywall tape, then mud over it and paint it. The great thing is that if you ever need to remove the drywall, you can take off the baseboard, grab the bottom of the tape, and pull it up. Because it’s a nylon mesh, you can pull it up to expose the screws, then unscrew the drywall and take it down as one piece.

The fact that you can remove it so easily makes it a reusable asset. The IRS recognizes this as a five-year asset. Since it’s a five-year asset, everything connected to that wall can now be classified as a five-year asset.

Tom Brodie

CSSI - Cost Segregation Services

(713) 906-3710

tom.brodie@cssiservices.com

www.CSSIServices.com/tom-brodie

Read this entire interview here: https://tinyurl.com/mr22f6mx

Top lessons learned from this experience:

- Don’t ever get into an asset class that you know nothing about without first going to industry specific events, building relationships, asking questions, and getting an advisor to help you analyze and purchase your first deal.

- Buying portfolios can be a great thing, you get multiple properties at a discounted rate, and after you buy them, you split them up and sell a few at market price, while keeping the others.

- This is not really related to car washes, but I have heard that the first offer you get is typically the highest offer you will get, and it turned out to be true in this case. When I decided to sell them while they were still open, we got an offer that was higher than the one that we ended up taking, but I turned it down because at that time the properties were not distressed and our sales price was based on actual NOI. However, it confirmed this theory that the first offer that you get is typically the highest offer you will get.

- Work with a broker that exclusively sells that specific asset class, and follow up with them on a regular basis to make sure you and your properties are on top of their mind. I’m a believer in showing up and following up because people easily forget about you, whether you are selling or buying a property, you need to keep people accountable. This is not to say that the broker wasn’t working on them, but it was to keep reminding her that I was really interested in selling them. My follow ups were about once a month/once every other month.

- There’s a known saying in real estate that “You make money when you buy”. And because I got these properties at a great price, and even though the deal was a complete failure, that is another reason why this worked out. Proving another real estate theory to be true.

Three years after purchasing these properties I decided that it’s not worth my time to try to fix it, and that I’d put the car washes up for sale, and close them completely. Not knowing when I was going to be able to sell them. I decided to take the hit on the mortgage payments until I sold them because my time was not worth the time that I was spending trying to solve that problem. The mortgage payments were cheaper than my time. The car washes stayed closed for two full years. Last year I managed to sell one of them, and this year I sold the remaining two, two years after completely closing them.

I hope that you can learn from my lessons learned, so that you don’t have to make the same mistakes that I made. To better investments!

www.montecarlorei.com/investors

Car washes have been a hot topic with investors for the last few years, why are they a good investment?

The popularity of car washes has definitely grown since I started. We began selling car washes because there was an influx of equipment orders. We were asked by an equipment operator to start doing site selection. In the beginning, we were looking for land, and that eventually led to what we do now—selling existing car washes and everything that comes with them.

What’s really brought car washes to the forefront is the recurring memberships. Every city has its own weather challenges. Here in Dallas, for example, we sometimes get those random freezes that people might not know about. Other markets have a lot of rain. It depends on your market, but these recurring memberships allow somebody to sustain income even during the down times. You don’t need a sunny day to make an income if you play your cards right and build those memberships.

Another reason is that car washes are low-labor businesses, which is part of why they’ve become so popular. With self-serves, for example, you have minimal staffing needs. Of course, you still need someone to pick up trash and ensure everything is working correctly, but not having to hire a large staff is very appealing to investors. The express tunnels need a lot fewer people than opening a restaurant or a retail store.

What should investors keep in mind when buying car wash sites for building a car wash?

It’s real estate 101: we need to consider our location. This is especially important in car washing, because you have to think about a car wash as an impulse buy. If I am driving down the road and there’s a car wash, I should stop. But if I can’t turn around or get to it, I’m probably not going to turn around and go back. Now, if it’s right there and I can easily get to it, I’m going to pull off and wash my car because it was an impulse buy.

These are all things we look at: ingress, egress, and population. You want to make sure the area can support the car wash. How close is the competition? These are all considerations we take into account, even when we’re selling dirt. And whenever we’re working with somebody to rebuy a car wash, we go through all of this with them because, at the end of the day, we want our buyers to be successful. Hopefully, they’ll continue to buy more, and we love seeing them succeed.

Why is right now a good time to buy car washes?

I will say there’s a sense of urgency right now for many people. As you know, this year they passed the Big, Beautiful Bill, and this is huge for our industry. We’re back to 100% depreciation, and you can take advantage of cost segregation. What that means is you can write off equipment and similar items, which can save significantly. I literally have people coming to me now in October trying to close before December 31, saying, “I need to close so that I can get some tax write-offs.”

For many reasons, I’d say there’s a sense of urgency right now. If you want to take advantage of buying a car wash and benefiting from that tax law, you need to do it now because a car wash deal can take 30 to 90 days to close, so we’re really at that point where, if you’re going to get it done, you need to be going under contract now.

Melissa Croll

melissa@attleerealty.com

https://www.instagram.com/carwashprincessmelissa/

www.carwashtraders.com

Join our investor list here: https://montecarlorei.com/investors/

Previous interview with Mike:

1. https://tinyurl.com/3hjx8j3d
2. https://tinyurl.com/vb6yyzzn

Mike Morawski

mike@mikemorawski.com

https://www.linkedin.com/in/michael-morawski/

Subscribe to our investor list here: https://montecarlorei.com/investors/

Read this episode here: https://tinyurl.com/2km2c2k9

Why did it pass our test besides the fact that these partners have a great track record and having exited 4 deals with them?

1. Low vacancy. There is a shortage of small bay industrial in the Phoenix market, people have been building large bay industrial. For the small tenants that need a smaller space, the available inventory is very low.

2. Leases expiring and below market. A lot of the tenants had their lease expiring during our ownership, and the vast majority is below market, one of the largest tenants in the property with the biggest rent upside, already decided to not renew. We underwrote them not renewing a year from now, and they are significantly below market.

3. IG Leases. All of the tenants except one are on industrial gross (IG) leases. We are converting all of the tenants to NNN leases. This will also increase the bottom line for our investors.

4. Prohibited cost to build. Besides the market having very low vacancy, the vast majority of tenants being between 30 to 70% below market, and the leases expiring in the next 24 months, small bay industrial is cost prohibited to build. It costs more to build than the rents that you’re going to get. We are purchasing the property at a significant discount to replacement cost. The property was built in 1999 and it looks really good.

5. Location. The property has freeway visibility and is right next to the freeway exit.

6. Market. Phoenix is a phenomenal market. It has a 16% population growth since 2010, a job growth of 45 to 50% since 2010. The personal income tax is very low at 2.5%. They’re exploding in terms of plants, campuses, and jobs being created in the area. There is a $65 billion chip plant being created next to the property. There is a $20 billion Intel expansion. These are all creating jobs, which is always a great sign of a phenomenal market to be in.

Final Thoughts

The raise took a little bit longer than what we thought it was going to take. We did not finish the entire raise and still have a couple million to go, however, we did manage to close on the property and the couple million that we have to go is mainly for reserves, so that still needs to be finalized.

Commercial Real Estate Tips Learned Recently:

Turn expense into income: e.g., rent dumpster out.

You can open a Senior Living home in any state if one tenant has a disability due to the ADA / Fair Housing Act.

Always over-raise in case investors don’t send funds.

If a deal blows up, attorney often refunds fees (to keep you as a client).

When you refinance, you don’t pay taxes. This means you can cash out of a property, or get a line of credit, and buy another property without paying taxes on that down payment. Make sure you are comfortable with the LTV’s when you cash out.

Interest rates are always negotiable, you can get ~0.25% interest rate break if you open a checking/savings with lender.

When developing a property from the ground up, always assume that the piece of land has all of these: endangered species, wetlands, easements, utility issues, trees – until proven otherwise. This means you need to get all of these reports and surveys done (amongst many other things)) before purchasing a piece of land for development.

Join our investor club here: https://montecarlorei.com/investors/

Also some great news for raising funds: an investor can now be considered accredited if they invest 200k or more in the offering!

Jonathan Tavares

(508) 212-1193

jonathan@plglp.com

www.premierlawgroup.net

Join our investor club here: https://montecarlorei.com/investors/

Read the entire episode here: https://tinyurl.com/4dzzaart

The pros and cons of office

Professionals need an office, so it's a staple in downtown areas. A stabilized office can fetch a premium. Some of the most expensive and impressive buildings in the world are office buildings. The cons are that we have a lot of office vacancies, and we have more work-from-home opportunities post-COVID, which completely turned the office upside down in some cities, counties, and towns. We have many cities with a lot of impending office vacancies. However, as another pro, I'm hearing about a lot of discussion about multifamily conversions and turning these office buildings into high-quality multifamily units, which also serve a need. The singular scariest thing about offices as products is being left responsible for the building. If it's 30% vacant or more, that's the single most frightening thing.

The pros and cons of retail

The cons we're talking about here are the opportunities. What scares us are often the opportunities. While the scariest part of an office could be holding the bag, paying the property taxes on a building that's assessed for what it's worth is a little frightening. But when you lease it, when you hold and plan correctly, you have a good team, and you have it for 10 cents on the dollar because it's been vacant, it's a whole different story.

If you want to be extremely safe, you'll put your money in a savings account. If you want a slightly higher risk, you put in a retail triple-net tenant that will give you the mailbox money, but it's at 5%. It goes for everything.

The pros and cons of industrial

The biggest pro for me is that there has been a recent focus on the domestic industry. We have a lot of local infrastructure being built around US-based industries, such as manufacturing, warehousing, new Amazon distribution, data centers, and OpenAI Stargate. A lot of money is being invested in it. There is this sentiment that each country should be able to manufacture its products, and I think we're sensing that now. Hopefully, we continue to see this trend.

Americans love buying things. The same reason that retail works is why the industrial works. So much industry is built around shipping products, getting them from A to B, warehousing for Amazon, etc. Even if people stop going to the retail store, Amazon is always going to need warehouses. There will be many companies providing other forms of distribution and accessory services to Amazon. As long as Americans love buying stuff online or in person, the industry will likely remain strong.

And then there's opportunity. There are a lot of small towns, especially here in Texas, that have 100 to 300,000 people, where you can buy quality industrial for 30 dollars a foot. If you can tolerate a hold and lease it up in a year or two, those deals can be had all day, and there are lots of more stabilized national credit tenant deals to be had. There are all sorts of things that can be found with a propensity for appreciation.

Trent Herrera

trinity@blacktie-re.com 

Join our investor club here: https://montecarlorei.com/investors/

Read the interview here: https://tinyurl.com/54p9jcvm

How should people decide their acquisition targets?

This is incredibly unique to each person. What's your appetite? Is it residential or commercial real estate? Let's assume it's commercial real estate. Each economist, economics professor, person who studies economics, and person who works in finance or retail is part of a cycle. Every city, block, town, county, state, and even country is in a different cycle of everything all the time. It is chaos.

One of my favorite topics to talk about is the concept of the three-body problem. When you have one item, it is easy to predict what that item will do. It could be a planet, a financial entity, or a person. When you have one variable, it's very easy to calculate. When you have two variables interacting with each other, it starts to get a little harder. But when you have three or more, you start to reach an incalculable level of complexity. When scientists study planet orbits or ask whether this asteroid is going to hit us, they're always calculating a three-body problem. And we have this with real estate in so many ways. It is this chaotic complex, constantly orbiting, always spinning, and shifting off its orbit. It is truly the epitome of a three-body problem, in the sense that it is so vastly complex. It's extremely hard to time.

Most brokers don't bring the math with them.

No, they don't. And it's a big gripe of mine because I work with my peers in the real estate world every day, and as soon as you get to any level of sophistication in commercial real estate, you're crunching numbers pretty hardcore. When you have a fiduciary responsibility to somebody to protect their wealth and their money and make money for them, how can you do that if you can't deeply understand the math? It's one of my cardinal sins in the commercial real estate practice. As an agent, you should understand math and be able to explain it to everybody.

And my wrap-up on acquisitions: find a good partner, stay away from sizzle and hot. You want to be cold in your thinking and logical, knowing your asset types and your "why." This is partly what you're looking to your sponsor for, and part of the relationship you have with your sponsor. The appetite your sponsor has will have a bearing. If you're doing LP or investments like that, then you're going to want to work with a sponsor who has deals that you like.

Trent Herrera

trinity@blacktie-re.com 

Join our investor club here: www.montecarlorei.com/investors

Read the entire episode here: https://tinyurl.com/mr4ces9c

How can a passive investor know that a syndicator/operator cares about their money?

We've all looked at deals that, at the surface, the sponsor looked great, and everything was above board, and the yield was what we wanted, and it was our appetite. And something happens. And to some degree, I think that you can never, 100%, insulate yourself from a bad egg, but there are signs. We have this term in the industry, commission breath, that's always a number one red flag. Someone with a servant mindset is not going to have commission breath at all. There's no sizzle in that industry of building generational wealth, the sizzle is, we're going to build generational wealth using math and fundamentals. But when there's too much sizzle, that's a red flag.

The biggest single indicator is the math and the story, and the history track record. When you have a target of an asset type or class that you're comfortable with, and when you have a track record, when you have some under your belt, it's easier to see when something doesn't look or feel the way it should in that industry. I guess I will answer that by saying the single biggest defense is sophistication and experience, and maybe even leveraging your friends, there have certainly been friends that have saved me from bad investments, just from a second look and talking through a deal.

We're talking about the foundation of what makes a syndication or an investment successful, Underwriting is no joke; it's 75% of what makes a syndication work. My best clients, my best investors, all understand underwriting, and if they don't, they've hired me to help them understand it, and to walk them through it so that they can see what I'm seeing. There are so many ways that you can look at a property wrong. And I also believe that not one person should look at a property. There should be a multitude of people and aspects looking at a property, opining and giving valid, good criticism and feedback. My number one tip when it comes to foundations is to dive into underwriting and do your best to understand each deal; it takes years, and even then, there are still deals that you see and you struggle. The underwriting in the math is where you'll see if the deal is truly viable for you or not. And that goes along with the risk management side and accreditation.

Each one of us has a very different life. We all live such different lives, and we all have different amounts of kids and cars and mortgages and investments, and so we all have these tolerances and knowing what those are for you through the eyes of someone like you or I, who's been doing this for a long time, is important, understanding the level you should be playing at. How much is too big a bite off for you? How are you accredited? What's your accreditation level? Those things are all guardrails that are in place to help each investor make good decisions. Each style of offering that is done is styled differently to either accept less of a wealthy and sophisticated base or not, through your underwriting and through your understanding of your life and your position, not biting off more than you can chew, and only investing money that you can tolerate losing.

Trent Herrera

trinity@blacktie-re.com 

Join our investor club here]]>How to make sure a syndicator/operator cares about your money as an investor, what can you do to mitigate the risk of investing with a bad operator? Trinity (Trent) Herrera, commercial director and real estate consultant of Black Tie Real Estate, shares his knowledge.

Read the entire episode here: https://tinyurl.com/mr4ces9c

How can a passive investor know that a syndicator/operator cares about their money?

We've all looked at deals that, at the surface, the sponsor looked great, and everything was above board, and the yield was what we wanted, and it was our appetite. And something happens. And to some degree, I think that you can never, 100%, insulate yourself from a bad egg, but there are signs. We have this term in the industry, commission breath, that's always a number one red flag. Someone with a servant mindset is not going to have commission breath at all. There's no sizzle in that industry of building generational wealth, the sizzle is, we're going to build generational wealth using math and fundamentals. But when there's too much sizzle, that's a red flag.

The biggest single indicator is the math and the story, and the history track record. When you have a target of an asset type or class that you're comfortable with, and when you have a track record, when you have some under your belt, it's easier to see when something doesn't look or feel the way it should in that industry. I guess I will answer that by saying the single biggest defense is sophistication and experience, and maybe even leveraging your friends, there have certainly been friends that have saved me from bad investments, just from a second look and talking through a deal.

We're talking about the foundation of what makes a syndication or an investment successful, Underwriting is no joke; it's 75% of what makes a syndication work. My best clients, my best investors, all understand underwriting, and if they don't, they've hired me to help them understand it, and to walk them through it so that they can see what I'm seeing. There are so many ways that you can look at a property wrong. And I also believe that not one person should look at a property. There should be a multitude of people and aspects looking at a property, opining and giving valid, good criticism and feedback. My number one tip when it comes to foundations is to dive into underwriting and do your best to understand each deal; it takes years, and even then, there are still deals that you see and you struggle. The underwriting in the math is where you'll see if the deal is truly viable for you or not. And that goes along with the risk management side and accreditation.

Each one of us has a very different life. We all live such different lives, and we all have different amounts of kids and cars and mortgages and investments, and so we all have these tolerances and knowing what those are for you through the eyes of someone like you or I, who's been doing this for a long time, is important, understanding the level you should be playing at. How much is too big a bite off for you? How are you accredited? What's your accreditation level? Those things are all guardrails that are in place to help each investor make good decisions. Each style of offering that is done is styled differently to either accept less of a wealthy and sophisticated base or not, through your underwriting and through your understanding of your life and your position, not biting off more than you can chew, and only investing money that you can tolerate losing.

Trent Herrera

trinity@blacktie-re.com 

Join our investor club here https://montecarlorei.com/investors/

Read the entire interview here: https://tinyurl.com/25hhhjsf

What is the state of the market today? What are the IRRs looking like? Are you seeing more or fewer deals come across your desk?

There has been a shift to funds in the last 6-8 mos. Traditionally, especially during COVID, a lot of clients were doing a lot of multifamily syndication. Now, granted, that's been a piece that we focused on for a long time. A lot of our clients are heavily involved in the multifamily space, but with increasing interest rates over 22 and various other factors, property taxes throughout many counties and throughout the country, going up very quickly, as well as insurance and specific markets. We have a lot of clients in various markets in Texas that have just gone crazy, places like Houston or Florida, where insurance rates have skyrocketed. It's presented some challenges for some of our clients. Instead of seeing just a straight deal with a certain percentage of debt somewhere around 70- 80%, a lot of times, there's a lot of creative financing going on to make up for that debt piece that may not be there or where those percentages of debt to purchase price may be a little bit lower than what a lot of clients were used to before.

You see a lot of preferred equity. We've seen clients building out structures where, in essence, they're providing almost a debt structure to their investors too, to create a sort of debt piece as well as an equity piece in their raises. We've seen a lot of clients create funds and use their funds to come in for part of the debt piece for specific projects as well.

Depending on the asset type, and I'll specifically exclude development projects, we're seeing a lot of target IRRs between 15 and 20% generally.

Where do all the LLCs go for a syndication so that everyone is protected as much as they can possibly be?

There's all sorts of different structures that you might use to set up a syndication or a fund and for different reasons, for tax reasons, for asset protection reasons, etc. A typical syndication structure is going to include a syndication entity, and that's typically known as the issuer entity, that's the entity that's selling securities.

Why does the SEC care about what I'm doing if I'm raising capital to go buy real estate? The Supreme Court came up with a test that's called the Howie test. The SEC does an analysis to determine if you were selling securities or not, and essentially boils down to the four main tenets of the Howie test:

1) Is an investor investing money? Typically, the answer is yes.

2) Are they expecting some sort of return on profits? And usually the answer is yes.

3) Whether the efforts are generated by someone other than the person who's investing, like some sort of promoter, or in the space we call a sponsor. In these deals, a sponsor where a GP that is raising the capital from investors. The investors are passive in the deal.

4) A common enterprise is if the investors are pooling together capital through the efforts of the GP to buy some sort of underlying investments. That's typically going to be real estate.

Jonathan Tavares

(508) 212-1193

jonathan@plglp.com

www.premierlawgroup.net

Join our investor list at https://montecarlorei.com/investors/

Read the entire interview here: https://tinyurl.com/mrxzdtu9

What are some of the biggest things that we should keep in mind with regard to evaluating a property and managing it?

Kathryn: Those two can be spoken of simultaneously, when you think about it. It's generally the third-largest expense that you have, and it's the most controllable one. If you have a facility that's 120 units, and you're trying to get to a 35% ratio, but the taxes are 15% of the money that you can spend, management is what's going to go out the window. That's how that affects the underwriting side of it: the evaluating. And I find it's the same issue whenever we're reading these OM's. Pro forma is pro forma. You need to know what that property is worth today. That is the current retail value of that property. What you're doing with your pro forma or your projections is based on the history of the underwriting process and nothing else.

Now, population growth helps, not being supply-indexed out to the max does help. StorTrack has now put in a whole other section where you can see where brand-new housing developments are going in the markets. That's powerful to know, especially when you're looking at facilities in a market. You do want to know where all that new housing is going. And it'll tell you if it's multi-family, single-family, or apartments.

Amy: automation isn't a one-size-fits-all. You have to do that market research to ensure that the model fits that location. Do you have the right technology in place? Are you using a kiosk, smart locks, and a security system? How does that maintain that smooth transition for a tenant experience? Who's going to handle that maintenance? Who's going to handle that oversight? Is this all going to transition and improve the facility's efficiency? And ultimately, the bottom line, because we all know and understand that anybody can buy a facility, what is the end game?

Kathryn: Most of the AI-generated things right now are free to use for your facilities. The question is, where do you get it? How do you know which one to use? That's why I'm excited that Amy and I are so AI-driven. I've been using ChatGPT for two years.

Amy: What works for a 45 to 100 unit facility does not work for a 700 to 800 unit facility.

Is there anything else that you think is important for our audience to know?

Kathryn: They should be going to state association meetings or to national meetings. If you're not even in self-storage yet, you should be telling people that you're looking for self-storage. You should be broadcasting that from every place you possibly can.

In the ISS (Inside Self Storage) conference this week, I guarantee you that in that vendor hall, there are going to be at least 20 vendors that are strictly AI-driven. But you don't know about it unless you start actually going out there and actively getting involved in it. Go to your local self-storage facility. Talk to the manager there. If there's no manager, call their number, see if somebody answers. Start learning the verbiage for the love of goodness. Every time I hear somebody say that they're buying a unit and I've never sold a unit, the unit stays. But make sure that when you're out there, you're telling everybody, I want self-storage. You never know who you're going to run into.

Amy Jenkins

How can new investors get started in the self-storage industry? What technologies are transforming the self-storage industry? What are the biggest challenges in self-storage management? Amy Jenkins and Kathryn East, co-founders of Omni Asset Management Group, share their knowledge.

Read the entire interview here: https://tinyurl.com/mrxzdtu9

What are some of the biggest things that we should keep in mind with regard to evaluating a property and managing it?

Kathryn: Those two can be spoken of simultaneously, when you think about it. It's generally the third-largest expense that you have, and it's the most controllable one. If you have a facility that's 120 units, and you're trying to get to a 35% ratio, but the taxes are 15% of the money that you can spend, management is what's going to go out the window. That's how that affects the underwriting side of it: the evaluating. And I find it's the same issue whenever we're reading these OM's. Pro forma is pro forma. You need to know what that property is worth today. That is the current retail value of that property. What you're doing with your pro forma or your projections is based on the history of the underwriting process and nothing else.

Now, population growth helps, not being supply-indexed out to the max does help. StorTrack has now put in a whole other section where you can see where brand-new housing developments are going in the markets. That's powerful to know, especially when you're looking at facilities in a market. You do want to know where all that new housing is going. And it'll tell you if it's multi-family, single-family, or apartments.

Amy: automation isn't a one-size-fits-all. You have to do that market research to ensure that the model fits that location. Do you have the right technology in place? Are you using a kiosk, smart locks, and a security system? How does that maintain that smooth transition for a tenant experience? Who's going to handle that maintenance? Who's going to handle that oversight? Is this all going to transition and improve the facility's efficiency? And ultimately, the bottom line, because we all know and understand that anybody can buy a facility, what is the end game?

Kathryn: Most of the AI-generated things right now are free to use for your facilities. The question is, where do you get it? How do you know which one to use? That's why I'm excited that Amy and I are so AI-driven. I've been using ChatGPT for two years.

Amy: What works for a 45 to 100 unit facility does not work for a 700 to 800 unit facility.

Is there anything else that you think is important for our audience to know?

Kathryn: They should be going to state association meetings or to national meetings. If you're not even in self-storage yet, you should be telling people that you're looking for self-storage. You should be broadcasting that from every place you possibly can.

In the ISS (Inside Self Storage) conference this week, I guarantee you that in that vendor hall, there are going to be at least 20 vendors that are strictly AI-driven. But you don't know about it unless you start actually going out there and actively getting involved in it. Go to your local self-storage facility. Talk to the manager there. If there's no manager, call their number, see if somebody answers. Start learning the verbiage for the love of goodness. Every time I hear somebody say that they're buying a unit and I've never sold a unit, the unit stays. But make sure that when you're out there, you're telling everybody, I want self-storage. You never know who you're going to run into.

Amy Jenkins

Kathryn East

www.omniassetmanagementgroup.com

Read the entire episode here: https://tinyurl.com/yu5ufr49

Can we get an SBA loan for development?

For construction, these loans are even more attractive. We offer a 26-year term, three years of interest only. The idea there is that you'll get 12 months for your construction process. We can extend it if it's a larger project, but then two more years of interest only for your lease-up period. And then, we capitalize everything the project needs until it can pay its bills. In other words, we are going to give you an interest reserve account that will make your debt payments during construction when there's no income. We'll also figure out what the operating deficit is during the lease-up period, and we can include that in the loan. It's a very all-encompassing loan. A lot of times, when we talk about what people can qualify for, they don't realize that it's as easy to qualify for a construction loan as it is for an acquisition loan. I'm not saying it's easier to do a construction project, but you can qualify just as easily. It just comes down to, "Do you have that 10%?" because we're going to give the project everything else it needs to get to stabilization.

Can we refinance from a conventional into an SBA loan?

Yes, the rule is that we have to be able to reduce your monthly payment by 10%. And if there's a demand language in the original note and if it's on an unreasonable term, then it's also refinanceable. Let's say you got a hard money loan, and it was a 10-year note. It did have a low rate, and I may not be able to improve your rate, but as long as the term of that loan wasn't appropriate for real estate, which SBA would say it wasn't if it was 10 years versus 20 or 25 years, then that is refinanceable.

You also have a 100% financing option. Can you elaborate on that?

Yes, this is the people's favorite thing to hear. Once you own a facility and you've owned it for 12 months, you can expand either via construction or acquisition with no more money down. The rules are, first of all, you have to have owned it for 12 months, at least. If you're obtaining a 504 loan, they want you to own it for 24 months. But let's just stick with the 7(a) world rate now. After 12 months, as long as the ownership is going to match identically, and it's the same LLC.

Technically, if you're doing an acquisition, let's say, you're buying the facility down the street, you can roll it into its own LLC. The ownership of the two LLCs now needs to be identical, and they need to roll up to a parent company so that it essentially is one company that owns two LLCs, identical ownership, and the ownership can't have changed. If you came to me, and six months ago, you bought out your partner, I would tell you to wait 12 months because it's going to be a 12-month look back. After all, that ownership needs to be the same. It needs to be reasonable that you're sharing branding, marketing resources, third-party management, all of those things, if it's an acquisition, and then SBA says that is technically an expansion. And then, of course, if you're adding on to an existing property, that's also an expansion. Again, after 12 months, we can do that expansion construction loan with no more money into the project. That's a great way to utilize the SBA. Take your project as far as it can go, and build a portfolio with the least amount of money.

Anne Mino

anne.mino@liveoak.bank

You can read the entire interview here: https://tinyurl.com/bdkvxrnr

What are SBA loans, and why do they matter?

The Small Business Administration (which is what SBA stands for) is a loan program that was established back in the early 1950s. The entire purpose of it is to help entrepreneurs access capital financing that they may not otherwise be able to qualify for through traditional channels, so through conventional lending and the primary benefits are lower down payments. Think of a 10% down payment, instead of 30 to 40%, which you might see in a conventional loan, and longer repayment terms. For anything that has commercial real estate involved, it is automatically on a 25-year term with competitive interest rates, and then it's easier to qualify. You don't have to have experience in your subject field. In other words, in the self-storage world, if you don't own self-storage. That's perfectly okay, and that's why the SBA enables us to do these loans to anybody who needs them.

It's a little more painful to get, but nothing compared to CMBS loans, which everybody hates, but the numbers do have to work out the debt service. Please elaborate on the debt service and what the requirements are.

These loans are considered cash-flow-based loans. In other words, we want to see that the cash flow of the business can support the debt. For example, if you're just looking for a land loan, and there is no business attached to it, that's not something that we could do under this loan program. But as long as there's a business attached to it, we're looking at the debt service coverage of that business to pay back the debt. In an ideal world for self-storage, we want to see that in year one, the business can reach 1.15 debt service coverage, which essentially means the business is making its loan payment and then about a 15% profit. And then we want to see it steadily go up from there, and we're very lucky in the regard that we can use a borrower's projections that they've put together to tell us what they're going to do with that business.

Can SBA do loans for any asset class in real estate?

Yes, as long as it's a cash-flowing business and it must be owner-occupied, not retail, office, they're non-applicable. If you're a veterinarian, let's say you buy a strip center, and it owns some other real estate, it is okay as long as 51% of that strip center is going to be used by your veterinary practice. Same thing with storage. Let's say you had a storage facility, and there was another retail component on the property. That's fine, and still SBA eligible, as long as the storage makes up more than 51% of the total square footage.

For offices, it's the same thing. I would have to occupy office minimum of 51% of my office building. And for multi-family, which is similar to self-storage because we are the operators, would we automatically qualify?

Multi-family does not, as they don't touch anything with residential real estate at all, even though multi-family is considered commercial.

Anne Mino

anne.mino@liveoak.bank

Read the entire interview here: https://tinyurl.com/5fxk6ydm

Regarding markets from your newsletter, the few growing cities are Raleigh, North Carolina, Gainesville, Georgia, and smaller, large metro areas.

There are about 56 or so metropolitan areas and more than a million people in the USA, and the ones that are growing more rapidly now are the smaller ones, those that have a couple of million population. Raleigh and Gainesville would be an example of that. And even areas that are in the 500,000 to a million range, I think some of that has to do with housing affordability, and I think that also people just maybe wanting to be in a less congested environment, that has shown up to be a factor now. The larger regions, Southern California, the Bay Area on the West Coast, Seattle, New York, all the Boston to Washington corridor on the east coast, and Atlanta, they're growing at slower rates, and a large portion of those regions do present a housing affordability challenge. If you look at the percentage of household budgets that go to housing and transportation, it's a significant percentage. Can you manage your transportation cost? Maybe that'll be somewhat dependent on distance to work and commuting, but the big cost is having the vehicle, insuring the vehicle, and financing that. The one that you can manage is to go to a market that has much less expensive housing. If you're in a market that can offer you a $400,000 house, versus a market where it takes a million, that makes a big difference.

I wonder how the inflation will continue to make an impact on the bedroom communities?

That's a big question. The whole issue with potential tariffs. Now, I believe we're on again with some pretty significant tariffs on aluminum and steel, affecting Canada, Mexico and and certainly China. I think that's as I understand it, across the board, that'll have some impact. I think just the uncertainty will have some impact.

And then construction costs, my take on that is I don't see much abatement in that area. We're going to have, I think, continuing in Southern California, because of the fire effect, they'll be as significant and particularly on the labor side. And this also then relates to the issue of immigration enforcement in the construction industry, particularly the residential construction industry, there's a substantial percentage of undocumented people working in those areas. Again, an open question as to how much of that is going to translate into higher labor costs.

Looking ahead in 2025, people were saying, hold until 2025 and you'll be fine. And now, they move to 2026, I hear lenders are extending their loans to their existing clients based past 2025, where do you think we're going to be this year? Do you think it's a great or not so great time to invest in real estate?

It's always a good time if the characteristics of the individual property are great and if you can swing the equity or the debt to close the deal. As to whether there are a lot of real bargains, that doesn't seem to be the case, the only area where that seems to be a possibility is with office assets, but then you're taking on the challenge of occupying that space, or undertaking a residential conversion.

Pike Oliver

news.ares.org

pike@urbannexus.com

How do you think that is impacting real estate professionals that are related to rebuilding in the area? Are people flying in from other states or cities to get that kind of business?

I do know that there have been some folks who are looking to potentially acquire sites that maybe people whose homes were burned, are not interested in reoccupying, and there's pluses and minuses associated with that. Some of the folks are coming in with low-ball offers and trying to take advantage of the distress. On the other hand, I heard of a lot that burned in the ballast eyes area and whistle for a million dollars the other day, so that doesn't sound like too much of a low ball offer. A lot of things are involved in real estate, there's the good side and the bad side, as far as opportunities, there will be opportunities to rebuild, but it's challenging because of all the individual ownership of the residential lots. Whether there are large-scale opportunities, that remains to be seen, and there's a lot of work to be done in clearing the sites, certifying them environmentally, and doing all of that, and that's just getting underway, and it's going to take some months to get that all squared away. There are several issues associated with fire insurance. We've seen a lot of concern about that. California is probably going to have to look at how it regulates that, perhaps a little more liberally as far as allowing for rates to essentially pay the true cost of providing the insurance.

What are some trends for the year coming from your newsletter? There is improved sentiment regarding potential stabilization of real estate and also some top markets to watch. What have you been keeping up with regarding what you think is coming up in 2025?

I always like to say that I have no high-definition crystal ball, all I know is what I read from people who are more expert at this sort of thing than I am.  I think we're probably past the most challenging adjustments coming out of the COVID period. And there has been a lot of question about inflation and interest rates. I think one thing we have to always keep in mind is that what the Fed does fundamentally affects short term interest rates. Rates. Long term interest rates are kind of a different matter, although influenced.  Just everything that's going on with policy. I wouldn't be looking to see a return to the very low interest rates that we had up until the pre-COVID period. I think that's behind us now.

The positive thing is we've had a few years of higher rates, although, by historical standards, in my career lifetime, not all that high. I think that the market of consumers now is going to be more accustomed to interest rates in the 6 7% realm, less put off by it, and people's lives change. Their families change. They have a need, and they're not going to wait forever to act upon that need if they can afford it.

Pike Oliver

news.ares.org

pike@urbannexus.com

Read this interview here: https://tinyurl.com/yf53zdpu

Lessons Learned

• Some of the Dollar Stores that closed are now selling in bankruptcy for a huge discount.
• There are so many ways you can partner up with people, you can do a JV (joint venture) with owners who have a lot of dark real estate (such as Dollar stores that are closing). Dark retail is a retail store that still has a lease but they have decided to close doors, they are still responsible for rent, but having a dark retail in your center isn’t good for your other tenants, so you would want to have that property filled again. What can you convert that to?
• You can partner up with cities, ask the city what do they need, offer to buy the land at $1/sf, offer to pay starting on year 3-10 when the property is ready or fully stabilized, get funds from them or breaks in fees.
• If you need a capital partner, there are capital market intermediaries that can help you find family offices or a construction loan, I spoke with a couple of people that did that a while ago and as far as I recall, their fees are around 2-2.5%.
• When you raise a fund, the real estate fund management fee is 1.5-2% of the committed capital.
• Don’t give special terms such as MFN unless an investor is committing a minimum of 25% of the deal. A “Most Favored Nation” clause gives a party the legal right to terms and benefits under the contract that are as good as or more favorable than the terms and benefits received by anyone else who enters into a similar contract with the other party.
• After webinar let them know you have the next week open for any questions they may have, this builds trust and helps them move forward.

Loans and Lenders:

You must pick up 5-6 new lenders a year.

Meet all of your lenders yearly, give them a report with your PFS (personal financial statement), show all property owned, how they have performed, share your mistakes and lessons learned, share the vision for the company, be proactive, present the business plan, how have you operated the assets.

After a loan is done, the lenders get a 2 week update, then it becomes quarterly. Send pictures, and show how are you doing vs pro forma.

Negotiate on loan unforeseen costs, stick with your needs even if you may lose that lender.

Negotiate that if you hit x percentage value increase, the lender gives the loan at x interest rate.

Agency debt is non recourse, and credit unions are great.

Don’t give any personal guarantees, the bigger you go, the less common it is for them to ask for a personal guarantee, lots of co-GP family offices can help and will show their balance sheet. You will need to have some guarantor for carve outs only.

We must negotiate debt to the ground, LTC is currently at 50%, don’t do variable rate.

We must read all pages of the loan docs and comment, edit, someone I know has made as many as 500 comments. You must have other banks lined up first they say no. Also, put a homestead exemption on all of your loan documents so they can’t take your home in case things go south, and make sure that they’re not removing any of your constitutional rights.

What topics should I cover next? Let me know at admin@montecarlorei.com

Read this interview here: https://tinyurl.com/v25xssbn

We all know that retail is changing. It's a lot more service-oriented today, and it will be even more moving forward as people want to buy things online. How do you help them have a diverse amount of service providers so that they will all work with each other well in terms of what they provide so they are all thriving in that center?

We evaluate the local community and understand what's missing. If there's already an Italian restaurant in the market, we don't want to step on anybody's toes. The worst thing to have is a new shopping center or a new downtown walkable community, and immediately the first thing that pops up is a duplication of what's already there. We take the time to get to know what the community is asking for, attend local meetings, and talk about economic development. It is common for us to stop people on the street and say, "Hey, we're going to be working on a project that's coming up, and we want your input" because the more the community feels like they are part of the process, the more they're going to welcome the project with open arms. We've had conversations on behalf of multi-family developers to say, "Let us go and work for the community early," because if we can do an activation, a pop-up, or a farmers market on the site before you build, chances are we can get goodwill from the community. They will be excited for us to potentially capture some of those vendors from the farmers market and put them in a permanent space. There's nothing worse than someone coming in from outside and saying, "My Italian is better than your Italian," and that's not a good way to garner goodwill when you're coming into a new community.

Can you elaborate on how they work because sometimes water is involved and all of that? Which effort would it take from the owner of the property for these popups?

It depends on how much time we have because, at the very beginning, you've probably got a property under contract, and you need to go through the approval process. We're working with the current owner of the property and not our future client, who's going through the approval process. It is up to the current owner if they are receptive to dealing with us and letting us activate it so that there is positive momentum. It could be something as easy as a shipping container park. It could be a food truck park and those investments are picnic tables. Maybe there's existing space on the property that we can leverage bathrooms for, or it just might be a farmers market where we're not necessarily providing bathrooms but just creating a gathering space that people can come to. You can activate it on something as small as half an acre or an acre, but it just depends on what that timeline is.

A lot of the folks that we work with on the multi-family side and who we advise on the retail component are leaning in the direction of having anywhere from 12 to 25,000 square feet of retail space, and that's a good critical mass. We're going to assess what else is in the community and hopefully be able to leverage and be respectful of what's there. But if we're coming in and there's nothing around us within a 10-minute drive, 25,000 is that magic number that we would like to see in terms of a retail component. A lot of times, multi-family developers are pushed to do retail, and they don't want to, they don't get it, or they don't have performance for it. In my opinion, they end up performing in the space too high. It really should be an amenity, just like the fitness studio, just like the pool, just like any walking trails around it, because if you have the right...]]>What are some retail trends that may not be so obvious today? Why should you add a retail component to your multi-family project? How to host a successful popup in your center? Edie Weintraub, Founder and Managing Director of Terra Alma, shares her insights.

Read this interview here: https://tinyurl.com/v25xssbn

We all know that retail is changing. It's a lot more service-oriented today, and it will be even more moving forward as people want to buy things online. How do you help them have a diverse amount of service providers so that they will all work with each other well in terms of what they provide so they are all thriving in that center?

We evaluate the local community and understand what's missing. If there's already an Italian restaurant in the market, we don't want to step on anybody's toes. The worst thing to have is a new shopping center or a new downtown walkable community, and immediately the first thing that pops up is a duplication of what's already there. We take the time to get to know what the community is asking for, attend local meetings, and talk about economic development. It is common for us to stop people on the street and say, "Hey, we're going to be working on a project that's coming up, and we want your input" because the more the community feels like they are part of the process, the more they're going to welcome the project with open arms. We've had conversations on behalf of multi-family developers to say, "Let us go and work for the community early," because if we can do an activation, a pop-up, or a farmers market on the site before you build, chances are we can get goodwill from the community. They will be excited for us to potentially capture some of those vendors from the farmers market and put them in a permanent space. There's nothing worse than someone coming in from outside and saying, "My Italian is better than your Italian," and that's not a good way to garner goodwill when you're coming into a new community.

Can you elaborate on how they work because sometimes water is involved and all of that? Which effort would it take from the owner of the property for these popups?

It depends on how much time we have because, at the very beginning, you've probably got a property under contract, and you need to go through the approval process. We're working with the current owner of the property and not our future client, who's going through the approval process. It is up to the current owner if they are receptive to dealing with us and letting us activate it so that there is positive momentum. It could be something as easy as a shipping container park. It could be a food truck park and those investments are picnic tables. Maybe there's existing space on the property that we can leverage bathrooms for, or it just might be a farmers market where we're not necessarily providing bathrooms but just creating a gathering space that people can come to. You can activate it on something as small as half an acre or an acre, but it just depends on what that timeline is.

A lot of the folks that we work with on the multi-family side and who we advise on the retail component are leaning in the direction of having anywhere from 12 to 25,000 square feet of retail space, and that's a good critical mass. We're going to assess what else is in the community and hopefully be able to leverage and be respectful of what's there. But if we're coming in and there's nothing around us within a 10-minute drive, 25,000 is that magic number that we would like to see in terms of a retail component. A lot of times, multi-family developers are pushed to do retail, and they don't want to, they don't get it, or they don't have performance for it. In my opinion, they end up performing in the space too high. It really should be an amenity, just like the fitness studio, just like the pool, just like any walking trails around it, because if you have the right retailer or cafe at the base of your apartment building, those tenants upstairs have an opportunity to make a friend, maybe a future spouse or partner or business relationship. They're more likely to stay a second year and a third year, and you don't have to start all over and try to find a new resident because you've created a sense of place, a sense of community, and it's a much nicer place to be in.

Edie Weintraub

www.terraalma.com

https://podcasts.apple.com/us/podcast/hustle-and-heart-conversations-with-culture-creators/id1750502470

Read the entire interview here: https://tinyurl.com/9624cn5k

Smart developers are in touch with their city representatives. The city is a great resource for leads. If you meet with them, they will tell you: that’s a bad land owner, or we want this place developed. Entitlement goes super fast when the city owns the land.

Create a public/private partnership with the city so they sell their land for cheap and you build what they need in the area, and they allow the change of use to what is needed. You would put a development agreement in place, and the city offsets fees to help the deal work.

Ask city what projects are stuck, which projects developers are not paying them for or have loans coming up.

If working with land that the city owns isn't an option, and for areas that you may think there is no more land to build, note that everything is still available to build, in the sense of you can repurpose several buildings. The things the presenter looks to get in contract and build (in their case multi family) are: auto dealerships, used car lots, private schools, a shopping center that isn’t doing well.

When working on a deal in a city that is known to be difficult, for example, any city in California, make sure to keep the deposit on your offer very low. They recommend $50-100k, and make sure that you can get your deposit back if there is a 50-50 chance of the project working out. Try to figure out early with the city if it is likely to work out or not. If the seller doesn't like your offer with a $50k deposit and 2 yr due diligence, show them your track record, in the sense that you will close once you get through the city, and show the fact that you have always closed on all of your deals.

A contract that has worked for the presenter is having 75-90 days feasibility, and at the end of that, have a non refundable deposit, in this example $50k, and have a close of escrow based on getting the permit, or a 18-24 month timeframe, with options to extend. You should also note that you will close earlier if you get the grading permit, or within 18 months and 3 extension options. You may think this is unrealistic in expensive areas in California, but they normally get this accepted because they close on 100% of deals that they get permits for.

As far as getting any property entitled, make sure to have individual meetings with each city council member before getting it entitled, so you can manage the story very well. Find what’s important to the neighbor as well.

People are investing in what they call "bedroom communities" which are the cities near larger cities that are growing, also known as path of progress. An example would be Atlanta and Marietta which is a near by town that people started moving to after prices in Atlanta got too expensive, but they still work in Atlanta.

Lastly, a few months ago we interviewed someone that was building homes with a retail component in the bottom in Utah, so that the owner would have their business at the bottom and live on top, and that person said that those were very popular. However, at this event, they said the opposite, shopkeep space for the bottom part of a house is not the best way to address that, the best is to have a condominium lease floor and have a retail broker lease them out. We are highlighting both perspectives so that you do your own homework, if this is something you'd like to build in the future.

Read this episode here: https://tinyurl.com/49eua957

Based on all of your readings so far, what is happening right now?

The two fundamentals for generating wealth in the US have not changed, it's either small business or real estate. The economy goes up and down. We are having a recession right now, I purchased more properties at the peak of markets, knowing the markets were going to roll over and go down. It isn't because I wanted to, it's because as an independent contractor in the mortgage business, my income is best at market peaks, and it tanks in the downturns which are the best times to buy. My tax returns don't support it, so I have to figure out how to generate wealth through real estate, and buy at market peaks, knowing that I am doing exactly that.

Real estate is the slowest and the most boring path to wealth, but if you hang on to something for 20 years, the value is going to be up. We see the same thing with the equities market, the stock markets, spin the wheel of fortune, pick a date, and roll 20 years forward. I've property outside of Tampa, and they're talking about Tampa residential real estate stinks now due to over building, people moving to Florida seem to be slowing down, that's the headline. When you're coming off of five years of massive growth, does it make sense to have a little cooling period? Apartment buildings, after massive growth, does it make sense for the market to pull back a little bit? Does that mean that apartments are a bad investment? After Phoenix goes up 25% a year for four years, do you want to buy in Phoenix? Maybe not in year five but does that mean you're going to ignore Phoenix for the next 37 years?

As far as a recession, I've always been in the "easy landing camp", because of other aspects going on. The job market is holding up because until the job market tanks, which is a trailing indicator, we're not hitting it. The bigger challenge we're having is the two, or three years of overcooked inflation, that's what everybody's fighting right now.

Looking into the next two years, what do you think people should be doing right now about commercial real estate investing?

What an incredible time to buy! When I'm talking with people, if you're a Democrat, I'm going to play a Republican and if you're Republican, I'm going to play a Democrat. The purpose is, you don't need Yes folks around you. You need people who are going to work to broaden your thought process, challenge it and you get to sleep on it. Then, come back and tell me what you want to do, and we will execute.

Before the Fed meeting, when they lowered the rates, I put in my residential newsletter that the best time to buy was 90 days ago. When the interest rates were hitting 8% was the absolute best time to buy residential real estate in California. You had no competition, and the sellers were scared to death, so you were able to negotiate lower prices. We're in Prop 13, and lower prices mean lower taxes forever. And when the interest rates drop, we know what to do then. Now that the interest rates have gone back up, the commercial real estate cap rates are up. "Why is that happening?" Because now they're not expecting the Fed to be continuing half-percent cuts because the news is out that maybe the economy isn't as stinky as mainstream media would like to talk about. Go back historically and you start pulling cap rates to get a perspective.

Michael Ryan

mike@michael-ryan.com

Read this entire interview here: https://tinyurl.com/mre9kmt4

What are you investing in right now?

I like very simple buildings that can be used for multiple purposes, and my favorite is Flex Industrial. It is any industrial building in an industrial park used for other purposes than manufacturing or warehousing. One building that I have on a main industrial road used to look industrial until we did a renovation on it. We have an office tenant in there, a hot tub store, a flower shop, a cabinet store and we just put a bridal dress company in there, all are nonindustrial uses. Most people would never think of a bridal shop being an industrial building, but this building works for so many different types of uses, that if we have a vacancy come up, we might have 20 to 30 different ideas that people present to us in terms of what could work in the building.

I love that in flex industrial the rates tend to be a lot more competitive than retail. If someone wants to be in the suburbs as an office user, you're typically going to be paying a lot less than being in a dedicated office building in the suburbs, and you could still have light industrial in there as well. It's versatile and it's somewhat removed from warehousing. The one that I have is more in the inner city limits. It's very difficult to build something next door to us to compete with us, whereas, if you have a warehouse outside of city limits and there's available land, you could go and build another building next door, and have the versatility of the different types of tenants, that's my preference. If I could buy one thing going forward, that's what I'd focus on.

There are a lot of people who are opposed to data centers. Anytime a new one gets presented, it seems that there's an opposition group that are trying to fight it and get it blocked. I understand that pushback, but we need these data centers. AI is growing at a crazy pace. We need the data centers on top of it. There's a study that said that by 2030 data centers will take up 9% of the total US grid, that's double from what it is today, and that's already coming off of huge growth in the last few years, as these data centers have become more prevalent. They're taking up a lot of power, the forecast is for them to take up even more power, and they also need water, which is, I think, an under appreciated component of data centers.

What are the downsides of the industrial?

I've said to a lot of people, don't invest in industrial real estate. The biggest thing is, if you make a mistake, it's magnified much more than any other asset class. To illustrate, imagine if you were to buy a 15-unit apartment building, and you bought it in a good area, in a city, you're always going to have tenants in there. You just might need to lower the rent a little bit. If it's $1,200 and you say, "I just want to have I want to make sure my bills are paid." and you undercut the market at $800, you'll always have tenants. It's a matter of what price you need to accept. In industrial, if you buy the wrong building, you might never find a tenant. There are horror stories that I could tell of guys that have bought a property and they've sat vacant for years. If you do that with a single-tenant building, perhaps for the equivalent price of a multi-tenant apartment building, and it sits vacant, you lose 100% of your revenue.

Chad Griffiths

www.industrialize.com

www.youtube.com/@industrialize

Read this episode here: https://tinyurl.com/mvnjh5sp

What are some of the latest things happening in the industrial asset class?

What I find so fascinating about industrial real estate is that it's such a wide variety of activities and subcategories of industrial. Ten years ago, most people just grouped industrial as one big asset class, and they'd talk about it at a very high level, and that was it. But now, we should be breaking industrial into more subcategories, because if you look at the warehousing or the logistics side of it, that's gone through a pretty big roller coaster on its own that's independent of other subcategories. And just to give you an example, there are so many warehouses, distribution centers, and logistics facilities that went up so crazy over the last couple of years that in some large markets, they were adding 10- 20 million square feet of warehouse space every year. And now, some of those markets where they overbuilt, there's too much inventory. Their vacancy rate has gone from very low to being problematic in some areas, and it's going to take some time to work through that.

If you look at other subcategories of industrial, manufacturing has still done quite well and it is coming back to North America. Manufacturing and warehousing have been on different paths. There's a new one that has only come up within the last few years, which I think deserves its subcategory, and that is the high-tech industrial which could be EV factories or gigafactories, which is a kind of broad term they use to describe battery factories. Tesla has their gigafactories, that name is kind of extended to other companies as well. You also have semiconductor manufacturing plants, like high-tech labs. Essentially, these aren't manufacturing facilities, if you were to picture Boeing making airplanes, that is traditional manufacturing but these high-tech ones are completely different and there are billions of dollars being invested. TSMC is doing a multi-billion dollar facility in Phoenix, and there's another one going up in Ohio and Columbus, they're popping up everywhere and these are massive facilities. And then the other one that you have is data centers which are growing at a crazy pace.

How do you keep up with that as an industrial investor? How do you look ahead and try to understand what you should be investing in the future?

There are two primary things that I do myself. First, you need to be in a city that has population growth for the foreseeable future. It can't be that there's population growth because there's one major project going on, and then once that project is done, perhaps jobs leave with it. You need to be in a big city where there's optimism that the population growth will continue. Population grows, everybody needs more stuff, they're shopping more, they're doing more online shopping and so warehouses and industrial investment follows population growth.

The second thing is to invest in properties that have multiple uses. If that one tenant that's in there, or multiple tenants that are in there, whether it's at the end of their lease, or they go into bankruptcy, or they get bought out and they just no longer need it, they eventually leave. I want to make sure that when that tenant leaves, that building is suitable and compatible for the next tenant without me having to spend a ton of money retrofitting it.

Chad Griffiths

www.industrialize.com

www.youtube.com/@industrialize

Read this episode here: https://tinyurl.com/4uaeke3p

What are midterm rentals? Why should someone have to offer a midterm rental as an investor?

Most people are very familiar with long-term unfurnished rentals, and in the last decade, short-term rentals have been very popular with Airbnb. Those midterm rentals have slid under the radar for quite some time, but we're making more headlines now because so many cities are prohibiting short-term rentals. In New York and Denver, we have a lot of regulations around short-term rentals, whether you need a license, whether you're restricted in which kind of properties you can offer, whether it has to be your primary residence, or whether you can only do it for 90 days. A lot of regulations happening around short-term rentals so what people are finding is, instead of either selling the property, especially in this real estate market, or switching it back to an unfurnished, long-term rental. They have another opportunity to be able to keep the rental furniture there and still be able to make a higher yield than they would be renting it unfurnished.

The nice thing about midterm rentals is if you work with a corporation like ours, you could rent them to corporations in the area, so you have a really solid customer base. No one's going to do anything to their corporate apartment that will make them get disciplined at work, and the average stay is about 99- 100 Days. You do have a couple of turns a year but nowhere like what you were doing with Airbnb in terms of maybe a couple of nights and then a turn. It is a nice medium compared to the unfurnished rental.

We have a couple of offices in California where the rules and laws around renting properties are very much geared toward the tenant or The occupant. By having the corporation rent the property for a specific assignment, you're not going to have somebody end up squatting or staying there beyond their term of what they're allowed, which also allows you to keep the rental rate up with the market. Once someone moves out, you're not subject to rent control, you can set your new market. If the industry or the real estate market is on an upswing, you can certainly get the increased prices related to the upswing and it is a nice way to diversify your overall portfolio.

What are some cons to midterm rentals?

We are subject to corporations and their ebbs and flows. That doesn't necessarily mean that it's only good in an up environment, because when there's a down environment, we do see movement of employees when they consolidate locations. Maybe they're closing this office and they're going to relocate everyone to this office. If your property is located near the office that closed, that could certainly be a con.

And then, there are times where we can be affected by the overall economy, like, if the government shuts down for a week, and everyone takes a deep breath and they're like, "Oh, what's going on? How long will they be closed?" We could see pockets of times when everyone is kind of taking a breath and trying to adjust to the new economy but once they do start making those plans, like either closing places, maybe they're going to expand, or maybe interest rates are rising, and everyone's kind of taking a breath, businesses will start to adapt to that and start to make some sort of change, and that change is good for corporate housing.

Corporations do not relocate people, and they do not start new assignments in December but that doesn't mean that we go vacant in that month, but if your tenant happens to leave in December, the likelihood of us finding somebody new before]]>Why should you have a mid-term rental? What are the pros and cons of mid-term rentals? What do corporations look for when looking for corporate housing? Angela Healy, CEO of AvenueWest Managed Corporate Housing shares her knowledge.

Read this episode here: https://tinyurl.com/4uaeke3p

What are midterm rentals? Why should someone have to offer a midterm rental as an investor?

Most people are very familiar with long-term unfurnished rentals, and in the last decade, short-term rentals have been very popular with Airbnb. Those midterm rentals have slid under the radar for quite some time, but we're making more headlines now because so many cities are prohibiting short-term rentals. In New York and Denver, we have a lot of regulations around short-term rentals, whether you need a license, whether you're restricted in which kind of properties you can offer, whether it has to be your primary residence, or whether you can only do it for 90 days. A lot of regulations happening around short-term rentals so what people are finding is, instead of either selling the property, especially in this real estate market, or switching it back to an unfurnished, long-term rental. They have another opportunity to be able to keep the rental furniture there and still be able to make a higher yield than they would be renting it unfurnished.

The nice thing about midterm rentals is if you work with a corporation like ours, you could rent them to corporations in the area, so you have a really solid customer base. No one's going to do anything to their corporate apartment that will make them get disciplined at work, and the average stay is about 99- 100 Days. You do have a couple of turns a year but nowhere like what you were doing with Airbnb in terms of maybe a couple of nights and then a turn. It is a nice medium compared to the unfurnished rental.

We have a couple of offices in California where the rules and laws around renting properties are very much geared toward the tenant or The occupant. By having the corporation rent the property for a specific assignment, you're not going to have somebody end up squatting or staying there beyond their term of what they're allowed, which also allows you to keep the rental rate up with the market. Once someone moves out, you're not subject to rent control, you can set your new market. If the industry or the real estate market is on an upswing, you can certainly get the increased prices related to the upswing and it is a nice way to diversify your overall portfolio.

What are some cons to midterm rentals?

We are subject to corporations and their ebbs and flows. That doesn't necessarily mean that it's only good in an up environment, because when there's a down environment, we do see movement of employees when they consolidate locations. Maybe they're closing this office and they're going to relocate everyone to this office. If your property is located near the office that closed, that could certainly be a con.

And then, there are times where we can be affected by the overall economy, like, if the government shuts down for a week, and everyone takes a deep breath and they're like, "Oh, what's going on? How long will they be closed?" We could see pockets of times when everyone is kind of taking a breath and trying to adjust to the new economy but once they do start making those plans, like either closing places, maybe they're going to expand, or maybe interest rates are rising, and everyone's kind of taking a breath, businesses will start to adapt to that and start to make some sort of change, and that change is good for corporate housing.

Corporations do not relocate people, and they do not start new assignments in December but that doesn't mean that we go vacant in that month, but if your tenant happens to leave in December, the likelihood of us finding somebody new before January slips.

Angela Healy

angela@avenuewest.com

https://www.linkedin.com/in/angela-healy-avenuewest/

Read this episode here: https://tinyurl.com/4ajk387f

How to find the highest and best use for a piece of land?

It comes down to vision. For us and our process, if it's under 5 acres, I don't want to worry about it because doing something with 3 acres is the same amount of work, and the same amount of headache, as it does with 300 acres. I'm going to look at the overview of the market, what is the need, what is the city's master plan? And just because they have something in their master plan doesn't mean they want to stick with it. What's the city's vision? What's the market's vision? What is the market demanding right now? For example, right now, I am not looking necessarily for really large lots or humongous houses, attainable housing is a lot more in demand, that means multifamily housing and townhome developments. It is not because I love the look of townhomes, but that's what the market is demanding and what is needed in the community. We've the city's vision, the market conditions vision, and then the possibility of what's there. There may also be some products that were very successful in other cities that we put it in this city.

What is a new product that is in high demand in certain areas?

We’re fitting 30 units in 5 acres that the city wanted to just zone commercial. The commercial is great if you have a specific tenant. You've to build it specifically for the commercial people. Jack in the Box wants a specific look, Starbucks, etc. We've built this product in Brigham City, and I've also seen it be successful in other cities, the market was saying "We want some commercial but we also need attainable housing, multifamily housing, or townhomes on top". We've designed this unit that is one single tax ID. It's an individual townhome. The bottom is a commercial use that they can run a business from, they don't need to get a special license and the other two floors are the residential housing. The maker spaces are usually in high demand. They sell for about $100,000 more than the typical townhome unit.

Can you share a couple of tips on how you manage things, and how you keep the company growing from a leader's perspective?

These are important: 1) Delegation and utilizing the actual systems. 2) Being able to say "no" to things that don't serve you, and 3) Set expectations, and that can be expectations for vendors, other contractors that we're working with, and civil engineers having a clear scope of work. 5) I live and breathe by my calendar, if it's not on my calendar, it doesn't exist. That means even if my executive assistant and I need to work on a project, and it's just working on something, we will block that time, and we'll put it in the calendar. Or even if it's in person, it has to be on my calendar. On Sundays my husband and I go through our week and plan our week and say, "What does this week look like? Am I missing anything?"

Amy Johnson

amyj@ystreetcapital.com

https://www.linkedin.com/in/amy-johnson-358217162/

Read the interview here: https://tinyurl.com/bddxjmvv

How did you partnership come about?

My husband and I decided to get into the rental game market of residential houses and we turned our own little primary house into a rental and moved into an ugly, disgusting house and kept doing that over and over. It was difficult for us to scale, to keep doing individual residential house: get the loan, qualify, find the right property, all of those things and we knew we wanted to continue to grow. Fast forward, we acquired a great amount of properties, and decided to sell some of our portfolio and roll those into some larger assets. And one of those assets, we were an LP or a limited partner in some self-storage and saw the power of that.

Then we got into land development, I needed some additional support, and that's where I met Victor Menasce, through a different mastermind. I paid him as a consultant on a project. As we were bringing on different projects, I had brought on some others and we just had a really good working relationship with different things, and they had some skills and knowledge and different things that I needed. I realized, that if I wanted to scale this, I couldn't do everything on my own.

How did the conversation start so people can understand where values come from? Why would you both want to do that?

Both companies were very successful before and I think that it is like a relationship, because partnerships are a good relationship. Instead of coming for a spouse or boyfriend having a cup that's half full, and expecting your partner to fill the other half, both of you come with a very full cup and come together, and then you get to create something even bigger. It wasn't that one person came in and tried to save or rescue or take over, that is not a great partnership. Now, that can be a business move. I have looked at other companies where I could see where I could add value. It doesn't mean you can't add value to them, but you're going to come together full and create something bigger, so that each has one cup and, together instead of making two cups, you make three.

What tools have you implemented? What has been the most helpful to your company and how do you manage and oversee everything?

One of the systems that we utilize is our EOS system, our rocks and our wigs. It is aligned and doing our level 10. If you have a good EOS system, it's because you have your priorities straight. When you have a company that is only handling emergencies or firefighting, you're not putting your priorities in straight and that's where you're not growing as well. Another system for us is Asana, but that's more for our project management standpoint. I used to use Google Doc to make my to-do list, and I'd share it with my assistant. Good tracker, but there's more accountability with Asana.

Some individuals say, "The last thing I want to do is taking four meetings a year of two days each, plus every single Friday for two hours to go over our rocks and wigs and our issues lists, and things like that. If you're busy, sometimes that can seem overwhelming and I was grateful for the structure. There were times that I was like, "I'm so busy I don't have time for this." You need to make time so that you can create it.

Amy Johnson

amyj@ystreetcapital.com

https://www.linkedin.com/in/amy-johnson-358217162/

Read the interview here: https://tinyurl.com/ymmwthzz

What is happening in your area and market?

Probably similar to a lot of people around the country, transaction volume is down significantly year over year on the buy and sale side. Leasing activity has been pretty active over the last year or so. The sales side had a slowdown, but on the leasing side, there's been definitely an uptick. I think a lot of it has to do with the fact that although we see some negative signs in the economy, with the unemployment rate ticking up, inflation's still not quite under control as of yet. For whatever reason, the consumer still is spending a lot, which is probably a bad thing long term, but in the short term, it seems to be keeping a lot of these enterprises afloat. On the retail side, it's been a very active last year or so. But, regarding investment real estate, it's been affected. I work with a lot of people who are looking to do development, especially in land acquisition, and ground-up construction, and that's been very slow over the last year or so.

Are sellers coming down on price at this point?

Some are, and a lot aren't. I think what it comes down to is the staying power. There are a lot of sellers out there that do have bank notes that are coming due. Now, the kicker is that a lot of banks are trying to work it out with the sellers, especially if they see that there's a path towards them ultimately being able to be compliant soon. Banks aren't in the business of owning real estate, so they don't want to have to get foreclosed on the property and then have to go through the whole process of getting it off their books. In most instances, if they see a path toward the seller or the owner being able to perform, they're usually going to be able to work things out with the owner. Now, there are also a lot of sellers out there that own the properties outright, and they're just like, "Hey, we'll wait around and we don't have to sell right now." There's no real urgency and so, do I think that there will be a mountain of distress? No, I don't think so, but very optimistic over the next 12 to 24 months that rates are going to start coming down and transaction volume is going to spike because there's a lot of demand. It's not like people don't want to buy stuff, it's just kind of we're at an impasse. And so, once the gap is bridged, I think we're going to start seeing significant volume.

What do you look for? I'm briefly guessing multifamily projects are being built in the area.

You look at residents. Rooftops for retail are huge because those are the demographics that are ultimately going to be shopping at the places or eating at the places that are going to be nearby. We look a lot for different city initiatives that are kind of pushing for certain things to happen in areas. I follow closely with different rezoning that are taking place, though, these are all publicly available. By the way, you can go to our metro market, we have the Metro council that votes on rezoning that is taking place. If you just look through a list of the ones that are being heard every two weeks, it's a treasure trove of information.

Raphael Collazo

raphael@grisantigroup.com

www.linkedin.com/in/raphaelcollazo

Read this entire interview here: https://tinyurl.com/ykutphd6

What do you think is the state of the market now? What's on your mind in terms of the economy and your investments?

On the economic side, one of two dominoes has fallen that is going to impact investors in general: 1) interest rates spiked up which caused a lot of other domino effects and a huge adjustment in prices. When there's a 20 or 30% price adjustment in the stock market, everybody calls it a crash. I've not heard anybody call it a crash but that's factually what's happened here on the real estate prices. Some assets have gone down more, and some have gone down a little less, but on average is 15 to 30%. And I think that's domino number one. 2) The domino that I am still waiting for is a recession that I think is a very high probability based on macro data. And then when you get that, you would typically have a stock market crash. Unfortunately, this time around, there's a direct correlation between the length and an inversion of the yield curve, and how long that goes for, which is at a record right now. If you were to chart it out, which I've seen and I've done, it implies a 45 to 50% stock market crash, which even when I say that I can't picture it, but that's what theoretically should be happening, taking history and applying it to today in terms of the length of inversion.

I'm bracing for a very major second domino to fall and not a lot of people are talking about. A lot of people are talking about interest rate cuts, I'm expecting at least one and possibly two before the end of the year. But I think what a lot of people tend to forget is that the reason why they cut rates is because there is a recession or a recession is about to happen and the economy is doing bad. It's not just randomly happening.

We had some interesting data today. They released the CPI data, it was -0.1 month over month and it was at 3.0% over a year, that's the regular CPI. The core CPI was at about 0.1%, I think 3.4 but it's trending down. There's a very high probability that it's going to continue to trend down because 43% of the CPI is comprised of what they call the owners’ equivalent rent, which is a highly likely 18-to-24-month lag indicator of rents. The CPI number has been overinflated for a long time.

How many deals do you have right now under your belt? And how are they doing?

I'm highly diversified because I have been doing it full-time for so many years. I'm currently in over 60 active LLCs, and I've been in over 150 to 200+ over the past 22 years. They're all different because some of them are from the 2000 era and some of them are from last year, or even this year. One thing that I think was very important is I didn't invest in any floating rate bridge loan deals, which was very difficult to not do because in 2020 to 2023, let's say, literally 90%+ of anything I got was that. If you wanted to invest in anything, it almost always had to be that, but it didn't match with my bucket, which I typically look for a 10-year fixed rate loan long term because I'm looking for predictable cash flow. I sidestep that so I'm not dealing with any of that, thankfully, although a lot of people are and I feel horrible about what's going on right now.

Jeremy Roll

jroll@rollinvestments.com

Read this entire interview here: https://tinyurl.com/2vy2tnhz

Real Estate

Every single deal has multiple problems you will have to overcome, a friend of mine that has been building multi family projects in California for several years told me that for each problem you must "block and tackle”, and I have never heard anyone say that there was an “easy” deal, especially in development. In fact, they say “if there was ever an easy deal, they all happened before I started my career, we were only left with the difficult ones”.

Another thing I learned is that buying a portfolio of properties for a discount is a fantastic way to invest. You not only get a discount on them, but you can turn around and sell a couple of them individually for a higher price and keep the other properties. As far as the car washes, I got 3 of them, and a self storage facility, and I got a discount on everything because I bought a portfolio, plus I negotiated a price reduction. And today, 3.5 years later, with the sale of that 1 car wash, I could have paid the entire mortgage for the 3 car washes and would have had money left.

I have also been working on partnerships with people that know their field very well but don’t have cash to invest, for example employees working at commercial real estate firms that are very good at what they do and haven’t thought about doing their own thing, or incredibly driven individuals. Say, you have 5 partners that are very capable, each working on a deal, yes your slice of the pie is smaller, but you now have 5 properties that you’re working on with very capable people. Regarding partnerships, you must do your due diligence on them, for me, it works to get to know them over time, see how they act and react to certain hurdles, see their integrity, and then I will partner up with them after I know them for a while.

Mindset

You may already know this first one and that is “Readers are leaders” indeed, I try observe what common traits highly successful people have, a lot of them did read a lot in their childhood, some of them started reading in their adult years, but what they have in common is that they do read a lot. The reason that this makes sense is because we can read one book and, no matter how amazing it was, we forget most of what we read. However, when we have “reading” as a regular thing in our lives, a lot of the messages of these books are very similar, they’re just written in different ways, and it’s through repetition that this information begins to stay with you for the long run.

Another trait that I have observed from some very successful people is that they experienced different extremes in their lives, wether they experienced poverty, or lived in a country that had a lot of problems, or even if they were born with a silver spoon but their parents made sure that in the summer time, they’d spend half of the time working at a farm doing hard labor, and the other half with the time they’d spend at one of their parent’s friends companies doing an internship. The common trait was that they had seen the good life and the bad life and that made them very driven. They are also very curious people and good listeners.

Earlier this year I realized I was becoming very negative with all that I was learning about what is happening to our country, I was not sure if this is how it has always been and we now just have more access to this information, or was it indeed getting worse. I have my personal opinions on that, but I decided to delete social...]]>Today we celebrate our 200th episode of the Commercial Real Estate Investing From A-Z podcast, I will share some of my most recent learnings and observations, some are in mindset, some are related to real estate investing.

Read this entire interview here: https://tinyurl.com/2vy2tnhz

Real Estate

Every single deal has multiple problems you will have to overcome, a friend of mine that has been building multi family projects in California for several years told me that for each problem you must "block and tackle”, and I have never heard anyone say that there was an “easy” deal, especially in development. In fact, they say “if there was ever an easy deal, they all happened before I started my career, we were only left with the difficult ones”.

Another thing I learned is that buying a portfolio of properties for a discount is a fantastic way to invest. You not only get a discount on them, but you can turn around and sell a couple of them individually for a higher price and keep the other properties. As far as the car washes, I got 3 of them, and a self storage facility, and I got a discount on everything because I bought a portfolio, plus I negotiated a price reduction. And today, 3.5 years later, with the sale of that 1 car wash, I could have paid the entire mortgage for the 3 car washes and would have had money left.

I have also been working on partnerships with people that know their field very well but don’t have cash to invest, for example employees working at commercial real estate firms that are very good at what they do and haven’t thought about doing their own thing, or incredibly driven individuals. Say, you have 5 partners that are very capable, each working on a deal, yes your slice of the pie is smaller, but you now have 5 properties that you’re working on with very capable people. Regarding partnerships, you must do your due diligence on them, for me, it works to get to know them over time, see how they act and react to certain hurdles, see their integrity, and then I will partner up with them after I know them for a while.

Mindset

You may already know this first one and that is “Readers are leaders” indeed, I try observe what common traits highly successful people have, a lot of them did read a lot in their childhood, some of them started reading in their adult years, but what they have in common is that they do read a lot. The reason that this makes sense is because we can read one book and, no matter how amazing it was, we forget most of what we read. However, when we have “reading” as a regular thing in our lives, a lot of the messages of these books are very similar, they’re just written in different ways, and it’s through repetition that this information begins to stay with you for the long run.

Another trait that I have observed from some very successful people is that they experienced different extremes in their lives, wether they experienced poverty, or lived in a country that had a lot of problems, or even if they were born with a silver spoon but their parents made sure that in the summer time, they’d spend half of the time working at a farm doing hard labor, and the other half with the time they’d spend at one of their parent’s friends companies doing an internship. The common trait was that they had seen the good life and the bad life and that made them very driven. They are also very curious people and good listeners.

Earlier this year I realized I was becoming very negative with all that I was learning about what is happening to our country, I was not sure if this is how it has always been and we now just have more access to this information, or was it indeed getting worse. I have my personal opinions on that, but I decided to delete social media from my phone and I can attest that I have been a lot happier ever since. I still check one social media once in a while on my laptop, but none of the others and life has been wonderful.

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Read the entire interview here: https://tinyurl.com/y8dvzpbf

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What are some of the largest problems you have worked on? How did you overcome them?

Michael: Let me start with transportation in the late 70s. For various factors, Orange County was not getting its fair share of state or federal transportation money and there just was not enough money to build the level of infrastructure that was needed. There was a change in law, allowing Santa Clara County to impose its own sales tax and use it for transportation. The Irvine company took the lead in gathering people in the county, and other jobs, primarily other big businesses. People were suspect that a developer would be asking that they raise their taxes for the good of everybody and so a coalition was put together, I worked on that for probably 8 years. The citizens in Orange County were pretty conservative and we put it on the ballot "Let's raise the sales tax by a penny for transportation" That got beat very badly. We regrouped. We came back a second time and finally a third time. After a change in state law, we got 55% to make that happen but that was an 8-year effort to make that happen and it took an awful lot of time. The Irvine Company was the leader, both behind the scenes and publicly in making that happen.

Pike: We would survey people in the community at least twice a year. One of the things I've always been fascinated by what came back was that two things would make a difference in the community’s acceptance of continued growth: 1) adequate roadways and 2) adequate good schools; so, the company put a big focus on that.

How did you tackle the water quality issue which is a major issue that came in at the end of things?

Pike: It was an issue that came up with a little area called Crystal Cove, at the end of the whole effort. The approach the company took is the same approach it always took which is to find the experts, get them involved, tell them to work out a solution that will be acceptable to the people whose primary mission in life is water quality, and figure out how it can be done and still allow the company to achieve its goals.

Michael: In the 30-40 years that this has been done, the specialized attorneys, the consultants, the engineers, when El Toro was an issue, people that understood jet noise, there was just an army of people that worked for the Irvine company on a consulting basis that helped to make this happen. The bill has to be in the hundreds of millions of dollars over time for those people to give their expertise and, as Pike said, that was a real big part of dealing with bureaucrats, with regulators. Once you're willing to speak their language and try to meet them halfway and have facts to deal with, that makes a big difference. The Irvine company was rarely confrontational. It rarely raised its voice, if you will, and it could look long-term and say, "We can solve this, it may take some time, but let's put the resources to it."

Pike Oliver

pike@urbanexus.com

Michael Stockstill

stockstill49@gmail.com

www.thebigplanbook.com

Read the entire interview here: https://tinyurl.com/46m22v7b

Buy the Transforming the Irvine Ranch book here: https://www.amazon.com/Transforming-Irvine-Ranch-William-American/dp/103212783X

You both participated in writing a book called Transforming the Irvine Ranch which one of the heiresses, Joan Irvine, also participated in, how did you get to write a book and what was the reasoning behind it?

Michael: We've always loved history when we were together at the Irvine company. We looked around and asked questions about the background of the company, we read the book, and we talked to other people who had lived it. Fast forward 40 years after talking about it many times, Pike called me one day and said, "Why don't we write that book." Ray Watson had written six chapters, and he gave a 500-page oral history. And with that as a base, we set out to write the book and had a great time doing it.

I would love to understand how Mr. Bren got himself into the Irvine company from your perspective.

Michael: Donald Bren had an interest in planned communities as a young man and as a builder. He started his own building company in his late 20s. He was 31 years old when he and some partners purchased 11,000 acres of what is now Mission Viejo, which is south of the Irvine Ranch. Bren was very interested in whole communities and design. Unfortunately, that was a bridge too far. Bren sold out after 3 years and eventually, Mission Viejo was bought by Philip Morris, they had deep pockets. He kept his eye on the Irvine Ranch, and built houses on the ranch. And in 1976, it became apparent that the ranch was going to go up for sale. Bren rounded up $100 million, and was prepared to join the bidding and it very quickly exceeded that. He was invited into the winning group, which was headed by Al Taubman from Detroit and included Joan Irvine. And in 1977, Bren owned 35% of the Irvine Company. But he did not have control and the other owners rallied around Al Taubman. And Taubman for the next five years became the real force in terms of decision making at the ranch.

What shapes Mr. Bren’s focus is an incredibly broad bandwidth of perspective, as compared to most people involved in real estate. For example, he will spend quite a bit of time looking at a site plan and making sure that the houses next to each other do not allow people to look in the other person's house. Then, he can look at the entire ranch to figure out the purpose and intent, and begin to think about how to implement open space and habitat preserves that amount to over 50,000 acres. There are very few people that can work across that dimension of detail.

The other element of this was Brent surrounded himself by very energetic people. They were well paid, they were motivated, and when things needed to be done, the usual response was: "We'll figure out how to get it done, and tell us the resources you need to make that happen." The Irvine company never had a lobbyist in Washington DC, we ended up hiring somebody there and it made a tremendous difference in some of the issues that we had to deal with at the time. Bren was very willing to spend resources, he was not a spendthrift, there were budgets but it was a huge property, it was a huge job.

Pike Oliver

pike@urbanexus.com

Michael Stockstill

stockstill49@gmail.com

www.thebigplanbook.com

Read this entire interview here: https://tinyurl.com/nut4m6b8

You have many projects right now, one in particular is huge. How did you get it? How did you put it together? And what are some of the good, bad and the ugly so far?

Every single one of our significant projects has landed in our lap. Somebody says, "I've got this deal. I don't know what to do with it. Can you help?" This was a huge property on the edge of Colorado Springs, it's 77 million square feet, and the perimeter is about seven miles.

Someone approached us who got it under contract, he didn't have the money to put it together, and had negotiated a reasonable price of 10,000 an acre, about 23 cents a square foot. If you look at agricultural land anywhere across the United States, it will vary between 3 to 10,000 an acre, depending on where it's located. If you're growing weed on it, it's maybe towards the higher end of that spectrum. I typically talk about the entitlement multiplier that comes with land because it's just dirt, why is this dirt worth more than that? It's because of what you can do with it. An agricultural land, 3 to 10,000 an acre, if it's entitled for development, and maybe you can put a subdivision on, it might be a couple of 100,000 an acre. If you can put a 40-story building on it might be several million an acre, but it's all still the same dirt. If we can transform this from agricultural land into the growth path for the city of Colorado Springs, we can probably create a reasonable multiplayer value.

We took over the contract, renegotiated it, and got it re-signed with us. We negotiated a fairly lengthy closing period, which included the entitlement. It had some timelines associated with it, so the sooner the entitlement or the expiration. We did not meet the entitlement timelines that we were originally expecting, based on conversations with both the county and the city of Colorado Springs, that this is something that would be pretty quick. It has turned out to not be quick, but it's still an amazing project.

Where is the market today? Are the deals better? Is it time to buy?

I would say that it's better in the sense that there's less insanity than there was because I think we would all acknowledge that many of the valuations that we witnessed in 2021, 2022, and parts of 2023 made no sense at all. I think reality is setting in for many of those and that's going to create distress for a number of them. If you think about folks who would have started a project, maybe a value-add project in 2021 with certain interest rate assumptions, assumptions about rent growth, etc, they find themselves in a very different world today, probably with no path to get into permanent financing without writing a massive check. And initially, they were probably thinking they were going to get a significant cash-out to refinance, but it's going the other way.

I think the lenders are still in a mode of "extend and pretend", bridge lenders in particular. The forecast flood of deals is a trickle, not a flood yet, I think it's coming but a lot of lenders don't want to recognize distress on their books. We are starting to see valuations become more reasonable. We are evaluating deals daily and looking at two projects that are significant opportunities for office-to-residential conversions at a decent price.

Victor...]]>How to find and assemble large projects? What are the real estate market trends? Victor Menasce, an author, real estate developer, and host of the Real Estate Espresso Podcast, shares his knowledge.

Read this entire interview here: https://tinyurl.com/nut4m6b8

You have many projects right now, one in particular is huge. How did you get it? How did you put it together? And what are some of the good, bad and the ugly so far?

Every single one of our significant projects has landed in our lap. Somebody says, "I've got this deal. I don't know what to do with it. Can you help?" This was a huge property on the edge of Colorado Springs, it's 77 million square feet, and the perimeter is about seven miles.

Someone approached us who got it under contract, he didn't have the money to put it together, and had negotiated a reasonable price of 10,000 an acre, about 23 cents a square foot. If you look at agricultural land anywhere across the United States, it will vary between 3 to 10,000 an acre, depending on where it's located. If you're growing weed on it, it's maybe towards the higher end of that spectrum. I typically talk about the entitlement multiplier that comes with land because it's just dirt, why is this dirt worth more than that? It's because of what you can do with it. An agricultural land, 3 to 10,000 an acre, if it's entitled for development, and maybe you can put a subdivision on, it might be a couple of 100,000 an acre. If you can put a 40-story building on it might be several million an acre, but it's all still the same dirt. If we can transform this from agricultural land into the growth path for the city of Colorado Springs, we can probably create a reasonable multiplayer value.

We took over the contract, renegotiated it, and got it re-signed with us. We negotiated a fairly lengthy closing period, which included the entitlement. It had some timelines associated with it, so the sooner the entitlement or the expiration. We did not meet the entitlement timelines that we were originally expecting, based on conversations with both the county and the city of Colorado Springs, that this is something that would be pretty quick. It has turned out to not be quick, but it's still an amazing project.

Where is the market today? Are the deals better? Is it time to buy?

I would say that it's better in the sense that there's less insanity than there was because I think we would all acknowledge that many of the valuations that we witnessed in 2021, 2022, and parts of 2023 made no sense at all. I think reality is setting in for many of those and that's going to create distress for a number of them. If you think about folks who would have started a project, maybe a value-add project in 2021 with certain interest rate assumptions, assumptions about rent growth, etc, they find themselves in a very different world today, probably with no path to get into permanent financing without writing a massive check. And initially, they were probably thinking they were going to get a significant cash-out to refinance, but it's going the other way.

I think the lenders are still in a mode of "extend and pretend", bridge lenders in particular. The forecast flood of deals is a trickle, not a flood yet, I think it's coming but a lot of lenders don't want to recognize distress on their books. We are starting to see valuations become more reasonable. We are evaluating deals daily and looking at two projects that are significant opportunities for office-to-residential conversions at a decent price.

Victor Menasce

The Real Estate Espresso Podcast

victor@victorjm.com

Read this entire interview here: https://tinyurl.com/rt4pvac2

You have been doing self-storage for 20 years, how is self-storage doing today?

We're bullish on storage. It doesn't matter what the economy's doing, because our asset classes are largely unaffected by what's happening when things are good, people buy more stuff and there's a need for storage so we do well. When there's a contraction in the economy and people are losing their jobs or businesses, it is going a little slower. They have to put their inventory in storage, or they sublease their office or whatever their business looks like and we benefit from that, as well. We are heading into a time that we've been preparing for years, which is kind of the intersection of all that. Interest rates are a little higher and the cost of capital is higher but we are seeing a contraction in the market, which is causing people to downsize businesses.

I heard this morning that in Austin, Texas 20% of the workforce is unemployed right now. Some of these companies are laying their people off. But there is a pullback right now, and the jobless rate is a little higher than even what the government statistics would show because we're seeing it and feeling it in the marketplace.

Do you think self-storage is being overbuilt in places?

You can't say that the industry is overbuilt. If everybody's rates all across the country, were going down and everybody was at 50% occupancy, maybe, but I don't think that we would ever get to that standpoint. There are lots of safeguards in our industry and we do know what it takes to do our homework and understand as developers, what makes this successful self-storage development project. With today's very difficult capital markets: appraisers, lenders, and private equity partners, they are not just throwing money at us, assuming it's going to win, they are forcing and they want to see our feasibility studies and the demand studies that we're doing in the marketplace to understand what a deal looks like before they're going to grant us a loan or loan us our limited partners that are going to come alongside of us or the hedge funds and invest with us. We shouldn't be coming forward if we didn't have that, and we really wouldn't get it anyway.

What are some things that you have seen happen at your mastermind?

A lot of the things that we've seen are things that we've built in an environment in which all the good things that we see in a mastermind can occur and some of that is true. As we take a step back, we recognize that following the Napoleon Hills model, which is when like-minded people come together and operate at a certain level, good things happen. They share best business practices, they can do business together and so from the beginning, that's the way we designed it. And we see other masterminds out there where they'll just accept anybody into the group, as long as they can write a check. We have an interview process, and it's an exclusive group that we've put into place in the mastermind.

Scott Meyers

www.selfstorageinvesting.com

Discover how these experts have navigated the ever-changing real estate landscape and learn about their investment portfolios, which span various asset classes such as retail, industrial, multifamily, and more. They provide valuable insights on the challenges and opportunities they've encountered, from dealing with construction costs and interest rates to the impact of COVID-19 on their deals.

You'll also gain valuable knowledge about the importance of cash flow and how it factors into their investment decisions. Plus, find out about alternative investment strategies, including leveraging algorithms for trading and exploring the world of forex.

If you're looking to enhance your real estate investment knowledge or seeking inspiration from seasoned professionals, this video is a must-watch. Whether you're a seasoned investor or just getting started, these insights will help you make informed decisions in the world of real estate investment.

Don't miss this engaging and informative discussion that can potentially shape your investment strategy for the better. Subscribe to our channel and hit the notification bell to stay updated on more expert panels and industry insights.

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Read this entire interview here: https://tinyurl.com/bden8yy4

I met my partner for this syndication six years ago at the Real Estate Guys Summit at Sea. I've always emphasized that the expensive events are the best because everyone there is serious about real estate investing; they are industry veterans who want to connect with like-minded individuals. Most veterans avoid rookie events that cost $300 to attend because attendees are typically early in their careers, and many won't pursue real estate investing long-term.

It's crucial to cultivate relationships over time. Beyond learning about real estate investing, observing partners navigate various situations offers valuable insights. From my partner, I learned about his experiences with past partnerships and his dedication to protecting investors' interests. This aligns with my values, as I prioritize investors' funds over my own. Witnessing his integrity in personal interactions and how he handles adversity solidified my trust in him.

How did this opportunity arise? After six years, my partner approached me about collaborating on a deal. Despite my busy schedule, I accepted, recognizing the alignment with my goals and viewing it as a chance to evaluate our compatibility. I entered without expectations, emphasizing my willingness to defer to his expertise regarding compensation. This approach allowed me to showcase my abilities while demonstrating trust in his judgment.

Working with such a reputable partner was immensely enjoyable. Despite occasional challenges inherent to the asset class, our collaboration was overwhelmingly positive. Our complementary strengths facilitated smooth teamwork; where one hesitated, the other stepped in confidently.

Regarding compensation, we finalized discussions shortly before closing, with my partner proposing a generous split. I initially felt it was overly generous and suggested he retain more. After adjusting, he reiterated his appreciation for the opportunity, attributing his generosity to my demonstrated value and diligence during due diligence.

The ultimate outcome will be revealed upon exiting the deal in 2-3 years. So far, however, our webinar presentation garnered full commitment within two hours, and we secured a $100k discount post-webinar, to the delight of our investors.

I share this not to boast but to underscore the importance of integrity and patience in forging partnerships. Trust in the process and the individuals involved is paramount. Additionally, competence is non-negotiable; excellence breeds opportunities.

In conclusion:

1. Great individuals are rare, and integrity sets one apart. Regardless of age or experience, doing the right thing attracts opportunities. I've witnessed this firsthand, partnering with a diligent 20-year-old whose character and work ethic impressed me consistently.
2. My partner frequently encounters individuals seeking partnerships, yet most fail to invest in building relationships. Approaching someone out of the blue with partnership proposals rarely succeeds. I echo this sentiment; without rapport and shared values, collaboration is unlikely.

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Read this entire interview here: https://tinyurl.com/wewybvt5

What kind of fees do you charge and how does it benefit the property owner?

We only make money when our partners make money. We don't charge any upfront or recurring fee, free to use the service. Just like an Airbnb or other marketplace, will take whatever you decide to charge as a host and we'll charge the renter a service fee on top of that, and that's where our money comes from.

It is a sliding scale take rate based on the size of the dollar amount of the rental. For smaller rentals, if it's $30 a month, we're going to take a high percentage take rate on top, to make the money that you need to, versus we have some spaces that rent out for 1000s of dollars a month, we're going to take a very low percentage take rate on top of that. It varies by the amount. But again, very similar to what you'd see on Airbnb, where it kind of slides based on the amount of the reservation.

Have you scaled the operations to cater to your partners who are listing their spaces with you?

It's very much scaling the technology. The value of the platform is the value of the tools that we provide. Every year we're trying to think how can we make this more of a passive income experience for our hosts because that is one of our differentiating factors. If you think of other marketplaces, to make money on Uber, there's labor involved, you have to go drive around, or Instacart or DoorDash, and you have to work for the income that you earn. Even Airbnb tends to have a decent amount of management and turnover and customers. Oftentimes, management companies are hired, Neighbor, on the other hand, is the first platform where we can bring you a renter, and you're going to get a payment from that renter every month without doing much of anything, it's very passive income.

Further along in the business, we've gotten the bigger hosts and have started to use the platform to where today. We have hosts that may own a $30 billion real estate portfolio across the country, office or retail or multifamily and they're listing lots of space on our platform in 100 cities. The tools required to manage that amount of space are very different than the tools required to manage a driveway or a garage. And so, building more robust payment systems to work with any large enterprises, custom payment systems, or building tools, almost like SAS-type tools where you can see the layout of hundreds of spaces and assign renters to different spaces, we use this cool tool called a blueprint for large owners of the land...

Can you share an example of a REIT or a larger investor that has onboarded some properties with Neighbor and how did that go?

In the retail space, we work with a group called Federal Realty, one of the largest owners of retail space in the country both on the East Coast and the West Coast. We onboarded them, we work with them both the suites that struggled to rent then will rent those out for self-storage, and also the parking in a strip mall. There's always that parking in the back that nobody parks on, we've rolled out nationwide with them.

On the multifamily side, an example of one of the many multifamily groups we work with is Equity Residential, one of the largest owners in the country. In some properties, they have 20 different vacant parking stalls while in some properties, they have five, but at every property, they have and it's all income, and those properties get leased up very fast. If I look at properties that are onboarded, they get up to 75-80% occupancy quickly. And then, when you add on the interior self-storage opportunity...]]>What are some ways to increase income on a commercial property? Joseph Woodbury, CEO of Neighbor, shares his knowledge.

Read this entire interview here: https://tinyurl.com/wewybvt5

What kind of fees do you charge and how does it benefit the property owner?

We only make money when our partners make money. We don't charge any upfront or recurring fee, free to use the service. Just like an Airbnb or other marketplace, will take whatever you decide to charge as a host and we'll charge the renter a service fee on top of that, and that's where our money comes from.

It is a sliding scale take rate based on the size of the dollar amount of the rental. For smaller rentals, if it's $30 a month, we're going to take a high percentage take rate on top, to make the money that you need to, versus we have some spaces that rent out for 1000s of dollars a month, we're going to take a very low percentage take rate on top of that. It varies by the amount. But again, very similar to what you'd see on Airbnb, where it kind of slides based on the amount of the reservation.

Have you scaled the operations to cater to your partners who are listing their spaces with you?

It's very much scaling the technology. The value of the platform is the value of the tools that we provide. Every year we're trying to think how can we make this more of a passive income experience for our hosts because that is one of our differentiating factors. If you think of other marketplaces, to make money on Uber, there's labor involved, you have to go drive around, or Instacart or DoorDash, and you have to work for the income that you earn. Even Airbnb tends to have a decent amount of management and turnover and customers. Oftentimes, management companies are hired, Neighbor, on the other hand, is the first platform where we can bring you a renter, and you're going to get a payment from that renter every month without doing much of anything, it's very passive income.

Further along in the business, we've gotten the bigger hosts and have started to use the platform to where today. We have hosts that may own a $30 billion real estate portfolio across the country, office or retail or multifamily and they're listing lots of space on our platform in 100 cities. The tools required to manage that amount of space are very different than the tools required to manage a driveway or a garage. And so, building more robust payment systems to work with any large enterprises, custom payment systems, or building tools, almost like SAS-type tools where you can see the layout of hundreds of spaces and assign renters to different spaces, we use this cool tool called a blueprint for large owners of the land...

Can you share an example of a REIT or a larger investor that has onboarded some properties with Neighbor and how did that go?

In the retail space, we work with a group called Federal Realty, one of the largest owners of retail space in the country both on the East Coast and the West Coast. We onboarded them, we work with them both the suites that struggled to rent then will rent those out for self-storage, and also the parking in a strip mall. There's always that parking in the back that nobody parks on, we've rolled out nationwide with them.

On the multifamily side, an example of one of the many multifamily groups we work with is Equity Residential, one of the largest owners in the country. In some properties, they have 20 different vacant parking stalls while in some properties, they have five, but at every property, they have and it's all income, and those properties get leased up very fast. If I look at properties that are onboarded, they get up to 75-80% occupancy quickly. And then, when you add on the interior self-storage opportunity where equity residential, built storage units in all of their multifamily complexes nationwide for their tenants as a tenant amenity. And it turns out that if you talk to most owners of multifamily in the country, those are generally occupied at about 25 to 30%, occupancy, and storage nationwide has a 90 95% occupancy rate. So, you can bridge that gap. If they onboard the remaining ones on our platform, we can get them to 90-95% occupancy, through the community. It's great for them, it's great for the community and everyone's happy.

Joseph Woodbury

www.neighbor.com

joseph@neighbor.com

Read this entire interview here: https://tinyurl.com/yevhs2u3

How long did it take you to surpass your W2 income after you started investing?

It took 13 months from the time of purchase. Short-term rentals helped me achieve that goal more quickly.

How do you find a small boutique hotel? How do you analyze it, including conversions, if you undertake them?

Municipalities across the country are increasingly regulating short-term rentals in places like New York, Dallas, Atlanta, and Southern California. These regulations aim to protect the single-family housing market and the rental market. Hotels, classified as commercial properties, are designed for nightly rentals and thus aren't subjected to the same regulations. Authorities aren't shutting down major hotel chains like Marriott and Hilton due to the influence of hotel lobbyists. This lack of regulation provides an opportunity to invest in prime real estate in metropolitan areas or their suburbs.

To find these opportunities, I seek out tired hospitality assets typically owned by Mom-and-Pop operators who often reside on-site and handle all management tasks themselves. The inefficiencies of managing a business where you both live and work can be substantial. Many of these operators are slow to adopt technology, neglect online travel agencies (OTAs), and fail to engage in marketing efforts beyond word-of-mouth referrals or basic direct booking websites. By acquiring these properties, refreshing and renovating them, and listing them on OTAs such as Airbnb, booking.com, and Expedia hotels.com, we can attract a wider range of guests. We also focus on collecting guest emails and contact information to facilitate direct marketing efforts, which can significantly increase margins by avoiding OTA fees.

We target markets such as destination markets, ski towns, and beach towns. For instance, Panama City Beach attracts 17 million visitors annually. However, similar opportunities exist in various markets nationwide, including metropolitan areas. I've found success in acquiring outdated properties owned by owner-operators, improving their efficiency, updating their design, and consequently increasing their average daily rates (ADRs). Since commercial properties are valued based on net operating incomes, these improvements can significantly boost property values.

Can you discuss your systems, processes, and approaches to hiring and developing your team?

Investing in this asset class requires a team effort. I couldn't manage all my hotels alone, although I did gain experience managing all my short-term rentals while still involved in residential properties. I outsourced administrative tasks and guest communications to cope with increased demand. Boutique hotels generate revenue from the outset, enabling us to hire and outsource roles early on. For instance, with a property generating hundreds of thousands of dollars annually, we can afford a full property-level team, including a director of operations, operations manager, revenue manager, and guest relations team. Regarding guest check-in processes, we employ self-check-in systems for smaller properties, while larger properties with higher revenue may warrant on-site staff

Blake Dailey

www.instagram.com/blakejdailey

www.botiquehotelcon.com

Read this entire episode here: https://tinyurl.com/2s3u5u3y

What is like investing today compared to the past?

This is the hardest investment market we have ever participated in. There's staggering uncertainty about the future, with half of the pundits predicting a recession and others foreseeing a soft landing. People simply don't know what's coming, and this uncertainty freezes both debt and equity capital.

Part of the challenge today is that most of the people making investment decisions have only experienced an era of continually declining interest rates and cap rates, where you didn't have to be particularly skilled to make money. However, the current situation is different. While there was a brief interruption in the last quarter of 2008 and 2009, the past 15 years, and even longer for those under 50, have been relatively stable. Positive leverage, which used to be a hallmark of real estate investing, is now extremely difficult to achieve. In the past, we could finance properties at lower rates than their initial yield, resulting in immediate profitability. However, achieving such positive leverage today is nearly impossible. Despite this, we continue to invest in properties with tighter yields if we see opportunities to increase income.

What are some of the toughest lessons learned, and what advice would you give without someone having to experience it themselves?

Managing cash flow is crucial both corporately and at the property level. We've always prioritized managing our balance sheet, promptly paying down debt after liquidity events. The key lessons are:

1. Invest in projects with potential for revenue growth, especially in areas experiencing positive population growth.
2. Establish strong capital partnerships, as demonstrating the ability to close deals is vital. Seller financing can be advantageous for both parties.
3. Consider being a nonrecourse borrower to protect against personal liability in challenging times.
4. Honor loan covenants, and prioritize maintaining a clean balance sheet.

Regarding nonrecourse loans, although they may incur slightly higher costs, the benefits of a clean balance sheet outweigh the expense. While our model may not be replicable for everyone, I would advise paying the premium for nonrecourse loans if given the choice.

Commercial real estate is a fantastic industry with long-term wealth-building potential. While it's not without challenges, such as the current uncertainty in the market, it offers numerous advantages, including tax benefits and opportunities for cash-out financing. It's essential to treat real estate investment as a full-time commitment and to prioritize understanding the details of every transaction. Ultimately, success in this industry requires dedication, hard work, and a deep understanding of market dynamics.

Stephen Bittel

stephen@terranovacorp.com

www.terranovacorp.com

Join our newsletter here: www.montecarlorei.com

Read this entire episode here: https://tinyurl.com/y6s85em4

About 4,000 residential ground leases made over a 15-year period were coming up for renewal. The new rent, set at 5, 6, or 7% of the fair market value of the land, had been written so that rent would remain flat for an original 20 or 25 years. At expiration, the Company could charge 5, 6, or 7% of the new fair market value, but few foresaw how steeply land values would rise during the two decades. The residents created a Committee of 4000 to ask the company to discard the leases they had signed and to obtain more favorable conditions. They secured extensive news media coverage, took advertisements, held mass rallies, and won favorable community support, and as a result, the Company’s credibility plummeted. The Company made the Committee of 4,000 a new offer. The leaseholders could buy their land at an average of 50% of its appraised market value, and because interest rates were high, the Company would permit homeowners to pay for the land over a 30-year period with a variable-rate loan beginning at 10% - an acceptable interest rate in the mid-1980s.

Key takeaways:

• Donate land to create a university or anything that will attract a lot of people to live in the area, build around it.
• Donate a lot to the community to help your company have a good public image.
• There were many trials and tribulations, even when the city entitled something; some activists were able to reverse that.
• They went through all economic cycles. They very rarely, if ever, sell, which is something I fully believe and agree with.
• I heard from someone familiar with being a tenant that they are very strict landlords; you can’t have one thing out of place.
• I personally looked at some of their multifamily apartments, and they are very well run.
• He is very particular about how things look; he would remove trees that looked “old school” and put palm trees to make a certain area look better, and now I notice that every shopping center he owns has palm trees.
• He made his execs work very hard; I met someone here that knew one of his VPs, and when this VP was taking a vacation, Bren made him come back to work due to a problem, and it turned out that the problem wasn’t that big of a deal. To me, what that says is that the VPs were highly paid, and also that we all need to resolve an issue very quickly when it arises at that level, or at any level, in my opinion. Don’t ever let things linger.
• Nothing lasts forever; if you made a mistake on one thing here, you fix it for the next one.

Key takeaways on purchasing The Irvine Company:

• Be where the people are, go to the events that they go to, be in front of them. One of the partners that Bren had was at a horseshoe, and he ran into an Irvine Company family member, and that started the conversation of “has the ranch been sold yet,” which led to this person partnering up with multiple people, including Bren, to make the initial 50% purchase.
• Talk to the people who will get the deal done, in this case, they contacted the same lender. Bren always worked with the top people in the industry, whether they were CPAs, attorneys, lenders. Always go to the top for a significant opportunity.
• Get the seller what they want, in this case, one of the heiresses, Joann, to be a 10% stakeholder on that initial purchase.
• Corporations have a target number they will stop bidding at; this one was just under 20x of annual earnings, this one 3 million below the 20x annual earnings.

Subscribe to our...]]>We continue our education of the history of The Irvine Company, picking up where we left of  in the 1980's through 2013. Excerpts from the book: The Irvine Ranch: a Time for People" by Martin A. Brower.

Read this entire episode here: https://tinyurl.com/y6s85em4

About 4,000 residential ground leases made over a 15-year period were coming up for renewal. The new rent, set at 5, 6, or 7% of the fair market value of the land, had been written so that rent would remain flat for an original 20 or 25 years. At expiration, the Company could charge 5, 6, or 7% of the new fair market value, but few foresaw how steeply land values would rise during the two decades. The residents created a Committee of 4000 to ask the company to discard the leases they had signed and to obtain more favorable conditions. They secured extensive news media coverage, took advertisements, held mass rallies, and won favorable community support, and as a result, the Company’s credibility plummeted. The Company made the Committee of 4,000 a new offer. The leaseholders could buy their land at an average of 50% of its appraised market value, and because interest rates were high, the Company would permit homeowners to pay for the land over a 30-year period with a variable-rate loan beginning at 10% - an acceptable interest rate in the mid-1980s.

Key takeaways:

• Donate land to create a university or anything that will attract a lot of people to live in the area, build around it.
• Donate a lot to the community to help your company have a good public image.
• There were many trials and tribulations, even when the city entitled something; some activists were able to reverse that.
• They went through all economic cycles. They very rarely, if ever, sell, which is something I fully believe and agree with.
• I heard from someone familiar with being a tenant that they are very strict landlords; you can’t have one thing out of place.
• I personally looked at some of their multifamily apartments, and they are very well run.
• He is very particular about how things look; he would remove trees that looked “old school” and put palm trees to make a certain area look better, and now I notice that every shopping center he owns has palm trees.
• He made his execs work very hard; I met someone here that knew one of his VPs, and when this VP was taking a vacation, Bren made him come back to work due to a problem, and it turned out that the problem wasn’t that big of a deal. To me, what that says is that the VPs were highly paid, and also that we all need to resolve an issue very quickly when it arises at that level, or at any level, in my opinion. Don’t ever let things linger.
• Nothing lasts forever; if you made a mistake on one thing here, you fix it for the next one.

Key takeaways on purchasing The Irvine Company:

• Be where the people are, go to the events that they go to, be in front of them. One of the partners that Bren had was at a horseshoe, and he ran into an Irvine Company family member, and that started the conversation of “has the ranch been sold yet,” which led to this person partnering up with multiple people, including Bren, to make the initial 50% purchase.
• Talk to the people who will get the deal done, in this case, they contacted the same lender. Bren always worked with the top people in the industry, whether they were CPAs, attorneys, lenders. Always go to the top for a significant opportunity.
• Get the seller what they want, in this case, one of the heiresses, Joann, to be a 10% stakeholder on that initial purchase.
• Corporations have a target number they will stop bidding at; this one was just under 20x of annual earnings, this one 3 million below the 20x annual earnings.

Subscribe to our newsletter: www.montecarlorei.com

Read the entire episode here: https://tinyurl.com/m2ehfys7

1970's

At that point, cities and the County were increasingly imposing costly demands on the developer. These demands included roads, flood control channels, parks, and schools — all of which were previously provided by the cities and the County. The James Irvine Foundation became serious about selling The Irvine Company to comply with the Tax Reform Act.

When thinking of purchasing the company, Bren combined forces with Taubman, Allen, and the others. Understanding from Bren the need to have heiress Joan Irvine Smith on their side, Taubman and Bren had decided to allow Joan Irvine Smith to become an 11% partner of the consortium, allowing her to retain partial ownership of the Company she loved after the proposed purchase — which she relished.

On May 18, 1977, Mobil bid $336.6 million. The next day, May 19, the consortium bid $337.4 million — more than one-third higher than Mobil's original offer. At noon the following day, May 20, 1977, Mobil announced that it would not attempt to outbid the consortium. The consortium was prepared to go higher. The court approved the price, declared Taubman-Allen-Irvine the winner, and the sale of The Irvine Company was completed. Therefore, 112 years after James Irvine acquired the Irvine Ranch, the company became a Michigan corporation.

The consortium purchased the company for $337.4 million. Key to the financing of the acquisition was the $100 million loan, which was assembled by a group of 9 banks. The timing of the acquisition could not have been better, as the nation came out of the 1973-74 recession, and the economy grew warm in 1976 and 1977.

1980's

In 1983, Bren made a startling move. He offered to buy out Taubman and his partners by launching his own leveraged buyout of The Irvine Company, for their 51 percent of the Company, for which they had contributed less than $100 million six years earlier, Bren offered the “Eastern” shareholders $516 million.

Determining that they had made a sizeable profit and uncertain about the future resulting from the heated “greedy eastern carpetbagger” campaign and the residential leasehold crisis, the Taubman-led easterners agreed to accept Bren’s offer. Orange County newspaper reporters tried to uncover why these astute businessmen would sell a company which appeared to have an unlimited financial future, but Taubman would only comment “My father always told me you take some and you leave some.” To his hometown “Detroit Free Press” he boasted: “This was a better deal than the Louisiana Purchase.”

But Joan Irvine Smith objected to the buyout price as being too low, and objected to Bren’s saddling the Company with a $560 million debt (the $516 million buyout plus interest due to five banks making the loan). This valued the company at just over $1B and her 11% shares at about $100M. She filed suit. With the buyout also came $560M of debt. Bren worked with First Boston Company on financing the buyout, and he worked closely with accountants Kenneth Leventhal & Company on how to make the payments. The lawsuit lasted quite a few years in the 80s and after endless months of discovery, depositions, the trial which was in Michigan (where the company was incorporated) resulted in the judge awarding her $256M including accumulated interest.

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Read this entire episode here: http://tinyurl.com/55zadwbj

In 1864, James Irvine and three partners bought a 101,000-acre ranch, for around $26k. Much of that is now a city called Irvine, in California. It was initially a ranch focused on agriculture and it also encompassed coastal land. In the early 1900’s they started developing some of the real estate, and in the 1950’s they started large scale planned community development, also known as master planned communities, which encompasses building everything from residential to commercial and industrial buildings. The city of Irvine became one of the largest planned communities in the US.

I recently read the book The Irvine Ranch: A Time For People by Martin A. Brower, and I will be sharing what I highlighted from the book below for my own knowledge.

50's

• Novices in such real estate transactions, The Irvine Company prepared lease and sale agreements which did not require development as proposed nor reversion of the land to the Company if not used by the lessee or purchaser.

60's

• As they were expanding and continuously growing, one of their developments in the 60’s pioneered the “zero lot line” concept, in which a house is placed on its neighbor’s property line, resulting in one wide side yard rather than two small and useless side yards for each home. The unique plan placed groups of homes around a series of central green parks. Homes were priced from $27,000 to $32,000, a step below the prices in Turtle Rock Hills.
• As with all other Irvine Company village centers, included architecture consistent with its community, an attractive service station with pumps away from the streets, and with a supermarket and shops opening from a broad walkway rather than directly from the parking lot.
• Master planned to group buildings by size and use, the IIC was developed with strict covenants regulating land coverage, architectural design, landscaping and sound, odor and visual emissions. They were known for their innovative planning concepts.

70’s

• The Company’s Residential Division had developed strict guidelines for each village which builders had to obey if they wanted to be invited to build homes on the Ranch. One of the homebuilders in Greentree — The Bren Company — was felt not to be cooperating. It was determined that Bren would never again be invited to build on the Irvine Ranch.
• When a citizen spokesman completed an attack one of of the Irvine company’s plan for a new project and the city stood with him, the president at the time Raymond Watson, applauded. “You’re not supposed to applaud,” chided Company director of public relations Martin Brower. “Sure I am, this is real democracy in action, with each of us respecting the other’s role”.

We will continue this exploration on the next post as I will highlight how Donald Bren became a partial owner of The Irvine Company and how he then became the sole owner of The Irvine Company.

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Read this entire interview here: http://tinyurl.com/2jdstyra

How to canvass tenants for retail properties?

Canvassing is when we knock on doors to find tenants to lease spaces in our vacancies. I was taught very early in my career not to sit around and wait for the phone to ring, go out, and knock on doors. If you think about what would qualify as a great tenant, it would have other locations, someone that's paying another landlord rent. How easy is it? This is why I love retail, It's just great to be able to go within 1 to 2 hours from your property and knock on doors of retailers to see if they're interested in expanding or opening in your shopping center.

Canvassing tips and examples:

- I was sitting at a red light, and there was a van across the way from me. On the bottom of the van, there was a plumbing supplies company, and they had five locations listed. What I always tell my students or my leasing agents who work for me is this: if someone has one location, it's a 50/50 shot if they want a second; if they have three, four, or five, they want more – they're in the expansion business. That is why I took a picture of that van, saying, "Hey, everyone, open your eyes, this is a business; they have five locations, here are their locations." Now, I know that one of my shopping centers was a hole in their doughnut of locations. I called the place, and they said they weren't interested in my area, but they gave me two other areas, and I have no friends that own properties there, so I sent my friends the information.

- There are prospects everywhere. There are prospects on bus benches, where you're driving down and it reads "Hey, have a smoothie!" and they list multiple locations under the bus bench. I love getting the little magazines that they hand out at doctors' offices or pediatrician offices, where it's the little community magazine. I grab those, and then on the weekend, I go through them, and I have found tons of prospects, because what does it tell you if they're advertising in a magazine? They've got money because we know the first thing that goes, if attendance is not doing well, a business isn't doing well, is marketing. They have another location, and they have money to spend on marketing, so I'll call them.

- I just did a deal with a men's clothing store that I found an ad in a magazine and called them up. I said, "Hey, I've got this property; we'd love to have men's clothing," and they were very interested. Within 90 days, they opened in one of my properties.

- I have an assignment that I'm working on in Cleveland, where I took over a 15% occupied mall and we have signed 49 leases in two years. I've met over 1800 businesses in Cleveland personally in two years. That's how you sign 49 leases. I realized that because the property was in downtown Cleveland, with lots of office buildings around and the food court had only two or three tenants, but because we got their sales, we knew that they were doing very well. I created a flyer that showed a picture of the nine available food court spaces. I said, "Food court spaces are available. I think it's a great rate, utilities included." Then I asked, "Which ones had hoods and which ones had refrigeration?" And I went and handed it out to 50 restaurants like fast-casual restaurants. Within 90 days, we leased five of them. Flyers—where the guy can come into the store and the gatekeeper goes, "Oh, this lady dropped this off, but it's got nine...]]>How to canvass tenants for retail properties? What are some techniques to get a new tenant? Who to target? Beth Azor, the "Canvassing Queen", CRE leasing coach, developer, investor, author/speaker, and CEO of Azor Advisory Services shares her knowledge.

Read this entire interview here: http://tinyurl.com/2jdstyra

How to canvass tenants for retail properties?

Canvassing is when we knock on doors to find tenants to lease spaces in our vacancies. I was taught very early in my career not to sit around and wait for the phone to ring, go out, and knock on doors. If you think about what would qualify as a great tenant, it would have other locations, someone that's paying another landlord rent. How easy is it? This is why I love retail, It's just great to be able to go within 1 to 2 hours from your property and knock on doors of retailers to see if they're interested in expanding or opening in your shopping center.

Canvassing tips and examples:

- I was sitting at a red light, and there was a van across the way from me. On the bottom of the van, there was a plumbing supplies company, and they had five locations listed. What I always tell my students or my leasing agents who work for me is this: if someone has one location, it's a 50/50 shot if they want a second; if they have three, four, or five, they want more – they're in the expansion business. That is why I took a picture of that van, saying, "Hey, everyone, open your eyes, this is a business; they have five locations, here are their locations." Now, I know that one of my shopping centers was a hole in their doughnut of locations. I called the place, and they said they weren't interested in my area, but they gave me two other areas, and I have no friends that own properties there, so I sent my friends the information.

- There are prospects everywhere. There are prospects on bus benches, where you're driving down and it reads "Hey, have a smoothie!" and they list multiple locations under the bus bench. I love getting the little magazines that they hand out at doctors' offices or pediatrician offices, where it's the little community magazine. I grab those, and then on the weekend, I go through them, and I have found tons of prospects, because what does it tell you if they're advertising in a magazine? They've got money because we know the first thing that goes, if attendance is not doing well, a business isn't doing well, is marketing. They have another location, and they have money to spend on marketing, so I'll call them.

- I just did a deal with a men's clothing store that I found an ad in a magazine and called them up. I said, "Hey, I've got this property; we'd love to have men's clothing," and they were very interested. Within 90 days, they opened in one of my properties.

- I have an assignment that I'm working on in Cleveland, where I took over a 15% occupied mall and we have signed 49 leases in two years. I've met over 1800 businesses in Cleveland personally in two years. That's how you sign 49 leases. I realized that because the property was in downtown Cleveland, with lots of office buildings around and the food court had only two or three tenants, but because we got their sales, we knew that they were doing very well. I created a flyer that showed a picture of the nine available food court spaces. I said, "Food court spaces are available. I think it's a great rate, utilities included." Then I asked, "Which ones had hoods and which ones had refrigeration?" And I went and handed it out to 50 restaurants like fast-casual restaurants. Within 90 days, we leased five of them. Flyers—where the guy can come into the store and the gatekeeper goes, "Oh, this lady dropped this off, but it's got nine food court spaces; this one has a hood, this one doesn't have a hood." This is better than a business card.

- The last thing I want to say, which is the most important, is when you walk into a retail space, never ask for the owner. I know there has been decades of sales training that says, "Get to the decision maker," but I promise you, if you walk in and say, "Is the owner here?" you're going to shoot yourself in the foot. It's just a terrible thing to do because they'll immediately think, "Why doesn't she think I'm the owner?" and they might even lie and say, "No, the owner's not here."

Beth Azor

www.bethazor.com

www.twitter.com/bethazor1

www.instagram.com/bethazor

Read this entire interview here: http://tinyurl.com/8y6b9k57

You are in tune with the economy and economics. We have some interesting news on interest rates recently; let's dive into that and see where your thoughts are for 2024 and 2025.

The interest rates and how fast they increased have been a big shock to the real estate system. Any industry relying on borrowing has been challenged by the interest rate increases, and real estate has been hit particularly hard because we normally have 60 to 80% leverage on the commercial side, and that involves a lot of loans. Anyone on variable-rate loans has been feeling the pressure.

At the Fed Funds meeting, they mentioned they're not planning on increasing rates. They didn't increase rates, shifting away from the narrative we've been hearing for a while, which was higher for longer, meaning these interest rates, which increased the fastest in 40 years, were expected to remain high. The Federal Reserve aimed to take some steam out of the economy, but they've seen that while unemployment is still low, inflation has come down. That's encouraging, and they indicated they are looking towards three interest rate decreases next year. The 10-Year treasury, on which many mortgages in the commercial world are based, has already been retreating, and that good news for investors with debt on their properties. It will also indirectly affect cap rates, correlated with interest rates. Cap rates, how we value properties, have expanded, meaning property values have gone down, and different real estate sectors have seen different decreases, but with interest rates coming down, we hope cap rates will compress, and values will go up.

You started with multifamily and then moved to different asset classes; can you share your reasoning behind it? Why did you pick those asset classes?

I'm investing in three asset classes: multifamily, medical office, and self-storage. For people newer to real estate, they might see real estate as an asset class, but within real estate, there are several different asset classes.I was heavily invested in multifamily and knew I should diversify because you never know what will happen. I diversified into self-storage properties, which has been great. I also invest in California and out of California. Living in LA, I'm one of the rare investors who invest in California and out of state. Diversifying within different asset classes has been a good way to spread out the risk, especially with tenant rules and regulations constantly evolving, they're a lot more strict with multifamily than with self storage. Migration patterns affect both asset classes similarly, but tenant laws and COVID restrictions apply only to multifamily, not self-storage. During COVID, seeing restrictions in multifamily, I realized my investors were exposed to legislative liabilities. Diversifying into self-storage, with less regulation but good returns, has worked well.

The last 18 months have been crazy in the real estate world, and some people have a mutual fund or stock mindset, trying to time the market. A common saying in our world is that it's not about market timing; it's about time in the market. These should be long-term investments. Whether you buy at the bottom or 10% off the bottom, they should be viewed as long-term.

Chad Zdenek

www.ihelpbizownersretire.com

Read this entire interview here: http://tinyurl.com/3z7wnnd2

What are some ways that real estate operators and syndicators could market themselves in today's world with all the technology, and now even ChatGPT?

After I sold my companies, I retired for seven years and when I decided to come back and create my mastermind, I had to put myself out there. And my first thoughts and observations were social media. I'm a big believer, in The Wheel which I started in 1993, you're the hub and each thing you do is a spoke. The big question is how to get people on the wheel, and then take them around, and I think a lot of people leave out is the getting them on the wheel part. And I thought social media had a couple of powerful components: 1) anyone in the world can find you and you can reach anyone else in the world and, for the most part, it's free. And so, I thought, "Okay, I'm going to have to get in the social media game." I didn't want to, I was still missing my story, and I was living a very almost private life. I wouldn't even do a Jim Rohn post, and not even mention that he was my business business partner and that I owned Jim Rohn International, the company that I'd sold. We have to be willing to put ourselves out there. It's our ego that doesn't want to be judged, I had to be content to say some people are going to judge me, they're going to say, "Oh, I'm bragging, or I'm whatever", versus the other people that say, "Kyle, I've been following you, you're making a difference in my life."

If I can get them on the wheel, that's not a funnel, funnels have agendas, I'm not talking selling, everything I've ever taught is about attracting, it's about fishing versus hunting. I've always talked about marketing as principles and tactics and tactics change all the time. The tactics to fill a room in 1993 changed in 2004, and that changed 2010, and that changed 2016, and today is also different, but the principles haven't changed at all. The core principles are:

1) Build a relationship with people, and build trust. To do that, you have to have a way to talk to them and social media is the first step, podcasts are great for that as well. And from there, getting people onto an email list that you have a little bit more control over.

2) You have to show up where the people are. I'm a big proponent of events, especially specific types of events that are industry related and your avatar will be there. You have to show up sometimes whether it's groups or events, or that can be online. But again, anywhere I go, there is an intention, if I meet my avatar, is there something of value I can bring to them in the way of some resources. I have a bunch of free resources and that's how we became friends, you got on my email list, and we followed each other on social media, and we met at an event. I've done that 1000s of times but I also am not going to just hard sell them, it's the wheel. They go on the wheel, you put it out there, there's no agenda and when the customers are ready, that's when it happens. It's not about who, it's when the right person is ready, and taking the agenda out. But first, you have to get them on that social media's first step, or that email list.

Kyle Wilson

kyle@kylewilson.com

www.KyleWilson.com

Read this entire interview here: http://tinyurl.com/mryukh4j

There's a lot of pushbacks that we need to give tenants, how do you approach that because when you're talking to a national tenant, they have a lot of the upper hand.

I like to explain to them how it impacts the value of the property, because sometimes, especially if it's a national tenant, they're working from a real estate department, they've never had to think about it from a landlord's perspective. I like to show them how it's going to impact the landlord, and how do you propose we solve that? And put the burden back on them to come up with the solution. Once they understand that what they're asking for is a $100,000 ask, but they feel like it's a $10,000 ask, they start to weight their priorities a little bit differently because their goal is to get a deal done. Putting the weight back on them to be able to come up with solutions is important, some of these things are more important than others.

Vague or generous assignment language: tenants are priced based on their risk in retail, and so, when you have a tenant that can assign their lease to another guarantor, if it's not clear that the guarantor is of equal or greater strength, it can impact the value of the building. That's been happening a lot. You see that in single-tenant properties where a large operator will set up all of these locations, guarantee the lease, but have the ability to assign the lease to another operator. And so, someone will buy it at a lower cap rate with this really strong credit and then later have it assigned to a tenant with a lower credit, that's an immediate reduction on the value of the building. Tenants need to know what they're asking for and understand that their credit is the value of that building.

Retail landlords care more about the use more than they do about the rent: brokers will sometimes get frustrated when the first question the landlord asks, or the landlord rep asks is, what use? And they'll think, just tell me the price! No, it depends on what use, they want to know who are they, and how many locations they have, you can't just say I can't disclose. It wastes everyone's time because there might be an exclusive that prevents that use from being at that property. And that might keep them from doing a lease or waste everyone's time, but also, they might not like the use, or it might not fit with the overall feel of the center. There's a lot more psychology that goes into leasing out a shopping center than leasing an office building, for example.

Not every landlord wants the longest lease term possible: Brokers are very much incentivized to do a very long-term lease and sometimes the landlord doesn't want that, and sometimes the tenant doesn't either, so it's important to make sure that everyone's asking the right questions. A landlord is assumed to want the longest lease term possible and that's not always the case. One of the reasons is because they might want to stagger the expirations so that you don't have more than 30% rolling over in a year. Or sometimes the conditions might throw off the deal and that's one way to get it back on track by shortening it a little bit, or they might have a different long-term plan for the property.

Bethany Babcock

www.foresitecre.com

www.twitter.com/bethanyjbabcock

Read this entire interview here: http://tinyurl.com/y8cppmt8

You represent both tenants and landlords, what are the main things we should be aware of when negotiating a lease, especially from a landlord's perspective?

1. Fixed renewal options: in this world where now we're seeing rental rates increase dramatically, especially on retail properties in our area, when you're putting fixed renewal options, which give a tenant the right to renew at a specific price in the future, it's equivalent to putting a cap on the owner’s value. That's important because if the owner wants to sell or do anything, that's the cap, it doesn't get much better than that, so at that point, the value of their property is going to go up and down, subject to the market and the cap rates, but it's not going to go up and down based on rent anymore. That's a bigger ask that I think most tenants realize. A lot of times they'll ask for a five-year lease and then they'll want 20 years’ worth of rent options, that's never a good deal for the landlord.

2. Free rent upfront versus lower overall base rent:how to maximize the value of the lease? It's really important if a tenant is saying, I need to be at $20 a square foot, and you're thinking, that's tough, I don't think I can make that work, it's not working on my pro forma. One of the better ways to do that and still be able to maximize the value is to tell the tenant, I can't give you $20/square foot, what if I gave you a year's worth of free rent, and the first year is at zero, and then your effective rent over the period will be about $20/sf. But in year two, or year three, it'll be $23/square foot. What that does for the landlord is that when you're capping the value of the property, you're doing it after the free rent period, and they get the benefit of the higher rent, whereas the tenant still gets the same effective rent. That's one way to get a win-win scenario for both parties.

3. Buying up the rent to get more TI: Once you go over market rents, it doesn't help anybody. A really good example of this is Starbucks, back in 2006-2007, when they were expanding fast, they were buying up the rent high by getting a ton of TI and having their buildings just delivered to them. But in 2008, when the market adjusted, suddenly you had all of these little Starbucks that were closing, and the rents they were paying at that time were $50 a foot, and now it's even much higher. They couldn't replace or backfill those locations, even though it was a good real estate with those same rents and so a lot of landlords were in hardship. It matters because it's going to affect the value of their property.

4. HVAC and plumbing: If you're on the landlord side, make sure that it's a one-time event, or that it has an end date because if those issues go on indefinitely, that means every buyer or lender that underwrites that property is going to have to underwrite that possible event. If you have an end date, within one year or two years, they can put it in and once that period has passed, that risk subsides. But if it's ongoing, then it's going to diminish the value of the building, because it has to get underwritten each year, or conservatively, every few years, however often they think it might occur.

Bethany Babcock

www.foresitecre.com

www.twitter.com/bethanyjbabcock

My goals for 2023 were to purchase 6 properties worth $5M each and get one land ready for development in CA. My other goal was to sell or convert the car washes. Here is what I accomplished:

I accomplished 3 properties worth $5M, and this was in a partnership with 2 different people that helped me get there, so this is a fractional ownership of these opportunities and not exactly what I had in mind, my goal was for me to have sourced, closed on and operated the deal, along with my investors. And this was a partnership with a couple of other parties.

I also accomplished closing on another property that was part of my 2022 goals. This property took a long time to close because it was off market, and the seller was not organized, he hadn’t done his taxes for 3 years and it was like pulling teeth to get him to file his taxes. It took almost one year to close on this property and we are at least doubling the value of it in the next few months. The best way to describe the closing on this property is with two words: follow up. This is something I reiterate often in this podcast because nobody follows up. Only a few successful people follow up with me, and if you want to get something done, or a relationship built, you must follow up, period. Especially with someone that is busy, they get so many requests, emails and people trying to reach out to them. The only way to stand out is by following up.

What went wrong in 2023:

The car washes are not doing well because I am not a car wash operator nor do I want to be one. After my best employee had to leave due to personal issues, it went downhill, people started stealing, breaking in, things started to break and the list of things that needed fixing started to pile up. I am actually grateful for it because I learned quite a few things such as: don't ever invest in a new asset class that you know nothing about. If you find a property in a good city, make sure that the property is in a good part of town. This will save a lot of headache and potential issues.

I am also still not making what I was making at my sales job. I fully expect to make what I was making in 2024. One of the ways I will be doing that is partnering up with someone that has build many properties before and we will get land in contract, get them entitled for building either storage or multi-family and sell the entitlement.

Get a copy of my book here: http://tinyurl.com/52bak7th

If you'd like a PDF file of the book, please send me an email at admin@montecarlorei.com

Read the entire interview here: http://tinyurl.com/832h7ak6

How were you investing in 2020, 2021, 2022?

For that property, I must be honest and say there is no horror story to tell. The property did what it was supposed to do, we bumped rents by $175 from the very beginning to the end. On the last day, we had rents $176 dollars higher. So, the property did what it was supposed to, it also stayed highly occupied. You might say, it doesn't sound like a typical property, where are the horror stories? The answer is this, by stepping outside of the metro, we were able to buy the best property in this small market. We didn't have to be stingy; we didn't have to buy a really bad property in a bad area, we just bought a very nice property in a very nice area, it just wasn't in Atlanta. As a result, our process of actually running the property for years was fairly straightforward.

What about today? Things have changed dramatically since COVID. In December 2019, probably three months before COVID, cap rates were low, but they weren't crazy low so we probably bought the property at around 4.7 cap or 4.6 cap but if you fast forward to six months, nine months after COVID, cap rates were completely insane. Many people don't know the answer to this question which is, when do you think cap rates in the United States for multifamily were the lowest, which means the highest prices? The answer is March 2022.

How much have prices declined?

Another question that I think everyone should be asking that I don't see enough is, how much have prices declined? When you ask that question, you have to go back to the first question, which is when was the peak because whenever you measure a decline, you have to always measure it from the peak. First, you have to know where the peak is so that you can say how much of a decline there is. In March or April 2022, the peak is well known because CBRE has published that and a bunch of other people have published articles around that peak. We looked at our underwriting from those days, and we were losing a lot of offers, we were still making offers because you have full-time employees, and their job is to make offers even if they're losing them. We looked at the going-in cap rate in that month for the offers that we made. None of them were offers we won and one can say that we were conservative because we didn't win any offers and we didn't even get into best and final so it's nice to look at that benchmark. And then we looked at the offers that we made in November of 2023 so now the gap between the two is about 20 months and the difference is the offers we are making today are 37% lower than the offers we were making in March. Does that mean that the market is discounted by 37%? No.

What is the right price?

In the absence of crazy interest rates, what is the right price for our properties? The right price is about 15% higher than it is today and at some point, we will return to that price, we are never going to go back to 37% higher, probably not for the next five to 10 years. The only thing banks know how to do when bad things happen is to cut interest rates to zero, so it will happen at some point, but until that next Black Swan event occurs, prices are about 15% above where they are today. What causes them to go to that level is simply interest rates dropping by about 150 basis points from where they are.

Neal Bawa

www.multifamilyu.com

Read the entire interview here: http://tinyurl.com/4vj3wyhr

You sold a deal today and you returned a huge amount to the investors. Let's go over the entire process from why were you analyzing that deal and what made you want to buy it.

The name of the deal is Equinox at Night, which is a name that we gave it, it was called Weatherly Walk when we bought it. The property was sold today, which ended December 2023, and was purchased right about this time four years ago. We wanted to buy it in time and close in time for the depreciation benefits in 2019. The journey was one day short of four years.

I wasn't looking for a property in this particular marketplace but back in 2019, I had started feeling that properties were getting too expensive inside city limits and I felt like it was a terrific market to be putting a lot of money into. As I was talking about Atlanta, I started seeing good things and then as the years went on 2017-2018, I found that I was seeing more negative things about Atlanta than positive things because inside of the city, I was starting to see pricing that was just unreasonable for the income levels. What was happening was that the incomes of the people living in Atlanta, were going up 4% a year, and the property prices were going up 20% a year when property prices go up that much, the new owner needs to raise rents, so they're forcing rents higher because everyone's buying at these new prices. And for a while that works but then what happens is that either you start seeing occupancy fall, or even worse, you start seeing delinquency increase, as you start forcing people into 40% of their income, 45% of their income going to rent and almost 50% go into rent, then you're going to see a lot of delinquency, the first time their car breaks down, they can't pay rent.

How do you convince the investors that may have been used to keep investing in MSA itself?

In many of our projects, you just send out an email, and all the shares are taken. We knew that we were buying a better property and were going to make a lot of money on it but first, we had to convince investors (you're not going to make any money if you can't close the property). We did a two-step approach: first, before we put the property in the contract, we were making offers and we had identified three cities not two, that were around. We started holding webinars about the true opportunity in Atlanta, and then another webinar about the true opportunity in Phoenix. "First, I'll tell you about the true opportunity webinars and then I'll tell you about how that transition into getting the property funded", this is something that every syndicator should do instead of telling everybody, "Fayetteville is the greatest city in the Atlanta metro" which never works, what we do is we started to rank some of these outside cities. We started comparing these cities and started talking about these different cities and why we felt that they were better than Atlanta itself, both for single-family and multifamily. We always tell our database, that if you want to buy single-family homes, go do it. You'll be back talking to us in one or two years once you realize you've turned into a landlord, you just wanted to be an investor. We always tell people that the single-family experience is worth it, you learn a lot, and you don't want to do it again. 

Neal Bawa

www.multifamilyu.com

Read the entire interview here: http://tinyurl.com/yph2892p

What are some of the main topics that you want to pass to passive investors and how should they do due diligence?

The basis of the whole interaction is trust, you're trying to build rapport with your investors from a sponsor's point of view. From an investor's point of view, you want to make sure that you're a good fit. You have ways of thinking about things and your risk tolerance needs to fit into the asset class and the investment strategy that you're trying to do because if you're in a very aggressive fund, and you have a low-risk tolerance, regardless of what happens, you're not going to be happy. Those are the questions that I would start with.

When you're starting the due diligence as a sponsor, the number one goal is to make sure you're not in a Ponzi scheme or some sort of fraudulent group. There's a lot of good questions to ask to sort of drill down on that and if you're not comfortable at the beginning, you're probably not going to be comfortable at the middle or the end, as well.

During an up market, how would you recommend doctors doing their best to find out if a sponsor is not legitimate?

Having made several pretty bad mistakes as a limited partner, this is a topic that's near and dear to my heart. When I approach a deal as a limited partner, what I'm trying to do is understand that sponsor in such a way that we can build a 30, 40-year relationship. It's not about the first deal in its entirety, because I'm willing to put in the time, effort, and cost to get to a comfortable place knowing that when these guys or girls have a deal, and they send it to me, that I'm never going to have to go through this first step of due diligence again. I'm comfortable that they're not trying to push one past me, or whatever the case may be. And that's a gigantic step. I would personally say, and I know this is going to be shocking to your audience, but a lot of times, what I'll do is, I will hire a PI to go through and make sure that some of their previous deals have not been fraudulent.

If I had a fund, and I knew that the economy was about to take a turn, for example, in 2024, we all know that it'll be even better for finding deals. However, there is a lot of fear that normal human beings think that that specific time will never end and it'll be doom and gloom for a very long time so they end up not putting the money. From a fund perspective, I would personally prefer to have that cash available right now in case people get cold feet, how would one go about that, in your experience?

There are lots of sponsors out there that will do that, they'll get the capital, and hold on to it. It does add liability to to the fund. If you're going to do that, you would probably want to know how much E&O insurance they have, errors and omissions, and all the things to safeguard. Is there the ability for one person to be able to extract all of the cash and run, or is there a safety mechanism where it takes two people to sign off on it? There are lots of checks and balances, and systems out there that can be put in place for a reasonable cost if the sponsor hasn't thought about that, and what happens in those scenarios, and they very well should. But it's just personal...]]>How to approach due diligence on a new operator as a limited partner? How should investors decide if they should invest in a fund or not? How should you fundraise for deals that have not been determined what they are yet? When to say no to a potential investor? Dr. Joseph Ryan Smolarz, founder of STOR, shares his insights.

Read the entire interview here: http://tinyurl.com/yph2892p

What are some of the main topics that you want to pass to passive investors and how should they do due diligence?

The basis of the whole interaction is trust, you're trying to build rapport with your investors from a sponsor's point of view. From an investor's point of view, you want to make sure that you're a good fit. You have ways of thinking about things and your risk tolerance needs to fit into the asset class and the investment strategy that you're trying to do because if you're in a very aggressive fund, and you have a low-risk tolerance, regardless of what happens, you're not going to be happy. Those are the questions that I would start with.

When you're starting the due diligence as a sponsor, the number one goal is to make sure you're not in a Ponzi scheme or some sort of fraudulent group. There's a lot of good questions to ask to sort of drill down on that and if you're not comfortable at the beginning, you're probably not going to be comfortable at the middle or the end, as well.

During an up market, how would you recommend doctors doing their best to find out if a sponsor is not legitimate?

Having made several pretty bad mistakes as a limited partner, this is a topic that's near and dear to my heart. When I approach a deal as a limited partner, what I'm trying to do is understand that sponsor in such a way that we can build a 30, 40-year relationship. It's not about the first deal in its entirety, because I'm willing to put in the time, effort, and cost to get to a comfortable place knowing that when these guys or girls have a deal, and they send it to me, that I'm never going to have to go through this first step of due diligence again. I'm comfortable that they're not trying to push one past me, or whatever the case may be. And that's a gigantic step. I would personally say, and I know this is going to be shocking to your audience, but a lot of times, what I'll do is, I will hire a PI to go through and make sure that some of their previous deals have not been fraudulent.

If I had a fund, and I knew that the economy was about to take a turn, for example, in 2024, we all know that it'll be even better for finding deals. However, there is a lot of fear that normal human beings think that that specific time will never end and it'll be doom and gloom for a very long time so they end up not putting the money. From a fund perspective, I would personally prefer to have that cash available right now in case people get cold feet, how would one go about that, in your experience?

There are lots of sponsors out there that will do that, they'll get the capital, and hold on to it. It does add liability to to the fund. If you're going to do that, you would probably want to know how much E&O insurance they have, errors and omissions, and all the things to safeguard. Is there the ability for one person to be able to extract all of the cash and run, or is there a safety mechanism where it takes two people to sign off on it? There are lots of checks and balances, and systems out there that can be put in place for a reasonable cost if the sponsor hasn't thought about that, and what happens in those scenarios, and they very well should. But it's just personal preference.

Dr. Joseph Ryan Smolarz

www.storpartners.com

The Medicine & Money Show

Read the entire interview here: https://tinyurl.com/38phajz2

Major Lessons Learned

My first tip of the day is to go to Fannie Mae's website and look for Doug Duncan's predictions around what's going on in the marketplace, and he has accurately called every single rate change in the last 20 years.

Secondly, operations is indeed a critical element, Ken McElroy prides himself in having come into the real estate world from the operations standpoint, and he often emphasizes how important that is. The best underwriting, the best market, and product are only as good as you can execute it. You really need all the legs of the stool to be able to have something come off successful.

We always want high cap rates, low risk, and high appreciation but it's very hard to find all three, so you have to decide what is the most important to you. California has been able to generate great appreciations in recent years, but not so good on cap rates, and Texas, Florida, and other places have other things that are strong so you need to realize it's very hard to get everything you want, you have to choose which is important.

One of the most important things I've learned is how different sub-markets are and how different products are. It's incredible how different they are. You look at the curves of these markets and products. The general information will give you a general concept but you can always find products, you can always find portions of the market where it can be quite contrarian to what the general information is.

Don't fall in love with a deal and try to make it happen. Saying no can be more valuable than saying yes. Almost every property I've bought, I've gone to see it myself, I don't do the level of detail I used to but when you scale, you have to delegate to others. Go look at the other stores around the area, retail, grocery, etc. Who is it that actually comes in there? Market studies from the listing agents show you the one-mile, three-mile, and five-mile, what the demographics are, that's not necessarily who's in your property. As you can tell by going at nighttime, park the car, and see what comes in and out. When you make a mistake, it's tough to grieve, and lick your wounds for a while but don't run from it forever. Go back with your team and analyze what is it that went wrong or what is it we can do better next time. Sometimes we learn more from the things that don't work, than the things that do.

Change your model periodically. Switch from market to market to asset class to another, whatever it goes with the time so the market. One of the things I've done that has contributed to my success is to change the model. One of the things I haven't done so well is probably not change it as fast as I could have. It's hard to leave something that was working.

What's the most valuable asset that you have?

I think it's the 2,000 names that I have on my phone, because with those relationships you can start over if you have to rebuild. Relationships are critical, and character is more important than competence. It's nice to have both but character is number one.

And, above all, enjoy the journey. It's so easy to get caught up on every day operations and finding more success. But along the way, give back and smell the roses.

What are the top lessons learned over a very successful six decades of real estate investing? Tom Wilson, principal at Wilson Investment Properties, a seasoned investor in several asset classes including retail, office, multi-family, industrial and others, shares his wealth of knowledge.

Read the entire interview here: https://tinyurl.com/38phajz2

Major Lessons Learned

My first tip of the day is to go to Fannie Mae's website and look for Doug Duncan's predictions around what's going on in the marketplace, and he has accurately called every single rate change in the last 20 years.

Secondly, operations is indeed a critical element, Ken McElroy prides himself in having come into the real estate world from the operations standpoint, and he often emphasizes how important that is. The best underwriting, the best market, and product are only as good as you can execute it. You really need all the legs of the stool to be able to have something come off successful.

We always want high cap rates, low risk, and high appreciation but it's very hard to find all three, so you have to decide what is the most important to you. California has been able to generate great appreciations in recent years, but not so good on cap rates, and Texas, Florida, and other places have other things that are strong so you need to realize it's very hard to get everything you want, you have to choose which is important.

One of the most important things I've learned is how different sub-markets are and how different products are. It's incredible how different they are. You look at the curves of these markets and products. The general information will give you a general concept but you can always find products, you can always find portions of the market where it can be quite contrarian to what the general information is.

Don't fall in love with a deal and try to make it happen. Saying no can be more valuable than saying yes. Almost every property I've bought, I've gone to see it myself, I don't do the level of detail I used to but when you scale, you have to delegate to others. Go look at the other stores around the area, retail, grocery, etc. Who is it that actually comes in there? Market studies from the listing agents show you the one-mile, three-mile, and five-mile, what the demographics are, that's not necessarily who's in your property. As you can tell by going at nighttime, park the car, and see what comes in and out. When you make a mistake, it's tough to grieve, and lick your wounds for a while but don't run from it forever. Go back with your team and analyze what is it that went wrong or what is it we can do better next time. Sometimes we learn more from the things that don't work, than the things that do.

Change your model periodically. Switch from market to market to asset class to another, whatever it goes with the time so the market. One of the things I've done that has contributed to my success is to change the model. One of the things I haven't done so well is probably not change it as fast as I could have. It's hard to leave something that was working.

What's the most valuable asset that you have?

I think it's the 2,000 names that I have on my phone, because with those relationships you can start over if you have to rebuild. Relationships are critical, and character is more important than competence. It's nice to have both but character is number one.

And, above all, enjoy the journey. It's so easy to get caught up on every day operations and finding more success. But along the way, give back and smell the roses.

Tom Wilson

www.wilsoninvest.com

Read this entire episode here: https://tinyurl.com/mry4cbnv

What are some of the things we should be doing if our properties are in trouble?

The first I always look at is what's within your control. One of the things I've started to do is really dial in on my operations. Now, I have a massive advantage because I started in property management right out of college. For the first 10 years of my life, I managed 20-30,000 units. When I step on a project, I have a checklist in my mind that I've been through 100 times. The first thing I've done is scrubbing each one of my assets. I want to make sure that my expenses are completely in order, everything's been bid out multiple times, and that my market rents are exactly where they should be. I make sure that I have the right teams in place, that I'm maximizing my revenue, my other income, and my expenses. That requires a fairs amount of work. That's super important because no matter what, that is going to determine your next loan, your next investor, they're going to look at the operations.

The second thing is you have to dig into your partnership agreement with your LP equity and your prefs, and all of that, and you need to take a look at your stress points. And then you can start to bring in other sources to top it up, whether that's asset management, it could be family office, institutional, or a number of things, you can give up GP equity, you can bring more LP equity, you can come up with a loan, all of that should be fully transparent to your existing deal. You can't just change things and tell them later. You have to paper up and make sure it's all correct. That's the area that people are going to be in trouble on, thinking that this will be short term, I only need this for six months, three months, one year, whatever. If they're right, they're probably going to be okay but if they're not, people are going to wonder how they got squeezed out.

You need to go out and get other opinions from brokers, opinions of values, people are doing that all over the place. Brokers aren't listing deals right now, they're actually giving everybody BOV's. That's really important because that substantiates what the thing is worth. Then, you have to look at your debt, and see how much equity you have, and if you have equity, even if it's half, or 2/3 or 1/3, of what it was, that's still okay, you're in the money. Now, it doesn't really matter today because you're not selling, If you're selling today, that's exactly what would happen. You're playing the long game here so you need to have all that information and then you can go out and make good decisions on the asset, preserving the equity. I've been in a situation where we bought things and equities went down, probably everyone has, a car, a house, things depreciate, things go down in value, but over the long haul, especially with this inflation, you're on the right side of it, even though you might be feeling a little bit of pain. I want to be in hard assets during high inflationary times, because we all know, you can't build a home or apartments affordably right now, so if you own them, you're actually in that category. That's good, even though it might not feel good, if you can hold on to it, I truly believe that real estate is going to really skyrocket based on all these crazy...]]>What to do if your property is in trouble? If your interest rates are doubling? What will save your deals? This is a step by step guide on what to do if your property is in trouble, from managing your bank all the way to getting multiple bids from all of your vendors. Ken McElroy, CEO and founder of MC Companies, shares this golden guide with us.

Read this entire episode here: https://tinyurl.com/mry4cbnv

What are some of the things we should be doing if our properties are in trouble?

The first I always look at is what's within your control. One of the things I've started to do is really dial in on my operations. Now, I have a massive advantage because I started in property management right out of college. For the first 10 years of my life, I managed 20-30,000 units. When I step on a project, I have a checklist in my mind that I've been through 100 times. The first thing I've done is scrubbing each one of my assets. I want to make sure that my expenses are completely in order, everything's been bid out multiple times, and that my market rents are exactly where they should be. I make sure that I have the right teams in place, that I'm maximizing my revenue, my other income, and my expenses. That requires a fairs amount of work. That's super important because no matter what, that is going to determine your next loan, your next investor, they're going to look at the operations.

The second thing is you have to dig into your partnership agreement with your LP equity and your prefs, and all of that, and you need to take a look at your stress points. And then you can start to bring in other sources to top it up, whether that's asset management, it could be family office, institutional, or a number of things, you can give up GP equity, you can bring more LP equity, you can come up with a loan, all of that should be fully transparent to your existing deal. You can't just change things and tell them later. You have to paper up and make sure it's all correct. That's the area that people are going to be in trouble on, thinking that this will be short term, I only need this for six months, three months, one year, whatever. If they're right, they're probably going to be okay but if they're not, people are going to wonder how they got squeezed out.

You need to go out and get other opinions from brokers, opinions of values, people are doing that all over the place. Brokers aren't listing deals right now, they're actually giving everybody BOV's. That's really important because that substantiates what the thing is worth. Then, you have to look at your debt, and see how much equity you have, and if you have equity, even if it's half, or 2/3 or 1/3, of what it was, that's still okay, you're in the money. Now, it doesn't really matter today because you're not selling, If you're selling today, that's exactly what would happen. You're playing the long game here so you need to have all that information and then you can go out and make good decisions on the asset, preserving the equity. I've been in a situation where we bought things and equities went down, probably everyone has, a car, a house, things depreciate, things go down in value, but over the long haul, especially with this inflation, you're on the right side of it, even though you might be feeling a little bit of pain. I want to be in hard assets during high inflationary times, because we all know, you can't build a home or apartments affordably right now, so if you own them, you're actually in that category. That's good, even though it might not feel good, if you can hold on to it, I truly believe that real estate is going to really skyrocket based on all these crazy things that are going on globally.

Ken McElroy

www.kenmcelroy.com

www.mccompanies.com

Read this entire episode here: https://tinyurl.com/mryp72kv

A lot of investors have bridge debt or value-add deals, we're seeing capital calls, you've been through 25 years of this, how are you looking at what's happening right now?

What happens in a normal balanced market is: there needs to be a little push-pull between buyer and seller and what happened is that the buyers in the last couple of years were at a massive disadvantage, they had to stretch for pricing and for terms, they were shortening their due diligence periods, etc. It was all coming and what this is doing is, it's an adjustment for the sellers and that gets lost in cash calls and all of that. But we needed the sellers and the brokers to adjust their expectations. What was happening was that people were stretching for deals and many of those deals are the ones that are in trouble, so the market was not in balance.

I have talked to one investor that has five capital calls going on, there's a lot of challenge, but it's really counterintuitive. A lot of times, it's the idea of being fearful when others are greedy and being greedy when others are fearful, as Warren Buffett would say. Do you think, with the cap rate expansion, are we seeing some better deals now or are we not quite there yet?

We're not quite there. There's a lag effect with interest rates, with cap rates, with sellers and brokers and all of that. Playing defense and offense is a good analogy and I believe that you should be at all times. You should always be playing a little bit of offense, sometimes you're playing more offense, a lot of people right now are playing maybe a little more defense, but the worst thing that you can do is bury your head in the sand. If you're in this business for the long haul, I think that there needs to be a good balance there.

What has gotten our investors to trust us over a long period of time is full transparency. We all know news can be a little slanted but it does stand to reason. If somebody's in that kind of trouble, how are they managing that? Have they been talking with their lenders? Have they talked to their investors? What are they doing on the management side because, for the last 22 years, the market has not gone up. I've seen it go up and go down multiple times. There are strategies for all of those things. There has been a tremendous amount of focus on influencers raising money online, I don't have a problem with that, however, if that's their only skill, then they have a problem and if the investors invested in those people, then that's an LP problem. When things like this happen, and it will happen again, you start to look at experience and wisdom, and how deep your bench is, your capital reserves, and all those things.

What do you think about the Fed with rates?

From everything I read and see it doesn't appear that the Fed would do that, and if they do, what are they going to go down to? Five? They punch all the way past 3, 4, 5, 6 and now they're approaching 7, so think how far they have to go. Even if they say, yes, we're going to reduce rates, they're going to do it at about a quarter point, half a point over time. Maybe if you're lucky, that could be a point in a year. You have to put things in perspective, they're not going to go from 6- 7% rates or even 8 for single family, in some cases, and hard money is way over that.

What is happening with commercial real estate? Is now a good time to buy or will it get even better? How are the Fed rates going to play out? Ken McElroy, CEO and founder of MC Companies, shares his experience.

Read this entire episode here: https://tinyurl.com/mryp72kv

A lot of investors have bridge debt or value-add deals, we're seeing capital calls, you've been through 25 years of this, how are you looking at what's happening right now?

What happens in a normal balanced market is: there needs to be a little push-pull between buyer and seller and what happened is that the buyers in the last couple of years were at a massive disadvantage, they had to stretch for pricing and for terms, they were shortening their due diligence periods, etc. It was all coming and what this is doing is, it's an adjustment for the sellers and that gets lost in cash calls and all of that. But we needed the sellers and the brokers to adjust their expectations. What was happening was that people were stretching for deals and many of those deals are the ones that are in trouble, so the market was not in balance.

I have talked to one investor that has five capital calls going on, there's a lot of challenge, but it's really counterintuitive. A lot of times, it's the idea of being fearful when others are greedy and being greedy when others are fearful, as Warren Buffett would say. Do you think, with the cap rate expansion, are we seeing some better deals now or are we not quite there yet?

We're not quite there. There's a lag effect with interest rates, with cap rates, with sellers and brokers and all of that. Playing defense and offense is a good analogy and I believe that you should be at all times. You should always be playing a little bit of offense, sometimes you're playing more offense, a lot of people right now are playing maybe a little more defense, but the worst thing that you can do is bury your head in the sand. If you're in this business for the long haul, I think that there needs to be a good balance there.

What has gotten our investors to trust us over a long period of time is full transparency. We all know news can be a little slanted but it does stand to reason. If somebody's in that kind of trouble, how are they managing that? Have they been talking with their lenders? Have they talked to their investors? What are they doing on the management side because, for the last 22 years, the market has not gone up. I've seen it go up and go down multiple times. There are strategies for all of those things. There has been a tremendous amount of focus on influencers raising money online, I don't have a problem with that, however, if that's their only skill, then they have a problem and if the investors invested in those people, then that's an LP problem. When things like this happen, and it will happen again, you start to look at experience and wisdom, and how deep your bench is, your capital reserves, and all those things.

What do you think about the Fed with rates?

From everything I read and see it doesn't appear that the Fed would do that, and if they do, what are they going to go down to? Five? They punch all the way past 3, 4, 5, 6 and now they're approaching 7, so think how far they have to go. Even if they say, yes, we're going to reduce rates, they're going to do it at about a quarter point, half a point over time. Maybe if you're lucky, that could be a point in a year. You have to put things in perspective, they're not going to go from 6- 7% rates or even 8 for single family, in some cases, and hard money is way over that.

Ken McElroy

www.kenmcelroy.com

www.mccompanies.com

Read this entire interview here: https://tinyurl.com/3mz7t22h

A lot of people are in trouble, interest rates have doubled, insurance has doubled in many states, and some people have to do capital calls, how would you approach doing a capital call? And from an investor's perspective, how would you choose to participate in it or not?

The first thing we typically advise clients is from my buddy, Ken McElroy, when things aren't going well and things are starting to not go according to plan because lack of cash flows don't happen from one day to the next because those things are going to slowly start happening, the key is to make sure that you double down on your communication with your investors. A lot of syndicators, especially new ones, tend to sort of stick their heads in the sand a little bit when things aren't going well, the investor is going to be upset at us, and we should not tell them, if you're communicating once a quarter and things aren't going well, start communicating once a month or once a week or every day, depending on how severe things are. That way, when it's time to do the cash call, it's not a complete shocker, you've slowly been showing what's going on, it's been a tough environment, we need to refinance, and we can't because the interest rates have gone up and the whatever the situation is. Letting them know earlier will be appreciated by the investors and you’re going to be in a much better situation.

Try to avoid a cash call at the beginning. Usually, if there's the inclining of issues that happen, let's say, rents or revenues down because of whatever reason, then, the first line will be the syndicator. They'll make a loan to the company, they'll make a capital contribution to the project: 1) to show faith that they're confident in the project, 2) the cash call is the last thing you want to do.

For both syndicators and for investors, as you want to look at the operating agreement. If you need $500k, you probably want to ask for $750k. There are a lot of funds out there that are really targeting they might come in and say, look, I know you need 500, I'm going to give you the 500 or I'll give you a million, but then they insert themselves way ahead of everybody else. Obviously, the bank is going to be number one always, but then they're going to be second and they're going to have their money out before any of the LP money comes out.

Mauricio Rauld

www.premierlawgroup.net

www.youtube.com/@MauricioRauldEsq 

Read this episode here: https://tinyurl.com/yvk4k4e3

What are some of the biggest items that syndicators need to keep in mind that are easily forgotten?

Understand that you are in the business of selling securities, because a lot of times, especially new real estate syndicators, they don't quite understand that. I'm just buying real estate, why do I have to worry about the Securities and Exchange Commission or the SEC? I'm just getting a couple of my friends and we're going to go buy a single family home, or buy this building, why do we have to worry about all this stuff? People think of SEC as the stock market, stocks, bonds, mutual funds, etc but it is much broadly than that. TIC agreements, joint ventures, profit sharing agreements and promissory notes are potentially securities, I always joke that high fives and handshakes are securities but the structure itself doesn't matter. People try and get creative such as I'm going to structure it this way or that way, or it's just a loan, it's just my dad, but the reality is the SEC doesn't care about any of that, all they care about is whether you are raising money, where the returns are generated by your efforts. If you're raising money, and you're doing all the work, or you and your co-sponsors are doing all the work, and you have passive investors who are writing you a check, it doesn't matter how you structure it, and how creative you get structuring it, it's going to be a security and that's something that newbies forget.

What would be a way to go around that, would it be to raise a fund yourself under your company name, and then invest in that deal if you don't want to participate fully on the operations side or other things?

In order for somebody to come into the syndication group as a legitimate co-sponsor and bringing in some capital, there are three things they need to fit into because there's an exemption. The general rule is you need a broker dealer license, but we can find an exemption to registration and that would be what we call the issuer exemption which requires three things and most of these deals don't follow. Number one is no transaction-based compensation. This happens a lot, you have to be willing to say, I'm going to give you 10% of the GP even if you don't bring a single dime. I know you promised that you thought you were going bring a half a million dollars from your investors and it turns out, you aren't able to bring any, you still have to get that 5% or 10% because you're giving that person that percentage, not for raising money, but for other things they should be doing like any other syndicator: due diligence, underwriting, asset management and all these little ton of things otherwise it's transaction-based compensation. Your primary role needs to be those substantial duties, it can't be raising capital and you have to show that you're doing more than that. If you're a real syndicator, you have two or three partners, you're part of the team, and you're all working hard to make this deal work, then you're going to fit into that exemption.

Do funds pay an interest until they allocate all of the funds, is that optional?

That's the beauty of syndications in general and certainly with funds, you can be as creative as you want to be. I would usually recommend not making it super complicated, because...]]>What are some of the biggest items that syndicators need to keep in mind? How to raise a fund yourself under your company name? Mauricio Rauld , real estate syndication attorney of Premier Law Group and host of real estate syndicator live, shares his knowledge.

Read this episode here: https://tinyurl.com/yvk4k4e3

What are some of the biggest items that syndicators need to keep in mind that are easily forgotten?

Understand that you are in the business of selling securities, because a lot of times, especially new real estate syndicators, they don't quite understand that. I'm just buying real estate, why do I have to worry about the Securities and Exchange Commission or the SEC? I'm just getting a couple of my friends and we're going to go buy a single family home, or buy this building, why do we have to worry about all this stuff? People think of SEC as the stock market, stocks, bonds, mutual funds, etc but it is much broadly than that. TIC agreements, joint ventures, profit sharing agreements and promissory notes are potentially securities, I always joke that high fives and handshakes are securities but the structure itself doesn't matter. People try and get creative such as I'm going to structure it this way or that way, or it's just a loan, it's just my dad, but the reality is the SEC doesn't care about any of that, all they care about is whether you are raising money, where the returns are generated by your efforts. If you're raising money, and you're doing all the work, or you and your co-sponsors are doing all the work, and you have passive investors who are writing you a check, it doesn't matter how you structure it, and how creative you get structuring it, it's going to be a security and that's something that newbies forget.

What would be a way to go around that, would it be to raise a fund yourself under your company name, and then invest in that deal if you don't want to participate fully on the operations side or other things?

In order for somebody to come into the syndication group as a legitimate co-sponsor and bringing in some capital, there are three things they need to fit into because there's an exemption. The general rule is you need a broker dealer license, but we can find an exemption to registration and that would be what we call the issuer exemption which requires three things and most of these deals don't follow. Number one is no transaction-based compensation. This happens a lot, you have to be willing to say, I'm going to give you 10% of the GP even if you don't bring a single dime. I know you promised that you thought you were going bring a half a million dollars from your investors and it turns out, you aren't able to bring any, you still have to get that 5% or 10% because you're giving that person that percentage, not for raising money, but for other things they should be doing like any other syndicator: due diligence, underwriting, asset management and all these little ton of things otherwise it's transaction-based compensation. Your primary role needs to be those substantial duties, it can't be raising capital and you have to show that you're doing more than that. If you're a real syndicator, you have two or three partners, you're part of the team, and you're all working hard to make this deal work, then you're going to fit into that exemption.

Do funds pay an interest until they allocate all of the funds, is that optional?

That's the beauty of syndications in general and certainly with funds, you can be as creative as you want to be. I would usually recommend not making it super complicated, because then you start losing investors. Some people decide to give a flat fee, almost like a coupon rate.

Mauricio Rauld

www.premierlawgroup.net

www.youtube.com/@MauricioRauldEsq

Read this entire interview here: https://tinyurl.com/4ycychye

How were you evaluating deals when the market was hot and extremely competitive? How has that changed today?

We stopped doing multifamily early, about four or five years ago, and we sold a bunch, we only hold one multifamily project that I'm involved with right now. People call to buy it every day of the week. I say, I got six years left on my mortgage, we only have renovated half the units, I really don't care, if make me a stupid offer, and we'll consider selling it because I have no place to put the money. We don't really care about it. I've been doing industrial for many years, it's a cap rate play. What's the spread between your going in, your current cash flow, and your cost to finance? If I could buy on a 9.5 cap, I could finance on a 7.5% and then get 65% leverage with some interest only, I could probably get 8.5 or 9% current out of the deal, after closing costs. That's really what I look at, if you can't do it on a cocktail napkin, don't do the deal.

What are some of your hardest deals and lessons learned?

There are always deals that die in due diligence. Hopefully, they die earlier than later because you have out-of-pocket costs. We have one deal that we really liked that was upstate New York, in the vicinity of Ithaca College, it sat on a lot of excess land that was zoned for industrial or multifamily, whatever I wanted to build there. Basically, the land was free, it was a covered land play with a lot of excess land where the current ownership had already gone through the PUD approval with the municipality. I just needed a site plan.

In the middle of due diligence, the seller told me that their major tenant called them and said that they don't need all the space, they want to renegotiate the lease and give back 20% of the space. I said I don't want to deal with this now. And then the lender's appraiser found that was a sublet listing on Costar for the space. Unfortunately for the sellers, who were all in their late 70s and early 80s, they've owned this for quite some time, they asked me, what do we do? I said, you really don't have a choice but to renegotiate their lease now and ask them for another five or seven years before their options because three years from now, when they are up for renewals, they got you, and they'll tell you what they're going to pay. Here, you still have a little bit of strength. They ended up taking my advice, and they took back the idea, they brought down the rent a little bit, and they have seven years left before five-year options. But unfortunately, based on the revised income, I couldn't stand behind the price anymore.

There's always going to be deals in due diligence that die in due diligence. And there's no way to flush those out in advance. One thing I do with commercial buildings is I like to get the 10 largest tenants on the telephone and interview them. How's business? How many people? What are you doing? Are you back in the office? Are you still remote? How's the square footage working out for you? You flush a lot of these things out when you have those interviews. Don't just rely on an engineering report, an appraisal, and the financials because the tenants are going to tell what you the future of the building will be after the close.

What do family offices look for in a deal? How do they manage their investments, are they risk takers or not? How are they evaluating deals in today's market? Irwin Boris is responsible for Acquisitions & Asset Management at Peykar Capital, he has 25+ years of hands-on FP&A, due diligence, and operations experience.

Read this entire interview here: https://tinyurl.com/4ycychye

How were you evaluating deals when the market was hot and extremely competitive? How has that changed today?

We stopped doing multifamily early, about four or five years ago, and we sold a bunch, we only hold one multifamily project that I'm involved with right now. People call to buy it every day of the week. I say, I got six years left on my mortgage, we only have renovated half the units, I really don't care, if make me a stupid offer, and we'll consider selling it because I have no place to put the money. We don't really care about it. I've been doing industrial for many years, it's a cap rate play. What's the spread between your going in, your current cash flow, and your cost to finance? If I could buy on a 9.5 cap, I could finance on a 7.5% and then get 65% leverage with some interest only, I could probably get 8.5 or 9% current out of the deal, after closing costs. That's really what I look at, if you can't do it on a cocktail napkin, don't do the deal.

What are some of your hardest deals and lessons learned?

There are always deals that die in due diligence. Hopefully, they die earlier than later because you have out-of-pocket costs. We have one deal that we really liked that was upstate New York, in the vicinity of Ithaca College, it sat on a lot of excess land that was zoned for industrial or multifamily, whatever I wanted to build there. Basically, the land was free, it was a covered land play with a lot of excess land where the current ownership had already gone through the PUD approval with the municipality. I just needed a site plan.

In the middle of due diligence, the seller told me that their major tenant called them and said that they don't need all the space, they want to renegotiate the lease and give back 20% of the space. I said I don't want to deal with this now. And then the lender's appraiser found that was a sublet listing on Costar for the space. Unfortunately for the sellers, who were all in their late 70s and early 80s, they've owned this for quite some time, they asked me, what do we do? I said, you really don't have a choice but to renegotiate their lease now and ask them for another five or seven years before their options because three years from now, when they are up for renewals, they got you, and they'll tell you what they're going to pay. Here, you still have a little bit of strength. They ended up taking my advice, and they took back the idea, they brought down the rent a little bit, and they have seven years left before five-year options. But unfortunately, based on the revised income, I couldn't stand behind the price anymore.

There's always going to be deals in due diligence that die in due diligence. And there's no way to flush those out in advance. One thing I do with commercial buildings is I like to get the 10 largest tenants on the telephone and interview them. How's business? How many people? What are you doing? Are you back in the office? Are you still remote? How's the square footage working out for you? You flush a lot of these things out when you have those interviews. Don't just rely on an engineering report, an appraisal, and the financials because the tenants are going to tell what you the future of the building will be after the close.

Irwin Boris

irwinboris@gmail.com

Join our investing club here: https://montecarlorei.com/investors

Read this entire interview here: https://tinyurl.com/mjbhu6fm

How do you find your tenants?

First, it's the size of the space. Larger spaces tend to be more sophisticated tenants that want to have leasing agents. Tenant reps inflate all my costs so they're dangerous from a landlord's perspective. The size of the space warrants it, or the sophistication of the tenant, because their build-outs can be complicated and the doctors don't really know what they want. Their spouses tend to be the ones making some of these decisions, it's very difficult when you have a very expensive lease combined with a sophisticated build-out and there's an education process. I've done the leasing with reps, and I've done it with brokers. If the broker is a good broker, you won't have an issue, and I'll be happy to pay their fee.

Anything less than two or 3,000 square feet, I'm advertising it in front of the building. I'm putting the word out with existing doctors. There's a small group of community folks, these doctors tend to have a point person at their front desk, and they have a few important business people. If you put out the word out to a few of the larger ones, all these doctors, if they like your building, they bring those doctors with them because if you're an orthopod, or a pediatrician, or one of these sophisticated cancer doctors, they're looking for those physicians to be very close so they'll spread the word. But the larger ones that require hundreds of dollars per foot in additional capital tend to go to the reps or the brokers that can deal with that level of sophistication. I've done a few of those.

What's an average TI for a small office and the largest office that you have given?

If the doctor is willing to sign a long lease, and it's a reputable doctor, there is virtually no limit that I would not put them in, I will draw the tenant. In other words, I'll start at 10, I'll start to drive down at $20 to $30m but I'll go all the way up to 150, within reason. But if it's a reputable doctor that I know will draw his own clients and other doctors, it's worth it. The leases should not be less than three years, and that would be with no build-out or with near zero build-out. In the 5-10 years leases, I'm starting to spend money on the build-out. You'll have odd requests, special MRIs, or special PET scan scanners and those cost the building a lot of money, not the machine, I'm only talking about the build-out around the machine (the copper or the or the radiation field) that cost is very expensive. But once they've installed that equipment, it’s like a carwash, you can't take the carwash, it's the same thing for a doctor. Once a practice installs a machine, they will stay for 10 to 20 years, they're not willing to give up on their equipment.

What should we keep in mind with regards to medical office leases?

A lot of smaller guys are afraid of the lease, they're afraid of negotiating or structuring the lease. Don't be afraid of that, especially if you have direct contact with a doctor. You just come up with a form, go to the area's market and see if anyone has the forms. Don't let that be a challenge. That's the number one reason people don't invest in medical offices, they see it as something scary that they have to have these contracts, it's not an issue. Let's face it, these doctors are unsophisticated and straightforward.

William Pozo

williampozo@gmail.com

Join The Advanced Real Estate Investing Summit: www.aresummit.com use code SUMMIT20 for 20% off!

Read this entire episode here: https://tinyurl.com/mtyykj3j

What are the main differences between a regular IRA, for example, Fidelity or Vanguard, and a self-directed IRA?

When you're at some of those big box companies, they will give you that old pat on the back stuff and say," Oh, Steph, you can go and pick your stocks, bonds, and mutual funds yourself". That is not true self-direction. To do true self-direction is to invest in what you know, and it's the same types of vehicles that you've become accustomed to Roth IRAs, traditional IRAs, 401 K's, and health savings accounts, the same ones you see over there, except when you shift over here. Instead of picking your little toys out of that sandbox called stocks, bonds, and mutual funds, we give you the whole playground. You can participate in a big commercial deal, be a private money lender, and own a rental property inside your retirement account versus the stock market. These things have been around since the 70s, and the knee-jerk reaction I get is, "Oh my gosh, this is crazy. How come no one in my professional roundtables ever told me about this?" And a lot of times, it comes down to money because a lot of those institutions don't get paid when you create an account and when you invest in opportunities in your backyard, when you put money on Main Street versus Wall Street, that's the big difference.

Can we invest in other assets besides real estate?

It's almost Pandora's box. The IRS, and how the codes are written don't tell you, "Oh, here are all the beautiful things you can do to take advantage of our tax code", they tell you what you cannot do. As long as you're not violating one of these cardinal rules, self-dealing, which is to buy something you already own, doing business with anyone up and down your family tree: parents, grandparents, spouse, children, off limits, if they branch off such as brothers, sisters, aunts, uncles, cousins, nieces, nephews, they're okay. Your siblings can fund your deals, you can fund your siblings' deals, or stock of a sub chapter S company life insurance. There are certain things like collectible artwork that cannot be held. No artwork, no collectibles. Everything you can think of outside of that shortlist is doable: tax liens, private lending, precious metals, oil and gas, timber. I have brothers down west of Fort Worth, they breed cattle in their retirement account because it's what they know. Real estate is one of those three basic needs of every human on the planet. That is the most common but there's a million different ways you can participate in real estate.

Amanda Holbrook

(505) 514-0587

aholdbrook@irastc.com

www.specializedtrustcompany.com

Join us at The Advanced Real Estate Investing Summit: www.aresummit.com

Read this entire episode here: www.tinyurl.com/nhzj3rmv

What is a cognovit clause? How can that affect an investor if it is in a loan document?

A cognovit clause is a clause in an agreement that authorizes the entry of a judgment against the defaulting party in the event of a default. It's commonly referred to as a confession of judgment. If the loan documents contain a cognovit clause, it allows for the lender to file suit against the borrower in the event of a default, and to immediately obtain a judgment without any prior notice to the borrower. Obviously, that's potentially a major problem for a borrower because they don't receive notice of default, they don't receive an opportunity to cure, and they don't have the right to raise any defenses or effectively to have their day in court.

What are some of the main things that a borrower for a commercial property should be aware of with regards to loan documents?

Most commercial real estate loans are non-recourse loans, which means that in the event that the borrower defaults, the lender’s recourse is to foreclose on the property. If the value of the property isn't the amount of the judgment, the lender does not have the right to go after the borrower personally, for the deficiency. However, lenders under non-recourse loans typically require what are referred to as bad boy guarantees, or non-recourse carve out guarantees. Principals who are signing those guarantees need to be aware of the circumstances under which they could have personal liability. Early in my career, bad boy guarantees were limited to truly bad acts like fraud and material misrepresentation, misappropriating funds, bankruptcy and similar bad acts. Today, bad boy guarantees have grown in length but many of those things do not necessarily result from a bad act of the borrower, they could be change in economic circumstances or more macro-economic things that could trigger liability. You have to be careful in negotiating the bad boy guarantee and those bad acts, because they trigger personal liability to the principals who are signing them.

Top things to watch out for in loan documents:

Lenders requiring not just a mortgage on the property as their collateral, but also a pledge of all of the ownership interest in the borrower. Clients have agreed to that, they signed it before engaging counsel, once they've agreed to it, it's really hard when you get to the loan documents to try to undo it but that is one of those traps for the unwary. With a foreclosure you have to go through the courts, that process can take six to 12 months. With a pledge of equity, the lender can do a UCC Article 9 foreclosure, which only requires 10 days’ notice to the borrower before a public or private sale of the property is held.

Adam Lustig

www.bilzin.com

alustig@bilzin.com

Join us at The Advanced Real Estate Investing Summit: www.aresummit.com

You can read this entire interview here: https://tinyurl.com/5d9yzvzm 

How can someone add value or create an industrial opportunity for themselves?

Doing a gap analysis of what’s going on in the particular market that you’re looking to invest in and see what industries are happening there so you know what product you should develop, study how they have been leasing up, and at what rates. It's going to take a couple of years before it comes to fruition. I see opportunities infill such as ghost kitchens. Older B and C buildings sometimes become antiquated and if you feel like there’s a large enough need, building ground up is a good call. There's a big opportunity in refrigerated industrial because if you don’t build that from the beginning, you can’t always retrofit it, and that refrigerated space goes really quickly.

Is there a location that is even more ideal for industrial: major airports, trains or freeways?

For industrial, you want to be close to railways if you are getting a lot of products. I have a client that has 10s of 1000s of square feet and they are more in the northwest area because they don’t really need to worry about the airport, but they do get some product by rail that they work through. The most popular right now, if you’re doing a heavy distribution, it’d be more on the east side of town (in Orlando) so that you’re close to both the port, the airport and you have a rail. Having all the options makes it the most expensive. Regarding ports, the majority of traffic used to go come to California and it would have to work its way all the way across the country, we’re now seeing a lot more shipments going through the Panama Canal and then coming to the ports and then working through rail serve to get to people or even working up the river ways. My answer would be all the above, however, with a slight emphasis on ports on the East Coast are more valuable than before.

Buying and selling industrial today:

If you are not a cash buyer and you’re acquiring, or if you are wanting to sell, being much more creative in structuring a deal is going to create win-win opportunities. If you are a seller, perhaps consider the opportunity to provide seller financing, consult your CPA, but having an installment sale could be beneficial and that could keep you having some cash flow coming in and help to mitigate some of those losses. If you’re undercutting the bank by a point, it’s something that you can consider. I’m seeing more of that happening because if you’re going to the bank and you’re paying 7%, the seller may not get what they want, but I think that maybe the seller can get more if they look at doing creative seller financing. 

If you’re building anything new, understand that right now, we haven’t seen material and labor come down, I don’t expect any huge increases to the labor and materials as far as constructions, but it’s still high, so it makes it challenging.

Amy Calandrino

(407) 641-2221

www.beyondcommercial.com

Join the Advanced Real Estate Investing Summit on Oct 19 & 20: www.aresummit.com

Read this entire episode here: https://tinyurl.com/26msmatp

1. There’s a clause that banks are putting in some of their lending documents that is called cognovit clause – google explains that a cognovit is a type of confession of judgment, it refers to an acknowledgment or confession made by a defendant that the plaintiff’s cause is legitimate. It permits judgment to be entered without a trial for the purpose of saving costs.

2. Warren Buffet famously said “Only when the tide goes out do you learn who has been swimming naked”. The tide is out right now and we are starting to spot the naked swimmers.

There are more ponzi schemes coming to the surface, it feels like it’s almost one a week. Here are the most recent ones:

1. Real estate developer Robert Matthews has been sentenced to over five years in prison for multimillion-dollar frauds spanning multiple states, including Connecticut, Massachusetts, and Florida. The 65-year-old faced charges related to real estate scams that caused losses of over $30M to banks and investors
2. Real estate investor Sean Tissue was sentenced to six-and-half years in prison for fraud involving a $3M investment and bankruptcy.– As per court documents, Sean Tissue, also known as Sean Ryan, was the mastermind behind a substantial real estate investment fraud scheme between 2015 and 2021.
3. A carbon capture ponzi scheme promising returns of ~ 40% yearly is being investigated by the SEC. They raised anywhere between 150-250M. This person was being a lead speaker at some real estate groups and he was the “carbon capture” go to person.
4. 
   

In the news:

Clutter, a storage and moving startup once valued at ~$600M in 2019, is being forced to sell at a steep discount in an auction of its assets. The premise for Clutter was that they would come pick up your items, they’d take pictures, and they would move it all for you into a warehouse far from your main city to avoid high real estate costs, and store it for you

WeWork casted substantial doubt over its ability to continue operating amid liquidity and profitability challenges. WeWork told investors that the next year would be a make or break for the company. Sam Zell said in the early days of WeWork that he has never seen a model like this work (where they commit to a long term lease, but their customers are on month to month contracts).

Office leasing in Manhattan increased by 20% MoM in July to reach 2.3 million sq. ft.

Manhattan’s retail market is showing signs of improvement, with a growing number of tenants signing new deals.

Asking rents in Miami grew 12% YoY to reach $65.03. Availability of Class A properties in Miami declined 20.6% YoY.

The Mortgage Bankers Association predicted that commercial and multifamily mortgage lending would decline by 38% YoY. What do I see here? So many opportunities! There are 40% less transactions being made this year, less competition, better deals, time to buy!

I recently started using this excellent tool, Today I share latest things I have learned, some updates on the ponzi schemes that are rising and what is new in real estate investing.

Read this entire episode here: https://tinyurl.com/26msmatp

1. There’s a clause that banks are putting in some of their lending documents that is called cognovit clause – google explains that a cognovit is a type of confession of judgment, it refers to an acknowledgment or confession made by a defendant that the plaintiff’s cause is legitimate. It permits judgment to be entered without a trial for the purpose of saving costs.

2. Warren Buffet famously said “Only when the tide goes out do you learn who has been swimming naked”. The tide is out right now and we are starting to spot the naked swimmers.

There are more ponzi schemes coming to the surface, it feels like it’s almost one a week. Here are the most recent ones:

1. Real estate developer Robert Matthews has been sentenced to over five years in prison for multimillion-dollar frauds spanning multiple states, including Connecticut, Massachusetts, and Florida. The 65-year-old faced charges related to real estate scams that caused losses of over $30M to banks and investors
2. Real estate investor Sean Tissue was sentenced to six-and-half years in prison for fraud involving a $3M investment and bankruptcy.– As per court documents, Sean Tissue, also known as Sean Ryan, was the mastermind behind a substantial real estate investment fraud scheme between 2015 and 2021.
3. A carbon capture ponzi scheme promising returns of ~ 40% yearly is being investigated by the SEC. They raised anywhere between 150-250M. This person was being a lead speaker at some real estate groups and he was the “carbon capture” go to person.
4. 
   

In the news:

Clutter, a storage and moving startup once valued at ~$600M in 2019, is being forced to sell at a steep discount in an auction of its assets. The premise for Clutter was that they would come pick up your items, they’d take pictures, and they would move it all for you into a warehouse far from your main city to avoid high real estate costs, and store it for you

WeWork casted substantial doubt over its ability to continue operating amid liquidity and profitability challenges. WeWork told investors that the next year would be a make or break for the company. Sam Zell said in the early days of WeWork that he has never seen a model like this work (where they commit to a long term lease, but their customers are on month to month contracts).

Office leasing in Manhattan increased by 20% MoM in July to reach 2.3 million sq. ft.

Manhattan’s retail market is showing signs of improvement, with a growing number of tenants signing new deals.

Asking rents in Miami grew 12% YoY to reach $65.03. Availability of Class A properties in Miami declined 20.6% YoY.

The Mortgage Bankers Association predicted that commercial and multifamily mortgage lending would decline by 38% YoY. What do I see here? So many opportunities! There are 40% less transactions being made this year, less competition, better deals, time to buy!

I recently started using this excellent tool, tango.us, for creating SOP’s (standard operating procedures). As your company scales, it’s extremely important to create SOP’s from the get go, so that anyone can come in at anytime and pick up any job. This is how a fantastic company is run.

What’s happening to office?

I’m hearing more and more companies are requiring 3 days in the office, some are requiring 5 days in the office such as Jeff Bezos’s Blue Origin, calling themselves a work from work company. Elon Musk is also known for demanding employees being in the office 5 days a week. Facebook and Google right now are demanding 3 days a week in the office and Google announced that it will consider attendance as part of performance reviews.

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If someone wants to build a project from scratch, what would be the step-by-step that person would have to take, from who do they have to contact first, all the way to the team that they need to work with until completion?

Once you see what the parcel is and what it sounds like, you’re going to identify what jurisdiction has authority, whether it’s a city, the county, or a township, and then you’re going to start talking to them, to see what is the approval process in order to build on this piece of property and to find out how they feel about self-storage. If you’re going into a municipality that has a really bad taste in their mouth about storage, they’re going to put up every hurdle they possibly can because they don’t want you to build self-storage and so, that is something to be taken into consideration when you are looking at that piece of property and before you close on.

After you get it entitled, who should you start working with at that point?

You have your property and title and the next phase is what I would call the design phase. That’s when you are going to have your civil engineer, your architect is going to start working on elevations, and a lot of the details of the building. If the jurisdiction has design requirements, that is going to be working up those architectural drawings to show that you’re meeting the design requirements of that municipality. For instance, let’s say that on the street front, they don’t want to see any of the metal paneling, in that case, you’re going to have to look at other exterior finishes such as stucco, Splitface, veneer, and they’re probably going to want it to be aesthetically pleasing. If you’re in an environment where they have very strict design elements that they want, to say that they want it to match the feel and the look of the rest of the city, then that architect is going to understand what elements to put into the construction documents. That’s what you’re doing during the design phase, you are building the construction documents that are going to give the subcontractors, it’s going to give them all the very specific details of what they need to bid on the project and what will be executed during the time of construction.

What are some of the main things to keep in mind regarding legal when negotiating with anyone?

time is really important, wanting to know how quickly you can get the project done, and what obligations each person is going to have for those. Having realistic expectations is important. I've seen this in projects where the GC really wants this job, and they'll say, "Yeah, we can get the project done in nine months." And now all of a sudden, that owner has that expectation of nine months. Well, as you start working with all the subs, it may not be that and so I really encourage owners to have realistic expectations.

Then, the contractual amounts, when are you going to be paid?

Insurance is a really big thing, making sure that the GC has the correct general liability and builder's risk insurance, and that they are also making sure that all of their subs have it. One of the biggest things is safety. Is it a GC that values a safe working environment? Are they holding]]>What is the step-by-step guide to build a real estate project from scratch? What are the best practices for the construction of self-storage, RV, and boat storage? What are some of the main legal items to keep in mind? Melissa Anderson of Forge Building Company, shares her knowledge.

Read this entire interview here: ⁠https://tinyurl.com/y8sjpt89

If someone wants to build a project from scratch, what would be the step-by-step that person would have to take, from who do they have to contact first, all the way to the team that they need to work with until completion?

Once you see what the parcel is and what it sounds like, you’re going to identify what jurisdiction has authority, whether it’s a city, the county, or a township, and then you’re going to start talking to them, to see what is the approval process in order to build on this piece of property and to find out how they feel about self-storage. If you’re going into a municipality that has a really bad taste in their mouth about storage, they’re going to put up every hurdle they possibly can because they don’t want you to build self-storage and so, that is something to be taken into consideration when you are looking at that piece of property and before you close on.

After you get it entitled, who should you start working with at that point?

You have your property and title and the next phase is what I would call the design phase. That’s when you are going to have your civil engineer, your architect is going to start working on elevations, and a lot of the details of the building. If the jurisdiction has design requirements, that is going to be working up those architectural drawings to show that you’re meeting the design requirements of that municipality. For instance, let’s say that on the street front, they don’t want to see any of the metal paneling, in that case, you’re going to have to look at other exterior finishes such as stucco, Splitface, veneer, and they’re probably going to want it to be aesthetically pleasing. If you’re in an environment where they have very strict design elements that they want, to say that they want it to match the feel and the look of the rest of the city, then that architect is going to understand what elements to put into the construction documents. That’s what you’re doing during the design phase, you are building the construction documents that are going to give the subcontractors, it’s going to give them all the very specific details of what they need to bid on the project and what will be executed during the time of construction.

What are some of the main things to keep in mind regarding legal when negotiating with anyone?

time is really important, wanting to know how quickly you can get the project done, and what obligations each person is going to have for those. Having realistic expectations is important. I've seen this in projects where the GC really wants this job, and they'll say, "Yeah, we can get the project done in nine months." And now all of a sudden, that owner has that expectation of nine months. Well, as you start working with all the subs, it may not be that and so I really encourage owners to have realistic expectations.

Then, the contractual amounts, when are you going to be paid?

Insurance is a really big thing, making sure that the GC has the correct general liability and builder's risk insurance, and that they are also making sure that all of their subs have it. One of the biggest things is safety. Is it a GC that values a safe working environment? Are they holding their subs to the exact same requirements of making sure that they have a safety program in place, and that they have a way of enforcing it?

Melissa Anderson

(208) 286-8928

manderson@forgebuildings.com

www.forgebuildings.com

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Where do you think there is an opportunity for investing in the industrial market right now?

It's a tough time to invest in commercial real estate right now mostly because interest rates and the banking world are completely different and seller expectations are different today from one that where they were three years or two ago, but two deals that I've recently invested in, they're both land deals, and they're both infill sites. These are sites that are zoned industrial, but they also have the ability to build some retail. The first one was split up into four parcels to industrial and then to retail pads for drive-throughs or any other type of retail uses. So, one of those pads is in escrow now and the buyer has gone hard, that's done well. The other one, we bought for pretty cheap, because we bought it when the seller has it in escrow with the Self-Storage developer, and then the Self-Storage developer backed out. And then that was also during a time when the Fed kept raising rates in the economy seemed like it was going pretty well. So, I think like infill industrial land, and I'm also just a big believer in a Flex business park, small to medium bay, class B, class C type of industrial.

Is industrial, being overbuilt right now? Where do you see the lease rates going?

There are two different types of industrial products: small to medium bay and then there’s the bigger assets. The small to medium space really hasn’t been built so, I don’t think it’s being overbuilt. I think that there’s a supply issue and even in some instances, these business parks are being demolished and redeveloped for mixed use or other types of uses. But I do think in the bigger base, maybe in some other markets, some bigger markets, where there’s a lot of lands, and there’s a lot of spec development, possibly being overbuilt, but I’m very confident in business parks, and I don’t think they’re being overbuilt, and that’s fine, like Class B, Class C, industrial business parts.

What are some of the things that we should keep in mind as property owners to make sure that we put on the lease and some things that are really non-negotiable with regards to industrial?

Having space already clean and marketable for those prospects is most important. One of the things that we actually do is we know who that tenant wants more warehouse than an office. So, sometimes when a space comes available, and there’s more office build-out, just demo it out before you even take it out to market. Another key thing for industrial is if there’s some way that you can build some type of yar or industrial outdoor storage to complement that building, that’s a great value add to a property, you can even get higher rates and take some unused land and just create some more income that way. Overall, just creating a space that’s clean and marketable to your prospect with a mostly warehouse-less office is key.

Max Fisher

twitter.com/maxfisherRE

Why is there an opportunity for online lead generation within commercial real estate? What are some areas that you can be investing in an industrial that are showing very good solid returns and low vacancy rates? Max Fisher, an industrial broker with BRD Realty, shares his knowledge.

Read this entire episode here: https://tinyurl.com/3um3kz3z

Where do you think there is an opportunity for investing in the industrial market right now?

It's a tough time to invest in commercial real estate right now mostly because interest rates and the banking world are completely different and seller expectations are different today from one that where they were three years or two ago, but two deals that I've recently invested in, they're both land deals, and they're both infill sites. These are sites that are zoned industrial, but they also have the ability to build some retail. The first one was split up into four parcels to industrial and then to retail pads for drive-throughs or any other type of retail uses. So, one of those pads is in escrow now and the buyer has gone hard, that's done well. The other one, we bought for pretty cheap, because we bought it when the seller has it in escrow with the Self-Storage developer, and then the Self-Storage developer backed out. And then that was also during a time when the Fed kept raising rates in the economy seemed like it was going pretty well. So, I think like infill industrial land, and I'm also just a big believer in a Flex business park, small to medium bay, class B, class C type of industrial.

Is industrial, being overbuilt right now? Where do you see the lease rates going?

There are two different types of industrial products: small to medium bay and then there’s the bigger assets. The small to medium space really hasn’t been built so, I don’t think it’s being overbuilt. I think that there’s a supply issue and even in some instances, these business parks are being demolished and redeveloped for mixed use or other types of uses. But I do think in the bigger base, maybe in some other markets, some bigger markets, where there’s a lot of lands, and there’s a lot of spec development, possibly being overbuilt, but I’m very confident in business parks, and I don’t think they’re being overbuilt, and that’s fine, like Class B, Class C, industrial business parts.

What are some of the things that we should keep in mind as property owners to make sure that we put on the lease and some things that are really non-negotiable with regards to industrial?

Having space already clean and marketable for those prospects is most important. One of the things that we actually do is we know who that tenant wants more warehouse than an office. So, sometimes when a space comes available, and there’s more office build-out, just demo it out before you even take it out to market. Another key thing for industrial is if there’s some way that you can build some type of yar or industrial outdoor storage to complement that building, that’s a great value add to a property, you can even get higher rates and take some unused land and just create some more income that way. Overall, just creating a space that’s clean and marketable to your prospect with a mostly warehouse-less office is key.

Max Fisher

twitter.com/maxfisherRE

www.industrialtucson.com

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What are some of the biggest things that we should keep in mind with regards to building a solid operations arm of a company?

It’s critical that you keep your eye on the numbers. Every software system has a management report, and the management report will tell you where dollars are leaking out. You can develop the best proforma in the world but if it’s not implemented the way you intend, because you have invisible leaks, then you’re not going to succeed the way you should, you’ll still succeed, but not as well as you should. It’s really easy to turn that over to someone else and trust them, but it’s not always wise. I’ve been heard to say that not every manager steals, but every owner is stolen from. To prevent that, keep your eye on those numbers.

I’m a believer in consistency and simplicity. Whoever is running your shop, whether it’s a remote manager, or an onsite manager, it’s important to understand what are your processes, how you do them, and do them that way every time. We have a simple business model and I always encourage people to keep it simple, don’t complicate it with extra services that are logistically intensive, or manpower intensive. By keeping it simple, and having simple procedures and implementing them across the board, you up your game. Things fall into two camps: either an owner is frustrated that they can't get their manager with remote, or third-party management, or on-site to do what they want. And then others would say, I don't understand why they have a problem. And the difference between the two is accountability, people will deliver what you inspect, look at it, measure it, take a look at the MSR, if you're asking questions, you'll get much better responsiveness.

What are some things that you look for when you are interviewing someone for either a low-level job or a high-executive job?

That's one of the hardest things today, isn't it? We used to be very common in the workplace, pursuing excellence, being committed to doing a good job, you go to work every day, compassion is important, and caring about what you do - these are the things that I look for. And in the process of talking with people, I try to understand what their values are and see if there's an alignment of values. If you're very clear on your values, you establish your priorities based on your values, and then your decisions line up with that. That doesn't mean decisions are easy, but they line up. If you're talking with someone and you can tell that they don't value people, and if valuing people is important to you because you want people who rent from you to give you five-star reviews because you cared enough to make sure they could access their Christmas presents on Christmas Eve to put them under the tree on Christmas morning.

How do you create an excellent company culture from the beginning?

Culture flows from the top down. "They don't care what you know until they know that you care." A lot of that is conveyed by being really clear on your core values as a company, you know what you're about as your mission and your core values, your customer care, attention to detail, those are enough in running a property. Convey it clearly and frequently. You can't say, "we are a problem-solving organization", and keep kicking the problems...]]>What should we keep in mind in creating a solid operations arm of a real estate company? How to hire the best of the best? What are the tips for creating a great company culture? Anne Mari DeCoster, President & COO at Kingdom Storage Partners & Self Storage Investing, shares her insights.

Read this entire interview here: https://tinyurl.com/mr3h8emf

What are some of the biggest things that we should keep in mind with regards to building a solid operations arm of a company?

It’s critical that you keep your eye on the numbers. Every software system has a management report, and the management report will tell you where dollars are leaking out. You can develop the best proforma in the world but if it’s not implemented the way you intend, because you have invisible leaks, then you’re not going to succeed the way you should, you’ll still succeed, but not as well as you should. It’s really easy to turn that over to someone else and trust them, but it’s not always wise. I’ve been heard to say that not every manager steals, but every owner is stolen from. To prevent that, keep your eye on those numbers.

I’m a believer in consistency and simplicity. Whoever is running your shop, whether it’s a remote manager, or an onsite manager, it’s important to understand what are your processes, how you do them, and do them that way every time. We have a simple business model and I always encourage people to keep it simple, don’t complicate it with extra services that are logistically intensive, or manpower intensive. By keeping it simple, and having simple procedures and implementing them across the board, you up your game. Things fall into two camps: either an owner is frustrated that they can't get their manager with remote, or third-party management, or on-site to do what they want. And then others would say, I don't understand why they have a problem. And the difference between the two is accountability, people will deliver what you inspect, look at it, measure it, take a look at the MSR, if you're asking questions, you'll get much better responsiveness.

What are some things that you look for when you are interviewing someone for either a low-level job or a high-executive job?

That's one of the hardest things today, isn't it? We used to be very common in the workplace, pursuing excellence, being committed to doing a good job, you go to work every day, compassion is important, and caring about what you do - these are the things that I look for. And in the process of talking with people, I try to understand what their values are and see if there's an alignment of values. If you're very clear on your values, you establish your priorities based on your values, and then your decisions line up with that. That doesn't mean decisions are easy, but they line up. If you're talking with someone and you can tell that they don't value people, and if valuing people is important to you because you want people who rent from you to give you five-star reviews because you cared enough to make sure they could access their Christmas presents on Christmas Eve to put them under the tree on Christmas morning.

How do you create an excellent company culture from the beginning?

Culture flows from the top down. "They don't care what you know until they know that you care." A lot of that is conveyed by being really clear on your core values as a company, you know what you're about as your mission and your core values, your customer care, attention to detail, those are enough in running a property. Convey it clearly and frequently. You can't say, "we are a problem-solving organization", and keep kicking the problems down the road.

Anne Mari DeCoster

(480) 980-7418

annemari@selfstorageinvesting.com

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---

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Slides: https://bit.ly/444rIAo

Dr. Doug Duncan

Fannie Mae

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---

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Read the entire interview here: https://tinyurl.com/wzyy5rc8

What is the underlying theme for economic activity over the succeeding years?

Each year, I spend time in December or January thinking about what is the underlying theme for economic activity over the succeeding years. The reason I do that is this isn't a check against ourselves, the actually team does this, but I want to know whether at the outside of a time period. We had a good feel for the major impulses that were underway in economic activity in particular housing, because as the business Fannie Mae is in and then we use that to test ourselves across the course of the year, what did we miss, if anything or we are just lucky? Did we just make it a lucky guess? But it's also something that we can hang the discussion on when we're talking with people out speaking. So, the interesting fact of it is the optimal number of words for that theme is less than seven. People will remember if it's less than seven words, if it's more than seven, it gets lost so this is for awaiting improvements and affordability. It's not just affordability and housing that rise in interest rates means affordability across the economy and credit affordability, that kind of issue. So, it's intended not just to focus on housing, though it certainly does apply to housing.

Housing market supply issue.

We believe that geopolitical change is going to lead to the restructuring of supply chains and that's time consuming and expensive. The Fed is going to be leaning against the restructuring of supply chains, and you're seeing the stories emerge now about how difficult it is to replatform your company from one country to another country to strike relationships, shipping and transportation relationships, restructuring those things can be time consuming and expensive. We felt like that we got ahead of that one before  others did. That's going to be a contributor to the underlying rate of inflation for some time.

What is the relationship between housing and the business cycle?

There is a typical relationship between housing and the business cycle. As the Fed tightens on anticipation of the rise in inflation or in response to the rise of inflation, interest rates go up. Housing is very interesting since this is the first thing that happens: residential fixed investment, which is dynamic targeting building starts to slow; then, the next thing that happens is New Home Sales start to slow because builders are building less and so there are less being sold and then existing home sales start to slow. When the recession is full force and fit, interest rates come down, construction starts to pick up, new home sales start to pick up and existing home sales start to pick up so there's a predictable relationship. That was not the case in 2007 to 2009 because the center of the financial problem was the decline in underwriting standards in real estate so it was the core of the issue.

Dr. Doug Duncan, Fannie Mae's Chief Economist gave his Economic Forecast in June 2023. Dr. Duncan is the recipient of the prestigious Lawrence R Klein Award for Most Accurate Forecaster Over The Past 5 Years, he was also named by Bloomberg and BusinessWeek as one of the Top 50 Most Powerful People in Real Estate. Learn from one of the smartest economists in the U.S., who advises the U.S. government and the Federal Reserve on real estate matters. He delves into the topic of bank failures, and sheds light on what lies ahead for interest rates. 

Full video recording: https://bit.ly/43YaODA

Slides: https://bit.ly/444rIAo

Read the entire interview here: https://tinyurl.com/wzyy5rc8

What is the underlying theme for economic activity over the succeeding years?

Each year, I spend time in December or January thinking about what is the underlying theme for economic activity over the succeeding years. The reason I do that is this isn't a check against ourselves, the actually team does this, but I want to know whether at the outside of a time period. We had a good feel for the major impulses that were underway in economic activity in particular housing, because as the business Fannie Mae is in and then we use that to test ourselves across the course of the year, what did we miss, if anything or we are just lucky? Did we just make it a lucky guess? But it's also something that we can hang the discussion on when we're talking with people out speaking. So, the interesting fact of it is the optimal number of words for that theme is less than seven. People will remember if it's less than seven words, if it's more than seven, it gets lost so this is for awaiting improvements and affordability. It's not just affordability and housing that rise in interest rates means affordability across the economy and credit affordability, that kind of issue. So, it's intended not just to focus on housing, though it certainly does apply to housing.

Housing market supply issue.

We believe that geopolitical change is going to lead to the restructuring of supply chains and that's time consuming and expensive. The Fed is going to be leaning against the restructuring of supply chains, and you're seeing the stories emerge now about how difficult it is to replatform your company from one country to another country to strike relationships, shipping and transportation relationships, restructuring those things can be time consuming and expensive. We felt like that we got ahead of that one before  others did. That's going to be a contributor to the underlying rate of inflation for some time.

What is the relationship between housing and the business cycle?

There is a typical relationship between housing and the business cycle. As the Fed tightens on anticipation of the rise in inflation or in response to the rise of inflation, interest rates go up. Housing is very interesting since this is the first thing that happens: residential fixed investment, which is dynamic targeting building starts to slow; then, the next thing that happens is New Home Sales start to slow because builders are building less and so there are less being sold and then existing home sales start to slow. When the recession is full force and fit, interest rates come down, construction starts to pick up, new home sales start to pick up and existing home sales start to pick up so there's a predictable relationship. That was not the case in 2007 to 2009 because the center of the financial problem was the decline in underwriting standards in real estate so it was the core of the issue.

Dr. Doug Duncan

Fannie Mae

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---

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1. A San Francisco office building that was worth $300 million pre-pandemic is now in contract for around $60 million. And that is between 200 to 225/sf. The building next door at 550 California St is reportedly in contracts for $130 a square foot. Lastly, a friend of mine put an offer in an office building about a month ago, her offer was $75 a square foot and although she did not get the building, she ended up going to the second round, which means that people are considering $75/sf offers. Let that sink in for a bit! Rent was getting close to $100/sf per year. And now you are able to buy an entire office building for between 1.5-2 years worth of rent pre-pandemic.

2. Uber announced that they will be leasing out their entire office building in San Francisco.

3. Google announced that they will be shedding 1.4 million square feet of office space in Silicon Valley. As we all know commercial loans are 3, 5 or 7 year fixed, a lot of them are coming up and they have to refinance at not only double the interest rates, but also they have to refinance when their office building is completely vacant - and nobody will give you financing for that. Operators are returning the keys to the bank, or they are having fire sales which is what happened with this 350 California Street building.

4. Nordstrom is closing both of its Stores in downtown San Francisco, citing the changing dynamics of the area that hasn't recovered since the pandemic and has been in the spotlight for crime.

5. AT&T just announced that they're closing its flagship store, citing declining customer visits, occupancy and sales.

6. Cinemark also just decided to permanently close the Century San Francisco Centre 9 and XD theater following a review of local business conditions.

7. Whole Foods in Downtown San Francisco Closing a Year After Opening due to safety issues.

8. Several Other Major Retailer closures since the pandemic: Saks Off Fifth, Anthropologie, Office Depot, Amazon Go, The Real Real, CB2, Banana Republic, Athleta, The Container Store, Crate and Barrel, Disney, Marshalls, H&M, The Gap. Imagine how many hundreds of 1,000s if not millions of square feet will be available for rent right now in the retail space alone in this...]]>What's the state of commercial real estate in San Francisco, California? I will be giving you my personal insights of what I have seen happen to the city and what I think has led the city to its current demise.

Read this entire episode here: https://tinyurl.com/mryyfc6b

1. A San Francisco office building that was worth $300 million pre-pandemic is now in contract for around $60 million. And that is between 200 to 225/sf. The building next door at 550 California St is reportedly in contracts for $130 a square foot. Lastly, a friend of mine put an offer in an office building about a month ago, her offer was $75 a square foot and although she did not get the building, she ended up going to the second round, which means that people are considering $75/sf offers. Let that sink in for a bit! Rent was getting close to $100/sf per year. And now you are able to buy an entire office building for between 1.5-2 years worth of rent pre-pandemic.

2. Uber announced that they will be leasing out their entire office building in San Francisco.

3. Google announced that they will be shedding 1.4 million square feet of office space in Silicon Valley. As we all know commercial loans are 3, 5 or 7 year fixed, a lot of them are coming up and they have to refinance at not only double the interest rates, but also they have to refinance when their office building is completely vacant - and nobody will give you financing for that. Operators are returning the keys to the bank, or they are having fire sales which is what happened with this 350 California Street building.

4. Nordstrom is closing both of its Stores in downtown San Francisco, citing the changing dynamics of the area that hasn't recovered since the pandemic and has been in the spotlight for crime.

5. AT&T just announced that they're closing its flagship store, citing declining customer visits, occupancy and sales.

6. Cinemark also just decided to permanently close the Century San Francisco Centre 9 and XD theater following a review of local business conditions.

7. Whole Foods in Downtown San Francisco Closing a Year After Opening due to safety issues.

8. Several Other Major Retailer closures since the pandemic: Saks Off Fifth, Anthropologie, Office Depot, Amazon Go, The Real Real, CB2, Banana Republic, Athleta, The Container Store, Crate and Barrel, Disney, Marshalls, H&M, The Gap. Imagine how many hundreds of 1,000s if not millions of square feet will be available for rent right now in the retail space alone in this city? But who would want to open anything when criminals can steal what they want, technically up to $950. There are homeless tents in many of these major streets. These people are on drugs, a lot of the times shooting themselves up with needles. Sometimes you're stepping on needles yourself, sometimes they're defecating or urinating right in front of you. Why and who would want to take up that space for rent and who would even be successful there to begin with?

9. Westfield Mall announces that they are returning the keys to the bank, they have been operating in the San Francisco center for over two decades. They are attributing this decision to the challenging operating conditions in downtown San Francisco, which have led to decline in sales, occupancy, and foot traffic.

10. Hilton Union Square (which is one of the largest hotels in the city, an entire block) along with Park 55 Hotel will be stopping payments on their loan.

11. Huntington Hotel and Yotel were recently sold in foreclosure auctions. This is not only because San Francisco took a very long time to get out of the COVID mentality, but also, because of the crime and all of the issues with the homeless and everything else.

12. People don't want to have conferences in San Francisco anymore. Hotels are struggling.

Follow me on Twitter: https://twitter.com/steffbold

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Read this entire interview here: https://tinyurl.com/bdtzrpyp

Why should a busy professional invest in real estate in general?

Real estate has many benefits, unlike crypto or stocks, it's a hard tangible asset and it's generally stable and less volatile. So, there will always be some value in the land and the building itself and you can use leverage or debt to purchase it. For example, if you purchase a property and borrow 75% of the property's cost, and the property value increases 25%, you've essentially doubled your money.  You're basically borrowing money to generate income and grow your wealth.

Real estate is also great for an investor who has a long-term horizon, it's a long-term game because real estate tends to appreciate over time, if you hold on to a property for many years, you gradually grow your wealth over time. You can also force appreciation on a property by making some repairs or improvements and you can also reduce expenses, that will help you increase value and income. Given our high inflationary environment, another major benefit of real estate is that it can be a hedge against inflation because property values tend to increase over time, especially in an inflationary environment. Leaving money in the bank can sometimes cause it to lose value when there's inflation.

There are several tax advantages, such as writing off the depreciation, which is the wear and tear of a building and it's over a specified period of time. It's possible to receive positive cash flow even if you have a tax loss.

How do you vet an operator?

Talk to them, try to meet them on a zoom call or ideally in person, listen to what they are saying and ask yourself: are they listening to you and interested in learning about you, what is their track record, do they have experience in this particular asset class?

Another good question to ask the operator is, are they co investing in the deal and if so, how much? In general, I have tried to measure their character, do they seem overly confident or do they have a more conservative mindset, are they dodging your questions or are they being open and transparent and that gives you a sense of how trustworthy they are. A way to evaluate this is to understand if they've encountered challenges or failures or how they've handled underperforming deals and what they learned from the experience because everyone has failures, so transparency is the key.

The most important question to ask yourself is what does your intuition tell you about the sponsor? Women tend to be incredibly intuitive and we're very attuned to what our gut is telling us so at the end of the day, you should listen to your gut regarding a sponsor. You can also do background checks or Google them as well. Lastly, you should do due diligence on the deal itself, review the properties and locations and understand how they analyze the deal. Look at their projections for returns, are their numbers too positive? Do they seem to be over promising in terms of their returns, or are their returns much higher than average? Those are good questions to ask yourself.

What's the standard fee from acquisition all the way to exit fees that sponsors typically charge?

Asset management fees are anywhere between one and 2%, acquisition fees can be between one and 3%, the disposition fee is typically between one and 2% and the construction fee is typically around 5%. The total is up to 10%.

Sign up to...]]>Why should a busy professional invest in real estate? What are the benefits and the risks of investing in a syndication? How do you evaluate a deal right now and how to vet operators? What are standard fees that real estate syndicators charge? Our anonymous guest shares her knowledge to us.

Read this entire interview here: https://tinyurl.com/bdtzrpyp

Why should a busy professional invest in real estate in general?

Real estate has many benefits, unlike crypto or stocks, it's a hard tangible asset and it's generally stable and less volatile. So, there will always be some value in the land and the building itself and you can use leverage or debt to purchase it. For example, if you purchase a property and borrow 75% of the property's cost, and the property value increases 25%, you've essentially doubled your money.  You're basically borrowing money to generate income and grow your wealth.

Real estate is also great for an investor who has a long-term horizon, it's a long-term game because real estate tends to appreciate over time, if you hold on to a property for many years, you gradually grow your wealth over time. You can also force appreciation on a property by making some repairs or improvements and you can also reduce expenses, that will help you increase value and income. Given our high inflationary environment, another major benefit of real estate is that it can be a hedge against inflation because property values tend to increase over time, especially in an inflationary environment. Leaving money in the bank can sometimes cause it to lose value when there's inflation.

There are several tax advantages, such as writing off the depreciation, which is the wear and tear of a building and it's over a specified period of time. It's possible to receive positive cash flow even if you have a tax loss.

How do you vet an operator?

Talk to them, try to meet them on a zoom call or ideally in person, listen to what they are saying and ask yourself: are they listening to you and interested in learning about you, what is their track record, do they have experience in this particular asset class?

Another good question to ask the operator is, are they co investing in the deal and if so, how much? In general, I have tried to measure their character, do they seem overly confident or do they have a more conservative mindset, are they dodging your questions or are they being open and transparent and that gives you a sense of how trustworthy they are. A way to evaluate this is to understand if they've encountered challenges or failures or how they've handled underperforming deals and what they learned from the experience because everyone has failures, so transparency is the key.

The most important question to ask yourself is what does your intuition tell you about the sponsor? Women tend to be incredibly intuitive and we're very attuned to what our gut is telling us so at the end of the day, you should listen to your gut regarding a sponsor. You can also do background checks or Google them as well. Lastly, you should do due diligence on the deal itself, review the properties and locations and understand how they analyze the deal. Look at their projections for returns, are their numbers too positive? Do they seem to be over promising in terms of their returns, or are their returns much higher than average? Those are good questions to ask yourself.

What's the standard fee from acquisition all the way to exit fees that sponsors typically charge?

Asset management fees are anywhere between one and 2%, acquisition fees can be between one and 3%, the disposition fee is typically between one and 2% and the construction fee is typically around 5%. The total is up to 10%.

Sign up to attend Fannie Mae's Chief Economist talk on June 8th: https://bit.ly/44kzfvp

Sign up for the Monte Carlo Real Estate Investing Club here: www.montecarlorei.com/investors

---

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Read this entire interview here: https://tinyurl.com/2pk8c3ad

We are currently in a recession and there are two scenarios of appealing taxes: when the economy is doing great, and they want to come after you and get more money for your properties; and when the economy is going down and property prices decrease. What are techniques for decreasing taxes when the economy is doing well?

You must take into consideration different factors that you have for that property, the income producing potential, what's the end place income, and comparing that to what the overall market looks like, the market occupancy, market rental rates, market cap rates, etc. Diving more specifically into the nuances of the property is going to be where you'll find opportunities when it comes to properties in an up market.

The property appraiser is going to have more of the shoe on their foot when it comes to valuations in an up market. The sales are going to be supportive of higher values, the incomes are going to be supportive of higher values so this is where it really is a lot more imperative to be diligent in the review of the individual property to ensure that you're taking into consideration all of the nuances. You should look into what are some of the challenges that this individual property may have, are there little things that are not evident to the property appraiser from their mass appraisal perspective because they are required to value all the property within their jurisdiction so they're looking at the overall market factors. Market cap rate might be 4% for an industrial property, but is that the correct cap rate for the property that you have, which might have an additional risk factor associated with it, where there's near term leases that are coming due or there might be some different occupancy challenges that they may not know.

There's hesitation in the community to lower values when the market tends to turn downward. Make sure that the right rental rates are being used; if rental rates have decreased, ensuring that the appropriate market rental rates are being applied; make sure that the appropriate vacancy and collection losses are being considered and that any nuances with the property in terms of near term lease expirations are being considered, or credit defaults.

A lot of office properties are struggling where tenants are vacating because they don't need as much space. Property appraisers don't necessarily know these things are occurring until it's brought to their attention, so it's important to make sure that that type of information is being put forth to them and being provided to them.

Sales velocity has slowed dramatically across a lot of property types in the commercial real estate world. When you have a lot of sales and you have brokers that are selling deals at 3.5, 4.5 cap rates, everybody's willing to sling out their cap rate when cap rates like that transact. When properties do transact, the brokers and property owners are a lot more tight-lipped on what is the cap rate that properties traded for because a lot of people are taking haircuts on these deals.

Rely upon building cap rates through the weighted average cost of capital, or an equity dividend rate, or looking at the debt service coverage ratios and different things like that to try to come up with an accurate...]]>What are some techniques in decreasing property taxes when the economy is doing great and values are going up, and when the economy is in a downturn and values are going down? How often should you request a reassessment? How to approach properties in multiple states?  Nicholas Mau, Partner at FirstPointe Advisors, shares his knowledge.

Read this entire interview here: https://tinyurl.com/2pk8c3ad

We are currently in a recession and there are two scenarios of appealing taxes: when the economy is doing great, and they want to come after you and get more money for your properties; and when the economy is going down and property prices decrease. What are techniques for decreasing taxes when the economy is doing well?

You must take into consideration different factors that you have for that property, the income producing potential, what's the end place income, and comparing that to what the overall market looks like, the market occupancy, market rental rates, market cap rates, etc. Diving more specifically into the nuances of the property is going to be where you'll find opportunities when it comes to properties in an up market.

The property appraiser is going to have more of the shoe on their foot when it comes to valuations in an up market. The sales are going to be supportive of higher values, the incomes are going to be supportive of higher values so this is where it really is a lot more imperative to be diligent in the review of the individual property to ensure that you're taking into consideration all of the nuances. You should look into what are some of the challenges that this individual property may have, are there little things that are not evident to the property appraiser from their mass appraisal perspective because they are required to value all the property within their jurisdiction so they're looking at the overall market factors. Market cap rate might be 4% for an industrial property, but is that the correct cap rate for the property that you have, which might have an additional risk factor associated with it, where there's near term leases that are coming due or there might be some different occupancy challenges that they may not know.

There's hesitation in the community to lower values when the market tends to turn downward. Make sure that the right rental rates are being used; if rental rates have decreased, ensuring that the appropriate market rental rates are being applied; make sure that the appropriate vacancy and collection losses are being considered and that any nuances with the property in terms of near term lease expirations are being considered, or credit defaults.

A lot of office properties are struggling where tenants are vacating because they don't need as much space. Property appraisers don't necessarily know these things are occurring until it's brought to their attention, so it's important to make sure that that type of information is being put forth to them and being provided to them.

Sales velocity has slowed dramatically across a lot of property types in the commercial real estate world. When you have a lot of sales and you have brokers that are selling deals at 3.5, 4.5 cap rates, everybody's willing to sling out their cap rate when cap rates like that transact. When properties do transact, the brokers and property owners are a lot more tight-lipped on what is the cap rate that properties traded for because a lot of people are taking haircuts on these deals.

Rely upon building cap rates through the weighted average cost of capital, or an equity dividend rate, or looking at the debt service coverage ratios and different things like that to try to come up with an accurate estimate and support for the positions that you're taking in your property tax appeal.

Nicholas Mau

www.first-pointe.com

n.mau@first-pointe.com

Sign up to attend Fannie Mae's Chief Economist talk on June 8th: https://bit.ly/44kzfvp

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Read this entire interview here: https://tinyurl.com/2wuc94ky

What have been the top three lessons learned from lawsuits that you have seen out there? How can we avoid potential litigation in the future?The number one advice relative regarding litigation is don’t get into litigation. Nobody wins except the lawyers. Even lawyers will admit that in litigation, nobody wins. Avoid it, it would be my number one lesson to learn from. Number two, avoid litigation. The easiest is with full disclosure. The brokerage law in New York requires that the broker convey to a buyer what they know, or what they should have known. You can’t say, I didn’t realize that there was a hole in the roof, even though all the apartments on the top floor are flooded every time it rains, because you didn’t know that you should have known that. Was there a fire in the building two years ago? Was there some condition that you either knew or should have known? Do you have to convey that to the parties?

Also, in New York, if you’re representing a buyer and a seller, disclose who were you getting paid by, if you’re getting paid by someone, let the other party know. You will eliminate many potential issues relative to litigation by being an open book, being transparent, communicating, over-communicating. That’s something that’s generally good in real estate, to over-communicate rather than under-communicate. Having a lot of transparency avoids a lot of potential problems. 

What are some of the best hiring practices? What do you look for not only from the brokers that work with you, the agents that work with you, but also from the rest of the team that supports you?Real estate is a very competitive business, and it’s also very team-oriented. We enjoy talking to people that played team sports growing up. We also like to talk to people who exhibited excellence in some type of competitive area, whether it was captain of the debating team or president of the school newspaper, or something that was a competition where they excelled. Secondly, we looked for people who didn’t necessarily have the best grades in the world or the best education, but were very motivated. We used to joke around that we would only hire PhDs. And those were folks who are poor, hungry, and driven because they were going to work hard. But besides being hungry and driven, they must have passion for the business. We have people who had a passion for real estate, not that they thought they could make a lot of money, but did real estate resonate with them? That was a big part of what we thought led to success in the business because no matter how good you are, you’re still going to have tough and challenging times. But what enables you to get through that challenging time is that you love the business. And we looked for that passion, the most important of them all.

With the real estate investing mindset, is there anything else that is important for our audience to know?A broker should specialize in one thing really well. Investors should do the same. Pick an area of town, a city or region, a type of property, a type of transaction, or a type of something where you can know that particular thing better than others. This ability gives you a competitive...]]>What are some top lessons learned from lawsuits and how to avoid potential litigation in the future? Where is NYC going with regards to tenant laws? What are some of the best hiring practices in order to grow a real estate company? Top commercial broker in New York, Bob Knakal, Head of New York Private Capital Group for JLL, shares his insights.

Read this entire interview here: https://tinyurl.com/2wuc94ky

What have been the top three lessons learned from lawsuits that you have seen out there? How can we avoid potential litigation in the future?The number one advice relative regarding litigation is don’t get into litigation. Nobody wins except the lawyers. Even lawyers will admit that in litigation, nobody wins. Avoid it, it would be my number one lesson to learn from. Number two, avoid litigation. The easiest is with full disclosure. The brokerage law in New York requires that the broker convey to a buyer what they know, or what they should have known. You can’t say, I didn’t realize that there was a hole in the roof, even though all the apartments on the top floor are flooded every time it rains, because you didn’t know that you should have known that. Was there a fire in the building two years ago? Was there some condition that you either knew or should have known? Do you have to convey that to the parties?

Also, in New York, if you’re representing a buyer and a seller, disclose who were you getting paid by, if you’re getting paid by someone, let the other party know. You will eliminate many potential issues relative to litigation by being an open book, being transparent, communicating, over-communicating. That’s something that’s generally good in real estate, to over-communicate rather than under-communicate. Having a lot of transparency avoids a lot of potential problems. 

What are some of the best hiring practices? What do you look for not only from the brokers that work with you, the agents that work with you, but also from the rest of the team that supports you?Real estate is a very competitive business, and it’s also very team-oriented. We enjoy talking to people that played team sports growing up. We also like to talk to people who exhibited excellence in some type of competitive area, whether it was captain of the debating team or president of the school newspaper, or something that was a competition where they excelled. Secondly, we looked for people who didn’t necessarily have the best grades in the world or the best education, but were very motivated. We used to joke around that we would only hire PhDs. And those were folks who are poor, hungry, and driven because they were going to work hard. But besides being hungry and driven, they must have passion for the business. We have people who had a passion for real estate, not that they thought they could make a lot of money, but did real estate resonate with them? That was a big part of what we thought led to success in the business because no matter how good you are, you’re still going to have tough and challenging times. But what enables you to get through that challenging time is that you love the business. And we looked for that passion, the most important of them all.

With the real estate investing mindset, is there anything else that is important for our audience to know?A broker should specialize in one thing really well. Investors should do the same. Pick an area of town, a city or region, a type of property, a type of transaction, or a type of something where you can know that particular thing better than others. This ability gives you a competitive advantage.Also, be good to brokers. There’s an expression that says mean what you say, and say what you mean. Don’t lie to brokers, don’t mislead us. Treat us with respect. And that’s a two-way street.

Bob Knakal

@BobKnakal

bob.knakal@jll.com

Sign up to attend Fannie Mae's Chief Economist on June 8th: https://bit.ly/44kzfvp

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Read this entire intereview here: https://tinyurl.com/2jyny68p

Part of your business is focused on representing one party only, can you share a little bit about that and the reasoning?

Most brokers represent both sides, I've always focused my entire career on seller representation. As a broker, working with control is important. Many sellers are optimistic about the value of their property, and when the value gets down to the point where it is truly market, there are a few buyers that would buy at that price. I always wanted to work on the seller side for a couple of reasons: 1) We like to avoid conflicts of interest. We don't represent buyers. 2) I don't like to have to remember what I say to anybody. If I'm always working for the seller trying to get the highest possible price, I don't have to remember what I say. And that has worked out well over the years and as a broker to the extent that you can specialize in something, and articulate what you do and how you do it, it enables you to differentiate yourself from others. Back at the old company, we always say that we only represent sellers, we only sell properties, and we only work on exclusives. And that was very easy to convey, easy to understand, and it let clients know exactly where we stood.

George Ross, Trump's previous attorney, always talks about the fact that the best deals were the highest-paid deals. Can you attest to that? And how does one go about the first couple of years of paying top price, waiting on that until it becomes the next phenomenal deal?

In terms of buying property here, there used to be an investor in New York named Saul Goldman. He owned more property than anybody else in New York. I had the good fortune to meet with him back in the mid-80s when I started in the business. I said to him Mr. Goldman you own about 500 buildings, how are we able to do that? How did you amass such a big portfolio? He said Bob, I paid more than anybody else. That's the way he did it and that's the way you have to do it. I applaud him because he built an unbelievable portfolio and, even though at the time, he may have been paying a lot, in retrospect he didn't pay that much.

People must have reserves. The most popular type of transaction in New York is multifamily, and often, regardless of what the cap rate is, there's very little free cash flow in the first few years. You must be able to break even. A lot of folks are counting on appreciation, but it's challenging.

What are some techniques that buyers have used when purchasing a property after going in contract? What is the best way to approach it?

I've seen a lot on all those transactions I've done, but I haven't seen it all. It seems like in every deal there was a new thing that comes up that I wasn't prepared for. From a buyer's perspective, buyers try to get contingencies to their transactions to the extent they can. That's rare in New York, we very rarely have any post-contract execution or due diligence. And by not having that post-execution due diligence, the contract deposit is hard when it goes up. There are times when people will make claims of breaches if they don't want to close, that's generally difficult to prove. But the most common area that creates an issue for a buyer is environmental. And there are several...]]>Why should commercial real estate brokers represent only one party? Is buying prime real estate at a top price a great strategy? What are some techniquest that buyers and sellers have used when purchasing a property? Top commercial broker in New York, Robert Knakal, Head of New York Private Capital Group for JLL, shares his insights. 

Read this entire intereview here: https://tinyurl.com/2jyny68p

Part of your business is focused on representing one party only, can you share a little bit about that and the reasoning?

Most brokers represent both sides, I've always focused my entire career on seller representation. As a broker, working with control is important. Many sellers are optimistic about the value of their property, and when the value gets down to the point where it is truly market, there are a few buyers that would buy at that price. I always wanted to work on the seller side for a couple of reasons: 1) We like to avoid conflicts of interest. We don't represent buyers. 2) I don't like to have to remember what I say to anybody. If I'm always working for the seller trying to get the highest possible price, I don't have to remember what I say. And that has worked out well over the years and as a broker to the extent that you can specialize in something, and articulate what you do and how you do it, it enables you to differentiate yourself from others. Back at the old company, we always say that we only represent sellers, we only sell properties, and we only work on exclusives. And that was very easy to convey, easy to understand, and it let clients know exactly where we stood.

George Ross, Trump's previous attorney, always talks about the fact that the best deals were the highest-paid deals. Can you attest to that? And how does one go about the first couple of years of paying top price, waiting on that until it becomes the next phenomenal deal?

In terms of buying property here, there used to be an investor in New York named Saul Goldman. He owned more property than anybody else in New York. I had the good fortune to meet with him back in the mid-80s when I started in the business. I said to him Mr. Goldman you own about 500 buildings, how are we able to do that? How did you amass such a big portfolio? He said Bob, I paid more than anybody else. That's the way he did it and that's the way you have to do it. I applaud him because he built an unbelievable portfolio and, even though at the time, he may have been paying a lot, in retrospect he didn't pay that much.

People must have reserves. The most popular type of transaction in New York is multifamily, and often, regardless of what the cap rate is, there's very little free cash flow in the first few years. You must be able to break even. A lot of folks are counting on appreciation, but it's challenging.

What are some techniques that buyers have used when purchasing a property after going in contract? What is the best way to approach it?

I've seen a lot on all those transactions I've done, but I haven't seen it all. It seems like in every deal there was a new thing that comes up that I wasn't prepared for. From a buyer's perspective, buyers try to get contingencies to their transactions to the extent they can. That's rare in New York, we very rarely have any post-contract execution or due diligence. And by not having that post-execution due diligence, the contract deposit is hard when it goes up. There are times when people will make claims of breaches if they don't want to close, that's generally difficult to prove. But the most common area that creates an issue for a buyer is environmental. And there are several environmental issues we have here, we have lead paint, we have asbestos, we have potential oil leaks, and a number of buildings are still using heating oil. Some of those tanks are very old.

Robert Knakal

@BobKnakal

bob.knakal@jll.com

Sign up to attend Fannie Mae's Chief Economist on June 8th: https://bit.ly/44kzfvp

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Read this episode here: https://tinyurl.com/7evvpwe

What is happening in the real estate market today?

• The following are four different people that are having issues that I learned about just last week:
• 1. We are already seeing people go bankrupt in the multi-family space: 3,200 units from one operator were just returned to the bank in Houson.
• 2. Another big time person in the multi-family space sent an email out to their investors saying they will be doing a capital call.
• 3. I spoke with someone else that is currently extremely busy helping several owners add value to their multi-family properties, they weren’t good managers and are now hanging by a thread, if the value isn’t added, it’s over.
• 4. I also met someone else that partnered up with operators, this person was responsible for raising the funds, and now the management company that the operators hired is so bad that they only have 3 months runway. This person asked them multiple times to change management companies, and because the operators think the management company is highly regarded, they are not budging. Now what? The capital raiser not only updated all of their investors on the situation that they're in, but they're also speaking with attorneys and the attorneys said to keep a record of all conversations that they're having with the partners.
• 
  

Why is Diversity Important?

• This is a very important topic because I see a lot of non-diverse teams in the industry. And it's a proven fact that the most diverse companies outperform their less diverse peers by 36% in profitability. One study by Gartner revealed that a highly diverse environment can improve team performance by up to 30%. Diversity can also lead to better decision-making and higher profitability. When I talk about diversity, I don't only mean people of different colors, I mean people of different backgrounds, countries, younger, older and everything in between, because we have experienced different teams and therefore are more creative in the unique scenarios that arise when building companies.
• 
  

Men vs Women: Who is a Better Operator?

• This is, in my opinion, the best kept secret that is not a secret: women are fantastic operators, women led companies are simply ran better and are more profitable. This is because men and women are different in nature, and that is a beautiful thing because we must work with people that are strong where we are weak.
• If you don’t have a woman in your exec team, you definitely must look for one, and I’m not saying this because I’m a woman, I’m saying this because we are very different by nature, we care about different things, we observe different things, and we have different strengths and weaknesses that I think, combined, make for a super powerful team. And I’m not just saying this for the sake of saying it, it’s proven that women led companies perform better, and I’ve seen this both in the tech world and the real estate world. I’ll be generalizing, but according to my personal experience, men have big hairy goals and they don’t really think about the details of those goals. Women, on the other hand, are way more careful and conservative. Imagine how we can both lift each other up to a much...]]>This post covers a few different real estate investing topics: what is happening in the market today, how can diverse teams make you stand out from the competition and increase revenue, and I'm also giving a quick update on our tech stack.

  Read this episode here: https://tinyurl.com/7evvpwe

  
  

  What is happening in the real estate market today?

  
  

  • The following are four different people that are having issues that I learned about just last week:
  • 1. We are already seeing people go bankrupt in the multi-family space: 3,200 units from one operator were just returned to the bank in Houson.
  • 2. Another big time person in the multi-family space sent an email out to their investors saying they will be doing a capital call.
  • 3. I spoke with someone else that is currently extremely busy helping several owners add value to their multi-family properties, they weren’t good managers and are now hanging by a thread, if the value isn’t added, it’s over.
  • 4. I also met someone else that partnered up with operators, this person was responsible for raising the funds, and now the management company that the operators hired is so bad that they only have 3 months runway. This person asked them multiple times to change management companies, and because the operators think the management company is highly regarded, they are not budging. Now what? The capital raiser not only updated all of their investors on the situation that they're in, but they're also speaking with attorneys and the attorneys said to keep a record of all conversations that they're having with the partners.
  • 
    
  
  

  Why is Diversity Important?

  
  

  • This is a very important topic because I see a lot of non-diverse teams in the industry. And it's a proven fact that the most diverse companies outperform their less diverse peers by 36% in profitability. One study by Gartner revealed that a highly diverse environment can improve team performance by up to 30%. Diversity can also lead to better decision-making and higher profitability. When I talk about diversity, I don't only mean people of different colors, I mean people of different backgrounds, countries, younger, older and everything in between, because we have experienced different teams and therefore are more creative in the unique scenarios that arise when building companies.
  • 
    
  
  

  Men vs Women: Who is a Better Operator?

  
  

  • This is, in my opinion, the best kept secret that is not a secret: women are fantastic operators, women led companies are simply ran better and are more profitable. This is because men and women are different in nature, and that is a beautiful thing because we must work with people that are strong where we are weak.
  • If you don’t have a woman in your exec team, you definitely must look for one, and I’m not saying this because I’m a woman, I’m saying this because we are very different by nature, we care about different things, we observe different things, and we have different strengths and weaknesses that I think, combined, make for a super powerful team. And I’m not just saying this for the sake of saying it, it’s proven that women led companies perform better, and I’ve seen this both in the tech world and the real estate world. I’ll be generalizing, but according to my personal experience, men have big hairy goals and they don’t really think about the details of those goals. Women, on the other hand, are way more careful and conservative. Imagine how we can both lift each other up to a much better place? Women will be more careful in her underwriting and more conservative on her estimates, and the guys will be dreaming big and aiming high, in my opinion it’s a great combination, and a combination that must be implemented in your company asap.
  • 
    
  
  

  Join the Monte Carlo Investing Club here: www.montecarlorei.com/investors

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>3908b9f0-2fb4-4209-aae5-f26ff058ca2eTue, 18 Apr 2023 07:57:00 -080015:17falsefull11591591Self Storage, Getting Your First Deal, Dealing with Challenges: We Cover it AllHow to deal with problems with your properties? Why did I select self storage? How to get your first deal? Brainstorming exit strategies with your network. This is the talk I had with Beth Azor at her conference Women in Real Estate Investing Summit.

  Watch this interview here: https://tinyurl.com/mr47yc8p

  Define "I learned everything I could about self storage"

  Educating yourself, reading books, I hired a consultant that I heard speak on a podcast to help me analyze my first few deals.

  
  

  How did you find your first deal?

  
  

  It took me 2 years to find my first deal. I found it on crexi, I didn't have a team calling property owners to find off market deals, and the deal ended up being a portfolio of 3 car washes and a self storage. I didn't even bother asking anyone about car washes, that was mistake number one, and I didn't even go to a conference.

  
  

  How many deals had you looked at before selecting this property?

  
  

  Tons and tons, probably 1,000. It took me two years to find my first deal, I quit my job before finding it, which I don't recommend, you should find your first deal and then quit.

  
  

  Where you worried about money?

  
  

  No, I knew I could always get a job if it didn't work out. Everyone is fully capable of building anything from scratch.

  
  

  What interested you to put an offer in this deal?

  
  

  Car washes have a better cap rate because it's a much more hands on asset class, the numbers made sense.

  
  

  What interested you about self storage?

  
  

  Self storage is recession resistant, it does well in good times and in bad times. In good times people buy more, keep more and don't look at their credit card bills. In bad times, they downsize, they go from a 3 bedroom home to a 2 bedroom home and they need storage, and getting a storage is a lot cheaper than having that bigger home.

  
  

  How do you like owning something outside of your market?

  
  

  I went against my mentor's advice to buy things within a 2 hour driving distance from where you live and, for the car washes I don't like it, for the self storage, it's much easier to manage remotely.

  
  

  How did you pick your lender?

  
  

  You have to ask your local broker for recommendations, the sales broker in this case. The first couple of lenders said no. I kept going back to the broker to get more lender recommendations, and eventually one of them said yes. But 5 days before closing that lender called saying that they were switching the terms a bit, that because I didn't have experience operating a property, they'd like to retain the entire amount of the loan that I had in stock locked for the entire period of the loan. I called the president of the bank and I said, this doesn't make any sense, why would I even get a loan and not pay cash for it if you're locking my cash? We ended up meeting in the middle, putting a much smaller amount on hold for a couple of years, and after I prove myself as a good operator, they will remove that contingency.

  
  

  You were now the owner of three car washes and a self storage, what happened on day 2?

  
  

  Let's go to day 9 when one of the roofs caved! Thank God for Nationwide, they ended up paying within 2-4 weeks. The self storage has been smooth sailing, we have a local person that walks the facility about once a month, the tenants lease the units online. Today about 80% of self storage is still owned my mom and pops, and they're now retiring, they haven't implemented technology in their facilities. You can put cameras if they don't have it, you can install locks that will open with their phones. They are able to rent online, they get a unique code to the...]]>How to deal with problems with your properties? Why did I select self storage? How to get your first deal? Brainstorming exit strategies with your network. This is the talk I had with Beth Azor at her conference Women in Real Estate Investing Summit.

  Watch this interview here: https://tinyurl.com/mr47yc8p

  Define "I learned everything I could about self storage"

  Educating yourself, reading books, I hired a consultant that I heard speak on a podcast to help me analyze my first few deals.

  
  

  How did you find your first deal?

  
  

  It took me 2 years to find my first deal. I found it on crexi, I didn't have a team calling property owners to find off market deals, and the deal ended up being a portfolio of 3 car washes and a self storage. I didn't even bother asking anyone about car washes, that was mistake number one, and I didn't even go to a conference.

  
  

  How many deals had you looked at before selecting this property?

  
  

  Tons and tons, probably 1,000. It took me two years to find my first deal, I quit my job before finding it, which I don't recommend, you should find your first deal and then quit.

  
  

  Where you worried about money?

  
  

  No, I knew I could always get a job if it didn't work out. Everyone is fully capable of building anything from scratch.

  
  

  What interested you to put an offer in this deal?

  
  

  Car washes have a better cap rate because it's a much more hands on asset class, the numbers made sense.

  
  

  What interested you about self storage?

  
  

  Self storage is recession resistant, it does well in good times and in bad times. In good times people buy more, keep more and don't look at their credit card bills. In bad times, they downsize, they go from a 3 bedroom home to a 2 bedroom home and they need storage, and getting a storage is a lot cheaper than having that bigger home.

  
  

  How do you like owning something outside of your market?

  
  

  I went against my mentor's advice to buy things within a 2 hour driving distance from where you live and, for the car washes I don't like it, for the self storage, it's much easier to manage remotely.

  
  

  How did you pick your lender?

  
  

  You have to ask your local broker for recommendations, the sales broker in this case. The first couple of lenders said no. I kept going back to the broker to get more lender recommendations, and eventually one of them said yes. But 5 days before closing that lender called saying that they were switching the terms a bit, that because I didn't have experience operating a property, they'd like to retain the entire amount of the loan that I had in stock locked for the entire period of the loan. I called the president of the bank and I said, this doesn't make any sense, why would I even get a loan and not pay cash for it if you're locking my cash? We ended up meeting in the middle, putting a much smaller amount on hold for a couple of years, and after I prove myself as a good operator, they will remove that contingency.

  
  

  You were now the owner of three car washes and a self storage, what happened on day 2?

  
  

  Let's go to day 9 when one of the roofs caved! Thank God for Nationwide, they ended up paying within 2-4 weeks. The self storage has been smooth sailing, we have a local person that walks the facility about once a month, the tenants lease the units online. Today about 80% of self storage is still owned my mom and pops, and they're now retiring, they haven't implemented technology in their facilities. You can put cameras if they don't have it, you can install locks that will open with their phones. They are able to rent online, they get a unique code to the gate, you don't have to ever meet your customer.

  
  

  Are all the car washes gone?

  
  

  We're in the process of converting them, you have to keep talking to people and brainstorming ideas until you come up with the right strategy.

  
  

  
  

  
  

  Beth Azor

  
  

  www.bethazor.com

  
  

  www.linkedin.com/in/bethazor

  
  

  
  

  
  

  Subscribe to the Monte Carlo Investing Club here: www.montecarlorei.com/investors

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>784037c7-6a7c-4c0d-b6a8-3f0fa0866d1aThu, 06 Apr 2023 06:57:00 -080024:27falsefull11581581How to Prosper in a Challenging Commercial Real Estate MarketCommercial real estate has been a popular investment asset class for many years due to its ability to generate strong returns and provide diversification benefits to a portfolio. Up until last year, the challenge has been finding value-add opportunities in a highly competitive market, with compressed cap rates. Today, with the increase in interest rates, and a slow down in the economy, we have a different set of challenges, and our focus must shift to how can we make sure that a property is equipped to not only survive, but also thrive in this environment. In this article, we will explore some key considerations for passive investors looking to invest in commercial real estate in our current economy.

  Read this entire episode here: https://tinyurl.com/t2ycx99z

  
  

  Understand the market dynamics

  
  

  The basics are still important: is it a market that is growing, does it have a diverse industry, does it have a low poverty rate, what are the housing statistics such as appreciation over the last decade and average household income? If not in a major market, is it near a major city that has been growing over the last few years? This information can help you make informed investment decisions and avoid making costly mistakes.

  
  

  Define your investment objectives

  
  

  Evaluate if this is something you are comfortable with. Look at the previous economic downturns: how long did they take to recover? When was a good time to buy? While it’s impossible to predict the perfect timing for anything, we must understand at what discount rate we are comfortable purchasing at, knowing that we will be paying more for the mortgage (at least temporarily). Also remember, the downpayment will be smaller with the current cap rates going up. What do these numbers look like compared to the higher purchasing properties at a low cap rate? How many years of the higher interest rate will it take to get to the entire discount that you received? In some of our calculations it was as high as 50 years.

  
  

  Consider passive investment options

  
  

  One of the benefits of investing in commercial real estate as a passive investor is the ability to invest in a variety of different vehicles. Learn what are the pros and cons of each of these options.

  
  

  Diversify your portfolio

  
  

  Diversification is key to mitigating risk and achieving long-term investment success. Define three assets that are non correlated to each other. For example, real estate and the stock market. Real estate is on a different market swing. It does not trend up and down with the stock market, or energy.

  
  

  Partner with experienced professionals

  
  

  Investing in commercial real estate can be complex and challenging, particularly for passive investors. That’s why it’s important to partner with experienced professionals who can help guide you through the investment process. This may include investment advisors, asset managers, and property managers who have deep knowledge and expertise in commercial real estate.

  
  

  When working with a new operator, make sure to find someone in your network that has worked with that person in one capacity or another, and check for references. Do a deep dive on the underwriting of each property, if you’re not sure how to do that, hire someone to go over it with you.

  
  

  Focus on long-term value

  
  

  Commercial real estate investments are typically long-term in nature, and successful investors focus on creating long-term value. This may involve finding ways to improve the physical condition of the property, increasing rental income, implementing operational efficiencies to reduce costs, or expanding the property. By focusing on creating long-term value, investors can position themselves for...]]>Commercial real estate has been a popular investment asset class for many years due to its ability to generate strong returns and provide diversification benefits to a portfolio. Up until last year, the challenge has been finding value-add opportunities in a highly competitive market, with compressed cap rates. Today, with the increase in interest rates, and a slow down in the economy, we have a different set of challenges, and our focus must shift to how can we make sure that a property is equipped to not only survive, but also thrive in this environment. In this article, we will explore some key considerations for passive investors looking to invest in commercial real estate in our current economy.

  Read this entire episode here: https://tinyurl.com/t2ycx99z

  
  

  Understand the market dynamics

  
  

  The basics are still important: is it a market that is growing, does it have a diverse industry, does it have a low poverty rate, what are the housing statistics such as appreciation over the last decade and average household income? If not in a major market, is it near a major city that has been growing over the last few years? This information can help you make informed investment decisions and avoid making costly mistakes.

  
  

  Define your investment objectives

  
  

  Evaluate if this is something you are comfortable with. Look at the previous economic downturns: how long did they take to recover? When was a good time to buy? While it’s impossible to predict the perfect timing for anything, we must understand at what discount rate we are comfortable purchasing at, knowing that we will be paying more for the mortgage (at least temporarily). Also remember, the downpayment will be smaller with the current cap rates going up. What do these numbers look like compared to the higher purchasing properties at a low cap rate? How many years of the higher interest rate will it take to get to the entire discount that you received? In some of our calculations it was as high as 50 years.

  
  

  Consider passive investment options

  
  

  One of the benefits of investing in commercial real estate as a passive investor is the ability to invest in a variety of different vehicles. Learn what are the pros and cons of each of these options.

  
  

  Diversify your portfolio

  
  

  Diversification is key to mitigating risk and achieving long-term investment success. Define three assets that are non correlated to each other. For example, real estate and the stock market. Real estate is on a different market swing. It does not trend up and down with the stock market, or energy.

  
  

  Partner with experienced professionals

  
  

  Investing in commercial real estate can be complex and challenging, particularly for passive investors. That’s why it’s important to partner with experienced professionals who can help guide you through the investment process. This may include investment advisors, asset managers, and property managers who have deep knowledge and expertise in commercial real estate.

  
  

  When working with a new operator, make sure to find someone in your network that has worked with that person in one capacity or another, and check for references. Do a deep dive on the underwriting of each property, if you’re not sure how to do that, hire someone to go over it with you.

  
  

  Focus on long-term value

  
  

  Commercial real estate investments are typically long-term in nature, and successful investors focus on creating long-term value. This may involve finding ways to improve the physical condition of the property, increasing rental income, implementing operational efficiencies to reduce costs, or expanding the property. By focusing on creating long-term value, investors can position themselves for strong returns over the life of the investment. Decide what asset classes you are comfortable investing in during this downturn, and take the next step!

  
  

  
  

  
  

  Subscribe to our investing club here: www.montecarlorei.com/monte-carlo-investing-club

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>2c35c60a-a4c3-4395-93c8-b8ad262f5379Tue, 28 Mar 2023 06:57:00 -080017:00falsefull11571571How to Reduce Taxes: Business Owners & Real Estate ProfessionalsWhat are some strategies available for business owners and real estate professionals to decrease their taxes? Tim Gertz, CPA and Partner at Provision Wealth, will be exploring these scenarios with us.

  Read this entire interview here: https://tinyurl.com/mrxdyyan

  
  

  For business owners, including law firms, dentists, etc, what are some tax strategies available?

  The tax code is created for you. That is the incentive based model that has been created for you as a business owner to create wealth, or to create jobs, and more opportunity for them to tax more people. For business owners, the sky's the limit. In order to take a deduction under the code, it has to be ordinary and necessary for what you're doing. Every business is different, but as long as you can look at your business and make sure that you align your facts with what you're trying to do, you can duck almost everything. There are huge opportunities, we still have bonus depreciation in play. If you buy any equipment, meals, travel, auto expense, home office, it continues to go on.

  The inflation Reduction Act included huge opportunities for solar, if you have a commercial office building, you can put solar on it, you can get up to a 70% tax credit this year on that. On top of that, if you don't have a tax liability, the IRS has given you an opportunity to sell your tax credits. Not only do you have the opportunity to get a tax credit, but if you can't use it, you can sell it. Secure Act 2.0, which was signed into law in December, as incentives for setting up retirement accounts, where they will pay for the setup of the retirement account. It will be a dollar for dollar credit. When you look at businesses, look at what are you trying to do, and align yourself to what you're trying to accomplish, then everything would be deductible. If you're saying: I want to do this, then what is it that I need to do to make this an ordinary necessary deduction so that I'm aligned with the law, and I'm not doing anything that's in the gray areas, but it's ordinary and necessary, so I can deduct it.

  
  

  For real estate professionals – what are the tax benefits for them? Is this the best profession for tax purposes?

  It is. There are nuances here and there, a lot of times, I've a lot of people that are active in business A: the husband has a business, he is a dentist for example, and the wife is a real estate professional. That gives us an opportunity.

  Real estate professionals are huge, especially after 2017 with the advent of bonus depreciation on used assets, now we are able to create this huge loss in real estate that can offset all the income in this business that the other spouse has. Being a real estate professional does open a lot of opportunities. You're investing in an asset class that has been in a storied past of growth and appreciation. It's also a great asset to invest in. It's kind of a double whammy in that regard.

  
  

  The Inflation Reduction Act was huge. Whether you're a business owner, whether you own real estate, whether you're buying an electric car, whatever it might be, talk to someone about it. A client is putting a solar installation on their commercial building, and they're getting about a 90% credit. You're putting a $10 million dollar solar array, and getting a $9 million credit, which you can also sell, and you might be able to sell it for 90 cents on the dollar.

  
  

  Tim Gertz

  www.provisionwealth.com

  What are some strategies available for business owners and real estate professionals to decrease their taxes? Tim Gertz, CPA and Partner at Provision Wealth, will be exploring these scenarios with us.

  Read this entire interview here: https://tinyurl.com/mrxdyyan

  
  

  For business owners, including law firms, dentists, etc, what are some tax strategies available?

  The tax code is created for you. That is the incentive based model that has been created for you as a business owner to create wealth, or to create jobs, and more opportunity for them to tax more people. For business owners, the sky's the limit. In order to take a deduction under the code, it has to be ordinary and necessary for what you're doing. Every business is different, but as long as you can look at your business and make sure that you align your facts with what you're trying to do, you can duck almost everything. There are huge opportunities, we still have bonus depreciation in play. If you buy any equipment, meals, travel, auto expense, home office, it continues to go on.

  The inflation Reduction Act included huge opportunities for solar, if you have a commercial office building, you can put solar on it, you can get up to a 70% tax credit this year on that. On top of that, if you don't have a tax liability, the IRS has given you an opportunity to sell your tax credits. Not only do you have the opportunity to get a tax credit, but if you can't use it, you can sell it. Secure Act 2.0, which was signed into law in December, as incentives for setting up retirement accounts, where they will pay for the setup of the retirement account. It will be a dollar for dollar credit. When you look at businesses, look at what are you trying to do, and align yourself to what you're trying to accomplish, then everything would be deductible. If you're saying: I want to do this, then what is it that I need to do to make this an ordinary necessary deduction so that I'm aligned with the law, and I'm not doing anything that's in the gray areas, but it's ordinary and necessary, so I can deduct it.

  
  

  For real estate professionals – what are the tax benefits for them? Is this the best profession for tax purposes?

  It is. There are nuances here and there, a lot of times, I've a lot of people that are active in business A: the husband has a business, he is a dentist for example, and the wife is a real estate professional. That gives us an opportunity.

  Real estate professionals are huge, especially after 2017 with the advent of bonus depreciation on used assets, now we are able to create this huge loss in real estate that can offset all the income in this business that the other spouse has. Being a real estate professional does open a lot of opportunities. You're investing in an asset class that has been in a storied past of growth and appreciation. It's also a great asset to invest in. It's kind of a double whammy in that regard.

  
  

  The Inflation Reduction Act was huge. Whether you're a business owner, whether you own real estate, whether you're buying an electric car, whatever it might be, talk to someone about it. A client is putting a solar installation on their commercial building, and they're getting about a 90% credit. You're putting a $10 million dollar solar array, and getting a $9 million credit, which you can also sell, and you might be able to sell it for 90 cents on the dollar.

  
  

  Tim Gertz

  www.provisionwealth.com

  contact@provisionwealth.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>ba547262-3736-48e3-b440-8d6a8c1c09b6Thu, 16 Mar 2023 06:57:00 -080011:12falsefull11561561How to Reduce Taxes: W-2 Employees (Single and Married Scenarios)How can you reduce your taxes if you are a W-2 employee that is single, or a W-2 employee with a spouse that doesn't work? This is a topic we have been wanting to cover for a while and Tim Gertz, partner at Provision Wealth will share his insights.

  Read this entire interview here: https://tinyurl.com/2ckdcd6b

  
  

  Tax can be confusing and we all want to reduce our taxes. Let’s break it down into different scenarios, starting with W-2 employees that are high earners and are not married.

  Some would ask: what's the best tax planning advice for someone that single and a high W-2 earner, the joke is to get married! The tax laws incentivize you to: grow industry to create products, create revenue, create workforce, that can be taxed. Unfortunately, as a W-2 employee, you are in this little box where your opportunities are very minimal.

  There are still some opportunities such as: oil and gas investing. It can be very advantageous because it is outside of the material participation rules of the passive activity loss rules. You can invest in an oil and gas fund and have no involvement in it and be able to offset W-2 income. It's one of the few carve outs in code section 469 that gives us that opportunity.

  
  

  Another thing with the Inflation Reduction Act, it bumped up tax credits for energy efficiency. It reinstated the 30% tax credit on solar on residential properties. It increased the tax credits for vehicles, used vehicles, various energy efficient systems, whether it's HVAC, or things of that nature. Those are definitely things that you can look at to offset tax on W-2 taxable income.

  
  

  One of the other opportunities if you are an individual that does itemize deductions, an opportunity is called deduction stacking. Especially with charitable contributions. For example, instead of giving $10,000 every year, you  give $20,000 this year, then nothing the next year, then $20,000 the following year, and you flip flop between itemized and standard deductions.

  
  

  What about W-2 employees with a spouse that does not work. What are their options?

  This scenario opens up a huge opportunity. If the spouse wants to be involved in activities, they can look at:  What is it that they want to do? Do they want to open a business? Do they want to operate a business? Do they want to invest in real estate and become a real estate professional? One of the nice things about being married is that your income is combined, and your income and losses are combined. If you've an individual that's a W-2 high wage earner, and you have a spouse that is a real estate professional, and you invest in real estate that throws off half a million dollars of losses every year. Because they spouse is active in real estate, that loss is active. Now we have an active loss, and we have active income from W-2 that are married to each other, then they will offset each other. It doesn't have to be a real estate professional because that's where a lot of people are investing in. It can be any activity, it can be any business that someone materially participates in. It could be: coin laundry, things of that nature, things that are highly capital intensive, that have a lot of equipment on the upfront that can be depreciated. That can create a loss that will create an active loss. If they're active in it and materially participate in that activity, it will offset the W-2 income.

  A real estate professional has to:

  
  

  1. Work 750 hours in real estate activities.

  
  

  2. Do that more than any other income producing activity.

  Tim Gertz

  How can you reduce your taxes if you are a W-2 employee that is single, or a W-2 employee with a spouse that doesn't work? This is a topic we have been wanting to cover for a while and Tim Gertz, partner at Provision Wealth will share his insights.

  Read this entire interview here: https://tinyurl.com/2ckdcd6b

  
  

  Tax can be confusing and we all want to reduce our taxes. Let’s break it down into different scenarios, starting with W-2 employees that are high earners and are not married.

  Some would ask: what's the best tax planning advice for someone that single and a high W-2 earner, the joke is to get married! The tax laws incentivize you to: grow industry to create products, create revenue, create workforce, that can be taxed. Unfortunately, as a W-2 employee, you are in this little box where your opportunities are very minimal.

  There are still some opportunities such as: oil and gas investing. It can be very advantageous because it is outside of the material participation rules of the passive activity loss rules. You can invest in an oil and gas fund and have no involvement in it and be able to offset W-2 income. It's one of the few carve outs in code section 469 that gives us that opportunity.

  
  

  Another thing with the Inflation Reduction Act, it bumped up tax credits for energy efficiency. It reinstated the 30% tax credit on solar on residential properties. It increased the tax credits for vehicles, used vehicles, various energy efficient systems, whether it's HVAC, or things of that nature. Those are definitely things that you can look at to offset tax on W-2 taxable income.

  
  

  One of the other opportunities if you are an individual that does itemize deductions, an opportunity is called deduction stacking. Especially with charitable contributions. For example, instead of giving $10,000 every year, you  give $20,000 this year, then nothing the next year, then $20,000 the following year, and you flip flop between itemized and standard deductions.

  
  

  What about W-2 employees with a spouse that does not work. What are their options?

  This scenario opens up a huge opportunity. If the spouse wants to be involved in activities, they can look at:  What is it that they want to do? Do they want to open a business? Do they want to operate a business? Do they want to invest in real estate and become a real estate professional? One of the nice things about being married is that your income is combined, and your income and losses are combined. If you've an individual that's a W-2 high wage earner, and you have a spouse that is a real estate professional, and you invest in real estate that throws off half a million dollars of losses every year. Because they spouse is active in real estate, that loss is active. Now we have an active loss, and we have active income from W-2 that are married to each other, then they will offset each other. It doesn't have to be a real estate professional because that's where a lot of people are investing in. It can be any activity, it can be any business that someone materially participates in. It could be: coin laundry, things of that nature, things that are highly capital intensive, that have a lot of equipment on the upfront that can be depreciated. That can create a loss that will create an active loss. If they're active in it and materially participate in that activity, it will offset the W-2 income.

  A real estate professional has to:

  
  

  1. Work 750 hours in real estate activities.

  
  

  2. Do that more than any other income producing activity.

  Tim Gertz

  www.provisionwealth.com

  
  

  contact@provisionwealth.com

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>dfac680d-cad7-4b0d-ac1a-c3e34e0c6fe4Wed, 08 Mar 2023 11:38:00 -080014:25falsefull11551551Why is Diversification Important? How to Find Great Operators?Why is diversification important in your investments? How to find and vet great operators and partners? Patrick Grimes, CEO of Invest on Mainstreet, shares his advice after being in the business for over a decade.

  Read this entire interview here: https://tinyurl.com/2m8jh277

  Why is diversification important? What are the asset classes that you picked to diversify and why have you picked them?

  Multifamily is the core of our company, we have over a $500 million dollar portfolio now, and we have workforce housing currently in construction. If you look back over the data that suggests recession resilience and long term appreciating assets, you'll see that three bedroom two bathrooms are very strong. Then 80+ units is the next strongest asset class. All existing construction where you can buy for cash flow, income generating, and you're not hoping to build and hoping somebody will pay your premium price, that's the foundation of most of our investors' portfolios. But I have lost everything in real estate once. If you read my passive investor guide on my website, you'll see that it talks about diversifying, it talks about how the middle class has 7-8% of their portfolio in alternative assets. The high income earners are at 25%. Then the ultra wealthy is at 50%. If you want to invest like the high income earners, the ultra wealthy, you've to get out of those 401k's in the stock market, or IRAs in the stock market, or peel some of that off into a self directed variant which allows you to invest. Maybe your financial planner has you in the more stock markets or you're day trading.

  What is your process for deciding who you partner up with for these different asset classes?

  Having been somebody that lost at all, having lost at all doesn't mean you're not a good partner. In fact, I just spoke on a stage in Chicago in front of hundreds of people in economics. The question was How to do deals today, and would you do deals in today's economic environment? - everyone said yes for sure. But we were all talking towards how we saw the demand shift in 2009 and 2010. And how we saw the economic models breakdown and the financial systems. We were speaking from a lens of experience of being raked over the coals, and seeing how things fall apart. You're looking at people that made it out, and people that continue, but with better education and knowledge. I think that is part of what I look for in partners, is somebody that has been a little bit like me, and had some really rough times, but came out fighting, and now speaks from a level of understanding and made it through the failure, they didn't just go crawling back to whatever their job was, but fought their way out and now are moving forward.

  There are a lot of things to look at. But the general items are: are their investments recession resilient? Are they structured in a way like our real estate deal is, does it have six months of reserves so that if a financial disaster or natural disaster storm hits the property, you can ride it out? Are they fixed interest rates? Or are you at risk of losing all your cash flow, or maybe the building, which I know of several dozen now that are in threat of that this year.

  
  

  Patrick Grimes

  www.investonmainstreet.com

  Join me in Orlando on March 8th! www.bit.ly/3Yf9KYw

  
  

  
  

  
  

  ---

  
  

  Support this podcast: Why is diversification important in your investments? How to find and vet great operators and partners? Patrick Grimes, CEO of Invest on Mainstreet, shares his advice after being in the business for over a decade.

  Read this entire interview here: https://tinyurl.com/2m8jh277

  Why is diversification important? What are the asset classes that you picked to diversify and why have you picked them?

  Multifamily is the core of our company, we have over a $500 million dollar portfolio now, and we have workforce housing currently in construction. If you look back over the data that suggests recession resilience and long term appreciating assets, you'll see that three bedroom two bathrooms are very strong. Then 80+ units is the next strongest asset class. All existing construction where you can buy for cash flow, income generating, and you're not hoping to build and hoping somebody will pay your premium price, that's the foundation of most of our investors' portfolios. But I have lost everything in real estate once. If you read my passive investor guide on my website, you'll see that it talks about diversifying, it talks about how the middle class has 7-8% of their portfolio in alternative assets. The high income earners are at 25%. Then the ultra wealthy is at 50%. If you want to invest like the high income earners, the ultra wealthy, you've to get out of those 401k's in the stock market, or IRAs in the stock market, or peel some of that off into a self directed variant which allows you to invest. Maybe your financial planner has you in the more stock markets or you're day trading.

  What is your process for deciding who you partner up with for these different asset classes?

  Having been somebody that lost at all, having lost at all doesn't mean you're not a good partner. In fact, I just spoke on a stage in Chicago in front of hundreds of people in economics. The question was How to do deals today, and would you do deals in today's economic environment? - everyone said yes for sure. But we were all talking towards how we saw the demand shift in 2009 and 2010. And how we saw the economic models breakdown and the financial systems. We were speaking from a lens of experience of being raked over the coals, and seeing how things fall apart. You're looking at people that made it out, and people that continue, but with better education and knowledge. I think that is part of what I look for in partners, is somebody that has been a little bit like me, and had some really rough times, but came out fighting, and now speaks from a level of understanding and made it through the failure, they didn't just go crawling back to whatever their job was, but fought their way out and now are moving forward.

  There are a lot of things to look at. But the general items are: are their investments recession resilient? Are they structured in a way like our real estate deal is, does it have six months of reserves so that if a financial disaster or natural disaster storm hits the property, you can ride it out? Are they fixed interest rates? Or are you at risk of losing all your cash flow, or maybe the building, which I know of several dozen now that are in threat of that this year.

  
  

  Patrick Grimes

  www.investonmainstreet.com

  Join me in Orlando on March 8th! www.bit.ly/3Yf9KYw

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>f5dc255f-8d07-4dd7-9120-e995a46b9d24Tue, 28 Feb 2023 07:58:00 -080013:09falsefull11541541How to Raise $43M in a Year?How to raise $43M in a year? What kinds of non-recourse loans are available? Patrick Grimes, CEO of Invest on Mainstreet, shares his best practices on how he was able to raise millions last year, and how he overcame the hurdles along the way.

  Read this entire interview here: https://tinyurl.com/39wmxf8y

  What does the journey to raising $43 million really look like?

  I started back in 2006, I got some advice to get into real estate and I invested where I thought we're going to double and triple my money every couple of years but 2009, 2010 happened and I lost it all. It've personally guaranteed on pre development residential and raked me over the coals really bad, but a lot of people got hit pretty hard too. I think that one of the reasons why I'm successful today is because I failed early, failed young, fast and hard. It took me a few years to recover my credit, I worked my way up in the corporate world and did some really cool things. I did medical devices, solar cells, EV vehicles, and automation, robotics, one of a kind things. I got a master's in engineering and business, but I knew I needed to get back into real estate. I did it in much lower risk ways: in single family, both in recession resilient markets and assets that made measurable improvement to cash flow. Not inventing something from nothing, or a new development that's betting and hoping on pre-development returns. Reasonable return for a more moderate and recession resilient risk profile portfolio. That led me to a very successful path of grinding away in my career and moonlighting away in my real estate business. Ultimately, it was when my wife finally came around, and I realized that I was not dateable, and I needed to make some changes and focus on family. I make choices so that my future could grow so I stopped doing single family then traded into larger multi-family and apartment buildings, I partnered up, I started that to do large syndications around growth markets and diversify into other recession resilient, and non correlated assets like energy, where you can build safer portfolios.

  What are some of the best practices that other syndicators may actually benefit from?

  I came from high tech, when I started working I just kept my head down, underwriting, punching out numbers, and doing a lot of heavy lifting. In early 2020, I was advised, you're doing this the hard way, you've got a network of investors, colleagues that you've built a 15 year relationship with from high tech, but there's a lot of other investors out there and until you get your name out there and you tell your story, and you get out of your hermit hole and out from underneath your rock, nobody is going to know your story, you're not going to be as relatable, people aren't going to be drawn to what you're doing. I wrote a book, it's an Amazon best seller. I write for Forbes, I've written several articles on investing in commercial real estate. A lot of educational things about the trials and tribulations that I had. I started speaking on stages, I am speaking on MFIN on alternative investments, I've done economics and wealth building strategies. And people can relate to that.

  Patrick Grimes

  Invest on Mainstreet

  Join me at the Women's Real Estate Investment Summit on March 8th! www.azoracademy.com/women-s-real-estate-investment-summit-2023

  
  

  
  

  
  

  ---

  
  

  Support]]>How to raise $43M in a year? What kinds of non-recourse loans are available? Patrick Grimes, CEO of Invest on Mainstreet, shares his best practices on how he was able to raise millions last year, and how he overcame the hurdles along the way.

  Read this entire interview here: https://tinyurl.com/39wmxf8y

  What does the journey to raising $43 million really look like?

  I started back in 2006, I got some advice to get into real estate and I invested where I thought we're going to double and triple my money every couple of years but 2009, 2010 happened and I lost it all. It've personally guaranteed on pre development residential and raked me over the coals really bad, but a lot of people got hit pretty hard too. I think that one of the reasons why I'm successful today is because I failed early, failed young, fast and hard. It took me a few years to recover my credit, I worked my way up in the corporate world and did some really cool things. I did medical devices, solar cells, EV vehicles, and automation, robotics, one of a kind things. I got a master's in engineering and business, but I knew I needed to get back into real estate. I did it in much lower risk ways: in single family, both in recession resilient markets and assets that made measurable improvement to cash flow. Not inventing something from nothing, or a new development that's betting and hoping on pre-development returns. Reasonable return for a more moderate and recession resilient risk profile portfolio. That led me to a very successful path of grinding away in my career and moonlighting away in my real estate business. Ultimately, it was when my wife finally came around, and I realized that I was not dateable, and I needed to make some changes and focus on family. I make choices so that my future could grow so I stopped doing single family then traded into larger multi-family and apartment buildings, I partnered up, I started that to do large syndications around growth markets and diversify into other recession resilient, and non correlated assets like energy, where you can build safer portfolios.

  What are some of the best practices that other syndicators may actually benefit from?

  I came from high tech, when I started working I just kept my head down, underwriting, punching out numbers, and doing a lot of heavy lifting. In early 2020, I was advised, you're doing this the hard way, you've got a network of investors, colleagues that you've built a 15 year relationship with from high tech, but there's a lot of other investors out there and until you get your name out there and you tell your story, and you get out of your hermit hole and out from underneath your rock, nobody is going to know your story, you're not going to be as relatable, people aren't going to be drawn to what you're doing. I wrote a book, it's an Amazon best seller. I write for Forbes, I've written several articles on investing in commercial real estate. A lot of educational things about the trials and tribulations that I had. I started speaking on stages, I am speaking on MFIN on alternative investments, I've done economics and wealth building strategies. And people can relate to that.

  Patrick Grimes

  Invest on Mainstreet

  Join me at the Women's Real Estate Investment Summit on March 8th! www.azoracademy.com/women-s-real-estate-investment-summit-2023

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>2cd0ca77-06ac-41f5-a81d-8f818a40b7c3Tue, 21 Feb 2023 07:57:00 -080015:05falsefull11531531What is the State of Industrial? What to Do if Your Rates Are Rising this Year?What is the state of industrial investing today? Are the rising interest rates affecting some properties? What can you do to fix this problem? Chad Griffiths, Partner at NAI Commercial Real Estate, has been working in the space for over a decade and shares his insights.

  Read this entire interview here: https://tinyurl.com/yc82y696

  What is happening in the industrial world today?

  My overarching investment philosophy, and I try to share this with as many people as possible, because I think it's just the healthiest way to look at real estate, is investing very long term, I would almost like to think that I have an infinite money timeline. There are some properties that I don't ever want to sell, they might go to future generations. Anytime I buy a property, I must be as comfortable owning this property in 10 years, as I am today. That type of mentality smooths out these aberrations that we're going through. I think that this is going to be a painful aberration but I also think this is going to be temporary. I don't see interest rates being able to sustain this high going much past 2023. All the governments that are sitting on so much debt, all the corporations, all the households, by design, they're trying to curb inflation by pulling the interest rate lever, but it's making everything very expensive. And I do think that they'll pull that lever too hard and before we know it, we're going to have recessionary pressure and that comes with political implications. It's very hard to get reelected for a politician if they're in a deep recession. We'll start seeing all sorts of promises coming out this year, whether it's the other side saying, We're going to lower interest rates to stimulate the economy. And then the incumbents are going to say, We're going to do the same thing. I think we live largely in a political cycle more than an economic cycle because there are too many people pulling levers to try and get themselves elected. I don't think this is going to be long term in the grand scheme of most of our properties.

  What would you do if you had a mortgage coming up?

  
  

  I would probably raise money to pay that mortgage for the next couple of years, borrow from whoever you may need to borrow. Even credit cards potentially, there are several credit cards that you do not pay any interest for a year, I would potentially do that. If I believe that the rates are going to be going down. Another idea is start selling, or looking at partnerships. We have to do what we have to do. It’s also part of all the preparation that we all have been talking about over the last five years, that people have been thinking, The recession is around the corner. The people that have not prepared and bought at 4% cap rates with 20% down, that’s not on us because the wise investors have been warning people about this. It takes a 10% vacancy to destroy a deal in a recession. If people do not underwrite for that…they should have done their homework. A lot of people benefited over the last five years, and the ones that kept being super aggressive, you might need to take some money out of the benefit that you got over the last five years and put into these deals that might be suffering for the next couple of years, in my opinion.

  Chad Griffiths

  www.youtube.com/@industrialize

  Join our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: What is the state of industrial investing today? Are the rising interest rates affecting some properties? What can you do to fix this problem? Chad Griffiths, Partner at NAI Commercial Real Estate, has been working in the space for over a decade and shares his insights.

  Read this entire interview here: https://tinyurl.com/yc82y696

  What is happening in the industrial world today?

  My overarching investment philosophy, and I try to share this with as many people as possible, because I think it's just the healthiest way to look at real estate, is investing very long term, I would almost like to think that I have an infinite money timeline. There are some properties that I don't ever want to sell, they might go to future generations. Anytime I buy a property, I must be as comfortable owning this property in 10 years, as I am today. That type of mentality smooths out these aberrations that we're going through. I think that this is going to be a painful aberration but I also think this is going to be temporary. I don't see interest rates being able to sustain this high going much past 2023. All the governments that are sitting on so much debt, all the corporations, all the households, by design, they're trying to curb inflation by pulling the interest rate lever, but it's making everything very expensive. And I do think that they'll pull that lever too hard and before we know it, we're going to have recessionary pressure and that comes with political implications. It's very hard to get reelected for a politician if they're in a deep recession. We'll start seeing all sorts of promises coming out this year, whether it's the other side saying, We're going to lower interest rates to stimulate the economy. And then the incumbents are going to say, We're going to do the same thing. I think we live largely in a political cycle more than an economic cycle because there are too many people pulling levers to try and get themselves elected. I don't think this is going to be long term in the grand scheme of most of our properties.

  What would you do if you had a mortgage coming up?

  
  

  I would probably raise money to pay that mortgage for the next couple of years, borrow from whoever you may need to borrow. Even credit cards potentially, there are several credit cards that you do not pay any interest for a year, I would potentially do that. If I believe that the rates are going to be going down. Another idea is start selling, or looking at partnerships. We have to do what we have to do. It’s also part of all the preparation that we all have been talking about over the last five years, that people have been thinking, The recession is around the corner. The people that have not prepared and bought at 4% cap rates with 20% down, that’s not on us because the wise investors have been warning people about this. It takes a 10% vacancy to destroy a deal in a recession. If people do not underwrite for that…they should have done their homework. A lot of people benefited over the last five years, and the ones that kept being super aggressive, you might need to take some money out of the benefit that you got over the last five years and put into these deals that might be suffering for the next couple of years, in my opinion.

  Chad Griffiths

  www.youtube.com/@industrialize

  Join our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>8b6cc049-29c4-42c3-a03d-3a97b26bb340Thu, 09 Feb 2023 07:57:00 -080008:58falsefull11521521How to Manage an Industrial Property? Key Things to Keep in MindHow to manage an industrial portfolio? How to compensate managers? What are the key things to keep in mind? Chad Griffiths, industrial investor and Partner at NAI Commercial Real Estate, shares his insights.

  Read this entire episode here: https://tinyurl.com/mr2ch5x2

  
  

  How do you manage an industrial portfolio?

  I have a property that we bought two years ago, it's a $3 million building and there’s a single tenant in there, a fortune 1000 tenant that occupies the building of a manufacturing facility. A $3M multi-family building by comparison, has maybe 20 units and it’s much more management intensive. The industrial you have one tenant, the multi-family you have 20. The way our lease is structured is NNN: the tenant is responsible for paying all the operating costs on the property. Instead of them calling us for every little thing that goes wrong, they just fix it. In two years, I’ve been to that property a couple of times, my partner and I self-manage that one. We also have other properties with more tenants, and we have property managers in those ones. Even though it’s a lot easier to manage from a time, energy, focus standpoint, there are times when I think you do want to have a professional property manager.

  When should you get an onsite manager, and how often do they need to go there?

  The deciding factor for us is largely down to how complex the situation gets. Even though you’re not dealing with the same amount of tenants, things come up. The scale of having 10 tenants vs one tenant, where you have one point of contact, it’s very easy for us to follow up with a general manager, they take care of most of the things that go wrong. If there was something like an electrical issue, then we get involved and have a contractor come to address it. But it’s just much less time intensive to look after one tenant. The one where we have 10 tenants, there’s smaller tenants, they need a little bit more hand holding, because they might not know how everything works. There’s also a common area, so anytime you’re dealing with tenants having to interact, then you potentially have issues.

  The tenants pay base or net rent to the landlord, they also pay for the operating level expenses of the property. That’s usually property taxes, building insurance, common area maintenance, landscaping costs, etc, and that’s a budget. When a landlord gives a tenant their numbers in advance at the beginning of the year, the base rent is contractually agreed upon, that could be $10 a square foot for the whole term of the lease, there could be escalations, but that’s already known. Whereas the operating costs, all the landlord can do at the beginning of the year is an estimate. At the end of the year, they have to reconcile all those bills, this is how much we actually paid on all these things, add up how much they paid out of how much they collected, and they either need to give an invoice for any amount that is still owing, or they give a credit or refund back to the tenants. Because that operating cost is collected in advance, when the time comes to reconcile and you either have to send an invoice or send a credit, no tenant will ever complain about getting a check in the mail. But a tenant will not be happy if they get a $10,000 invoice at the end of the year because it was poorly projected at the beginning.

  
  

  Chad Griffiths

  www.youtube.com/@industrialize

  Join our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this...]]>How to manage an industrial portfolio? How to compensate managers? What are the key things to keep in mind? Chad Griffiths, industrial investor and Partner at NAI Commercial Real Estate, shares his insights.

  Read this entire episode here: https://tinyurl.com/mr2ch5x2

  
  

  How do you manage an industrial portfolio?

  I have a property that we bought two years ago, it's a $3 million building and there’s a single tenant in there, a fortune 1000 tenant that occupies the building of a manufacturing facility. A $3M multi-family building by comparison, has maybe 20 units and it’s much more management intensive. The industrial you have one tenant, the multi-family you have 20. The way our lease is structured is NNN: the tenant is responsible for paying all the operating costs on the property. Instead of them calling us for every little thing that goes wrong, they just fix it. In two years, I’ve been to that property a couple of times, my partner and I self-manage that one. We also have other properties with more tenants, and we have property managers in those ones. Even though it’s a lot easier to manage from a time, energy, focus standpoint, there are times when I think you do want to have a professional property manager.

  When should you get an onsite manager, and how often do they need to go there?

  The deciding factor for us is largely down to how complex the situation gets. Even though you’re not dealing with the same amount of tenants, things come up. The scale of having 10 tenants vs one tenant, where you have one point of contact, it’s very easy for us to follow up with a general manager, they take care of most of the things that go wrong. If there was something like an electrical issue, then we get involved and have a contractor come to address it. But it’s just much less time intensive to look after one tenant. The one where we have 10 tenants, there’s smaller tenants, they need a little bit more hand holding, because they might not know how everything works. There’s also a common area, so anytime you’re dealing with tenants having to interact, then you potentially have issues.

  The tenants pay base or net rent to the landlord, they also pay for the operating level expenses of the property. That’s usually property taxes, building insurance, common area maintenance, landscaping costs, etc, and that’s a budget. When a landlord gives a tenant their numbers in advance at the beginning of the year, the base rent is contractually agreed upon, that could be $10 a square foot for the whole term of the lease, there could be escalations, but that’s already known. Whereas the operating costs, all the landlord can do at the beginning of the year is an estimate. At the end of the year, they have to reconcile all those bills, this is how much we actually paid on all these things, add up how much they paid out of how much they collected, and they either need to give an invoice for any amount that is still owing, or they give a credit or refund back to the tenants. Because that operating cost is collected in advance, when the time comes to reconcile and you either have to send an invoice or send a credit, no tenant will ever complain about getting a check in the mail. But a tenant will not be happy if they get a $10,000 invoice at the end of the year because it was poorly projected at the beginning.

  
  

  Chad Griffiths

  www.youtube.com/@industrialize

  Join our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7d56616a-a0f3-4566-986e-9873cfe8b7ffThu, 02 Feb 2023 07:57:00 -080022:46falsefull11511511How to Find, Buy & Exit a Retail PropertyHow to find a retail deal, negotiate, buy, develop all while dealing with all the curveballs that are thrown at you? Beth Azor, CEO of Azor Advisory Services, has been investing in retail for the last 36 years and shares one particular deal from beginning to end.

  Read this entire interview here: https://tinyurl.com/3755w9hd

  
  

  Let's talk about a deal of yours, how did you find it and what happened throughout the deal if you still own it?

  I'm going to talk about B&B Plaza. I was at a City Commission meeting and they outlawed strip clubs, immediately my brain went to a strip club on Main and Main. It was going to happen 24 months from then. The next morning, I look up the tax rules on the address of the strip club and I found out this 80-year-old couple, I called them and said, I'm calling you about your building where Eden's nightclub is located, last night at the town of Davies commission meeting, they outlawed strip clubs, so 24 months from now, there will not be a strip club there, would you like to sell me your building? They said, no, we don't believe you, we get $10,000 per month in cash from the strip club. I sent them the minutes of the meeting, we started having a dialogue and they were not jumping up and down to sell me the building.

  The two-year mark comes, the strip club closes, and exactly my prediction happens, four competitors of mine swoop in, they were very aggressive with these people because they didn't understand them, and didn't know them. I got a call from their son. They had been very ill, and that they're definitely going to sell and I'm coming to town to meet five of you. I said okay, can I be the last person? He said yes, my parents really liked you so you have the jump ball. The next day he calls and says if you pay 3.4 million, it's yours. I said done. He says, how fast can you close? I said 24 hours. The reason why I could afford to pay more is because I had great relationships in the market. I had called a friend of mine who had a property across the street and she had just done a renewal for 5,000 square feet with a national company at $50 a square foot. My two shopping centers down the street: one was at $30 and one was $40. The fact that she had $50 rent and it was behind our parcels, was very good market intel. 

  
  

  I went through three project managers to build it. After we built it, everything was opened, Starbucks, Blaze Pizza, Select Comfort. A day before Verizon moved in, they told us that there is no RTU's in the building (air conditioner units). My air conditioning guy puts the air conditioning units on the roof, he doesn't pull a permit and he gets caught. I get a call from the city, with whom I have a phenomenal relationship saying you have an illegal vendor on your roof and he doesn't have insurance. I had to pay $27,000 in late fees to Verizon and I had penalties from the city because I tried to do it without a permit for speed purposes. It was a very expensive lesson.

  
  

  My NOI today is $660k, on average $66 a square foot, it's probably worth 12 to 14 million, we paid 3.4 million, the construction was probably another 4 million.

  
  

  Join the Women's Real Estate Investing Summit here: bit.ly/3JaGeiEBeth AzorTwitterInstagram

  
  

  
  

  
  

  ---

  
  

  Support this podcast: How to find a retail deal, negotiate, buy, develop all while dealing with all the curveballs that are thrown at you? Beth Azor, CEO of Azor Advisory Services, has been investing in retail for the last 36 years and shares one particular deal from beginning to end.

  Read this entire interview here: https://tinyurl.com/3755w9hd

  
  

  Let's talk about a deal of yours, how did you find it and what happened throughout the deal if you still own it?

  I'm going to talk about B&B Plaza. I was at a City Commission meeting and they outlawed strip clubs, immediately my brain went to a strip club on Main and Main. It was going to happen 24 months from then. The next morning, I look up the tax rules on the address of the strip club and I found out this 80-year-old couple, I called them and said, I'm calling you about your building where Eden's nightclub is located, last night at the town of Davies commission meeting, they outlawed strip clubs, so 24 months from now, there will not be a strip club there, would you like to sell me your building? They said, no, we don't believe you, we get $10,000 per month in cash from the strip club. I sent them the minutes of the meeting, we started having a dialogue and they were not jumping up and down to sell me the building.

  The two-year mark comes, the strip club closes, and exactly my prediction happens, four competitors of mine swoop in, they were very aggressive with these people because they didn't understand them, and didn't know them. I got a call from their son. They had been very ill, and that they're definitely going to sell and I'm coming to town to meet five of you. I said okay, can I be the last person? He said yes, my parents really liked you so you have the jump ball. The next day he calls and says if you pay 3.4 million, it's yours. I said done. He says, how fast can you close? I said 24 hours. The reason why I could afford to pay more is because I had great relationships in the market. I had called a friend of mine who had a property across the street and she had just done a renewal for 5,000 square feet with a national company at $50 a square foot. My two shopping centers down the street: one was at $30 and one was $40. The fact that she had $50 rent and it was behind our parcels, was very good market intel. 

  
  

  I went through three project managers to build it. After we built it, everything was opened, Starbucks, Blaze Pizza, Select Comfort. A day before Verizon moved in, they told us that there is no RTU's in the building (air conditioner units). My air conditioning guy puts the air conditioning units on the roof, he doesn't pull a permit and he gets caught. I get a call from the city, with whom I have a phenomenal relationship saying you have an illegal vendor on your roof and he doesn't have insurance. I had to pay $27,000 in late fees to Verizon and I had penalties from the city because I tried to do it without a permit for speed purposes. It was a very expensive lesson.

  
  

  My NOI today is $660k, on average $66 a square foot, it's probably worth 12 to 14 million, we paid 3.4 million, the construction was probably another 4 million.

  
  

  Join the Women's Real Estate Investing Summit here: bit.ly/3JaGeiEBeth AzorTwitterInstagram

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7945655d-4259-46db-a8fb-f49485bfbaf2Tue, 24 Jan 2023 07:57:00 -080025:13falsefull11501501What is The State of House Flipping in This Economy?What is happening in the flipping world today? How do you prepare as a flipper when the rates are high? How to buy deals with future expectations being low? Elisa Covington, founder and CEO of Transform Real Estate Investments shares her insights.

  Read this entire interview here: bit.ly/3iq0BgU

  
  

  What is happening in the flipping world today?

  
  

  It's interesting that people perceive what's happening in the housing market and the interest rate, that the market is tanking and nobody is buying homes anymore which I find not accurate based on my own experience. I've sold about nine homes this year, three homes at the beginning of the year when the market was really good and then the other six homes after the interest rate started increasing and the market declined.

  My experience hasn't been that terrible. The houses I flipped actually were able to sell on the market within a week or two. And, in most cases, the sale prices were at my expectation or even above my expectation. I have one home that's been sitting on the market for maybe two months now. Most of my experience has been positive which is contrary to popular belief. There are still a lot of buyers out there and I think the Bay Area market may be a little unique, too, because there's just not a lot of inventory, and even though the interest rates are high, buyers are taking a step back because of the limited inventory, but the supply and demand haven’t really shifted that much. Most agents that I work with, the top real estate agents in the Bay Area market, are still categorizing it as a sellers market.

  
  

  How are you able to buy deals with future expectations being low when it has been very competitive up until now?

  
  

  In this market, selling is harder because buyers are taking a step back because of the higher interest rate and the fear of a recession. Because buyers are taking a step back, it's actually really easy to get a good deal because there's not as much competition as before, especially with my target acquisitions, which are homes that are fixer-uppers that are in very poor condition. In a normal market, some buyers may say, we can afford a remodeled home so we're going to buy a home that's in a poor condition for a little less. And the difference in prices between a remodeled home and a fixer-upper is not as significant in a hot market because there's not much inventory and there's a lot of competition. But when the market is as slow as it is now, buyers are focused on remodeled homes, nicer homes, the fixer-uppers get overlooked, they tend to sit on the market and sell for a much lower price than the homes that have been remodeled. The difference in prices between those two types of homes actually has become more significant.

  In this market, it is easier to find good deals. That's the beauty of house flipping, we're on both sides of the market. We need to purchase a home to flip it, and then after the flip is done, we have to sell the home so we are both the buyer and the seller. When the market changes, if the market is hot, it's going to make it super easy to sell, you're going to sell for more than you are expecting and you will do fine but when the market is declining.

  
  

  Elisa Covington

  
  

  instagram.com/transformrealestate

  
  

  www.youtube.com/@TransformRealEstate

  Subscribe to our newsletter here: What is happening in the flipping world today? How do you prepare as a flipper when the rates are high? How to buy deals with future expectations being low? Elisa Covington, founder and CEO of Transform Real Estate Investments shares her insights.

  Read this entire interview here: bit.ly/3iq0BgU

  
  

  What is happening in the flipping world today?

  
  

  It's interesting that people perceive what's happening in the housing market and the interest rate, that the market is tanking and nobody is buying homes anymore which I find not accurate based on my own experience. I've sold about nine homes this year, three homes at the beginning of the year when the market was really good and then the other six homes after the interest rate started increasing and the market declined.

  My experience hasn't been that terrible. The houses I flipped actually were able to sell on the market within a week or two. And, in most cases, the sale prices were at my expectation or even above my expectation. I have one home that's been sitting on the market for maybe two months now. Most of my experience has been positive which is contrary to popular belief. There are still a lot of buyers out there and I think the Bay Area market may be a little unique, too, because there's just not a lot of inventory, and even though the interest rates are high, buyers are taking a step back because of the limited inventory, but the supply and demand haven’t really shifted that much. Most agents that I work with, the top real estate agents in the Bay Area market, are still categorizing it as a sellers market.

  
  

  How are you able to buy deals with future expectations being low when it has been very competitive up until now?

  
  

  In this market, selling is harder because buyers are taking a step back because of the higher interest rate and the fear of a recession. Because buyers are taking a step back, it's actually really easy to get a good deal because there's not as much competition as before, especially with my target acquisitions, which are homes that are fixer-uppers that are in very poor condition. In a normal market, some buyers may say, we can afford a remodeled home so we're going to buy a home that's in a poor condition for a little less. And the difference in prices between a remodeled home and a fixer-upper is not as significant in a hot market because there's not much inventory and there's a lot of competition. But when the market is as slow as it is now, buyers are focused on remodeled homes, nicer homes, the fixer-uppers get overlooked, they tend to sit on the market and sell for a much lower price than the homes that have been remodeled. The difference in prices between those two types of homes actually has become more significant.

  In this market, it is easier to find good deals. That's the beauty of house flipping, we're on both sides of the market. We need to purchase a home to flip it, and then after the flip is done, we have to sell the home so we are both the buyer and the seller. When the market changes, if the market is hot, it's going to make it super easy to sell, you're going to sell for more than you are expecting and you will do fine but when the market is declining.

  
  

  Elisa Covington

  
  

  instagram.com/transformrealestate

  
  

  www.youtube.com/@TransformRealEstate

  Subscribe to our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>e2fba229-f41d-43a9-a943-6fba4ab9d0a8Thu, 12 Jan 2023 07:57:00 -080018:11falsefull11491491Setting Goals for the New Year, How to Organize Your Day and When to Hire a Full Time VAToday we'll go over some tips for setting your real estate goals for the year, how to look at them on a daily, weekly, monthly and on a yearly basis, how to organize your day, and when is the optimal time to hire a full time VA. Bronson Hill, principal at Bronson Equity has been in the real estate investment world for the last four years, he has raised over $30M and shares his insights.

  You can read this entire episode here: bit.ly/3VTpvTL

  
  

  Last year you raised an incredible amount of money, what do you think was the biggest step you took in the last four years to get yourself to where you are right now?

  
  

  I think the biggest thing that happened was I made the decision that I was going to leave my job within a few years, I was going to figure out a way to do it. By doing that, your subconscious tries to figure it out, you go to events, meet the people, make connections. And in the process, I started a meet up in Southern California, and found my first investor there. I'd had so many calls with friends and family to raise money for real estate deals, and zero invested, it was so frustrating stuff, but this guy who I'd never met before, who simply saw me at the front of the room, he didn't see me as an expert, but as a leader in the space. The amazing thing is when you're trying to get started, it's so important that you try to find a way to add value. You're doing it by this podcast, other people are doing it by going to events and trying to find a way to help people on their journey. We create a lot of content now, emails, videos, we have our YouTube channel and all types of stuff to create value for people.

  You have a specific amount of days that you're completely disconnecting for the year. Can you tell me a little bit about that? And how do you do it?

  
  

  That's new for me. I'm always working and doing things, even on a day off. I'm a part of a coaching group now and they're saying that it's really good to have a certain number of free days, and that is defined as you don't answer an email, you don't pick up the phone. When somebody calls for business, you're out of the office. And it's so hard to do. But if you're an entrepreneur, you can hopefully have team members that can help, you train your people, you work with your partners, your investors, etc. I don't pick up the phone on the weekends unless it's an emergency. My goal this year is 115 free days where I don't do any work on those days.

  A lot of times when people decide to take a week, or a month off, and they just really let the team take care of the business, more often than not, the company actually does way better than when they were there watching over everybody.

  
  

  Is there anything else that is important to share regarding goal setting?

  
  

  You have to have written goals, when you write it down, you're actually creating something. And something doesn't exist unless you create it, you either speak it, you write it down. And put that up somewhere, I have my goals typed up with my mission statement, I laminated on the backside and there are pictures of what those goals look like. And I read those every morning. Keeping that in front of you is really important. I encourage anybody who's listening who wants to change their life, start creating the goals and keeping them in front of you all the time.

  Yeah,Bronson Hill

  
  

  www.bronsonequity.com

  
  

  VA finder: www.virtualstafffinder.com

  
  

  zero tax summit, get notified by joining our...]]>Today we'll go over some tips for setting your real estate goals for the year, how to look at them on a daily, weekly, monthly and on a yearly basis, how to organize your day, and when is the optimal time to hire a full time VA. Bronson Hill, principal at Bronson Equity has been in the real estate investment world for the last four years, he has raised over $30M and shares his insights.

  You can read this entire episode here: bit.ly/3VTpvTL

  
  

  Last year you raised an incredible amount of money, what do you think was the biggest step you took in the last four years to get yourself to where you are right now?

  
  

  I think the biggest thing that happened was I made the decision that I was going to leave my job within a few years, I was going to figure out a way to do it. By doing that, your subconscious tries to figure it out, you go to events, meet the people, make connections. And in the process, I started a meet up in Southern California, and found my first investor there. I'd had so many calls with friends and family to raise money for real estate deals, and zero invested, it was so frustrating stuff, but this guy who I'd never met before, who simply saw me at the front of the room, he didn't see me as an expert, but as a leader in the space. The amazing thing is when you're trying to get started, it's so important that you try to find a way to add value. You're doing it by this podcast, other people are doing it by going to events and trying to find a way to help people on their journey. We create a lot of content now, emails, videos, we have our YouTube channel and all types of stuff to create value for people.

  You have a specific amount of days that you're completely disconnecting for the year. Can you tell me a little bit about that? And how do you do it?

  
  

  That's new for me. I'm always working and doing things, even on a day off. I'm a part of a coaching group now and they're saying that it's really good to have a certain number of free days, and that is defined as you don't answer an email, you don't pick up the phone. When somebody calls for business, you're out of the office. And it's so hard to do. But if you're an entrepreneur, you can hopefully have team members that can help, you train your people, you work with your partners, your investors, etc. I don't pick up the phone on the weekends unless it's an emergency. My goal this year is 115 free days where I don't do any work on those days.

  A lot of times when people decide to take a week, or a month off, and they just really let the team take care of the business, more often than not, the company actually does way better than when they were there watching over everybody.

  
  

  Is there anything else that is important to share regarding goal setting?

  
  

  You have to have written goals, when you write it down, you're actually creating something. And something doesn't exist unless you create it, you either speak it, you write it down. And put that up somewhere, I have my goals typed up with my mission statement, I laminated on the backside and there are pictures of what those goals look like. And I read those every morning. Keeping that in front of you is really important. I encourage anybody who's listening who wants to change their life, start creating the goals and keeping them in front of you all the time.

  Yeah,Bronson Hill

  
  

  www.bronsonequity.com

  
  

  VA finder: www.virtualstafffinder.com

  
  

  zero tax summit, get notified by joining our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>d7f5497a-9ef5-4232-b56c-33295b13fc3bThu, 05 Jan 2023 07:57:00 -080020:54falsefull11481481What's Happening With Hotels in This Economy? Which Markets Are Thriving? What Type of Hotel Should You Invest In?What’s going on with hotels in this economy? Which markets are they thriving now? What are the benefits of investing and operating hotels? What are some types of hotels that may be great investments today? Julie Surago, Vice President at Olive Tree Holdings shares her insights.

  You can read this entire interview here: bit.ly/3G2PLVO

  
  

  What is going on with hotels today?

  
  

  Through COVID, you would expect that hotels got hit the most because of the stoppage and most travel both business leisure and international group, and yet hotels were able to weather the storm based because of the PPP loans that were given out by the government. And each hotel employs a fairly large number of people anywhere from Best Western which has 20 employees up to 1000, and Marriott which might have 200 employees and they took advantage of that. So, there wasn’t a lot of distress in the market that we really expected to see. In fact, my firm was going to try to find some opportunities in the hospitality and real estate investment market, but it never really transpired.

  What are some of the benefits of investing and operating hotels? It's very hands-on and you have people moving in and out on a daily basis, but are the returns better?

  
  

  The biggest challenge with hotels today is staffing. Every industry is having trouble with staffing, especially the hospitality industry, hotels, and restaurants because there are a lot of turnovers and there are not as many international H-1B1 visas. However, the biggest benefit of a hotel versus any other type of real estate class is in times of inflation, when the value of the dollar is going up, hotels can react quickly. They set their rates every single day so you'll notice when you look at, not just hotels, but airlines, the prices are going up pretty significantly along with everything else. Whereas, if you have a multifamily lease or an office lease, retail, or industrial, some of those either get reset once a year or get reset every five years which is a lot harder to react to inflation.

  If you were to purchase a hotel today, what are some of the major things you would be looking for?

  
  

  I look for upside. If you're looking at a hotel, maybe it has a brand that is strong, but there should be an opportunity to "upmarket" something. What has been attractive for hotel investors is the ability to assume a loan at a fixed interest rate. There are a lot of hotels, particularly midscale hotels with limited service, that are on long-term CMBS loans and maybe they have a fixed interest rate of 4.5% which is extremely attractive right now. Another thing that has been attractive for people and also for some sellers is the big firms that have the ability to do so are offering seller financing at terms lower than what you can find in the market. I'm seeing hotels that were not attractive buys five years ago, but sellers are able to sell them now because they can offer that financing at cheaper returns, which really improves the upside, at least in comparison to what you can find.

  What kind of hotel size would you look for?

  
  

  I'm really into limited-service hotels. The resorts and full service are very attractive and fun to own but limited service usually is easier to operate. Fewer employees and a lot cheaper to buy. Another thing that is always been attractive to me is to buy nicer economy hotels. I think those weather the storm really well as far as any kind of economic disruption, whether that be building like Qantas or Wyndham micro hotels,

  Julie Surago

  
  

  julie.surago@gmail.com

  
  

  
  

  
  

  ---

  
  

  Support...]]>What’s going on with hotels in this economy? Which markets are they thriving now? What are the benefits of investing and operating hotels? What are some types of hotels that may be great investments today? Julie Surago, Vice President at Olive Tree Holdings shares her insights.

  You can read this entire interview here: bit.ly/3G2PLVO

  
  

  What is going on with hotels today?

  
  

  Through COVID, you would expect that hotels got hit the most because of the stoppage and most travel both business leisure and international group, and yet hotels were able to weather the storm based because of the PPP loans that were given out by the government. And each hotel employs a fairly large number of people anywhere from Best Western which has 20 employees up to 1000, and Marriott which might have 200 employees and they took advantage of that. So, there wasn’t a lot of distress in the market that we really expected to see. In fact, my firm was going to try to find some opportunities in the hospitality and real estate investment market, but it never really transpired.

  What are some of the benefits of investing and operating hotels? It's very hands-on and you have people moving in and out on a daily basis, but are the returns better?

  
  

  The biggest challenge with hotels today is staffing. Every industry is having trouble with staffing, especially the hospitality industry, hotels, and restaurants because there are a lot of turnovers and there are not as many international H-1B1 visas. However, the biggest benefit of a hotel versus any other type of real estate class is in times of inflation, when the value of the dollar is going up, hotels can react quickly. They set their rates every single day so you'll notice when you look at, not just hotels, but airlines, the prices are going up pretty significantly along with everything else. Whereas, if you have a multifamily lease or an office lease, retail, or industrial, some of those either get reset once a year or get reset every five years which is a lot harder to react to inflation.

  If you were to purchase a hotel today, what are some of the major things you would be looking for?

  
  

  I look for upside. If you're looking at a hotel, maybe it has a brand that is strong, but there should be an opportunity to "upmarket" something. What has been attractive for hotel investors is the ability to assume a loan at a fixed interest rate. There are a lot of hotels, particularly midscale hotels with limited service, that are on long-term CMBS loans and maybe they have a fixed interest rate of 4.5% which is extremely attractive right now. Another thing that has been attractive for people and also for some sellers is the big firms that have the ability to do so are offering seller financing at terms lower than what you can find in the market. I'm seeing hotels that were not attractive buys five years ago, but sellers are able to sell them now because they can offer that financing at cheaper returns, which really improves the upside, at least in comparison to what you can find.

  What kind of hotel size would you look for?

  
  

  I'm really into limited-service hotels. The resorts and full service are very attractive and fun to own but limited service usually is easier to operate. Fewer employees and a lot cheaper to buy. Another thing that is always been attractive to me is to buy nicer economy hotels. I think those weather the storm really well as far as any kind of economic disruption, whether that be building like Qantas or Wyndham micro hotels,

  Julie Surago

  
  

  julie.surago@gmail.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>b343fad7-7b9e-4b05-86b9-200ce7cab7b4Thu, 29 Dec 2022 07:57:00 -080016:51falsefull11471471Do You Compare Yourself With Other Real Estate Investors?Do you feel like you're way behind other investors regarding your real estate goals? Do you look at others and sometimes feel like you haven't made much progress compared to them? Today I'm going to remind you to just focus on your journey because you don't know what others are really going through!

  You can read this entire episode here: bit.ly/3v40ASh

  
  

  Watch the detailed explanation about Matt Onofrio's $35M alleged fraud here: bit.ly/3hBSk99

  With the year coming to an end, and a brand new one starting, I thought it would be useful to talk about being happy with our journey, not comparing ourselves with others. There's something happening right now in the real estate industry with a particular person that a lot of operators were looking up to him, he was growing incredibly quickly, in a very short time, he was hanging out with the who's who of real estate, and he was even writing a book for Bigger Pockets. He had just started investing in real estate for the very first time, three to four years ago. It turns that, as of now, everything may have been a fraud. 

  
  

  When I did my own startup over a decade ago, it was not only one of the most difficult things that I have done, but I also learned that it's so important for us to focus on our own things and never worry about "the competition" and the fact that all of our competitors are doing so much better than us. One of them copied everything that we were doing and raised millions of dollars. The other also raised a lot more millions of dollars. The one that copied us at the end of the day ended up going out of business. And the other one that had raised even more millions of dollars, the CEO ended up terminating his life because he had purchased a ton of inventory that he was not going to be able to sell. These people were on the news, they were on the tech startup blog posts being written about nonstop. The CEO that unalived himself was hanging out with top people in the tech industry, including the Zappos founder, and a few other people. So it was very easy to be thinking that I was so far behind them. Look at all these amazing connections that this person has, what now? 

  
  

  If you are worried about the competition, you are wasting precious time. And my point is not about the competition with regards to real estate, but it's more on the comparison aspect of it, how we can easily think that this other person is so much further ahead than me, what am I doing wrong? There was this nurse guy that at least two people asked me to interview him this year. In the last four years, which is exactly the same amount of time that I have been doing real estate full time, he managed to be a "real estate mogul" worth $160 million.

  
  

  At the end of 2019 up until now that this person started from zero investments to being worth $160 million, to being now investigated for fraud. Before this fraud investigation came along, the thought did cross my mind, what am I doing wrong? I am far behind his numbers in the same four years. I did reach out to him twice asking him to come over the podcast and he never responded. I was really more curious on how did you go from zero to this much in just four years. This is fantastic. Fast forward to now, just two weeks ago, I get my daily real estate digest and it says that Matt Onofrio, this person that was previously a nurse and became a very successful real estate investor is now being investigated by the SEC for fraud. And I thought... nurse... that sounds so familiar. And it turned out that he was the person that everybody has been telling me about that had an amazing story. It turned out that it was not so amazing, after all. He is now facing federal bank fraud...]]>Do you feel like you're way behind other investors regarding your real estate goals? Do you look at others and sometimes feel like you haven't made much progress compared to them? Today I'm going to remind you to just focus on your journey because you don't know what others are really going through!

  You can read this entire episode here: bit.ly/3v40ASh

  
  

  Watch the detailed explanation about Matt Onofrio's $35M alleged fraud here: bit.ly/3hBSk99

  With the year coming to an end, and a brand new one starting, I thought it would be useful to talk about being happy with our journey, not comparing ourselves with others. There's something happening right now in the real estate industry with a particular person that a lot of operators were looking up to him, he was growing incredibly quickly, in a very short time, he was hanging out with the who's who of real estate, and he was even writing a book for Bigger Pockets. He had just started investing in real estate for the very first time, three to four years ago. It turns that, as of now, everything may have been a fraud. 

  
  

  When I did my own startup over a decade ago, it was not only one of the most difficult things that I have done, but I also learned that it's so important for us to focus on our own things and never worry about "the competition" and the fact that all of our competitors are doing so much better than us. One of them copied everything that we were doing and raised millions of dollars. The other also raised a lot more millions of dollars. The one that copied us at the end of the day ended up going out of business. And the other one that had raised even more millions of dollars, the CEO ended up terminating his life because he had purchased a ton of inventory that he was not going to be able to sell. These people were on the news, they were on the tech startup blog posts being written about nonstop. The CEO that unalived himself was hanging out with top people in the tech industry, including the Zappos founder, and a few other people. So it was very easy to be thinking that I was so far behind them. Look at all these amazing connections that this person has, what now? 

  
  

  If you are worried about the competition, you are wasting precious time. And my point is not about the competition with regards to real estate, but it's more on the comparison aspect of it, how we can easily think that this other person is so much further ahead than me, what am I doing wrong? There was this nurse guy that at least two people asked me to interview him this year. In the last four years, which is exactly the same amount of time that I have been doing real estate full time, he managed to be a "real estate mogul" worth $160 million.

  
  

  At the end of 2019 up until now that this person started from zero investments to being worth $160 million, to being now investigated for fraud. Before this fraud investigation came along, the thought did cross my mind, what am I doing wrong? I am far behind his numbers in the same four years. I did reach out to him twice asking him to come over the podcast and he never responded. I was really more curious on how did you go from zero to this much in just four years. This is fantastic. Fast forward to now, just two weeks ago, I get my daily real estate digest and it says that Matt Onofrio, this person that was previously a nurse and became a very successful real estate investor is now being investigated by the SEC for fraud. And I thought... nurse... that sounds so familiar. And it turned out that he was the person that everybody has been telling me about that had an amazing story. It turned out that it was not so amazing, after all. He is now facing federal bank fraud charges.

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>da22a322-6083-4a99-9414-bee73897e0b6Tue, 20 Dec 2022 07:57:00 -080014:46falsefull11461461What is the State of Commercial Real Estate? Which Asset Class Will Hurt the Most Next Year?What is the state of commercial real estate? Who will be selling next year in 2023? Which asset class do we think will hurt the most next year? Deidre Wollard, a writer and editor at The Motley Fool will share her insights.

  You can read this entire episode here: bit.ly/3uxdx70

  What is the state of commercial real estate today?

  
  

  It is an interesting time. It has always an interesting time in real estate. Right now, I feel like everybody is waiting for something to happen, which is really interesting. We're certainly seeing that on the residential side, because the housing market is sort of on pause. And we are seeing that on the commercial side as well, interest rates are so high that people can't get access to capital the way they could. And there's that little uncertainty about what's next in the overall economic sector. Are we headed into a recession? Consumers are spending a lot right now, is that going to shift? All of that uncertainty is leading to a bit of a lack of deal flow from what I've seen.

  Which asset class do you think will be the one that is most hurt next year?

  
  

  I think it continues to be office, office has really struggled. We are also starting to see a little bit of a weakness in industrial. That has been happening ever since Amazon about three or four months ago made a statement about looking at their warehouse spacing, we have seen that sort of fall throughout the industry. So there's a little bit of a weakness starting to happen in industrial. Overall, it's nothing to worry about. But with office, the question I keep asking myself is, is this a permanent shift? And I think my viewpoint on that has changed throughout the cycle as different things just keep happening. Because the employers are starting to have more of the power, you're getting more and more employers demanding people to go back to the office. That is one reason that I'm getting a little bit optimistic about office.

  When you invest in your next deal, what asset class is more interesting to you right now and why?

  
  

  Multifamily is forever interesting, because we're never going to run out of need for it. And it's not as much driven by what happens with the economy. Rent prices right now are definitely stabilizing, the question though is where are we overbuilding and that's the thing that's really important to watch because we saw so much activity flow into the Sunbelt, both before the pandemic and during, and that's moderating a bit. You see some of these hot markets get a little different and you start to wonder, are we building too much in Austin, Texas, for example, and start to think about, where's the money going next? Where are the people going next? That I think that is the puzzle that is most interesting.

  I think hotels is an interesting one to follow. Because when we look at consumer behavior, everybody spent on goods during a portion of the pandemic, then everybody switched over to experiences, and that changed the forecast of hospitality. The longer term trend that I'm watching there that I think is really interesting, is what we saw with Airbnb and long term stays, they saw their 28 day and higher stays keep growing.They announced recently that they're now letting apartment renters rent on Airbnb, which is interesting. At the same time, you've got Marriott, that just announced Apartments by Bonvoy, which is basically, medium term rentals of more apartment style units. There's something happening there with medium term 30 to 90 days, stays, I think that's an area to keep an eye on.

  
  

  Deidre Wollard at The Motley Fool

  
  

  What is the state of commercial real estate? Who will be selling next year in 2023? Which asset class do we think will hurt the most next year? Deidre Wollard, a writer and editor at The Motley Fool will share her insights.

  You can read this entire episode here: bit.ly/3uxdx70

  What is the state of commercial real estate today?

  
  

  It is an interesting time. It has always an interesting time in real estate. Right now, I feel like everybody is waiting for something to happen, which is really interesting. We're certainly seeing that on the residential side, because the housing market is sort of on pause. And we are seeing that on the commercial side as well, interest rates are so high that people can't get access to capital the way they could. And there's that little uncertainty about what's next in the overall economic sector. Are we headed into a recession? Consumers are spending a lot right now, is that going to shift? All of that uncertainty is leading to a bit of a lack of deal flow from what I've seen.

  Which asset class do you think will be the one that is most hurt next year?

  
  

  I think it continues to be office, office has really struggled. We are also starting to see a little bit of a weakness in industrial. That has been happening ever since Amazon about three or four months ago made a statement about looking at their warehouse spacing, we have seen that sort of fall throughout the industry. So there's a little bit of a weakness starting to happen in industrial. Overall, it's nothing to worry about. But with office, the question I keep asking myself is, is this a permanent shift? And I think my viewpoint on that has changed throughout the cycle as different things just keep happening. Because the employers are starting to have more of the power, you're getting more and more employers demanding people to go back to the office. That is one reason that I'm getting a little bit optimistic about office.

  When you invest in your next deal, what asset class is more interesting to you right now and why?

  
  

  Multifamily is forever interesting, because we're never going to run out of need for it. And it's not as much driven by what happens with the economy. Rent prices right now are definitely stabilizing, the question though is where are we overbuilding and that's the thing that's really important to watch because we saw so much activity flow into the Sunbelt, both before the pandemic and during, and that's moderating a bit. You see some of these hot markets get a little different and you start to wonder, are we building too much in Austin, Texas, for example, and start to think about, where's the money going next? Where are the people going next? That I think that is the puzzle that is most interesting.

  I think hotels is an interesting one to follow. Because when we look at consumer behavior, everybody spent on goods during a portion of the pandemic, then everybody switched over to experiences, and that changed the forecast of hospitality. The longer term trend that I'm watching there that I think is really interesting, is what we saw with Airbnb and long term stays, they saw their 28 day and higher stays keep growing.They announced recently that they're now letting apartment renters rent on Airbnb, which is interesting. At the same time, you've got Marriott, that just announced Apartments by Bonvoy, which is basically, medium term rentals of more apartment style units. There's something happening there with medium term 30 to 90 days, stays, I think that's an area to keep an eye on.

  
  

  Deidre Wollard at The Motley Fool

  
  

  twitter.com/deidre

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>ab084712-bb13-4bdf-a429-317f86ee35c5Thu, 08 Dec 2022 20:09:00 -080011:46falsefull11451451Zoning Research + Tips For Working With The City to Get Your Project ApprovedHow to find what a property is zoned for in the city's website? What are some tips on working with the city to get your project approved? How to go about rezoning a parcel? Scott Krone, principal at Coda Design + Build and Coda Management Group is a developer with over 30 years of experience and shares his knowledge.

  Watch this interview here: bit.ly/3XJZg45

  Read this interview here: bit.ly/3ucrMhi

  
  

  Let's go over an entitlement example please.

  
  

  When someone brings us a property, the first thing that we do, and we're determining if we're going to move forward with it, is we look at what are the entitlements. Entitlements are a fancy word of saying, what is the zoning, what are you entitled to do on a property. A lot of people think that they have to go to someone in the city and get this information, when, in reality, it's already out there in public forum. As developers, we will always go and look to what it is, and then, we will trust, but verify. We will then go back to the city planners and say, this is what we saw, we want to make sure that we're in agreement. It's our way of trusting and verifying with the city official.

  I selected a location that we recently worked on in the City of Dayton, and I picked this one because there's a lot of different things here. There are tabs called residents, businesses, government. Typically, we go to government, because that's where the different departments are broken down. Here you see planning, neighborhood and development, public works, community communications, community development, boards, commissions and committees, these are all different ones. Public Works has sewers and water lines, planning, neighborhood and development, this is probably where the information is going to be under, because this is how they plan for things.

  
  

  We click on that one, and it comes up with the zoning coded map, it has an interactive zoning map, this one is really nice. Others might be on a PDF. We will click on that, and then, we put in the address, the property comes up, and we can click on show more results.

  
  

  To clarify a couple of things: 1) Every city website is going to be completely different, unfortunately, from one another 2) What we're looking at right now is either a property that you are looking at purchasing or expanding to make sure that it's zoned properly or could be rezoned, correct?

  
  

  We try not to rezone, but if we do, that’s a whole different process. Right now, we're trying to determine what it is that we are allowed to do. When we look at this one, 535 East Third Street, it's bouncing back and forth between these two, I’m not sure why. I’m going to zoom in to see the streets, because then that way I’ll know where we are. We are now under the UBD District, but UBD means nothing to me, I have no idea what that is, they've come up with this general term. It might be unified business district, it might be, etc. But that is what we're going to be looking for when we do it. If you look under this category, there's a PD 108, this is a planned development, and that was 108th planned development HD 2. These are all different districts that are zoned, if we zoom back out, you can see the different zoning sections, they all have different colors to make it interesting. I2 is typically industrial, a second version of industrial. There's a CBD, which might be the commercial business district as opposed to unified business district. So those are all the things that we look for in terms of the breakdown.

  How to find what a property is zoned for in the city's website? What are some tips on working with the city to get your project approved? How to go about rezoning a parcel? Scott Krone, principal at Coda Design + Build and Coda Management Group is a developer with over 30 years of experience and shares his knowledge.

  Watch this interview here: bit.ly/3XJZg45

  Read this interview here: bit.ly/3ucrMhi

  
  

  Let's go over an entitlement example please.

  
  

  When someone brings us a property, the first thing that we do, and we're determining if we're going to move forward with it, is we look at what are the entitlements. Entitlements are a fancy word of saying, what is the zoning, what are you entitled to do on a property. A lot of people think that they have to go to someone in the city and get this information, when, in reality, it's already out there in public forum. As developers, we will always go and look to what it is, and then, we will trust, but verify. We will then go back to the city planners and say, this is what we saw, we want to make sure that we're in agreement. It's our way of trusting and verifying with the city official.

  I selected a location that we recently worked on in the City of Dayton, and I picked this one because there's a lot of different things here. There are tabs called residents, businesses, government. Typically, we go to government, because that's where the different departments are broken down. Here you see planning, neighborhood and development, public works, community communications, community development, boards, commissions and committees, these are all different ones. Public Works has sewers and water lines, planning, neighborhood and development, this is probably where the information is going to be under, because this is how they plan for things.

  
  

  We click on that one, and it comes up with the zoning coded map, it has an interactive zoning map, this one is really nice. Others might be on a PDF. We will click on that, and then, we put in the address, the property comes up, and we can click on show more results.

  
  

  To clarify a couple of things: 1) Every city website is going to be completely different, unfortunately, from one another 2) What we're looking at right now is either a property that you are looking at purchasing or expanding to make sure that it's zoned properly or could be rezoned, correct?

  
  

  We try not to rezone, but if we do, that’s a whole different process. Right now, we're trying to determine what it is that we are allowed to do. When we look at this one, 535 East Third Street, it's bouncing back and forth between these two, I’m not sure why. I’m going to zoom in to see the streets, because then that way I’ll know where we are. We are now under the UBD District, but UBD means nothing to me, I have no idea what that is, they've come up with this general term. It might be unified business district, it might be, etc. But that is what we're going to be looking for when we do it. If you look under this category, there's a PD 108, this is a planned development, and that was 108th planned development HD 2. These are all different districts that are zoned, if we zoom back out, you can see the different zoning sections, they all have different colors to make it interesting. I2 is typically industrial, a second version of industrial. There's a CBD, which might be the commercial business district as opposed to unified business district. So those are all the things that we look for in terms of the breakdown.

  Scott Krone

  
  

  info@codamg.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>f217e341-7987-407d-b3c5-b430d141a9c1Thu, 01 Dec 2022 07:48:00 -080027:10falsefull11441441Status of Retail Leases Today: Good or Bad?What is happening in the retail space given the high interest rates? Are national tenants still leasing at the same speed as last year? What are some things to keep in mind when negotiating leases in today's environment? James Chung, founder of the econic company shares his insights.

  You can read this entire interview here: bit.ly/3Xg8pkE

  What is the state of retail and leasing with national tenants in California, in the Bay Area in particular?

  
  

  From a velocity point, the market has actually stayed pretty high. And I think that would be very shocking for people to hear especially coming out of COVID. However, what was interesting is that we found that, like what happened during the financial crisis in 2008, the Bay Area, because of its fundamentals, is usually the last to fail and the first to recover. And because the barrier to entry has always been so high a lot of national tenants and local tenants, when they see opportunities that were never available historically become available, there becomes a classic supply and demand situation where the opportunities unfortunately are less than the demand. We've actually seen in the better shopping centers, there has been almost an increase in demand for those opportunities, especially for second gen food space. So there has been a lift, believe it or not in occupancy costs for those premier opportunities.

  What do you think the plan will be for big spaces that are becoming available?

  
  

  What we've seen along those lines are a lot of alternative uses that are being proposed and introduced. Things like large pharma medical enter into retail environments where traditionally they would have never done so, we've seen industries like auto want to get in. With the onset of all the EV cars coming into the market, there are many new brands that are looking for showrooms and even sale centers, or service centers. What's great about that new segment is that they do not expose the projects to hazardous materials, because they're not changing oil. They're not fixing engines, they're fixing batteries at the end of the day. My guess is that there will be a return of that demand in the larger format sector sooner rather than later. People are rethinking their execution plans and sizes, and that trend started pre COVID, as we saw a lot of what we called right sizing, those that realized they didn't need as much space as they thought. But as that continues to evolve, I think at some point in the near term we will see a return of a lot of those tenants back into that larger format space.

  What do you think owners should be doing to prepare for the next couple of years?

  
  

  It's important to think long term, not short term. The knee jerk reaction is to transact differently, and while inflation is 100% real, and CPI is at an all time rate, a lot of landlords were reacting by trying to be hyper aggressive with annual increases, redefining how transactions are put together. And while there is merit to that, and it does need to evolve, I think it's also about securing a tenant today for the next 10, 20 years, and working in partnership with them in finding a solution for a healthy ratio and occupancy costs for that tenant. And while that description is not a one size fits all, the complexion of a transaction for a small restaurant tenant versus a 50,000 foot box tenant are completely different. 

  James Chung

  
  

  the...]]>What is happening in the retail space given the high interest rates? Are national tenants still leasing at the same speed as last year? What are some things to keep in mind when negotiating leases in today's environment? James Chung, founder of the econic company shares his insights.

  You can read this entire interview here: bit.ly/3Xg8pkE

  What is the state of retail and leasing with national tenants in California, in the Bay Area in particular?

  
  

  From a velocity point, the market has actually stayed pretty high. And I think that would be very shocking for people to hear especially coming out of COVID. However, what was interesting is that we found that, like what happened during the financial crisis in 2008, the Bay Area, because of its fundamentals, is usually the last to fail and the first to recover. And because the barrier to entry has always been so high a lot of national tenants and local tenants, when they see opportunities that were never available historically become available, there becomes a classic supply and demand situation where the opportunities unfortunately are less than the demand. We've actually seen in the better shopping centers, there has been almost an increase in demand for those opportunities, especially for second gen food space. So there has been a lift, believe it or not in occupancy costs for those premier opportunities.

  What do you think the plan will be for big spaces that are becoming available?

  
  

  What we've seen along those lines are a lot of alternative uses that are being proposed and introduced. Things like large pharma medical enter into retail environments where traditionally they would have never done so, we've seen industries like auto want to get in. With the onset of all the EV cars coming into the market, there are many new brands that are looking for showrooms and even sale centers, or service centers. What's great about that new segment is that they do not expose the projects to hazardous materials, because they're not changing oil. They're not fixing engines, they're fixing batteries at the end of the day. My guess is that there will be a return of that demand in the larger format sector sooner rather than later. People are rethinking their execution plans and sizes, and that trend started pre COVID, as we saw a lot of what we called right sizing, those that realized they didn't need as much space as they thought. But as that continues to evolve, I think at some point in the near term we will see a return of a lot of those tenants back into that larger format space.

  What do you think owners should be doing to prepare for the next couple of years?

  
  

  It's important to think long term, not short term. The knee jerk reaction is to transact differently, and while inflation is 100% real, and CPI is at an all time rate, a lot of landlords were reacting by trying to be hyper aggressive with annual increases, redefining how transactions are put together. And while there is merit to that, and it does need to evolve, I think it's also about securing a tenant today for the next 10, 20 years, and working in partnership with them in finding a solution for a healthy ratio and occupancy costs for that tenant. And while that description is not a one size fits all, the complexion of a transaction for a small restaurant tenant versus a 50,000 foot box tenant are completely different. 

  James Chung

  
  

  the econic company

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>3801670e-7355-43d0-adc7-17957180f4b5Fri, 18 Nov 2022 07:42:00 -080020:50falsefull11431431Are Prices Coming Down? + Latest Lessons LearnedWhat is happening with commercial property prices in this market given the latest interest rate hikes? What are some of the lessons learned over the last few weeks?

  You can read this entire interview here: bit.ly/3V9hfig

  
  

  Has our time to buy commercial properties finally arrived? I think so. The prices for commercial real estate are going down, I am getting at least one email per that that says “price reduction”. And I haven’t seen these price reduction emails since I started investing up until the last couple of months. Today I even got a call from a broker that just 2 weeks ago said that the pricing guidance for a particular property was $10.5M, now it’s $8.5M, and they told our assistant that the guidance was north of $7M! So not only did we hear two different prices, but we also just got a 30% discount in 2 weeks. It is finally here, it is my prediction that prices will continue to drop well into 2023.

  
  

  It’s worth reminding you of my calculations that I shared a few weeks ago, where, when the cap rate increases just 1% on a $6M deal that was selling in 2021 at a 5% cap, and today it’s at a 6% cap, you just got a $1M discount. At a 2% cap increase, you got a 1.7M discount. I predict a minimum of a 2% cap rate increase on average, depending on the asset class. And let’s not forget that your mortgage payment is about $30k more per year, but when rates go down again 5 years from now (at the latest in my opinion), you’ll be able to refinance, and sell it at a 5% cap again. You paid $150k in higher payment, for a $1.7M discount, which by the way the interest part of it is tax deductible. Not to mention that your downpayment is less as well, you keep an extra $600k that you don’t need to put as a down payment. And then invest that at anything that gives you even a 10% return yearly, you get $60k per year, pay your higher mortgage at $30k more, and you still get to keep $30k! Brilliant!

  
  

  Lessons Learned

  
  

  1. Over the last several weeks I learned a few lessons that I thought would be beneficial for you to know. I’ve a friend that I believe is a billionaire real estate investor. Besides the fact that he is an awesome human being, he was sharing with me the other day about one of his huge deals, I don’t recall what the issue was, but he had to work with a legal team, and he told me that he met with the entire legal team every Saturday morning to get an update. He said that we always need to be on top of everything and demand regular updates from everyone, otherwise they will let it slide. Imagine, he is already working with a top law firm that money can afford, and he is telling me that he is the one scheduling weekly in person meetings with the legal team to get updates and demand progress on the project. This same person, on another note, got to where he is today by working very hard for decades.

  2. I recently asked George Ross, Trump’s attorney from the apprentice, what should I do to get bigger deals, not only from a mindset perspective but also a team’s perspective, etc. He said it’s as easy as adding a zero. With regards to team, he said I could join an experienced team, or build one myself.

  
  

  3. When doing anything related to your real estate investments, make sure to involve your lawyer, even for standard sales agreements. Our attorney caught a few things in a recent standard sale agreement we were about to get in contract for.

  
  

  Join George Ross’s Mastermind here: www.victorjm.com/mastermind-series

  
  

  Subscribe to our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this...]]>What is happening with commercial property prices in this market given the latest interest rate hikes? What are some of the lessons learned over the last few weeks?

  You can read this entire interview here: bit.ly/3V9hfig

  
  

  Has our time to buy commercial properties finally arrived? I think so. The prices for commercial real estate are going down, I am getting at least one email per that that says “price reduction”. And I haven’t seen these price reduction emails since I started investing up until the last couple of months. Today I even got a call from a broker that just 2 weeks ago said that the pricing guidance for a particular property was $10.5M, now it’s $8.5M, and they told our assistant that the guidance was north of $7M! So not only did we hear two different prices, but we also just got a 30% discount in 2 weeks. It is finally here, it is my prediction that prices will continue to drop well into 2023.

  
  

  It’s worth reminding you of my calculations that I shared a few weeks ago, where, when the cap rate increases just 1% on a $6M deal that was selling in 2021 at a 5% cap, and today it’s at a 6% cap, you just got a $1M discount. At a 2% cap increase, you got a 1.7M discount. I predict a minimum of a 2% cap rate increase on average, depending on the asset class. And let’s not forget that your mortgage payment is about $30k more per year, but when rates go down again 5 years from now (at the latest in my opinion), you’ll be able to refinance, and sell it at a 5% cap again. You paid $150k in higher payment, for a $1.7M discount, which by the way the interest part of it is tax deductible. Not to mention that your downpayment is less as well, you keep an extra $600k that you don’t need to put as a down payment. And then invest that at anything that gives you even a 10% return yearly, you get $60k per year, pay your higher mortgage at $30k more, and you still get to keep $30k! Brilliant!

  
  

  Lessons Learned

  
  

  1. Over the last several weeks I learned a few lessons that I thought would be beneficial for you to know. I’ve a friend that I believe is a billionaire real estate investor. Besides the fact that he is an awesome human being, he was sharing with me the other day about one of his huge deals, I don’t recall what the issue was, but he had to work with a legal team, and he told me that he met with the entire legal team every Saturday morning to get an update. He said that we always need to be on top of everything and demand regular updates from everyone, otherwise they will let it slide. Imagine, he is already working with a top law firm that money can afford, and he is telling me that he is the one scheduling weekly in person meetings with the legal team to get updates and demand progress on the project. This same person, on another note, got to where he is today by working very hard for decades.

  2. I recently asked George Ross, Trump’s attorney from the apprentice, what should I do to get bigger deals, not only from a mindset perspective but also a team’s perspective, etc. He said it’s as easy as adding a zero. With regards to team, he said I could join an experienced team, or build one myself.

  
  

  3. When doing anything related to your real estate investments, make sure to involve your lawyer, even for standard sales agreements. Our attorney caught a few things in a recent standard sale agreement we were about to get in contract for.

  
  

  Join George Ross’s Mastermind here: www.victorjm.com/mastermind-series

  
  

  Subscribe to our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>470e85bc-8efa-4936-9519-c006b8d7a26aTue, 01 Nov 2022 06:35:00 -080011:07falsefull11421421Depreciation: Which Asset Classes Are Best for Cost Segregation?What is cost segregation? Are there asset classes that have better depreciation than others? Cindy Blumenfeld, Director of Client Development at Engineered Tax Services shares her knowledge.

  You can read this entire episode here: bit.ly/3VzZIks

  
  

  What is cost segregation, and when should people get that study done?

  
  

  It's a study for depreciation of an investment property, not the primary residence that you live in, but any investment property, it could be commercial, it could be a house, or an office condo that you're doing significant leasehold improvements to. The IRS for some reason has commercial property being depreciated over 39 years, and residential, such as apartment buildings 27.5 years. That means that, let's say you spent $5 million to buy or build a building, not including land, land isn't depreciable, and your CPA takes that $5 million and divides it by 39 years, that's how much can write off every year, and that doesn't make a whole lot of sense, or give the owners a whole lot of benefit because none of the components in the building lasts 30 or 40 years. An alternate method, not only approved by the IRS, but preferred by the IRS is via an engineered cost segregation study. It's basically an engineering appraisal of the building for tax purposes.

  Is there a particular asset class that is more favorable for someone who needs that depreciation that year?

  
  

  When you turn that building upside down, and the more things that fall out of it the better, those are all the things that we're going to reclassify. Maybe there are more benefits in multifamily, or a retail store, or a manufacturing facility that has more different components inside it. I know self storage is a hot market right now, and depending on what the structures are made out of, if they're metal, or aluminum, as opposed to concrete, they can be depreciated over a 15 year life. We do a lot of restaurants, McDonald's, for example, and the franchisees don't own the shell of the building, which is a 39 year asset anyway, we can't accelerate it, but all the components inside the building we can. I had one McDonald's client that we did a portfolio of eight locations, he had acquired them about five or six years prior to us doing this study, and we were able to recapture all that missed depreciation, giving him back over a million dollars in cash.

  Are there any other tips for investors to take advantage of depreciation that is important for them to know?

  
  

  We didn't talk about energy yet, we also certify for 179D and the 45L energy certifications. This is for bigger commercial real estate, 45L is a tax credit, we've been talking about depreciations, which is tax deduction. If I got somebody a $500,000 tax deduction, they would have to times that by their tax rate, and that's their net cash benefit, whereas a tax credit is a dollar for dollar straight credit. The 45L had expired, they're reinstating it as of January 2023 and that's for large, low rise multifamily development, three stories and under, and that would go to the developer, a couple of $1,000 per door or dwelling for designing with the ultimate energy efficiency. That's where we come in, it has to be certified by an engineer. And the 179D has actually been out since 2006, and never got the front page recognition it was due, it was a temporary incentive, it was out for a few years, it expired for a few years. They reinstated it and made it retroactive, and it expired again for a few years, reinstated, made retroactive, it expired again. It was just going around like that for a while and now they finally made it permanent.

  Cindy Blumenfeld

  
  

  (954)...]]>What is cost segregation? Are there asset classes that have better depreciation than others? Cindy Blumenfeld, Director of Client Development at Engineered Tax Services shares her knowledge.

  You can read this entire episode here: bit.ly/3VzZIks

  
  

  What is cost segregation, and when should people get that study done?

  
  

  It's a study for depreciation of an investment property, not the primary residence that you live in, but any investment property, it could be commercial, it could be a house, or an office condo that you're doing significant leasehold improvements to. The IRS for some reason has commercial property being depreciated over 39 years, and residential, such as apartment buildings 27.5 years. That means that, let's say you spent $5 million to buy or build a building, not including land, land isn't depreciable, and your CPA takes that $5 million and divides it by 39 years, that's how much can write off every year, and that doesn't make a whole lot of sense, or give the owners a whole lot of benefit because none of the components in the building lasts 30 or 40 years. An alternate method, not only approved by the IRS, but preferred by the IRS is via an engineered cost segregation study. It's basically an engineering appraisal of the building for tax purposes.

  Is there a particular asset class that is more favorable for someone who needs that depreciation that year?

  
  

  When you turn that building upside down, and the more things that fall out of it the better, those are all the things that we're going to reclassify. Maybe there are more benefits in multifamily, or a retail store, or a manufacturing facility that has more different components inside it. I know self storage is a hot market right now, and depending on what the structures are made out of, if they're metal, or aluminum, as opposed to concrete, they can be depreciated over a 15 year life. We do a lot of restaurants, McDonald's, for example, and the franchisees don't own the shell of the building, which is a 39 year asset anyway, we can't accelerate it, but all the components inside the building we can. I had one McDonald's client that we did a portfolio of eight locations, he had acquired them about five or six years prior to us doing this study, and we were able to recapture all that missed depreciation, giving him back over a million dollars in cash.

  Are there any other tips for investors to take advantage of depreciation that is important for them to know?

  
  

  We didn't talk about energy yet, we also certify for 179D and the 45L energy certifications. This is for bigger commercial real estate, 45L is a tax credit, we've been talking about depreciations, which is tax deduction. If I got somebody a $500,000 tax deduction, they would have to times that by their tax rate, and that's their net cash benefit, whereas a tax credit is a dollar for dollar straight credit. The 45L had expired, they're reinstating it as of January 2023 and that's for large, low rise multifamily development, three stories and under, and that would go to the developer, a couple of $1,000 per door or dwelling for designing with the ultimate energy efficiency. That's where we come in, it has to be certified by an engineer. And the 179D has actually been out since 2006, and never got the front page recognition it was due, it was a temporary incentive, it was out for a few years, it expired for a few years. They reinstated it and made it retroactive, and it expired again for a few years, reinstated, made retroactive, it expired again. It was just going around like that for a while and now they finally made it permanent.

  Cindy Blumenfeld

  
  

  (954) 439-1671

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>489cb3a4-4095-471a-bfaa-bad295549fc6Tue, 18 Oct 2022 06:51:00 -080015:24falsefull11411411Industrial Leases: What to Watch out ForWhat are some major items you should keep in mind when negotiating and reviewing an industrial lease? What are some potential major pitfalls? Chad Griffiths a commercial real estate broker and industrial investor will share his knowledge with us.

  You can read this entire episode here: bit.ly/3e0P84Y

  Let's review things people should keep in mind regarding industrial leases.

  
  

  A lease is going to spell out who the tenant is, who the landlord is, who the parties are, the size of the space, when it commences, how long of a lease term it is, what the lease rate is going to be, and that can be a fixed rate for the duration of the lease, or it can be a lease that has predetermined escalations in it. Let's use a quick 10-year lease as an example, it might start at $10 a square foot and go to $15 a square foot by the end of the term. What we're actually seeing is quite common right now is a rent increase tied to some percentage, so it could be tied to CPI, or it can just be a percentage that's put in. I just did a lease late last week. It started at $8.50 a square foot and had two and a half percent yearly escalations for a five-year term. We're starting to see that that is pretty common as well.

  Once you start getting beyond the obvious terms of what's in the lease, who the parties are, how long it's going to go for, what the rent is, then you're going to start getting into provisions that deal with the operating costs. For those needing a quick refresher on it, the majority of leases are going to be structured, I should preface that there are NNN leases. You'll have one lease, it'll say that this is the base amount that they pay, then the tenants also pay for their proportionate share of all the operating level expenses of the building. That's property taxes, building insurance, commentary, maintenance, management fees, and that's always going to be an estimate. The landlord will give the tenant an estimate on what it's going to be in advance. After the year ends and all the bills come in, they either give the tenant a credit, if they charged too much, or they invoice them if there was not enough paid throughout the course of the year. That language is probably the most important thing as a property owner myself, you want to have it very clear that any increases in those expenses can get passed through to the tenant. If that language is vague, and it becomes contentious, it might not be a big deal if it's a small lease like a 5,000 square foot lease, and those discrepancies, but you can imagine when some of these big distribution centers are approaching a million square feet, if there's a small discrepancy between how the landlord expected it to be and what the tenant interpreted it at, that can be 10s, hundreds of 1,000s, if not millions of dollars.

  
  

  Make sure that you understand all the little details, even insurance could be another one that becomes contentious, it varies market to market, but in my market it was common that tenants had to have $2 million worth of insurance. And now almost every landlord has increased that to $5 million of insurance, and there'll be markets where I'm sure it's even higher where prices are higher. But just making sure that that insurance provision is correct, involving your insurance agent, but at least it should be viewed as a document where a number of people have input into it, and the accountant might want to have input into how some of these costs are handled, your lawyer definitely needs to be involved in it, insurance broker is another one.

  
  

  Chad Griffiths

  
  

  What are some major items you should keep in mind when negotiating and reviewing an industrial lease? What are some potential major pitfalls? Chad Griffiths a commercial real estate broker and industrial investor will share his knowledge with us.

  You can read this entire episode here: bit.ly/3e0P84Y

  Let's review things people should keep in mind regarding industrial leases.

  
  

  A lease is going to spell out who the tenant is, who the landlord is, who the parties are, the size of the space, when it commences, how long of a lease term it is, what the lease rate is going to be, and that can be a fixed rate for the duration of the lease, or it can be a lease that has predetermined escalations in it. Let's use a quick 10-year lease as an example, it might start at $10 a square foot and go to $15 a square foot by the end of the term. What we're actually seeing is quite common right now is a rent increase tied to some percentage, so it could be tied to CPI, or it can just be a percentage that's put in. I just did a lease late last week. It started at $8.50 a square foot and had two and a half percent yearly escalations for a five-year term. We're starting to see that that is pretty common as well.

  Once you start getting beyond the obvious terms of what's in the lease, who the parties are, how long it's going to go for, what the rent is, then you're going to start getting into provisions that deal with the operating costs. For those needing a quick refresher on it, the majority of leases are going to be structured, I should preface that there are NNN leases. You'll have one lease, it'll say that this is the base amount that they pay, then the tenants also pay for their proportionate share of all the operating level expenses of the building. That's property taxes, building insurance, commentary, maintenance, management fees, and that's always going to be an estimate. The landlord will give the tenant an estimate on what it's going to be in advance. After the year ends and all the bills come in, they either give the tenant a credit, if they charged too much, or they invoice them if there was not enough paid throughout the course of the year. That language is probably the most important thing as a property owner myself, you want to have it very clear that any increases in those expenses can get passed through to the tenant. If that language is vague, and it becomes contentious, it might not be a big deal if it's a small lease like a 5,000 square foot lease, and those discrepancies, but you can imagine when some of these big distribution centers are approaching a million square feet, if there's a small discrepancy between how the landlord expected it to be and what the tenant interpreted it at, that can be 10s, hundreds of 1,000s, if not millions of dollars.

  
  

  Make sure that you understand all the little details, even insurance could be another one that becomes contentious, it varies market to market, but in my market it was common that tenants had to have $2 million worth of insurance. And now almost every landlord has increased that to $5 million of insurance, and there'll be markets where I'm sure it's even higher where prices are higher. But just making sure that that insurance provision is correct, involving your insurance agent, but at least it should be viewed as a document where a number of people have input into it, and the accountant might want to have input into how some of these costs are handled, your lawyer definitely needs to be involved in it, insurance broker is another one.

  
  

  Chad Griffiths

  
  

  www.youtube.com/c/ChadGriffithsCRE

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>837f5c17-5f5f-4d64-b862-99b2d20c495bTue, 04 Oct 2022 06:27:00 -080021:58falsefull11401401How to Find Good GC's for Your Real Estate ProjectsHow to find a good general contractor for your commercial projects? What questions should you ask? What’s a typical timeline for a medium to large project? Aaron Saunders, Managing Director of Spartan Investment Group has 16 years of experience in the construction management industry and shares his knowledge.

  You can read this entire episode here: bit.ly/3BxQD2p

  
  

  What are some questions you recommend people asking a potential General Contractor (GC)? And how to find a good one that is specific to their location?

  
  

  Spartan Investment Group had hired a couple of GC’s in the past and one of them did pretty well, one of them did okay, but it just didn’t feel like they were meeting the expectations. And that morphed into questions such as “Well, what if we built this in house? What would it look like? What are some expectations that we would have if we had a general contracting arm?”. If we are treating these projects as our own projects, and having our investors best intentions in place, and I’m not saying other general contractors don’t, but we felt we could be the best stewards of our investors money if we were really managing their projects in house, with an internal team. With that in place, 18 months ago we started to build out tools and processes. The thought process was always coming back to what is the best way to execute a project when someone knocks on our door, because ultimately we want to build all of our projects.

  What are some things to look for when you’re trying to identify a general contractor?

  
  

  Look at their history, their resume, the projects that they have completed, you may see that the general contractor doesn’t have the specific projects that you are looking for, but you can ask them, do people on your team have a resume from other organizations that you have brought over that have executed something similar to this? Look for that portfolio of projects, ask for recommendations from architects, and that will help you narrow down your search as you identify a GC or multiple GC’s that you want to work with. The next step would be to sit down, interview them, and make sure that your scope of work aligns with what they do and the expectations that they have for the project because ultimately, they may be a good contractor.

  Let’s say it is zoned for whatever asset class we’re building. What is next? And how do you assemble a team in a city that you may not have done business with in the past?

  
  

  We will reach out to some of our industry partners that we are working with currently to find out if they have worked in that city, and who is a good civil engineer to work with in that city. The nice thing about having a local civil engineer is that they know the city, they understand the process, they understand a lot of the soil types in that city and how we want to build our building.

  If they haven’t done self storage before, we will coach them a little bit on what our typical building structures look like. For example, that we don’t need a large deep foundation, obviously depending on the geotechnical report, and let them know what the parameters of our building requirements are.

  
  

  First is going to be identifying that civil engineer and starting to build. Then it depends, are you going to be building a multi-story facility? Do we need an architect on board? Is it going to be a single-story facility where we can go to one of our building manufacturers and they can provide us building elevations?

  
  

  Aaron Saunders

  
  

  aaron@spartan-investors.com

  Interested in our next self storage syndication? Fill out this interest form: How to find a good general contractor for your commercial projects? What questions should you ask? What’s a typical timeline for a medium to large project? Aaron Saunders, Managing Director of Spartan Investment Group has 16 years of experience in the construction management industry and shares his knowledge.

  You can read this entire episode here: bit.ly/3BxQD2p

  
  

  What are some questions you recommend people asking a potential General Contractor (GC)? And how to find a good one that is specific to their location?

  
  

  Spartan Investment Group had hired a couple of GC’s in the past and one of them did pretty well, one of them did okay, but it just didn’t feel like they were meeting the expectations. And that morphed into questions such as “Well, what if we built this in house? What would it look like? What are some expectations that we would have if we had a general contracting arm?”. If we are treating these projects as our own projects, and having our investors best intentions in place, and I’m not saying other general contractors don’t, but we felt we could be the best stewards of our investors money if we were really managing their projects in house, with an internal team. With that in place, 18 months ago we started to build out tools and processes. The thought process was always coming back to what is the best way to execute a project when someone knocks on our door, because ultimately we want to build all of our projects.

  What are some things to look for when you’re trying to identify a general contractor?

  
  

  Look at their history, their resume, the projects that they have completed, you may see that the general contractor doesn’t have the specific projects that you are looking for, but you can ask them, do people on your team have a resume from other organizations that you have brought over that have executed something similar to this? Look for that portfolio of projects, ask for recommendations from architects, and that will help you narrow down your search as you identify a GC or multiple GC’s that you want to work with. The next step would be to sit down, interview them, and make sure that your scope of work aligns with what they do and the expectations that they have for the project because ultimately, they may be a good contractor.

  Let’s say it is zoned for whatever asset class we’re building. What is next? And how do you assemble a team in a city that you may not have done business with in the past?

  
  

  We will reach out to some of our industry partners that we are working with currently to find out if they have worked in that city, and who is a good civil engineer to work with in that city. The nice thing about having a local civil engineer is that they know the city, they understand the process, they understand a lot of the soil types in that city and how we want to build our building.

  If they haven’t done self storage before, we will coach them a little bit on what our typical building structures look like. For example, that we don’t need a large deep foundation, obviously depending on the geotechnical report, and let them know what the parameters of our building requirements are.

  
  

  First is going to be identifying that civil engineer and starting to build. Then it depends, are you going to be building a multi-story facility? Do we need an architect on board? Is it going to be a single-story facility where we can go to one of our building manufacturers and they can provide us building elevations?

  
  

  Aaron Saunders

  
  

  aaron@spartan-investors.com

  Interested in our next self storage syndication? Fill out this interest form: bit.ly/3LyCWos

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>94464dc1-a10e-422a-8ff0-d6efaa258e00Thu, 22 Sep 2022 06:34:00 -080018:26falsefull11391391How to Vet Great Operators?What questions should you ask operators who will be managing an investment? Whether you’re a syndicator or a passive investor, it’s important to know what questions to ask in order to vet them properly. Camilla Jeffs, Principal at Steady Stream Investments shares her knowledge.

  You can read this entire episode here: bit.ly/3epLwt3

  
  

  As a syndicator, how do you find good operators for your deals?

  
  

  One of the keys is finding someone who is experienced. You want someone that has at least four or five years of experience. And by experience, I don’t mean how long they have been in business, but what kind of experience have they had? Think about the quality of experience, for example, a woman I know started her syndication journey as an operator in the last two years. She has already been through a fire in her apartment, squatters, all sorts of things. She is one of the best operators I have ever seen because she’s there at the property, getting into the details, she’s really working hard to make sure that asset is running well. Whereas other people that might be more “experienced”, they may have moved away from actually managing the asset and hired a team. Sometimes the team doesn’t quite do it as well, so you get into problems. The more removed you get from the asset can make it problematic.

  How do you go about vetting them for the first time that you’re working with them?

  
  

  I have a specific list of questions that I ask. For example, I ask about their track record and their experience, and almost all of them will tell you the highs, the great things that they have done, which is good, you need to know that they can achieve greatness. If they can’t achieve greatness, you don’t want to invest with them. Then I ask, “tell me about a failure that you had, or a big challenge that you experienced in real estate”. If they say, “Oh, I haven’t really had any big failures”, you have to run the other way because there is a big failure coming. It happens every time in real estate, real estate can be unpredictable, like I said, my friend went through a fire at her apartment units, you don’t know when things like that will happen. What is important is not whether they have faced challenges, but how they approached those challenges. Have they tackled them head on? Or did they just hide their head in the sand? And are they honest about it? Are they honest that they actually lost money and that taught them they need to do X, Y, and Z differently? And now we do XYZ different to really hedge against losing any money in the future. That’s what I want to know. I want to know that you’ve experienced some hard knocks, and that you’ve learned from them, so that now my money is safer with you than it was before.

  What are some of the biggest complaints you hear the most from passive investors?

  
  

  The number one thing is lack of communication. As a syndicator, if you tell your investors that you will be sending out a monthly report, send out the monthly report. Don’t resist it, don’t be late on it, send out your report. If myself, as a passive investor, don’t get those reports I’m scratching my head wondering if something wrong happened. The brain jumps to conclusions, and now I might think my money is at risk, and I start panicking. You will then get calls and emails asking what is going on, so send out the updates.

  Camilla Jeffs

  
  

  www.steadystreaminvestments.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast:...]]>What questions should you ask operators who will be managing an investment? Whether you’re a syndicator or a passive investor, it’s important to know what questions to ask in order to vet them properly. Camilla Jeffs, Principal at Steady Stream Investments shares her knowledge.

  You can read this entire episode here: bit.ly/3epLwt3

  
  

  As a syndicator, how do you find good operators for your deals?

  
  

  One of the keys is finding someone who is experienced. You want someone that has at least four or five years of experience. And by experience, I don’t mean how long they have been in business, but what kind of experience have they had? Think about the quality of experience, for example, a woman I know started her syndication journey as an operator in the last two years. She has already been through a fire in her apartment, squatters, all sorts of things. She is one of the best operators I have ever seen because she’s there at the property, getting into the details, she’s really working hard to make sure that asset is running well. Whereas other people that might be more “experienced”, they may have moved away from actually managing the asset and hired a team. Sometimes the team doesn’t quite do it as well, so you get into problems. The more removed you get from the asset can make it problematic.

  How do you go about vetting them for the first time that you’re working with them?

  
  

  I have a specific list of questions that I ask. For example, I ask about their track record and their experience, and almost all of them will tell you the highs, the great things that they have done, which is good, you need to know that they can achieve greatness. If they can’t achieve greatness, you don’t want to invest with them. Then I ask, “tell me about a failure that you had, or a big challenge that you experienced in real estate”. If they say, “Oh, I haven’t really had any big failures”, you have to run the other way because there is a big failure coming. It happens every time in real estate, real estate can be unpredictable, like I said, my friend went through a fire at her apartment units, you don’t know when things like that will happen. What is important is not whether they have faced challenges, but how they approached those challenges. Have they tackled them head on? Or did they just hide their head in the sand? And are they honest about it? Are they honest that they actually lost money and that taught them they need to do X, Y, and Z differently? And now we do XYZ different to really hedge against losing any money in the future. That’s what I want to know. I want to know that you’ve experienced some hard knocks, and that you’ve learned from them, so that now my money is safer with you than it was before.

  What are some of the biggest complaints you hear the most from passive investors?

  
  

  The number one thing is lack of communication. As a syndicator, if you tell your investors that you will be sending out a monthly report, send out the monthly report. Don’t resist it, don’t be late on it, send out your report. If myself, as a passive investor, don’t get those reports I’m scratching my head wondering if something wrong happened. The brain jumps to conclusions, and now I might think my money is at risk, and I start panicking. You will then get calls and emails asking what is going on, so send out the updates.

  Camilla Jeffs

  
  

  www.steadystreaminvestments.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>8e12a4be-4831-4a5b-afce-f9c6dd6c35c2Thu, 08 Sep 2022 06:08:00 -080017:44falsefull11381381Car Wash Update! 55% Cash on Cash, Would I Do It Again?Almost two years after investing in a few car washes, what are the results? Would I invest in car washes again? What are the pros and cons? Is there any upside in this asset class?

  You can read this entire episode here: bit.ly/3cnH25O

  
  

  The last time I spoke about the car washes they were going great. We had 36% cash on cash returns. And last year we had a full year of managing the entire thing. And we ended up not with a 36% cash on cash return, we ended up with a 55% cash on cash return on that deal. I want to note a couple of things:

  
  

  1. I was managing the whole thing myself and not paying myself. There is no management fee there. If someone were to underwrite this deal, they should definitely put a management fee. For example, when I buy a self storage facility, if it’s managed by a mom and pop, and they don’t have a management fee, I have to underwrite it with a management fee. I wanted to let you guys know that fact.

  
  

  2. This also includes the credit card that we installed on all locations. I think we spent 60 or 70k. Yes, it was an absurd, we got screwed by this particular vendor. This includes that as a “downpayment” because it was out of pocket.

  
  

  We had a 55% cash on cash on our entire first year, our first full 12 months. Amazing, right? Well, after that, I decided I do not want to do car washes anymore. Why? Because it took my entire year, I was not able to learn how to manage it, or how to have a system in place for it to be somewhat a passive investment. I am not local, and that added to the issues. And that is not where the issues ended, I realized that we were getting significantly robbed, 1000s of dollars have been missing.

  
  

  Now I need to figure out how to exit them because cannot sell as a carwash anymore, because the income is not matching, and at the same time, I decided to exit these properties as soon as humanly possible. What is the first thing that I thought I could do to exit all of these car washes?

  
  

  1. I could do a build to suit, I could go out to retailers and figure out who would want any of these locations and we would build whatever their heart desires, and then we would lease it to them and either keep the property, or exit.
  2. Another option was to sell it as land. One of the carwashes has an extra piece of land in the back. If we look at the value of the entire thing with the land, it does make up for the mission NOI and it’s basically the price of the carwash, that is currently in the market as land.
  3. Another option was that the two remaining are actually not only zoned for retail, they’re also zoned for multifamily. So for the one that has a piece of land in the back, we could tear the carwash down and build a multifamily building.
  4. The last property doesn’t have extra piece of land. So that one I might sell to somebody local, completely separate from everything else.
  5. 
     
  
  

  In the meantime, what I decided to do is to partner up with somebody local, whom I trust, he is a vendor that has been great up until now with everything. I’ll give him a percentage of the NOI and he will take care of everything. We’re going to have weekly calls to make sure that nothing falls through the cracks. The idea is for us to bring the NOI back to normal, make some improvements, even increase the NOI from last year, and then sell the very last carwash, if that will be the only one remaining.

  
  

  If you like the cash on cash and you want to figure out how to manage a carwash remotely, how to hire and have the best employees and how to make sure that the employees follow all of the steps, car washes are for you. However, if you want something more on the passive side, carwashes is 100% not for you.

  
  

  Join our newsletter here: Almost two years after investing in a few car washes, what are the results? Would I invest in car washes again? What are the pros and cons? Is there any upside in this asset class?

  You can read this entire episode here: bit.ly/3cnH25O

  
  

  The last time I spoke about the car washes they were going great. We had 36% cash on cash returns. And last year we had a full year of managing the entire thing. And we ended up not with a 36% cash on cash return, we ended up with a 55% cash on cash return on that deal. I want to note a couple of things:

  
  

  1. I was managing the whole thing myself and not paying myself. There is no management fee there. If someone were to underwrite this deal, they should definitely put a management fee. For example, when I buy a self storage facility, if it’s managed by a mom and pop, and they don’t have a management fee, I have to underwrite it with a management fee. I wanted to let you guys know that fact.

  
  

  2. This also includes the credit card that we installed on all locations. I think we spent 60 or 70k. Yes, it was an absurd, we got screwed by this particular vendor. This includes that as a “downpayment” because it was out of pocket.

  
  

  We had a 55% cash on cash on our entire first year, our first full 12 months. Amazing, right? Well, after that, I decided I do not want to do car washes anymore. Why? Because it took my entire year, I was not able to learn how to manage it, or how to have a system in place for it to be somewhat a passive investment. I am not local, and that added to the issues. And that is not where the issues ended, I realized that we were getting significantly robbed, 1000s of dollars have been missing.

  
  

  Now I need to figure out how to exit them because cannot sell as a carwash anymore, because the income is not matching, and at the same time, I decided to exit these properties as soon as humanly possible. What is the first thing that I thought I could do to exit all of these car washes?

  
  

  1. I could do a build to suit, I could go out to retailers and figure out who would want any of these locations and we would build whatever their heart desires, and then we would lease it to them and either keep the property, or exit.
  2. Another option was to sell it as land. One of the carwashes has an extra piece of land in the back. If we look at the value of the entire thing with the land, it does make up for the mission NOI and it’s basically the price of the carwash, that is currently in the market as land.
  3. Another option was that the two remaining are actually not only zoned for retail, they’re also zoned for multifamily. So for the one that has a piece of land in the back, we could tear the carwash down and build a multifamily building.
  4. The last property doesn’t have extra piece of land. So that one I might sell to somebody local, completely separate from everything else.
  5. 
     
  
  

  In the meantime, what I decided to do is to partner up with somebody local, whom I trust, he is a vendor that has been great up until now with everything. I’ll give him a percentage of the NOI and he will take care of everything. We’re going to have weekly calls to make sure that nothing falls through the cracks. The idea is for us to bring the NOI back to normal, make some improvements, even increase the NOI from last year, and then sell the very last carwash, if that will be the only one remaining.

  
  

  If you like the cash on cash and you want to figure out how to manage a carwash remotely, how to hire and have the best employees and how to make sure that the employees follow all of the steps, car washes are for you. However, if you want something more on the passive side, carwashes is 100% not for you.

  
  

  Join our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>58861490-f91b-4916-8799-e6b77a071876Thu, 25 Aug 2022 06:57:00 -080017:22falsefull11371371Questions To Ask a Self Storage Broker & How to Present an Offer (Part 2)What items should you go over when you're talking to a self storage broker? How to present an offer? Kathryn East has several years experience in the self storage space, she is the Founder of Sopapta Consulting, Management & Auditing, and shares her knowledge.

  You can read this entire episode here: bit.ly/3dHeNiR

  
  

  How do you present an offer that is 30% below what they are asking for?

  
  

  You explain how you came up with this number based on what they told you, for instance, you are trying to sell it to me at 85% occupied, but your economic occupancy is 60%. I am not going to pay you for what you didn’t do with that facility. So we’re going to go with your 60% economic occupancy, which means it’s worth $1.7M, not $2.4.

  If it’s an experienced self storage broker, they will generally come back with “I absolutely understand what you are saying, however, this facility is not using the right kind of website, they’re not really promoting themselves very well. There’s delinquency that you could clear up”. Then your answer is "Okay, you said it right there for me, I have to do it. Why would I pay your client for what they did not do?". Or they will say “I’ve done a market research on this property, as you can see in my OM, based on my pro forma numbers in year one, and you could bring it to this value, which means it’ll actually exceed the purchase price in year one”. I will then say, Great, why didn’t you have your client do that? If you are going to sell this property at a price point that’s less than if you would have instructed that client to do what you state that they can do – why are you selling it? You're selling it short and ultimately affecting your client.

  
  

  Obviously, they can project numbers, it’s like having a crystal ball in your hand. Sometimes that’s what it feels like when they're projecting exit strategies of three to five years from now. Do I know what cap rates or interest rates are going to be in three to five years? Of course not, all I know is this asset class is in a cycle. We were at the top of that cycle six months ago and now we’re going back down, and at some point we're going back up. After I have said to the broker “If you know it can do this, why not instruct your client to do that, and re-list it after six months of implementing your ideas that created this pro forma"? And they answer, Because they want to sell it now. Fair enough, then the now price is $1.7M.

  
  

  Brokers are actually really nice, I have never felt disrespected or been disrespected by them. If they're not a self storage broker, your goal is not to offend them with your underwriting, it’s to educate them. It’s a give and take relationship when you are a buyer versus a seller. That’s what we’re looking at. I wish I could say that there is this long process about underwriting, and learning it does takes time, it might take you three hours to underwrite something to where you feel comfortable with writing an LOI, and that can take me 20 minutes, but I have been doing this for many years. I have perfected the way I am looking at it, but to be clear, I learn new things every single day about the underwriting process.

  
  

  Broker OM's make it easier because they have done a lot of the legwork for you. Just reading that offering memorandum, looking at pictures, getting a good visual identity of what that property looks like currently, that’s all it’s about.

  
  

  Trust but verify, no matter how you are looking at it.

  
  

  Kathyrn East

  
  

  (314) 596-6542

  
  

  What items should you go over when you're talking to a self storage broker? How to present an offer? Kathryn East has several years experience in the self storage space, she is the Founder of Sopapta Consulting, Management & Auditing, and shares her knowledge.

  You can read this entire episode here: bit.ly/3dHeNiR

  
  

  How do you present an offer that is 30% below what they are asking for?

  
  

  You explain how you came up with this number based on what they told you, for instance, you are trying to sell it to me at 85% occupied, but your economic occupancy is 60%. I am not going to pay you for what you didn’t do with that facility. So we’re going to go with your 60% economic occupancy, which means it’s worth $1.7M, not $2.4.

  If it’s an experienced self storage broker, they will generally come back with “I absolutely understand what you are saying, however, this facility is not using the right kind of website, they’re not really promoting themselves very well. There’s delinquency that you could clear up”. Then your answer is "Okay, you said it right there for me, I have to do it. Why would I pay your client for what they did not do?". Or they will say “I’ve done a market research on this property, as you can see in my OM, based on my pro forma numbers in year one, and you could bring it to this value, which means it’ll actually exceed the purchase price in year one”. I will then say, Great, why didn’t you have your client do that? If you are going to sell this property at a price point that’s less than if you would have instructed that client to do what you state that they can do – why are you selling it? You're selling it short and ultimately affecting your client.

  
  

  Obviously, they can project numbers, it’s like having a crystal ball in your hand. Sometimes that’s what it feels like when they're projecting exit strategies of three to five years from now. Do I know what cap rates or interest rates are going to be in three to five years? Of course not, all I know is this asset class is in a cycle. We were at the top of that cycle six months ago and now we’re going back down, and at some point we're going back up. After I have said to the broker “If you know it can do this, why not instruct your client to do that, and re-list it after six months of implementing your ideas that created this pro forma"? And they answer, Because they want to sell it now. Fair enough, then the now price is $1.7M.

  
  

  Brokers are actually really nice, I have never felt disrespected or been disrespected by them. If they're not a self storage broker, your goal is not to offend them with your underwriting, it’s to educate them. It’s a give and take relationship when you are a buyer versus a seller. That’s what we’re looking at. I wish I could say that there is this long process about underwriting, and learning it does takes time, it might take you three hours to underwrite something to where you feel comfortable with writing an LOI, and that can take me 20 minutes, but I have been doing this for many years. I have perfected the way I am looking at it, but to be clear, I learn new things every single day about the underwriting process.

  
  

  Broker OM's make it easier because they have done a lot of the legwork for you. Just reading that offering memorandum, looking at pictures, getting a good visual identity of what that property looks like currently, that’s all it’s about.

  
  

  Trust but verify, no matter how you are looking at it.

  
  

  Kathyrn East

  
  

  (314) 596-6542

  
  

  sopapta21@gmail.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7a0a2711-ce3a-4c30-9765-91727b4810efThu, 18 Aug 2022 06:58:00 -080014:22falsefull11361361How to Underwrite a Self Storage Property & What to Look For in The OMHow to underwrite a self storage property? How to look at an OM? Kathryn East has several years experience in the self storage space, she is the Founder of Sopapta Consulting, Management & Auditing, and shares her knowledge.

  You can read this entire interview here: bit.ly/3JMFgay

  
  

  We are going to underwrite a deal together, and see where Kathryn's mind is at when she gets an OM, I will let you take it from here.

  
  

  Deals are made. In order to create the cap rates and the profit analysis that’s needed for specific clients, I have to underwrite these very carefully. I love OM's, they generally have 95% of the information that I need. The first thing I’m doing is looking at pictures, it sounds very elementary, but I need to see the property from their eyes. Those pictures are designed to make the property look better than what it is, so there could be some filtering applied. The purpose of that is to see what the general condition of the property is, because I have to know how much Capex I’m going to have to put into this property, and that’s directly going to affect my evaluation.

  The next step is to enter the numbers exactly as they’re stated on the OM, into an evaluator. I need to see, from the numbers that they provide, how accurate is it to get that price point that they’re looking for. Most of the time, brokers are cap rate driven, so if I’m looking at a property that says that they want 1.2 million at a 6.5 cap rate, I need to determine whether or not that’s realistic, based on the information they’ve provided in their current analysis column. We all know that as interest rates go up, cap rates go up, things fluctuate, it’s a cycle.

  
  

  When I’m looking at the numbers, I’m trying to determine whether or not it’s a fair asking price. A lot of times we’ll find some small issues on the underwriting on the offering memorandum and that leads to questions for the broker, so we're able not only to decipher whether or not they’re necessarily a self storage broker, and believe me, I love self storage brokers, because their underwriting is quite impeccable, but they often underwrite price for pro forma.

  
  

  What do you think when you see a broker put a projected cap rate for year one or two and not the existing cap rate?

  
  

  First of all, don’t buy off of a cap rate, but you can determine what the value is on your exit strategies on cap rates. If I buy this property at a six and a half cap, I’m estimating to sell it at a 6.5 cap in my exit strategies, which are three to five years, generally. We have seen a lot of inventory come across that has been selling in a year or 18 months, that was a year ago, that’s the past. Now we’re back onto our holding pattern. It’s always a cycle, so we are back to the three to five years. When they say “I want $2.4 million based on the exit strategy I’m projecting in five years of an eight cap", I’m asking “Where did you come up with that information, because our current column is more like 2.5?”.

  A lot of brokers are dictated the pricing by the seller themselves, so they have to ask their clients how much are you wanting for this property? They throw out $2.4 million, the broker runs the analysis on the current numbers and says “That’s at a four cap, interest rates are at a six and a half, you’re probably not going to get that”. Then the client says “Well, you are going to get it for me anyway”. Which is why underwriting as-is is so important, that is what will give you your actual asking price.

  
  

  Kathyrn East

  
  

  (314) 596-6542

  
  

  How to underwrite a self storage property? How to look at an OM? Kathryn East has several years experience in the self storage space, she is the Founder of Sopapta Consulting, Management & Auditing, and shares her knowledge.

  You can read this entire interview here: bit.ly/3JMFgay

  
  

  We are going to underwrite a deal together, and see where Kathryn's mind is at when she gets an OM, I will let you take it from here.

  
  

  Deals are made. In order to create the cap rates and the profit analysis that’s needed for specific clients, I have to underwrite these very carefully. I love OM's, they generally have 95% of the information that I need. The first thing I’m doing is looking at pictures, it sounds very elementary, but I need to see the property from their eyes. Those pictures are designed to make the property look better than what it is, so there could be some filtering applied. The purpose of that is to see what the general condition of the property is, because I have to know how much Capex I’m going to have to put into this property, and that’s directly going to affect my evaluation.

  The next step is to enter the numbers exactly as they’re stated on the OM, into an evaluator. I need to see, from the numbers that they provide, how accurate is it to get that price point that they’re looking for. Most of the time, brokers are cap rate driven, so if I’m looking at a property that says that they want 1.2 million at a 6.5 cap rate, I need to determine whether or not that’s realistic, based on the information they’ve provided in their current analysis column. We all know that as interest rates go up, cap rates go up, things fluctuate, it’s a cycle.

  
  

  When I’m looking at the numbers, I’m trying to determine whether or not it’s a fair asking price. A lot of times we’ll find some small issues on the underwriting on the offering memorandum and that leads to questions for the broker, so we're able not only to decipher whether or not they’re necessarily a self storage broker, and believe me, I love self storage brokers, because their underwriting is quite impeccable, but they often underwrite price for pro forma.

  
  

  What do you think when you see a broker put a projected cap rate for year one or two and not the existing cap rate?

  
  

  First of all, don’t buy off of a cap rate, but you can determine what the value is on your exit strategies on cap rates. If I buy this property at a six and a half cap, I’m estimating to sell it at a 6.5 cap in my exit strategies, which are three to five years, generally. We have seen a lot of inventory come across that has been selling in a year or 18 months, that was a year ago, that’s the past. Now we’re back onto our holding pattern. It’s always a cycle, so we are back to the three to five years. When they say “I want $2.4 million based on the exit strategy I’m projecting in five years of an eight cap", I’m asking “Where did you come up with that information, because our current column is more like 2.5?”.

  A lot of brokers are dictated the pricing by the seller themselves, so they have to ask their clients how much are you wanting for this property? They throw out $2.4 million, the broker runs the analysis on the current numbers and says “That’s at a four cap, interest rates are at a six and a half, you’re probably not going to get that”. Then the client says “Well, you are going to get it for me anyway”. Which is why underwriting as-is is so important, that is what will give you your actual asking price.

  
  

  Kathyrn East

  
  

  (314) 596-6542

  
  

  sopapta21@gmail.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>73337cb3-8dfe-45e4-9bd7-bc3315382eb7Thu, 11 Aug 2022 06:54:00 -080016:15falsefull11351351Pros and Cons of Investing in Car WashesWhy should anyone invest in car washes? What are the pros and cons? What are some ways to add value in car washes? Whitney Elkins-Hutten, Director of Investor Education at passiveinvesting.com shares her knowledge.

  You can read this entire interview here: bit.ly/3zV7qvF

  
  

  What are some of the pros and cons of car washes that you have invested in so far?

  
  

  A pro would be that we are looking to buy properties from Mom and Pop owners that are already stabilized and performing, ideally they already may have several properties under management. However, because they are the operator, they haven't figured out how to scale themselves out of the business. That scaling problem is what we are looking to solve. That is also the next pro, because we are looking to build one of the only third party management companies for carwashes. We take advantage of not only operational expenses, sharing full time employees between different properties and keeping our labor expenses low. But we can also keep our chemicals and supply expenses low because we can buy in bulk. We also have a great Training Management Program. Anyone that has run a business knows that one of the hardest things to scale is your people so with this, we can actually achieve that type of scaling. Then, the ability to layer on a strong brand and duplicate that model over several other properties is of benefit. 

  As for cons, this is a different type of investment. Investors that get into the space can be starry-eyed, they may look at the returns and think that this is easy money. They may think they can make passively 10 to 15% cash on cash 20 30% IRR on this type of investment, but it does come with its different types of risks. It has seasonality type risks, business competition and competition between competitors. There is also intra competition, which is between the assets you already currently own. You have to be partnered with an operator that knows what they are doing as far as being able to acquire the right facilities that have the right metrics layer on this type of strong marketing brand. When buying a carwash, you can't just pick a piece of land and build a carwash, it doesn't just work anywhere, you have to have eyeballs on the property. More importantly, you have to have the traffic count coming by, similar to self storage, you need the traffic count coming by, but it also needs to be able to turn in the correct direction and lead to the correct direction. Whenever you get the traffic on the property, you now need to be able to manage the traffic on the property and get a correct flow to be able to service your customers because at the end of the day, it's your customers that's going to drive your business.

  
  

  What are some ways to add value in car washes?

  
  

  One, make sure you are in a great metropolitan service area that has the demographics to be able to support a carwash. Start the due diligence while you're under contract, what is the current operator doing well? What are they not doing well? What we are seeing, especially picking up from mom and pop owners, is that their employee count is very high. Their employees are not trained, there is no strong branding on the property, they haven't moved to subscription model. Look for ways to increase your income, look for ways to decrease your expenses. Can you renegotiate vendor contracts to bring down some of your chemicals that you purchase? Can you optimize the tunnel speeds so you are not spending as much in water and electricity? Can you add an express lane to the property to add an additional tier to your subscription model and move those people that pay a higher tier through faster?

  Whitney Elkins-Hutten

  
  

  whitney@passiveinvesting.com

  
  

  Why should anyone invest in car washes? What are the pros and cons? What are some ways to add value in car washes? Whitney Elkins-Hutten, Director of Investor Education at passiveinvesting.com shares her knowledge.

  You can read this entire interview here: bit.ly/3zV7qvF

  
  

  What are some of the pros and cons of car washes that you have invested in so far?

  
  

  A pro would be that we are looking to buy properties from Mom and Pop owners that are already stabilized and performing, ideally they already may have several properties under management. However, because they are the operator, they haven't figured out how to scale themselves out of the business. That scaling problem is what we are looking to solve. That is also the next pro, because we are looking to build one of the only third party management companies for carwashes. We take advantage of not only operational expenses, sharing full time employees between different properties and keeping our labor expenses low. But we can also keep our chemicals and supply expenses low because we can buy in bulk. We also have a great Training Management Program. Anyone that has run a business knows that one of the hardest things to scale is your people so with this, we can actually achieve that type of scaling. Then, the ability to layer on a strong brand and duplicate that model over several other properties is of benefit. 

  As for cons, this is a different type of investment. Investors that get into the space can be starry-eyed, they may look at the returns and think that this is easy money. They may think they can make passively 10 to 15% cash on cash 20 30% IRR on this type of investment, but it does come with its different types of risks. It has seasonality type risks, business competition and competition between competitors. There is also intra competition, which is between the assets you already currently own. You have to be partnered with an operator that knows what they are doing as far as being able to acquire the right facilities that have the right metrics layer on this type of strong marketing brand. When buying a carwash, you can't just pick a piece of land and build a carwash, it doesn't just work anywhere, you have to have eyeballs on the property. More importantly, you have to have the traffic count coming by, similar to self storage, you need the traffic count coming by, but it also needs to be able to turn in the correct direction and lead to the correct direction. Whenever you get the traffic on the property, you now need to be able to manage the traffic on the property and get a correct flow to be able to service your customers because at the end of the day, it's your customers that's going to drive your business.

  
  

  What are some ways to add value in car washes?

  
  

  One, make sure you are in a great metropolitan service area that has the demographics to be able to support a carwash. Start the due diligence while you're under contract, what is the current operator doing well? What are they not doing well? What we are seeing, especially picking up from mom and pop owners, is that their employee count is very high. Their employees are not trained, there is no strong branding on the property, they haven't moved to subscription model. Look for ways to increase your income, look for ways to decrease your expenses. Can you renegotiate vendor contracts to bring down some of your chemicals that you purchase? Can you optimize the tunnel speeds so you are not spending as much in water and electricity? Can you add an express lane to the property to add an additional tier to your subscription model and move those people that pay a higher tier through faster?

  Whitney Elkins-Hutten

  
  

  whitney@passiveinvesting.com

  
  

  www.passiveinvesting.com/whitney

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>1a99527d-5671-45e3-a08d-936403c1d5b1Thu, 04 Aug 2022 06:57:00 -080016:18falsefull11341341High Interest Rates: Yikes or Yay!?Today I will be talking about the recent interest rate hikes. How crazy is it that just the latest rate increase was a whopping .75%? But... is that actually good or bad? Have you done the math? I have, and I will let you know how does that look for us, awesome investors. 

  You can read this entire episode here: bit.ly/3Ja6yre

  
  

  One super important thing that I want to talk about that I haven't heard anyone talk about yet is the fact that obviously, interest rates are going up, Oh, how terrible is going to be, a 6.5% interest rate after this latest increase on July 25th 2022. Some people are saying it's going to be in the eights by the end of this year. And guess what? I literally don't care. I did all the calculations and wanted to share it with you so that you understand that having high interest rates really do not matter. The cap rates go up as interest rates go up. I'll start by sharing some calculations that I did. Let's say you have a property that has a $300,000 NOI (net operating income) per year. And up until the beginning of this year, cap rates were for this kind of property were at around 5%. So the sales price for this property would be $6 million in January of 2022, and at that time, the interest rates were at about 4%. So we're going to do a calculation here at a 30% downpayment on a $6 million property at a beautiful interest rate of 4%. Your loan is going to be $4.2 million, and to keep things simple, we're going to do an interest only calculation, so $4.2 million at 4% interest only is $168,000 payment per year. That's a beautiful interest rate. That's a high price.

  
  

  Today, we're getting a higher interest rate, and because of that the cap rates are going up. So that means that the price for these properties are starting to go down. It's pure math, unless people are buying this with 100% cash, they need to get a loan and the loan is directly tied with a debt service coverage ratio. The debt service coverage ratio for those of you who may not know exactly what that is, is the ratio of cash available after expenses to service the debt, in other words, it is the ratio of how much net operating income you have to make your mortgage payments. So this should be around 1.2 to 1.3 debt service coverage ratio, that's what the banks look for. And in order for people to be able to stay at that 1.2 to 1.3 debt service coverage ratio, the price has to go down on these properties. So now, let's look at a mortgage rate of 5.75%, which is more or less what is happening today.

  
  

  Let's move this $300,000 NOI property to a 6% cap rate, and depending on the asset class, you may be a little bit higher, you may be a little bit lower, but let's average this cap rate at 6%. So at 6%, the sales price is going to be $5 million, you just got a $1 million discount because the interest rates went up. Now, I'm calculating from 4% interest rates to almost 2% more at 5.75%. The interest only payment with 30% down on a $5 million property is $201,250. Now, you are paying $168,000 a year at a 4% interest rate, and now you're paying $200,000. With this higher interest rate, as well as shaving off a million dollars, the price difference on your mortgage payment is an additional $33,250 per year. But let's not forget, we got a discount of a million dollars. To put it simply, you're going to be paying $33,000 more per year, and you got a $1 million discount! So let's calculate $1 million divided by $33,000, guess how many years is going to take for you to start being on the red? 30 years, it's going to take 30 years for you to get to that $1 million discount you got. If you're worried about the high interest rates, you should actually start celebrating!

  
  

  Steffany Boldrini

  
  

  linkedin.com/in/steffbold

  
  

  Sign up for our newsletter here: Today I will be talking about the recent interest rate hikes. How crazy is it that just the latest rate increase was a whopping .75%? But... is that actually good or bad? Have you done the math? I have, and I will let you know how does that look for us, awesome investors. 

  You can read this entire episode here: bit.ly/3Ja6yre

  
  

  One super important thing that I want to talk about that I haven't heard anyone talk about yet is the fact that obviously, interest rates are going up, Oh, how terrible is going to be, a 6.5% interest rate after this latest increase on July 25th 2022. Some people are saying it's going to be in the eights by the end of this year. And guess what? I literally don't care. I did all the calculations and wanted to share it with you so that you understand that having high interest rates really do not matter. The cap rates go up as interest rates go up. I'll start by sharing some calculations that I did. Let's say you have a property that has a $300,000 NOI (net operating income) per year. And up until the beginning of this year, cap rates were for this kind of property were at around 5%. So the sales price for this property would be $6 million in January of 2022, and at that time, the interest rates were at about 4%. So we're going to do a calculation here at a 30% downpayment on a $6 million property at a beautiful interest rate of 4%. Your loan is going to be $4.2 million, and to keep things simple, we're going to do an interest only calculation, so $4.2 million at 4% interest only is $168,000 payment per year. That's a beautiful interest rate. That's a high price.

  
  

  Today, we're getting a higher interest rate, and because of that the cap rates are going up. So that means that the price for these properties are starting to go down. It's pure math, unless people are buying this with 100% cash, they need to get a loan and the loan is directly tied with a debt service coverage ratio. The debt service coverage ratio for those of you who may not know exactly what that is, is the ratio of cash available after expenses to service the debt, in other words, it is the ratio of how much net operating income you have to make your mortgage payments. So this should be around 1.2 to 1.3 debt service coverage ratio, that's what the banks look for. And in order for people to be able to stay at that 1.2 to 1.3 debt service coverage ratio, the price has to go down on these properties. So now, let's look at a mortgage rate of 5.75%, which is more or less what is happening today.

  
  

  Let's move this $300,000 NOI property to a 6% cap rate, and depending on the asset class, you may be a little bit higher, you may be a little bit lower, but let's average this cap rate at 6%. So at 6%, the sales price is going to be $5 million, you just got a $1 million discount because the interest rates went up. Now, I'm calculating from 4% interest rates to almost 2% more at 5.75%. The interest only payment with 30% down on a $5 million property is $201,250. Now, you are paying $168,000 a year at a 4% interest rate, and now you're paying $200,000. With this higher interest rate, as well as shaving off a million dollars, the price difference on your mortgage payment is an additional $33,250 per year. But let's not forget, we got a discount of a million dollars. To put it simply, you're going to be paying $33,000 more per year, and you got a $1 million discount! So let's calculate $1 million divided by $33,000, guess how many years is going to take for you to start being on the red? 30 years, it's going to take 30 years for you to get to that $1 million discount you got. If you're worried about the high interest rates, you should actually start celebrating!

  
  

  Steffany Boldrini

  
  

  linkedin.com/in/steffbold

  
  

  Sign up for our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>d581db26-a48d-42ef-abbc-b12ccfd2550eTue, 26 Jul 2022 17:58:00 -080016:21falsefull11331331Industrial Investing Success Criteria and Potential PitfallsTop lessons learned from a bad industrial investment. How to analyze an industrial property? What's the state of industrial investments today? Chad Griffiths has been an industrial real estate broker since 2005 and investor since 2014.

  You can read this entire episode here: bit.ly/3APQyIK

  
  

  What is your success criteria for selecting an industrial property for purchase?

  
  

  I am a big believer in looking at downside risk first. Instead of trying to convince myself why I should do that deal, and to some extend you have to, but I do look at the downside risk first. How I look at it is, once the property is vacant, I do the exercise of finding out what that property is worth vacant. Even if you’re buying an industrial property and it has a five year tenant in it, that tenant might not renew when their term is up, they might go bankrupt, there are any number of reasons why the tenant could move out before their lease expires.

  I go through the exercise of determining what that building is worth vacant, and compare that to the pool of available properties for lease, properties for sale, any comparable transaction data that can be offset against it is helpful. This helps us go through the exercise of identifying any things that might be wrong with the building – for example: low ceiling heights, limited power or a poor marshaling area for trucks to get into.

  
  

  If a property has any of those characteristics, at some point it will be vacant and I want to know what my downside risk is by identifying that first, then I will start building out a pro forma on 5 or 10 years and making a number of assumptions. You can manipulate a pro forma in any way you want to have it spit out numbers that look appealing, but before I go through that exercise, I’m making sure that I don’t have exposure that I can’t afford.

  
  

  Can we go over a deal that you have recently looked at and you either decided to write an LOI for, or not move forward with it?

  
  

  I can share one that I bought, and subsequently sold and lost money on it which is what really helped shape my position on this on why I’m so diligent about this. In 2015, the second property that my partner and I bought, it was a condominium building, similar to residential, a lot of people don’t realize that industrial can also be condominiums. This was a 20,000 square foot building, and there were 10 individual condo warehouse bays, and the neighboring company owned their bay, they were a seafood distributor that wanted to expand, but couldn’t afford to buy the one next door. We ended up doing a lease with the owner at the time and then buying it back from him.

  We thought we were geniuses, this company already owns the bay next door, they just invested $250,000 and a cooler, and when 5 years comes up, we’re either going to be able to renew them at a higher rate, or we can sell it to them at that point. When the time came, we caught word that they had moved to another building and they were preparing to vacate ours. They were either brilliant in their negotiation tactic, or we just panicked, but we ended up selling it to them for about a 15% loss, because they called our bluff on it.

  
  

  The reason we sold it was because it only had a cooler in it. There was no washroom, no office space, so we would have been forced to pay to have that cooler removed. We tried finding other companies for it and we couldn’t, and we didn’t want to take on that risk, it was right at the beginning of COVID. Had we gone through the exercise of asking what is this space worth vacant before purchasing it, we wouldn’t have paid the price that we did.

  
  

  Chad Griffiths

  
  

  Top lessons learned from a bad industrial investment. How to analyze an industrial property? What's the state of industrial investments today? Chad Griffiths has been an industrial real estate broker since 2005 and investor since 2014.

  You can read this entire episode here: bit.ly/3APQyIK

  
  

  What is your success criteria for selecting an industrial property for purchase?

  
  

  I am a big believer in looking at downside risk first. Instead of trying to convince myself why I should do that deal, and to some extend you have to, but I do look at the downside risk first. How I look at it is, once the property is vacant, I do the exercise of finding out what that property is worth vacant. Even if you’re buying an industrial property and it has a five year tenant in it, that tenant might not renew when their term is up, they might go bankrupt, there are any number of reasons why the tenant could move out before their lease expires.

  I go through the exercise of determining what that building is worth vacant, and compare that to the pool of available properties for lease, properties for sale, any comparable transaction data that can be offset against it is helpful. This helps us go through the exercise of identifying any things that might be wrong with the building – for example: low ceiling heights, limited power or a poor marshaling area for trucks to get into.

  
  

  If a property has any of those characteristics, at some point it will be vacant and I want to know what my downside risk is by identifying that first, then I will start building out a pro forma on 5 or 10 years and making a number of assumptions. You can manipulate a pro forma in any way you want to have it spit out numbers that look appealing, but before I go through that exercise, I’m making sure that I don’t have exposure that I can’t afford.

  
  

  Can we go over a deal that you have recently looked at and you either decided to write an LOI for, or not move forward with it?

  
  

  I can share one that I bought, and subsequently sold and lost money on it which is what really helped shape my position on this on why I’m so diligent about this. In 2015, the second property that my partner and I bought, it was a condominium building, similar to residential, a lot of people don’t realize that industrial can also be condominiums. This was a 20,000 square foot building, and there were 10 individual condo warehouse bays, and the neighboring company owned their bay, they were a seafood distributor that wanted to expand, but couldn’t afford to buy the one next door. We ended up doing a lease with the owner at the time and then buying it back from him.

  We thought we were geniuses, this company already owns the bay next door, they just invested $250,000 and a cooler, and when 5 years comes up, we’re either going to be able to renew them at a higher rate, or we can sell it to them at that point. When the time came, we caught word that they had moved to another building and they were preparing to vacate ours. They were either brilliant in their negotiation tactic, or we just panicked, but we ended up selling it to them for about a 15% loss, because they called our bluff on it.

  
  

  The reason we sold it was because it only had a cooler in it. There was no washroom, no office space, so we would have been forced to pay to have that cooler removed. We tried finding other companies for it and we couldn’t, and we didn’t want to take on that risk, it was right at the beginning of COVID. Had we gone through the exercise of asking what is this space worth vacant before purchasing it, we wouldn’t have paid the price that we did.

  
  

  Chad Griffiths

  
  

  www.industrialize.com

  
  

  GriffithsCRE@gmail.com

  
  

  youtube.com/c/ChadGriffithsCRE

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>f76a1e98-3357-464c-92dc-57923b6eb265Thu, 14 Jul 2022 06:45:00 -080019:13falsefull11321321How to Develop a Self Storage Facility From ScratchWhat are the steps you should take to develop a self storage facility from the ground up? Skyler Hartman, CEO of Capitaline Ventures will generously share his knowledge with us.

  You can read this entire interview here: bit.ly/3bEbUya

  Let's go over the process of developing a self storage facility from the ground up, you can start from the decision on where to find the land, all the way to the beginning of construction, and everything in between.

  
  

  I like to look in my backyard first because I know the the economics of my surrounding area better than anywhere else in the country, there's less research needed, but that does give you a limited scope. I would always start with the economic analysis and verify that the city or town is growing, that there are good jobs, schools are adequate and getting good ratings, I don't want to be in a war zone. Wether storage may perform great in a war zone, that's just not the place I want to be. So I start with an economic analysis and a little bit of city due diligence, I find out what the zoning process is, is it a conditional use permit? Does it fit into commercial general? Is there any overlay districts that may allow storage that I'm not seeing? Or is it strictly light industrial? Know your zoning, and your economic analysis.

  From there, I do some competition analysis, basically mystery shopping. I have a basic spreadsheet with unit sizes prices, I'll shop online first and try to pinpoint their occupancy rates. And you can see that on some sites have "not available" or "call for availability". And you'll see the other units that are available as "rent now". Some REITs like U-haul won't even publish prices if they don't have units available. So you can really drill down on your competition quickly. And from the online search, I'll then do a phone call and evaluate the customer service. Did they answer the phone? If not, did they call me back? Were they polite? Were they professional?

  
  

  Moving on to finding contractors and doing land surveys, let's say someone is brand new to all of this lingo, what do they need to look for? What do they need to get? And how would they even figure out if a contractor is good for self storage or not?

  
  

  I would interview at least five general contractors, and I'd prefer a design build contractor. They will help me through any of my processes that I get hung up on, and the entitlement process if needed. We're really good at that in our company, nut sometimes there are some issues that we don't see or it's an area that we're not familiar with, such as California, we have a project going there right now, which I probably won't do another one there. With that being said, design build firms are excellent in walking you through the entire process, as well as optimizing your design from the start. Typically, you'll get a cost plus bid from a GC or that's what we want to see, a cost plus. What that means is whatever the build cost, if it's $5 million, the builder will then put their price on top of that, which is typically six, eight, or 10%. Depending on how much business you do with the firm, you'll get a different pricing plan. The benefit there is if they bid the project at $5 million, it's an open book project, we come in at $4.5 million, that $500,000 in savings goes right back to us, which is excellent.

  How long would a project take from beginning to end?

  
  

  Let's say it's a 100,000 square feet of net rentable, depending on the city process, you could go from start to finish in 12 to 14 months. Six months in design and six months in the build process.

  Skyler Hartman

  
  

  (801)...]]>What are the steps you should take to develop a self storage facility from the ground up? Skyler Hartman, CEO of Capitaline Ventures will generously share his knowledge with us.

  You can read this entire interview here: bit.ly/3bEbUya

  Let's go over the process of developing a self storage facility from the ground up, you can start from the decision on where to find the land, all the way to the beginning of construction, and everything in between.

  
  

  I like to look in my backyard first because I know the the economics of my surrounding area better than anywhere else in the country, there's less research needed, but that does give you a limited scope. I would always start with the economic analysis and verify that the city or town is growing, that there are good jobs, schools are adequate and getting good ratings, I don't want to be in a war zone. Wether storage may perform great in a war zone, that's just not the place I want to be. So I start with an economic analysis and a little bit of city due diligence, I find out what the zoning process is, is it a conditional use permit? Does it fit into commercial general? Is there any overlay districts that may allow storage that I'm not seeing? Or is it strictly light industrial? Know your zoning, and your economic analysis.

  From there, I do some competition analysis, basically mystery shopping. I have a basic spreadsheet with unit sizes prices, I'll shop online first and try to pinpoint their occupancy rates. And you can see that on some sites have "not available" or "call for availability". And you'll see the other units that are available as "rent now". Some REITs like U-haul won't even publish prices if they don't have units available. So you can really drill down on your competition quickly. And from the online search, I'll then do a phone call and evaluate the customer service. Did they answer the phone? If not, did they call me back? Were they polite? Were they professional?

  
  

  Moving on to finding contractors and doing land surveys, let's say someone is brand new to all of this lingo, what do they need to look for? What do they need to get? And how would they even figure out if a contractor is good for self storage or not?

  
  

  I would interview at least five general contractors, and I'd prefer a design build contractor. They will help me through any of my processes that I get hung up on, and the entitlement process if needed. We're really good at that in our company, nut sometimes there are some issues that we don't see or it's an area that we're not familiar with, such as California, we have a project going there right now, which I probably won't do another one there. With that being said, design build firms are excellent in walking you through the entire process, as well as optimizing your design from the start. Typically, you'll get a cost plus bid from a GC or that's what we want to see, a cost plus. What that means is whatever the build cost, if it's $5 million, the builder will then put their price on top of that, which is typically six, eight, or 10%. Depending on how much business you do with the firm, you'll get a different pricing plan. The benefit there is if they bid the project at $5 million, it's an open book project, we come in at $4.5 million, that $500,000 in savings goes right back to us, which is excellent.

  How long would a project take from beginning to end?

  
  

  Let's say it's a 100,000 square feet of net rentable, depending on the city process, you could go from start to finish in 12 to 14 months. Six months in design and six months in the build process.

  Skyler Hartman

  
  

  (801) 899-3767

  
  

  skyler@yourwaystorage.com

  
  

  www.capitalineventures.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>4860dee1-39f0-428c-8d28-e9dcca8827bdThu, 30 Jun 2022 06:55:00 -080019:16falsefull11311311Top 5 Tips For Negotiating LeasesWhat are the top 5 things you should keep in mind when negotiating retail leases? What kinds of tenants are leasing retail space today? Drew Kristol from Marcus & Millichap shares his insights.

  You can read this entire interview here: bit.ly/3OwCHub

  
  

  What is the state of retail right now, and what kinds of tenants are leasing a space?

  
  

  Florida came back very quickly after COVID, we have a government that is very pro business and has done as much as they can to try to encourage people to get outside and shop. There has been a lot of business occurring in Florida, whereas some other states have been locked down and not encouraging the amount of outdoor experiential shopping. Marcus and Millichap had its all time greatest year in 2021, with $90 billion worth of sales. Our previous high was $45 billion, and we’re actually ahead of the sales this year compared with the previous year. I think the main reason is that there has been a lot of real pent up demand in the retail market, and we are seeing returns that are a lot better than other product types. What do we mean by product type? Multifamily, industrial, office, retail land, those are really the major product types.

  What are the five most important things that retail investors should keep in mind when negotiating leases?

  
  

  1. Try to get annual rental increases that at least match inflation. Inflation is off the charts and I don’t know if it’s going to continue to go this way, but I would say try to negotiate at least 2.5-3% minimum annual increases, but the more the better. A lot of people are going to look at “What is my NOI growth over time?”. The only way to match inflation is to have increases. And if they don’t, when you market the property, people are going to do their analysis, and will be a little concerned that the growth is flat, and they may pass over your deal, or offer you a lower price to get a better return to cover for that.

  2. Always do a NNN lease. Expenses are going up, we’re going through a mini insurance crisis right now in South Florida, where insurance used to cost about $1 per sf for the building. We’re looking at quotes in some cases between three and $5 a foot in certain areas.

  
  

  3. Have a tenant base that is as service oriented as possible. You don’t want to have too many tenants in your tenant roster that someone’s going to inspect that rent roll and say “GameStop is not long for this world, kids are downloading video games, how is that business going to last if kids keep continuing to go online and download their video games?” You don’t want too many tenants like that, that are not long term for this retail world. You want to have a good mix of restaurants if you have the parking, because you need parking to add restaurants

  
  

  4. This is important, have a thematic tenant roster. You want to try to not put the wrong type of tenants together. If you have children’s clothing, a daycare, or a church, then you don’t want to put a marijuana dispensary in the center even if you’re allowed to. They may pay good money, but they may drive off other tenants. If you have a bar, or a liquor store, then sticking a marijuana dispensary may not be a bad idea.

  
  

  5. You should always be in constant contact with the rental market. An owner should want to know what all their neighbors are paying in rent, or what developments are happening locally, what new laws could affect their property, what new zoning codes are coming in, that could add density or be a detriment. Brokers can add a lot of value, it's important to pick up their calls, in order to understand where the market is, it would be a mistake not opening themselves up.

  
  

  Drew Kristol

  
  

  (786) 522-7065

  
  

  What are the top 5 things you should keep in mind when negotiating retail leases? What kinds of tenants are leasing retail space today? Drew Kristol from Marcus & Millichap shares his insights.

  You can read this entire interview here: bit.ly/3OwCHub

  
  

  What is the state of retail right now, and what kinds of tenants are leasing a space?

  
  

  Florida came back very quickly after COVID, we have a government that is very pro business and has done as much as they can to try to encourage people to get outside and shop. There has been a lot of business occurring in Florida, whereas some other states have been locked down and not encouraging the amount of outdoor experiential shopping. Marcus and Millichap had its all time greatest year in 2021, with $90 billion worth of sales. Our previous high was $45 billion, and we’re actually ahead of the sales this year compared with the previous year. I think the main reason is that there has been a lot of real pent up demand in the retail market, and we are seeing returns that are a lot better than other product types. What do we mean by product type? Multifamily, industrial, office, retail land, those are really the major product types.

  What are the five most important things that retail investors should keep in mind when negotiating leases?

  
  

  1. Try to get annual rental increases that at least match inflation. Inflation is off the charts and I don’t know if it’s going to continue to go this way, but I would say try to negotiate at least 2.5-3% minimum annual increases, but the more the better. A lot of people are going to look at “What is my NOI growth over time?”. The only way to match inflation is to have increases. And if they don’t, when you market the property, people are going to do their analysis, and will be a little concerned that the growth is flat, and they may pass over your deal, or offer you a lower price to get a better return to cover for that.

  2. Always do a NNN lease. Expenses are going up, we’re going through a mini insurance crisis right now in South Florida, where insurance used to cost about $1 per sf for the building. We’re looking at quotes in some cases between three and $5 a foot in certain areas.

  
  

  3. Have a tenant base that is as service oriented as possible. You don’t want to have too many tenants in your tenant roster that someone’s going to inspect that rent roll and say “GameStop is not long for this world, kids are downloading video games, how is that business going to last if kids keep continuing to go online and download their video games?” You don’t want too many tenants like that, that are not long term for this retail world. You want to have a good mix of restaurants if you have the parking, because you need parking to add restaurants

  
  

  4. This is important, have a thematic tenant roster. You want to try to not put the wrong type of tenants together. If you have children’s clothing, a daycare, or a church, then you don’t want to put a marijuana dispensary in the center even if you’re allowed to. They may pay good money, but they may drive off other tenants. If you have a bar, or a liquor store, then sticking a marijuana dispensary may not be a bad idea.

  
  

  5. You should always be in constant contact with the rental market. An owner should want to know what all their neighbors are paying in rent, or what developments are happening locally, what new laws could affect their property, what new zoning codes are coming in, that could add density or be a detriment. Brokers can add a lot of value, it's important to pick up their calls, in order to understand where the market is, it would be a mistake not opening themselves up.

  
  

  Drew Kristol

  
  

  (786) 522-7065

  
  

  www.olsonkristolgroup.com

  
  

  drew.kristol@marcusmillichap.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7f07dc6e-ae3e-4f42-9d62-7b94eb5e16b3Tue, 21 Jun 2022 06:45:00 -080025:13falsefull11301301Top Tips From Commercial Real Estate ConferenceThe information in this post were my notes from the Women's Real Estate Investment Summit by Beth Azor. I highly recommend attending this next year.

  You can read this entire episode here: bit.ly/3QbW8KF

  
  

  Lending

  
  

  Because self storage is a business, you can do an SBA loan to purchase. Make sure to go with a lender that is experienced in SBA loans in order for it to take the least amount of time. You will find these lenders at industry specific conferences, you should also ask your network about them.

  It was recommended to never to do a CMBS loan, even thought the rates are great, because you are stuck with it for 10 yrs, there's a prepayment penalty, you cannot put a second loan on the property, and it gets sold multiple times over the life of the loan, and you don’t have a direct contact. They can foreclose on you very quickly.

  
  

  Make sure to ask lenders if they service their own loans.

  
  

  Look at NOI/debt amount. Lenders like 9% and above debt yield ratio.

  
  

  If you're syndicating a deal, documentation on capital call is important for banks. Also, the controlling interest should stay with operator (this will also be required by the bank).

  
  

  Finding deals

  
  

  Call brokers regularly so they keep you in mind.

  Deals are getting done because of Linkedin. People are meeting people online, they are becoming influencers in their specific real estate field, and they are finding deals because of that, as well as growing their network.

  
  

  Purchasing properties

  
  

  Let/make brokers invest in the deals that they’re bringing you. They will be very honest with the value of the deal they are investing in, they are also a great resource for any questions, and they understand the industry.

  Best practices

  
  

  Do a stress test analysis on your underwriting (and your existing properties) to see how the potential property would survive in an economic downturn. For instance, what would happen if 10-20% of the tenants left, what would happen if rents decreased by 10-20%.

  By the numbers

  
  

  Women outperform men in real estate investing by 2x1. I say this knowing that my audience is 65% men, and I love men. I say this because I want all the guys here to be mindful and purposeful to partner up with women. It has been proven over and over again that diverse teams in all industries do much better than non diverse teams.

  Beth asked lenders how many women have they lent to in their entire careers, they said between 1 and 3 women. That's an average of one woman per decade.

  
  

  Retail

  
  

  Beth’s #1 acquisition strategy: 100% leased centers (rents are too low).

  
  

  Never vacate old tenants before new leases are signed.

  
  

  Watch out if a business is being sold to an EB5 person who is just buying to get a visa. If that happens, they will likely not run it properly and will close the business after they get the visa. So you need to start thinking of who may take over that space.

  
  

  When you paint a retail center, calls from leasing brokers go up 20%, every time!

  
  

  When your tenants call asking for something, give it to them, but ask for something in return (like a waiver).

  
  

  For retail signage, have white letters on dark backgrounds, it jumps out in retail.

  
  

  Metro PCS is known for not paying rent.

  The information in this post were my notes from the Women's Real Estate Investment Summit by Beth Azor. I highly recommend attending this next year.

  You can read this entire episode here: bit.ly/3QbW8KF

  
  

  Lending

  
  

  Because self storage is a business, you can do an SBA loan to purchase. Make sure to go with a lender that is experienced in SBA loans in order for it to take the least amount of time. You will find these lenders at industry specific conferences, you should also ask your network about them.

  It was recommended to never to do a CMBS loan, even thought the rates are great, because you are stuck with it for 10 yrs, there's a prepayment penalty, you cannot put a second loan on the property, and it gets sold multiple times over the life of the loan, and you don’t have a direct contact. They can foreclose on you very quickly.

  
  

  Make sure to ask lenders if they service their own loans.

  
  

  Look at NOI/debt amount. Lenders like 9% and above debt yield ratio.

  
  

  If you're syndicating a deal, documentation on capital call is important for banks. Also, the controlling interest should stay with operator (this will also be required by the bank).

  
  

  Finding deals

  
  

  Call brokers regularly so they keep you in mind.

  Deals are getting done because of Linkedin. People are meeting people online, they are becoming influencers in their specific real estate field, and they are finding deals because of that, as well as growing their network.

  
  

  Purchasing properties

  
  

  Let/make brokers invest in the deals that they’re bringing you. They will be very honest with the value of the deal they are investing in, they are also a great resource for any questions, and they understand the industry.

  Best practices

  
  

  Do a stress test analysis on your underwriting (and your existing properties) to see how the potential property would survive in an economic downturn. For instance, what would happen if 10-20% of the tenants left, what would happen if rents decreased by 10-20%.

  By the numbers

  
  

  Women outperform men in real estate investing by 2x1. I say this knowing that my audience is 65% men, and I love men. I say this because I want all the guys here to be mindful and purposeful to partner up with women. It has been proven over and over again that diverse teams in all industries do much better than non diverse teams.

  Beth asked lenders how many women have they lent to in their entire careers, they said between 1 and 3 women. That's an average of one woman per decade.

  
  

  Retail

  
  

  Beth’s #1 acquisition strategy: 100% leased centers (rents are too low).

  
  

  Never vacate old tenants before new leases are signed.

  
  

  Watch out if a business is being sold to an EB5 person who is just buying to get a visa. If that happens, they will likely not run it properly and will close the business after they get the visa. So you need to start thinking of who may take over that space.

  
  

  When you paint a retail center, calls from leasing brokers go up 20%, every time!

  
  

  When your tenants call asking for something, give it to them, but ask for something in return (like a waiver).

  
  

  For retail signage, have white letters on dark backgrounds, it jumps out in retail.

  
  

  Metro PCS is known for not paying rent.

  Beth Azor

  
  

  Join the conference next year here.

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>09a14142-6f7e-4ad2-98c7-b13ec38529b7Thu, 09 Jun 2022 19:14:00 -080019:06falsefull11291291How to Evaluate & Purchase a Retail Property on Your OwnHow to evaluate and purchase a retail property by yourself? Where to get started? Jessica Malcomnson purchased two retail centers in the last couple of years and shares her lessons learned.

  You can read this entire interview here: bit.ly/3m59g6t

  
  

  How did you purchase your first retail center?

  
  

  I started out with a single family investment. I then also picked up short term rentals, office, and a warehouse building. My dream was to own shopping centers, and in 2019 was when I really began the journey to invest in shopping centers. And I realized at that time that, because I had taken some time off, I knew that I had to get back in the business, my career had lost momentum from a leasing perspective. But I knew I had to get back in and start networking with the brokers who are selling the real estate that I'm looking to purchase. I started to get back in to attending networking functions, local ICSC events, just so I could get my goals out there and network with the brokers who are selling shopping center.

  How did you get your first few loans because a lot of lenders don't want to lend to people who don't have a full time job.

  
  

  That was one of the challenges. My first shopping center was going to be my biggest purchase to date, and the lending process was new to me. Originally when I started the process, the broker that I was working with, Joe Russo of Marcus and Millichap, was fabulous throughout the process and really held my hand in every step. I never at any point felt like he was doing this for financial gain, he referred me to a loan broker. They want to see what kind of experience do you have. And then they look at your financial statement.

  What was this first opportunity and what was the upside of it?

  
  

  Looking at photos of it, I was thinking that it's probably not a property that I want to purchase, but once we dove into the financials, I realized that this is something that should be of interest to me, I can't judge it just by looking at the photos. I decided to take a road trip to visit the property, I'm located in South Florida, the property is located in the Jacksonville market, that's roughly a four to five hour commute. I remember standing in the parking lot, sometime around two to three in the afternoon, seeing the amount of traffic passing by the property. It was also located at a lighted intersection, next to a McDonald's, across the street from a Walmart neighborhood market. I said, "Wow!", I was willing to pass on this property just based on photos because it's not "sexy real estate". But now I'm here standing in the parking lot looking around and noticing everything that's happening, and then I realized that this is something that I need to pull the trigger on.

  What are some of the cons of retail?

  
  

  One of the issues that came up, after I purchased my first shopping center was that the insurance company that I used sent an inspector out within the first couple of months. They do a full inspection of the property, and they come back with a list of items that they want taken care of in order to continue with the policy. And that was a big surprise, I never had that issue with any of the properties that I managed in the past. They wanted me to reroof the property because the roof was old, but it was also not leaking, so they accepted a seal coat of the roof. That was a huge expense that was not expected, when we didn't even have reserves yet.

  Jessica Malcolmson

  
  

  instagram.com/Jess_Malc

  
  

  How to evaluate and purchase a retail property by yourself? Where to get started? Jessica Malcomnson purchased two retail centers in the last couple of years and shares her lessons learned.

  You can read this entire interview here: bit.ly/3m59g6t

  
  

  How did you purchase your first retail center?

  
  

  I started out with a single family investment. I then also picked up short term rentals, office, and a warehouse building. My dream was to own shopping centers, and in 2019 was when I really began the journey to invest in shopping centers. And I realized at that time that, because I had taken some time off, I knew that I had to get back in the business, my career had lost momentum from a leasing perspective. But I knew I had to get back in and start networking with the brokers who are selling the real estate that I'm looking to purchase. I started to get back in to attending networking functions, local ICSC events, just so I could get my goals out there and network with the brokers who are selling shopping center.

  How did you get your first few loans because a lot of lenders don't want to lend to people who don't have a full time job.

  
  

  That was one of the challenges. My first shopping center was going to be my biggest purchase to date, and the lending process was new to me. Originally when I started the process, the broker that I was working with, Joe Russo of Marcus and Millichap, was fabulous throughout the process and really held my hand in every step. I never at any point felt like he was doing this for financial gain, he referred me to a loan broker. They want to see what kind of experience do you have. And then they look at your financial statement.

  What was this first opportunity and what was the upside of it?

  
  

  Looking at photos of it, I was thinking that it's probably not a property that I want to purchase, but once we dove into the financials, I realized that this is something that should be of interest to me, I can't judge it just by looking at the photos. I decided to take a road trip to visit the property, I'm located in South Florida, the property is located in the Jacksonville market, that's roughly a four to five hour commute. I remember standing in the parking lot, sometime around two to three in the afternoon, seeing the amount of traffic passing by the property. It was also located at a lighted intersection, next to a McDonald's, across the street from a Walmart neighborhood market. I said, "Wow!", I was willing to pass on this property just based on photos because it's not "sexy real estate". But now I'm here standing in the parking lot looking around and noticing everything that's happening, and then I realized that this is something that I need to pull the trigger on.

  What are some of the cons of retail?

  
  

  One of the issues that came up, after I purchased my first shopping center was that the insurance company that I used sent an inspector out within the first couple of months. They do a full inspection of the property, and they come back with a list of items that they want taken care of in order to continue with the policy. And that was a big surprise, I never had that issue with any of the properties that I managed in the past. They wanted me to reroof the property because the roof was old, but it was also not leaking, so they accepted a seal coat of the roof. That was a huge expense that was not expected, when we didn't even have reserves yet.

  Jessica Malcolmson

  
  

  instagram.com/Jess_Malc

  
  

  linkedin.com/in/jessica-malcolmson-8569a322/

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>8897fa7e-2e76-4cc8-af64-c107ce628e8eThu, 02 Jun 2022 06:12:00 -080019:46falsefull11281281Real Estate Mogul Advice: How to Scale Your Real Estate InvestmentsWhat are some top advices for an investor looking at growing their portfolio and taking it to the next level? Chris Rising, co-founder and CEO of Rising Realty Partners, shares his top insights on scaling, delegating and syndications.

  You can read this entire interview here: bit.ly/3lmpB6z

  
  

  You have scaled your business to an incredible level. What are some of your top advice for an investor looking at growing their portfolio and taking it to the next level?

  
  

  On the syndication level, investors do expect a lot of hand-holding, and a lot of communication. And there’s a lot you can do digitally now that you weren’t able to do before. You’re really in two businesses, and maybe even three if you’re a property manager. You’re in the business of identifying real estate that you want to buy, you have the acquisition side, the operation side, and the investor relations, syndication business. That’s what our business looks like.

  On the operations side, we have asset managers who are more experienced in the real estate business, they have an MBA that oversees, maybe five assets or four assets. We have property managers, we have four or five people in the acquisitions team, and they are finding deals and underwriting deals. And then, we have about three or four people in our Investor Relations team. The mantra of my former mentor, or of my former boss, John Fishman used to say is, “You have to find them, mine them, and grind them.” And so, you have to be able to find the investors, you have to mine them, and then you’re grinding, you have to keep communicating and you have to keep growing.

  
  

  You can raise millions of dollars from one person if you keep communicating, even if deals don’t meet the return that we project. That doesn’t happen often, but it does happen. It doesn’t always happen the way we hope it would, but if you communicate with people, they feel like they’re part of your team and they understand the issues that you have. If you don’t communicate, you’ll never hear from that investor again.

  
  

  How you approach things when you want to delegate things? And when do you want to partner up with people, and what is your process for partnerships?

  
  

  I have enough scar tissue from bad partners, but I don't want someone to interpret bad partners as a bad human beings. When I say bad partners, it's just that our interests and/or expectations were not aligned, and it gets very difficult. The interesting thing about investing is that everybody's nice when things are good. When you lose a big tenant, or there might be a capital call, then not everybody is so nice. And that can also be within your partnership. I wish I could tell you that I have this wonderful method after so many years to identify partners, but I don't. What I do know is that if I'm talking to someone about being a parter, and if I can't make the decision right away, and I'm thinking about things, I usually say no. It's not always a scientific method.

  On delegation, the hardest thing you can do is to hire people. And the reason is, you really don't know what people are until they've been in the company for a while. We now make sure that they take tests to know if they can do their job. If you're going to be an acquisitions person, we're going to make you underwrite two or three buildings before we hire you. You have to have systems that allow you to use your time most effectively to make sure some things get done correctly.

  
  

  Chris Rising

  
  

  www.chrisrising.com

  
  

  What are some top advices for an investor looking at growing their portfolio and taking it to the next level? Chris Rising, co-founder and CEO of Rising Realty Partners, shares his top insights on scaling, delegating and syndications.

  You can read this entire interview here: bit.ly/3lmpB6z

  
  

  You have scaled your business to an incredible level. What are some of your top advice for an investor looking at growing their portfolio and taking it to the next level?

  
  

  On the syndication level, investors do expect a lot of hand-holding, and a lot of communication. And there’s a lot you can do digitally now that you weren’t able to do before. You’re really in two businesses, and maybe even three if you’re a property manager. You’re in the business of identifying real estate that you want to buy, you have the acquisition side, the operation side, and the investor relations, syndication business. That’s what our business looks like.

  On the operations side, we have asset managers who are more experienced in the real estate business, they have an MBA that oversees, maybe five assets or four assets. We have property managers, we have four or five people in the acquisitions team, and they are finding deals and underwriting deals. And then, we have about three or four people in our Investor Relations team. The mantra of my former mentor, or of my former boss, John Fishman used to say is, “You have to find them, mine them, and grind them.” And so, you have to be able to find the investors, you have to mine them, and then you’re grinding, you have to keep communicating and you have to keep growing.

  
  

  You can raise millions of dollars from one person if you keep communicating, even if deals don’t meet the return that we project. That doesn’t happen often, but it does happen. It doesn’t always happen the way we hope it would, but if you communicate with people, they feel like they’re part of your team and they understand the issues that you have. If you don’t communicate, you’ll never hear from that investor again.

  
  

  How you approach things when you want to delegate things? And when do you want to partner up with people, and what is your process for partnerships?

  
  

  I have enough scar tissue from bad partners, but I don't want someone to interpret bad partners as a bad human beings. When I say bad partners, it's just that our interests and/or expectations were not aligned, and it gets very difficult. The interesting thing about investing is that everybody's nice when things are good. When you lose a big tenant, or there might be a capital call, then not everybody is so nice. And that can also be within your partnership. I wish I could tell you that I have this wonderful method after so many years to identify partners, but I don't. What I do know is that if I'm talking to someone about being a parter, and if I can't make the decision right away, and I'm thinking about things, I usually say no. It's not always a scientific method.

  On delegation, the hardest thing you can do is to hire people. And the reason is, you really don't know what people are until they've been in the company for a while. We now make sure that they take tests to know if they can do their job. If you're going to be an acquisitions person, we're going to make you underwrite two or three buildings before we hire you. You have to have systems that allow you to use your time most effectively to make sure some things get done correctly.

  
  

  Chris Rising

  
  

  www.chrisrising.com

  
  

  twitter.com/chrisrising

  
  

  instagram.com/chrisrising

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7f6f6f55-03e8-4eec-96da-78176cfec825Thu, 19 May 2022 05:43:00 -080025:06falsefull11271271How to Invest in Retail & Grow Through SyndicationsHow to grow your retail portfolio and syndications? We will review the career of Aaron Zucker, founder and principal of Zucker Investment Group, they purchased 22 deals in the last 40 months through syndications. What does he look for when purchasing a retail property? What are some of the lessons learned so far?

  
  

  
  

  You can read this entire interview here: bit.ly/3w5RwO2

  
  

  
  

  
  

  How did you scale so fast? Let's go over your journey in the retail space and break it down to about every two months since you decided to start your company. 

  
  

  In the beginning I moved into my parents basement with a six month old. That was interesting to say the least, with no portfolio and not much of a plan. There was a plan, it was just notes on an iPad. We bought our first property as a covered land play in Irving, Texas, we still own that property today. It's on the border, on a great location, and we are planning to monetize that property in some way shape or form over time. Until then we're enjoying the cash flow. I'm about to break out in hives thinking about that experience, I had $50,000 of my saved money non-refundable without all the equity figured out. I was raising $1.8 million, which I definitely didn't have, from anybody and everybody who told me they would be interested in buying real estate. It was a good litmus test to see who was actually going to be a real LP in that company and who was just talking, or maybe wasn't interested in that type of deal. It worked itself out, we got the equity resolved and bought a deal.

  Then some time went by and people were still feeling out whether or not Zig was real. I'm sure that's still certainly the case, we're still trying to build a reasonable reputation. But we were able to source a couple more opportunities pretty much exclusively through the brokerage community, off market. That's a testament to the quality of relationships that I had and still have and I'm always building upon which we couldn't be any more bullish on leveraging the brokerage community, and getting them excited about the fact that we not only allow but encourage them to invest in deals with us, and they appreciate the fact that we move extremely quickly. We're young and nimble and are certainly aggressively growing. The mantra about our organization is that we're super aggressive, and we are, but when we look in the microcosm of a specific acquisition, it's usually pretty conservative.

  
  

  I'm a one man band at this point, I continue doing my thing, posting on social media saying we're looking for deals, hitting the phones hard, following up with the brokerage community, calling sellers, whatever it takes to procure something. Then one day, we acquired a sexy site, which was a Lululemon, single tenant. It was a Lululemon condo, and a joint venture with a group called Konover South based out of South Florida.

  
  

  Months thereafter, we were able to unlock an off market Chipotle deal, at an aggressive cap rate in a great market in Orlando, we executed on a blend and extend with the tenant and then flipped out of it. We sold that property in March of 2020 before the pandemic was hitting, and there were a few other acquisitions that were a little bit more boring. Between the time that we bought and sold that Chipotle, and the disposition of that, was what put Zig 1.0 on the map and gave us some some credibility that our group was looking for, and then more most importantly, executing on value add retail deals with great tenants, Chipotle, Lululemon in very good markets like Cincinnati and Orlando.

  
  

  
  

  
  

  Aaron Zucker

  
  

  Zucker Investment Group, they purchased 22 deals in the last 40 months through syndications. What does he look for when purchasing a retail property? What are some of the lessons learned so far?

  
  

  
  

  You can read this entire interview here: bit.ly/3w5RwO2

  
  

  
  

  
  

  How did you scale so fast? Let's go over your journey in the retail space and break it down to about every two months since you decided to start your company. 

  
  

  In the beginning I moved into my parents basement with a six month old. That was interesting to say the least, with no portfolio and not much of a plan. There was a plan, it was just notes on an iPad. We bought our first property as a covered land play in Irving, Texas, we still own that property today. It's on the border, on a great location, and we are planning to monetize that property in some way shape or form over time. Until then we're enjoying the cash flow. I'm about to break out in hives thinking about that experience, I had $50,000 of my saved money non-refundable without all the equity figured out. I was raising $1.8 million, which I definitely didn't have, from anybody and everybody who told me they would be interested in buying real estate. It was a good litmus test to see who was actually going to be a real LP in that company and who was just talking, or maybe wasn't interested in that type of deal. It worked itself out, we got the equity resolved and bought a deal.

  Then some time went by and people were still feeling out whether or not Zig was real. I'm sure that's still certainly the case, we're still trying to build a reasonable reputation. But we were able to source a couple more opportunities pretty much exclusively through the brokerage community, off market. That's a testament to the quality of relationships that I had and still have and I'm always building upon which we couldn't be any more bullish on leveraging the brokerage community, and getting them excited about the fact that we not only allow but encourage them to invest in deals with us, and they appreciate the fact that we move extremely quickly. We're young and nimble and are certainly aggressively growing. The mantra about our organization is that we're super aggressive, and we are, but when we look in the microcosm of a specific acquisition, it's usually pretty conservative.

  
  

  I'm a one man band at this point, I continue doing my thing, posting on social media saying we're looking for deals, hitting the phones hard, following up with the brokerage community, calling sellers, whatever it takes to procure something. Then one day, we acquired a sexy site, which was a Lululemon, single tenant. It was a Lululemon condo, and a joint venture with a group called Konover South based out of South Florida.

  
  

  Months thereafter, we were able to unlock an off market Chipotle deal, at an aggressive cap rate in a great market in Orlando, we executed on a blend and extend with the tenant and then flipped out of it. We sold that property in March of 2020 before the pandemic was hitting, and there were a few other acquisitions that were a little bit more boring. Between the time that we bought and sold that Chipotle, and the disposition of that, was what put Zig 1.0 on the map and gave us some some credibility that our group was looking for, and then more most importantly, executing on value add retail deals with great tenants, Chipotle, Lululemon in very good markets like Cincinnati and Orlando.

  
  

  
  

  
  

  Aaron Zucker

  
  

  instagram.com/aaron.zucker

  
  

  www.zuckerinvestmentgroup.com

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>03b33549-c64f-4d44-8d13-e85bfc0689c9Thu, 12 May 2022 15:42:00 -080017:41falsefull11261261One Tip to Improve Your Real Estate InvestmentsI’d like to share something that I started doing in 2020 that has been very useful for my real estate investment career.

  You can read this entire episode here: https://bit.ly/3se26jQ

  
  

  It's a very simple thing that I developed that has been very beneficial for me. It’s what I call the “Word of the Year”. It started in 2020 when I decided that that year I would focus on diversifying my investments because of the chaotic environment we were in, especially where I was in CA. My word for 2020 was “Diversification” and I decided that I had to diversify not to optimize for returns, but to decrease risks, well because the entire globe was shut down, nobody knew what would happen and that the country would print so much money. I ended up purchasing car washes, self storage, land, some crypto and some unique stocks I hadn’t thought of investing in before. The car washes and self storage did well, land we are a bit above what we invested, and the stocks initially went up and today they are down, so I am on the red at the moment. Looking back, it seems like I have achieved my goal of decreasing risks. I haven’t sold the stocks yet so that is TBD.

  
  

  For 2021 I realized that I was getting overwhelmed with doing everything myself, I knew that in order to expand my business I had to start putting processes in place and delegating as much as possible, so that I could focus on the important things and the bigger vision. I decided that my word of the year for 2021 would be “Delegation”. That year I started writing down everything I was doing, step by step, creating videos, making it as fool proof as possible, and hiring virtual assistants. Not all VA’s worked out, but I ended up with a couple of them that are working out quite well. You then start to see what each of their strengths are and you move tasks accordingly. In order for this to continue going smoothly throughout the years, the processes will have to be reviewed every 6 months to 1 year in order for us to make sure that the steps are up to date and that the videos are up to date. I will delegate that job to my VA :)

  
  

  Because you spend all year focused on the word of the year, it really engrains in your mind, so the words trickle down to the following years. For example in 2021 I invested in short term rentals. In 2022 I made a point looking at every task I was doing and to first ask myself: Can my VA do this? I am delegating more and more and finding more time. It can be literally anything from personal things all the way to calling the city planning department and finding out if this property is zoned for something we want to build there.

  
  

  The 2022 word just came to me in April, I am a part of a book club and the book we were reading The Almanack of Naval Ravikant and one of the quotes that stuck with me was “You will get rich by giving society what it wants but does not yet know how to get. At scale.” The way I made it work as far as real estate investing is, giving investors (when I syndicate) the absolute best service ever, they are our customers from a communications perspective, to great returns, to implementing technology in our investments as much as possible, and doing that "At Scale". Doing real estate at scale. With this mindset, everything that I am doing and thinking and looking at is, How am I going to be scaling this business?

  
  

  It has been wonderful, and I think it’s important to keep it a word of the year, or maybe every 6 months, but definitely not a monthly word because that may not really stay with you and you may not end up doing everything you want to get done during a month.

  
  

  Add me on Linkedin: www.linkedin.com/in/steffbold

  
  

  Subscribe to our newsletter: I’d like to share something that I started doing in 2020 that has been very useful for my real estate investment career.

  You can read this entire episode here: https://bit.ly/3se26jQ

  
  

  It's a very simple thing that I developed that has been very beneficial for me. It’s what I call the “Word of the Year”. It started in 2020 when I decided that that year I would focus on diversifying my investments because of the chaotic environment we were in, especially where I was in CA. My word for 2020 was “Diversification” and I decided that I had to diversify not to optimize for returns, but to decrease risks, well because the entire globe was shut down, nobody knew what would happen and that the country would print so much money. I ended up purchasing car washes, self storage, land, some crypto and some unique stocks I hadn’t thought of investing in before. The car washes and self storage did well, land we are a bit above what we invested, and the stocks initially went up and today they are down, so I am on the red at the moment. Looking back, it seems like I have achieved my goal of decreasing risks. I haven’t sold the stocks yet so that is TBD.

  
  

  For 2021 I realized that I was getting overwhelmed with doing everything myself, I knew that in order to expand my business I had to start putting processes in place and delegating as much as possible, so that I could focus on the important things and the bigger vision. I decided that my word of the year for 2021 would be “Delegation”. That year I started writing down everything I was doing, step by step, creating videos, making it as fool proof as possible, and hiring virtual assistants. Not all VA’s worked out, but I ended up with a couple of them that are working out quite well. You then start to see what each of their strengths are and you move tasks accordingly. In order for this to continue going smoothly throughout the years, the processes will have to be reviewed every 6 months to 1 year in order for us to make sure that the steps are up to date and that the videos are up to date. I will delegate that job to my VA :)

  
  

  Because you spend all year focused on the word of the year, it really engrains in your mind, so the words trickle down to the following years. For example in 2021 I invested in short term rentals. In 2022 I made a point looking at every task I was doing and to first ask myself: Can my VA do this? I am delegating more and more and finding more time. It can be literally anything from personal things all the way to calling the city planning department and finding out if this property is zoned for something we want to build there.

  
  

  The 2022 word just came to me in April, I am a part of a book club and the book we were reading The Almanack of Naval Ravikant and one of the quotes that stuck with me was “You will get rich by giving society what it wants but does not yet know how to get. At scale.” The way I made it work as far as real estate investing is, giving investors (when I syndicate) the absolute best service ever, they are our customers from a communications perspective, to great returns, to implementing technology in our investments as much as possible, and doing that "At Scale". Doing real estate at scale. With this mindset, everything that I am doing and thinking and looking at is, How am I going to be scaling this business?

  
  

  It has been wonderful, and I think it’s important to keep it a word of the year, or maybe every 6 months, but definitely not a monthly word because that may not really stay with you and you may not end up doing everything you want to get done during a month.

  
  

  Add me on Linkedin: www.linkedin.com/in/steffbold

  
  

  Subscribe to our newsletter: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>6fe1449f-f93c-427e-9794-9e9cf0f200b2Thu, 05 May 2022 03:50:00 -080012:02falsefull11251251Why Create Funds Instead of Syndications?Are funds more beneficial than syndications for the investors? Are they better for the sponsors? How to approach investors when you have a deal? How to find a great partner in the industry? Brian Spear, Principal at Sunrise Capital shares his experience.

  You can read this entire interview here: https://bit.ly/3vjvOGa

  
  

  Why do you recommend people creating a fund instead of syndications to be begin with?

  
  

  I wouldn’t say that, with absolute assurance, everyone should always create a fund, but I do believe that funds are better structure for both parties involved. Selfishly from the general partner side, it ‘s more flexibility of capital, it affords you the opportunity to be able to move at a moment’s notice. If every time that we stumbled upon a given transaction that we wanted to acquire, we had to roll out a brand new syndication. Then we would miss some deals, some opportunities in a hot market such as this, when you have to compete against other people. The brokers want to know where your equity derives. If you don’t have the ability to say, “I’ve eight figures sitting in the bank right now and I can close on this next week if we really need it to”, then you’re going to be at a little bit of a disadvantage, especially in this crazy environment where there’s so much capital chasing deals. The fund affords you to have that capital ready when those opportunities arise so that you can act and move faster, that expediency helps tremendously. 

  Funds will afford you to provide outsized IRRs as well. Depending upon the scale of your respective fund, you may be able to garner some lines of credit, which would afford you to be selective about when you bring capital in and leveraging that provides your investors with a higher internal rate of return. In addition, you get diversification across the various different assets.

  
  

  I’m assuming that you recommend people doing a syndication first, because it’s probably very hard to raise for a fund first?

  
  

  Yes, you want to use your own capital to go out and prove the business model. To have a simple, scalable, and repeatable one prior to rolling out a fund. It would be imprudent to just launch a fund from scratch, you need to go out and prove yourself first. There’s nothing wrong with that. But I do think that ultimately, the fund structure provides more benefits for everybody involved. I would pose to you that’s why the likes of Blackstone, Carlyle Group, Apollo, all the guys on Wall Street, don’t run out and do individual deals specific syndications. They do fund structures without fail for all those reasons.

  
  

  
  

  
  

  How do you approach an investor when you have a deal?

  
  

  The question of how you approach investors when you have a deal begins well in advance of when you have a deal. You’re never going to reach out to somebody, and hard sell them on wiring you $100,000 one day after you have a deal, come under contract, and all of a sudden need to scramble to get that capital. What you need to do is develop that relationship with the prospect or the potential investor many days, weeks, months or years in advance of that opportunity arising. If you intend to scale actively in this business, you’re going to need to build a substantive Rolodex. And you’re going to need to begin providing that Rolodex with valuable content that provides them with insight and knowledge that you are an authority in your industry and are worthy of their time, energy, effort, and ultimately capital, to partner with you on deals as you progress.

  
  

  
  

  
  

  Brian Spear

  
  

  Are funds more beneficial than syndications for the investors? Are they better for the sponsors? How to approach investors when you have a deal? How to find a great partner in the industry? Brian Spear, Principal at Sunrise Capital shares his experience.

  You can read this entire interview here: https://bit.ly/3vjvOGa

  
  

  Why do you recommend people creating a fund instead of syndications to be begin with?

  
  

  I wouldn’t say that, with absolute assurance, everyone should always create a fund, but I do believe that funds are better structure for both parties involved. Selfishly from the general partner side, it ‘s more flexibility of capital, it affords you the opportunity to be able to move at a moment’s notice. If every time that we stumbled upon a given transaction that we wanted to acquire, we had to roll out a brand new syndication. Then we would miss some deals, some opportunities in a hot market such as this, when you have to compete against other people. The brokers want to know where your equity derives. If you don’t have the ability to say, “I’ve eight figures sitting in the bank right now and I can close on this next week if we really need it to”, then you’re going to be at a little bit of a disadvantage, especially in this crazy environment where there’s so much capital chasing deals. The fund affords you to have that capital ready when those opportunities arise so that you can act and move faster, that expediency helps tremendously. 

  Funds will afford you to provide outsized IRRs as well. Depending upon the scale of your respective fund, you may be able to garner some lines of credit, which would afford you to be selective about when you bring capital in and leveraging that provides your investors with a higher internal rate of return. In addition, you get diversification across the various different assets.

  
  

  I’m assuming that you recommend people doing a syndication first, because it’s probably very hard to raise for a fund first?

  
  

  Yes, you want to use your own capital to go out and prove the business model. To have a simple, scalable, and repeatable one prior to rolling out a fund. It would be imprudent to just launch a fund from scratch, you need to go out and prove yourself first. There’s nothing wrong with that. But I do think that ultimately, the fund structure provides more benefits for everybody involved. I would pose to you that’s why the likes of Blackstone, Carlyle Group, Apollo, all the guys on Wall Street, don’t run out and do individual deals specific syndications. They do fund structures without fail for all those reasons.

  
  

  
  

  
  

  How do you approach an investor when you have a deal?

  
  

  The question of how you approach investors when you have a deal begins well in advance of when you have a deal. You’re never going to reach out to somebody, and hard sell them on wiring you $100,000 one day after you have a deal, come under contract, and all of a sudden need to scramble to get that capital. What you need to do is develop that relationship with the prospect or the potential investor many days, weeks, months or years in advance of that opportunity arising. If you intend to scale actively in this business, you’re going to need to build a substantive Rolodex. And you’re going to need to begin providing that Rolodex with valuable content that provides them with insight and knowledge that you are an authority in your industry and are worthy of their time, energy, effort, and ultimately capital, to partner with you on deals as you progress.

  
  

  
  

  
  

  Brian Spear

  
  

  www.parkinglotprofits.com

  
  

  www.sunrisecapitalinvestors.com

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>c2fd7abb-f8b2-4973-892b-d5e7e065a0f4Thu, 28 Apr 2022 03:47:00 -080015:23falsefull11241241Why Invest in Parking Lots? Pros & Cons of Parking Lots and Where to Find Lenders?How to invest in parking lots? What are the benefits and drawbacks of parking lot investing? How do you even go about learning about this new asset class? Are there lenders in this industry? Brian Spear, Principal at Sunrise Capital, shares what he has learned over the years.

  You can read this entire interview here: https://bit.ly/3rFaXuJ

  
  

  What are the pros and cons of owning a parking lot?

  
  

  Starting with seeking favorable long term economics, the demand for parking is growing and will continue to grow over the next several decades. The two largest generations that we have, Gen Z and the millennials, are going to need vehicles and travel throughout the entirety of the country. That demand is continuing to increase, while the supply of parking is shrinking over time. As the population grows, cities are getting more and more dense, developers are taking some of the high quality parcels in downtowns and redeveloping those assets into a higher and better uses. 

  Parking lots are prime parcels and some of the best locations in the country, just by the mere fact that somebody is willing to pay you money for the right to stand on my piece of land, tells you that you’re in a very high quality urban business district, or a very high traffic tourist destination. It’s exceptionally high quality land with low maintenance costs, there’s really not a lot going on inside of a parking lot, you have some bumper blocks, striping, but there’s not a lot of high capital expenditures inside of a parking lot. The vast majority of the revenue goes to the bottom line.

  
  

  How about some of the negatives in that space?

  
  

  Because it is fragmented, it is more difficult to scale in the industry, due to the ownership structure, most folks only own that one asset or those couple of assets. In order to scale, you’re not able to buy facilities and large swathes. Parking lots are more of a slow, steady plot. Another drawback is on the financing side. While there are some good lenders, just the mere fact that it’s not a well known asset class, there are fewer lenders in the marketplace that understand the asset class. And for that reason, if you have a more modest sized parking lot, you’re likely going to have more difficulty garnering the best and most attractive financing terms available in the marketplace.

  How did you find that first lender?

  
  

  By networking at these parking conferences, there are a handful of those national conferences on an annual basis. It’s a relatively small industry, and because these are relatively small niches, you have the ability to climb the ladder a little quicker than what you might be able to do with the other asset classes. You can network with some of the players that are top tier in the industry, by virtue of attending some of these conferences and things of that nature and spending some time in the conferences, talking shop with some of the players in the industry, you can garner some business cards that will help you attract some of the better debt available.

  Do you get the land on all the parking lot deals as well?

  
  

  We want to own the land, the value from our perspective is in the long term ownership of the land itself. Customers literally drive the car up and park on an hourly basis.

  I always tell people go to a conference for any new asset class, that’s the number one step, you’re going to meet so many people that can help you.

  
  

  You can do a ton of learning while you’re driving and listening to podcasts, but at some point, you have to get out there and meet people and start to take an action in that manner as well.

  Brian Spear

  
  

  https://bit.ly/3rFaXuJ

  
  

  What are the pros and cons of owning a parking lot?

  
  

  Starting with seeking favorable long term economics, the demand for parking is growing and will continue to grow over the next several decades. The two largest generations that we have, Gen Z and the millennials, are going to need vehicles and travel throughout the entirety of the country. That demand is continuing to increase, while the supply of parking is shrinking over time. As the population grows, cities are getting more and more dense, developers are taking some of the high quality parcels in downtowns and redeveloping those assets into a higher and better uses. 

  Parking lots are prime parcels and some of the best locations in the country, just by the mere fact that somebody is willing to pay you money for the right to stand on my piece of land, tells you that you’re in a very high quality urban business district, or a very high traffic tourist destination. It’s exceptionally high quality land with low maintenance costs, there’s really not a lot going on inside of a parking lot, you have some bumper blocks, striping, but there’s not a lot of high capital expenditures inside of a parking lot. The vast majority of the revenue goes to the bottom line.

  
  

  How about some of the negatives in that space?

  
  

  Because it is fragmented, it is more difficult to scale in the industry, due to the ownership structure, most folks only own that one asset or those couple of assets. In order to scale, you’re not able to buy facilities and large swathes. Parking lots are more of a slow, steady plot. Another drawback is on the financing side. While there are some good lenders, just the mere fact that it’s not a well known asset class, there are fewer lenders in the marketplace that understand the asset class. And for that reason, if you have a more modest sized parking lot, you’re likely going to have more difficulty garnering the best and most attractive financing terms available in the marketplace.

  How did you find that first lender?

  
  

  By networking at these parking conferences, there are a handful of those national conferences on an annual basis. It’s a relatively small industry, and because these are relatively small niches, you have the ability to climb the ladder a little quicker than what you might be able to do with the other asset classes. You can network with some of the players that are top tier in the industry, by virtue of attending some of these conferences and things of that nature and spending some time in the conferences, talking shop with some of the players in the industry, you can garner some business cards that will help you attract some of the better debt available.

  Do you get the land on all the parking lot deals as well?

  
  

  We want to own the land, the value from our perspective is in the long term ownership of the land itself. Customers literally drive the car up and park on an hourly basis.

  I always tell people go to a conference for any new asset class, that’s the number one step, you’re going to meet so many people that can help you.

  
  

  You can do a ton of learning while you’re driving and listening to podcasts, but at some point, you have to get out there and meet people and start to take an action in that manner as well.

  Brian Spear

  
  

  www.sunrisecapitalinvestors.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>6e8af3ec-ca36-47dd-bddb-e764fb37d2c2Thu, 21 Apr 2022 03:00:00 -080016:16falsefull11231231How to Raise $16M in One Day? What Did They Wish They Know Earlier in Their Careers?How to raise a $16M syndication in one day? What are the major things they wish they knew earlier in their careers? Mark Shuler and Josh Welch, founders of SGRE Investments and Three Pillars Capital share how they got there in their real estate syndication career.

  You can read this entire episode here: https://bit.ly/3Ec87SX

  
  

  How were you able to raise $16 million in one day? How did you arrive at that level?

  
  

  I'm not sure we know how we did it, but we managed to do this crazy raise. We had done a lot of preparatory legwork, we both have a very deep database of investors, we've done enough deals now that we have a lot of frequent fliers. As you do a deal, your database continues to grow as people talk to friends and family. We just teed it up, we do a very detailed deal deck and offering memorandum. We do a lot of preparatory emails, getting people in the space to understand that the deal is coming. At this point we're over raising on every deal, everybody knows that we're over raising so they're committing fast and early on the deals, and it's a record for us. At one point, we were raising a million dollars an hour for eight straight hours. We shut it down in 24 hours, Josh was getting pummeled with emails and phone calls.

  It seems like you guys are good partners, how did you guys meet? How did this partnership come about?

  
  

  Mark and I have been working together for years now, we've done several deals together. We crossed paths, and decided to team up and go on this one, and to the next and we just kept the relationship going.

  What are some of the things that you both wish you knew earlier in your career to expedite things for other people that you think that is important for them to know today?

  
  

  Something I wish I would have known from day one is how important processes are to the operations and how important the operations are in general. There's a huge misconception in this industry, that if you can raise money you can be a sponsor, and go run a deal. The more of those you can do, the more successful you'll be. But the reality is, if you don't know how to operate these assets, day over day, year over year, they can quickly go south on you. A lot of people in this market have gotten bailed out by rising prices. There will be a day where prices will flatline and stabilize, maybe even go down a little bit. Those who pay top dollar for something that is not running well will not get bailed out. The biggest lesson is that I could have put more emphasis on in the beginning is how to get a better process in your operations.

  Either get a mentor, get educated, or get a master's degree. You have to build on your knowledge base, though experience is a great teacher, but some of it you just have to sit down and read. It's not what I wish I had done, it's what I did. I feel like I propelled my career forward by 10 years by doing that. The other thing that you have to learn in this industry is how to raise money properly. I joined a mastermind to help me with that and educate me, in one year I probably shave 10 years off my learning curve. To figure out how to raise money effectively is the fruit of my labor from last year. If you figure out the process of raising money properly, you can raise a lot of money. That can be with anything in this industry, or with running a private equity firm, processes everything. 

  
  

  www.sgreinvestments.com

  
  

  mark@sgreinvestments.com

  
  

  How to raise a $16M syndication in one day? What are the major things they wish they knew earlier in their careers? Mark Shuler and Josh Welch, founders of SGRE Investments and Three Pillars Capital share how they got there in their real estate syndication career.

  You can read this entire episode here: https://bit.ly/3Ec87SX

  
  

  How were you able to raise $16 million in one day? How did you arrive at that level?

  
  

  I'm not sure we know how we did it, but we managed to do this crazy raise. We had done a lot of preparatory legwork, we both have a very deep database of investors, we've done enough deals now that we have a lot of frequent fliers. As you do a deal, your database continues to grow as people talk to friends and family. We just teed it up, we do a very detailed deal deck and offering memorandum. We do a lot of preparatory emails, getting people in the space to understand that the deal is coming. At this point we're over raising on every deal, everybody knows that we're over raising so they're committing fast and early on the deals, and it's a record for us. At one point, we were raising a million dollars an hour for eight straight hours. We shut it down in 24 hours, Josh was getting pummeled with emails and phone calls.

  It seems like you guys are good partners, how did you guys meet? How did this partnership come about?

  
  

  Mark and I have been working together for years now, we've done several deals together. We crossed paths, and decided to team up and go on this one, and to the next and we just kept the relationship going.

  What are some of the things that you both wish you knew earlier in your career to expedite things for other people that you think that is important for them to know today?

  
  

  Something I wish I would have known from day one is how important processes are to the operations and how important the operations are in general. There's a huge misconception in this industry, that if you can raise money you can be a sponsor, and go run a deal. The more of those you can do, the more successful you'll be. But the reality is, if you don't know how to operate these assets, day over day, year over year, they can quickly go south on you. A lot of people in this market have gotten bailed out by rising prices. There will be a day where prices will flatline and stabilize, maybe even go down a little bit. Those who pay top dollar for something that is not running well will not get bailed out. The biggest lesson is that I could have put more emphasis on in the beginning is how to get a better process in your operations.

  Either get a mentor, get educated, or get a master's degree. You have to build on your knowledge base, though experience is a great teacher, but some of it you just have to sit down and read. It's not what I wish I had done, it's what I did. I feel like I propelled my career forward by 10 years by doing that. The other thing that you have to learn in this industry is how to raise money properly. I joined a mastermind to help me with that and educate me, in one year I probably shave 10 years off my learning curve. To figure out how to raise money effectively is the fruit of my labor from last year. If you figure out the process of raising money properly, you can raise a lot of money. That can be with anything in this industry, or with running a private equity firm, processes everything. 

  
  

  www.sgreinvestments.com

  
  

  mark@sgreinvestments.com

  
  

  www.threepillarscapitalgroup.com

  
  

  joshuaw@threepillarscapitalgroup.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>087d09bb-d1ec-4d27-a5c2-dbf0fe286dc5Thu, 14 Apr 2022 12:20:00 -080022:55falsefull11221221Which Metaverses Should You Invest in Today? Is Decentraland Democratic and Meta a Socialist Metaverse?Why should you invest in the metaverse? Which metaverses should you invest in today? Is Decentraland more democratic and Meta a socialist metaverse? How should you start educating yourself? Dave Carr, head of Business Development at Parcel, who also previously worked at Decentraland, one of the most popular metaverses, shares his knowledge.

  What would you invest in today?

  
  

  I love the idea of the metaverse, that it enables creators to do all sorts of fantastic things and own their creations as well, for musicians to not have to get their works through a platform that somebody else owns and takes the vast majority of their money from. For me, it's about virtual worlds that are enabling creators to get their work out there, but are also incentivizing users to come and use the space, and deriving benefits from that. If you look at it at a very specific level, the NFT's that have come out this year, all of the different avatars, the different projects have sold for an extraordinary amount of money. A lot of these NFT projects have just disappeared or gone very quiet, some of them have failed, the ones that survive are the ones that are able to create a really strong community around them, that have shown a very clear roadmap of where they are headed, and how the benefits will be rolled out to people who own it.

  It's the same in terms of physical investments, you buy a piece of land in an area that is going to develop and be valuable to the people who move into that space. A golden rule is to avoid putting all of your eggs in one basket.

  
  

  Is it be safe to assume that places like The Sandbox and Decentraland are more democratic and Meta would be a more socialist world?

  
  

  In terms of control, you could say that Decentraland and The Sandbox are more democratic. That's a whole other discussion in terms of the governance structures of these open virtual worlds in the open metaverse because even the governance structure is still a test case if you like. But in terms of Meta, I'd be very surprised if they handed over control to the users, but I don't see that happening. Facebook, has been incredibly successful because you are the product and your data has been monetized. Some people are very happy with that, it's absolutely fine. It'll be a different experience to the decentralized worlds, I don't see it as a bad thing for Meta to be entering into this space because it educates people to what else is out there. The people can make the decision as to which experience they want to devote most of their time to.

  Anybody could come up with the next Decentraland and they can all create these worlds, tell us why we should invest in these worlds?

  
  

  Yes, anybody could come along and create a new Decentraland, and try to replicate this and potentially do it better. The benefit that Decentraland has is that it has the lead time it has been doing this longer. The Sandbox is not fully live yet, but it has been doing the backend development work, they will get it right when it launches, and be sure that it is working properly. Similar to Decentraland and other virtual worlds, they have the runs on the board, they have the brand partnerships in place, they have the content community familiar with it, they have the architects in their building, and they've been developing those people as well and supporting them. If things go according to plan then they will continue to be one of the more established worlds. They've made the mistakes that everybody is yet to make, there's a lot of benefit to be had in being first to market.

  Dave Carr

  
  

  twitter.com/parcelnft

  
  

  Parcel, who also previously worked at Decentraland, one of the most popular metaverses, shares his knowledge.

  What would you invest in today?

  
  

  I love the idea of the metaverse, that it enables creators to do all sorts of fantastic things and own their creations as well, for musicians to not have to get their works through a platform that somebody else owns and takes the vast majority of their money from. For me, it's about virtual worlds that are enabling creators to get their work out there, but are also incentivizing users to come and use the space, and deriving benefits from that. If you look at it at a very specific level, the NFT's that have come out this year, all of the different avatars, the different projects have sold for an extraordinary amount of money. A lot of these NFT projects have just disappeared or gone very quiet, some of them have failed, the ones that survive are the ones that are able to create a really strong community around them, that have shown a very clear roadmap of where they are headed, and how the benefits will be rolled out to people who own it.

  It's the same in terms of physical investments, you buy a piece of land in an area that is going to develop and be valuable to the people who move into that space. A golden rule is to avoid putting all of your eggs in one basket.

  
  

  Is it be safe to assume that places like The Sandbox and Decentraland are more democratic and Meta would be a more socialist world?

  
  

  In terms of control, you could say that Decentraland and The Sandbox are more democratic. That's a whole other discussion in terms of the governance structures of these open virtual worlds in the open metaverse because even the governance structure is still a test case if you like. But in terms of Meta, I'd be very surprised if they handed over control to the users, but I don't see that happening. Facebook, has been incredibly successful because you are the product and your data has been monetized. Some people are very happy with that, it's absolutely fine. It'll be a different experience to the decentralized worlds, I don't see it as a bad thing for Meta to be entering into this space because it educates people to what else is out there. The people can make the decision as to which experience they want to devote most of their time to.

  Anybody could come up with the next Decentraland and they can all create these worlds, tell us why we should invest in these worlds?

  
  

  Yes, anybody could come along and create a new Decentraland, and try to replicate this and potentially do it better. The benefit that Decentraland has is that it has the lead time it has been doing this longer. The Sandbox is not fully live yet, but it has been doing the backend development work, they will get it right when it launches, and be sure that it is working properly. Similar to Decentraland and other virtual worlds, they have the runs on the board, they have the brand partnerships in place, they have the content community familiar with it, they have the architects in their building, and they've been developing those people as well and supporting them. If things go according to plan then they will continue to be one of the more established worlds. They've made the mistakes that everybody is yet to make, there's a lot of benefit to be had in being first to market.

  Dave Carr

  
  

  twitter.com/parcelnft

  
  

  www.meetparcel.com

  
  

  dave@meetparcel.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>06415a73-5a7d-403d-83f1-d773efd1f62fThu, 07 Apr 2022 05:22:00 -080017:34falsefull11211211Can you Develop in the Metaverse? How to Monetize It?What is the metaverse in very basic terms? Why should someone invest in land in the metaverse? Can you be a developer in the metaverse? How to monetize it? Dave Carr, head of Business Development at Parcel, who also previously worked at Decentraland, one of the most popular metaverses, shares his knowledge.

  What is the metaverse, from someone that would not even know it is to begin with?

  
  

  The Metaverse is a more immersive version of the internet. In the very early days of the internet, you would go to very specific websites, now it’s very much a seamless part of our lives. But you would visit these destinations, and you would do things and then you would go to another website. I think we can look at the current virtual worlds as these new versions of these websites that you used to visit. If we take an example of Decentraland, you can access it via your regular browser. There are other virtual worlds that you can access from a desktop client, like an app that you will put onto your computer, there are some worlds that you can access through your virtual reality headset and you are effectively walking, or your avatar is, and you look around and see buildings that have been created. You're able to play games, it's what we say is an immersive version of the internet. Then brands and organizations can have an existence and a profile in these virtual worlds, whereby because of its interactive nature, you can interact with brands. So what that means for virtual real estate is that if I am walking through a virtual world, I'm walking around on land that can be purchased and can be used to create a shopfront, a game world, an art gallery, all sorts of different mechanisms and experiences for the people who are logging in and walking around these worlds to interact with an experience.

  I get the part that we don't have to deal with tenants, we don't have to deal with leaky roofs or cleaning up after anything, you can lease the property out. Is there anything else that an investor would be able to monetize within the metaverse that we haven't covered yet?

  
  

  I think anybody looking to buy land in a virtual world really needs to think about the long game. Let's think about it like a video game, you can be a console owner, like you can own PlayStation, an Xbox, or a Nintendo, but if you don't have the games and the experiences on that console, it's just a box. I think you can probably think about this the same way with virtual worlds, you can build these worlds, you can sell the land. But if there is no value being added to these properties, in the form of festivals or games that people enjoy playing, or content that makes people want to visit and also come back and revisit then the land will not have the value. You can rent that land so there can be a rental income, there are also things like fractionalization that could potentially divide up the land and sell off those individual parcels.

  Does that mean that I could build a multifamily apartment complex in the metaverse, or condos and sell each unit?

  
  

  I imagine that's entirely possible and that comes down to fractionalization. If you look at some of the things that are coming up with just digital art NFT's, whereby a group of people individually can't afford to buy this one piece of art so they pull their resources, they then identify those pieces that they each want to have shared ownership. And just as a developer puts up a building, then each of those different apartments are bought by different people, and they form that corporation that ends up managing the building, then I think there's no reason why this couldn't happen in a virtual world.

  Dave Carr

  
  

  twitter.com/parcelnft

  
  

  What is the metaverse in very basic terms? Why should someone invest in land in the metaverse? Can you be a developer in the metaverse? How to monetize it? Dave Carr, head of Business Development at Parcel, who also previously worked at Decentraland, one of the most popular metaverses, shares his knowledge.

  What is the metaverse, from someone that would not even know it is to begin with?

  
  

  The Metaverse is a more immersive version of the internet. In the very early days of the internet, you would go to very specific websites, now it’s very much a seamless part of our lives. But you would visit these destinations, and you would do things and then you would go to another website. I think we can look at the current virtual worlds as these new versions of these websites that you used to visit. If we take an example of Decentraland, you can access it via your regular browser. There are other virtual worlds that you can access from a desktop client, like an app that you will put onto your computer, there are some worlds that you can access through your virtual reality headset and you are effectively walking, or your avatar is, and you look around and see buildings that have been created. You're able to play games, it's what we say is an immersive version of the internet. Then brands and organizations can have an existence and a profile in these virtual worlds, whereby because of its interactive nature, you can interact with brands. So what that means for virtual real estate is that if I am walking through a virtual world, I'm walking around on land that can be purchased and can be used to create a shopfront, a game world, an art gallery, all sorts of different mechanisms and experiences for the people who are logging in and walking around these worlds to interact with an experience.

  I get the part that we don't have to deal with tenants, we don't have to deal with leaky roofs or cleaning up after anything, you can lease the property out. Is there anything else that an investor would be able to monetize within the metaverse that we haven't covered yet?

  
  

  I think anybody looking to buy land in a virtual world really needs to think about the long game. Let's think about it like a video game, you can be a console owner, like you can own PlayStation, an Xbox, or a Nintendo, but if you don't have the games and the experiences on that console, it's just a box. I think you can probably think about this the same way with virtual worlds, you can build these worlds, you can sell the land. But if there is no value being added to these properties, in the form of festivals or games that people enjoy playing, or content that makes people want to visit and also come back and revisit then the land will not have the value. You can rent that land so there can be a rental income, there are also things like fractionalization that could potentially divide up the land and sell off those individual parcels.

  Does that mean that I could build a multifamily apartment complex in the metaverse, or condos and sell each unit?

  
  

  I imagine that's entirely possible and that comes down to fractionalization. If you look at some of the things that are coming up with just digital art NFT's, whereby a group of people individually can't afford to buy this one piece of art so they pull their resources, they then identify those pieces that they each want to have shared ownership. And just as a developer puts up a building, then each of those different apartments are bought by different people, and they form that corporation that ends up managing the building, then I think there's no reason why this couldn't happen in a virtual world.

  Dave Carr

  
  

  twitter.com/parcelnft

  
  

  www.meetparcel.com

  
  

  dave@meetparcel.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7f10ec25-72d4-4bca-a202-0fd1cfc94d98Thu, 31 Mar 2022 04:56:00 -080020:59falsefull112012015 Lessons From Going From $100M to JailImagine building a $100M real estate company, losing it all, and then going to jail on top of it? That's what happened with Mike Morawski, he was sentenced to 10 years in federal prison, charged on wire and mail fraud after transferring funds from one syndication to another without notifying his investors. He discusses his top 5 lessons learned.

  You can read this entire interview here: https://bit.ly/3KQJYU1

  
  

  Let’s start with the growing too fast mistake. How slow is ideal for you and why?

  
  

  I catch myself sometimes wanting to go do something else, I have to put a pause and not look at deals because we're underwriting a whole bunch of deals right now. We're not willing to pull the trigger yet because we're waiting to get a little bit more down the road with stabilization, we bought our first deal, what we're doing is pausing a little bit. We're doing capital improvements, turning some units, we will get 25-30% of the complex turned, then we’ll go do the next one once stabilization processes are underway. Whenever you walk into something, just walk cautiously. I think too often we walk into things with so much excitement, so much vigor and energy that we don't pay attention to the little things, take the blinders off and use your peripheral vision.

  Moving on to the lawyer issue, if I were to ask a lawyer for some advice, I would follow their advice and think that I'm doing the right thing. Have you implemented something around that?

  
  

  Yes, I became the question guy, people say that I ask way too many questions, and I say it's because I'm curious and I also wanted to make sure that I'm safe. I don't think we should ever be afraid to ask questions, no matter how big or small, and we need to fact check. Just like when a doctor said you had cancer, and you didn't think you had it, you go get a second opinion. I think it's the same thing in the legal profession.

  When you're held at that higher standard, because you raise capital, or you have somebody else's best interest at hand, you're the fiduciary, and you need to tell them everything. Transparency and communication is more important today. You should have more investor calls, newsletters, written documentation, pictures, and things that the investor can't ever push back and say, I didn’t know this. When occupancy drops, call your investors and let them know what you're trying to do to solve the problem.

  
  

  In terms of vacancy, what was it before and what ended up being during the crisis?

  
  

  We would buy properties that were typically low 80s and high 70s in occupancy, people didn't want value add back then. Everybody loves it today. So we would buy these value add deals, and we would turn them around. We actually had occupancy rates in the high 80s, low 90s, 92% is where we averaged. When 2008 rolled around, occupancies dropped back into the high 70s. And it was overnight, and some properties went even further than that. I owned a deal in Anderson, Indiana, when we bought that property it was rated on a list out of of 275 by Money Magazine, the number three city in the country to raise a family, we bought that property, and within nine months it was fourth from the bottom, it was 281. Anderson was in the automobile industry, and those were one of the industries that got hit the hardest in 2008, automotive and transportation. We were heavily invested in markets like that. As a result, businesses went out of business, and people lost their jobs and had to move. I had a property manager call me on a Monday morning from this property in Anderson in tears, saying, I have 30 moving trucks in the parking lot this morning. How do you weather that storm? This goes back to being under capitalized, we didn't have enough money.

  Mike Morawski

  
  

  Imagine building a $100M real estate company, losing it all, and then going to jail on top of it? That's what happened with Mike Morawski, he was sentenced to 10 years in federal prison, charged on wire and mail fraud after transferring funds from one syndication to another without notifying his investors. He discusses his top 5 lessons learned.

  You can read this entire interview here: https://bit.ly/3KQJYU1

  
  

  Let’s start with the growing too fast mistake. How slow is ideal for you and why?

  
  

  I catch myself sometimes wanting to go do something else, I have to put a pause and not look at deals because we're underwriting a whole bunch of deals right now. We're not willing to pull the trigger yet because we're waiting to get a little bit more down the road with stabilization, we bought our first deal, what we're doing is pausing a little bit. We're doing capital improvements, turning some units, we will get 25-30% of the complex turned, then we’ll go do the next one once stabilization processes are underway. Whenever you walk into something, just walk cautiously. I think too often we walk into things with so much excitement, so much vigor and energy that we don't pay attention to the little things, take the blinders off and use your peripheral vision.

  Moving on to the lawyer issue, if I were to ask a lawyer for some advice, I would follow their advice and think that I'm doing the right thing. Have you implemented something around that?

  
  

  Yes, I became the question guy, people say that I ask way too many questions, and I say it's because I'm curious and I also wanted to make sure that I'm safe. I don't think we should ever be afraid to ask questions, no matter how big or small, and we need to fact check. Just like when a doctor said you had cancer, and you didn't think you had it, you go get a second opinion. I think it's the same thing in the legal profession.

  When you're held at that higher standard, because you raise capital, or you have somebody else's best interest at hand, you're the fiduciary, and you need to tell them everything. Transparency and communication is more important today. You should have more investor calls, newsletters, written documentation, pictures, and things that the investor can't ever push back and say, I didn’t know this. When occupancy drops, call your investors and let them know what you're trying to do to solve the problem.

  
  

  In terms of vacancy, what was it before and what ended up being during the crisis?

  
  

  We would buy properties that were typically low 80s and high 70s in occupancy, people didn't want value add back then. Everybody loves it today. So we would buy these value add deals, and we would turn them around. We actually had occupancy rates in the high 80s, low 90s, 92% is where we averaged. When 2008 rolled around, occupancies dropped back into the high 70s. And it was overnight, and some properties went even further than that. I owned a deal in Anderson, Indiana, when we bought that property it was rated on a list out of of 275 by Money Magazine, the number three city in the country to raise a family, we bought that property, and within nine months it was fourth from the bottom, it was 281. Anderson was in the automobile industry, and those were one of the industries that got hit the hardest in 2008, automotive and transportation. We were heavily invested in markets like that. As a result, businesses went out of business, and people lost their jobs and had to move. I had a property manager call me on a Monday morning from this property in Anderson in tears, saying, I have 30 moving trucks in the parking lot this morning. How do you weather that storm? This goes back to being under capitalized, we didn't have enough money.

  Mike Morawski

  
  

  www.mycoreintentions.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>974b2742-ccdc-48fb-b526-b198a8171f65Thu, 17 Mar 2022 04:33:00 -080012:40falsefull11191191From a $100M Real Estate Company to $0 - How to Overcome AdversitiesHow to deal with the worst possible outcome when it comes to real estate investing? Mike Morawski has dealt with the ultimate challenge, he was sentenced to 10 years in federal prison, charged on wire and mail fraud after transferring funds from one syndication to another without notifying his investors. He explains how he has overcome this life changing moment.

  You can read this entire interview here: https://bit.ly/366pNSJ

  
  

  What happened along the way that was a mistake? What were the CAP rates at that time?

  
  

  I built a $100 million company with 100 employees working for me. We were in five markets around the country with 4,000 apartments. I thought that I had a team behind me that was getting the work done in restabilizing properties, but that wasn't happening. We should have taken a property, got it stabilized, and then gone to buy the next one, but I didn't do that. As an example, in 2007 I closed 17 transactions for 2,700 units, which was a lot of real estate in a quick period of time. I was undercapitalized and didn't raise enough money, I was over leveraged in that I bought all that $60 million worth of real estate at an 85% loan to value.

  Cap rates were 12-14%, they were a lot higher than they are now. As a matter of fact, I wrote a book called “Exit Plan”, and somebody was reading the book six months ago, and he called me to ask if I really bought that deal at a 13% CAP. I said yes. The funny thing is that I know the investor who just bought that deal with 4% CAP. It just goes to show you where the market is.

  
  

  You had a huge buffer with that high CAP rate, people today don’t have that much buffering in case of an additional 10% vacancy rate. Even though you were at an 85% loan to value that CAP rate is pretty high, so what happened after that?

  
  

  I just want to revisit that 85% loan to value, I don't think anybody should be in a real estate deal that they're not at 65-75% LTV. I've been looking at loans today, and some lenders sent me an email saying that they have loans at 80 and 85% LTV and I thought that's suicide.

  I had all this real estate, and 2008 comes around, it was the worst economic crisis that the country has ever seen. What happened was people started to move out of apartments, the market shifted and we had all this bad paper and foreclosures go to the market. My thought was, people are going to lose their house and they're going to need a place to live. Well, that wasn't what happened. People went home and doubled up, so our occupancies dropped. It was like hitting a brick wall, we started to come off of the rails and unwind as a company.

  
  

  By 2010, my occupancies had dropped and my NOI had dropped as a result of it. We went to some lenders and they helped us re-stabilize deals, but we still couldn't mitigate the storm. I had 38 companies at the time, and I had a number of deals that were very profitable and others that were not as profitable. So I started to take money from my profitable companies and move it into my non profitable companies. And my thought around the whole situation was, this is a recession and it tends to last 18 months. There’s a 12% correction in the marketplace, and then it bounces back. Well, this lasted for seven or eight years, it had a 40% correction in the market and people are still affected by it today. I thought if I move money between companies, and when the market comes back, I can put the money back.

  
  

  Did your lawyer tell you that you had to disclose that? Did he get charged for guiding you in the wrong direction?

  
  

  No, that was not ever part of the conversation, and I never thought I was breaking the law. They held me to a different standard because I was a licensed professional / syndicator.

  Mike...]]>How to deal with the worst possible outcome when it comes to real estate investing? Mike Morawski has dealt with the ultimate challenge, he was sentenced to 10 years in federal prison, charged on wire and mail fraud after transferring funds from one syndication to another without notifying his investors. He explains how he has overcome this life changing moment.

  You can read this entire interview here: https://bit.ly/366pNSJ

  
  

  What happened along the way that was a mistake? What were the CAP rates at that time?

  
  

  I built a $100 million company with 100 employees working for me. We were in five markets around the country with 4,000 apartments. I thought that I had a team behind me that was getting the work done in restabilizing properties, but that wasn't happening. We should have taken a property, got it stabilized, and then gone to buy the next one, but I didn't do that. As an example, in 2007 I closed 17 transactions for 2,700 units, which was a lot of real estate in a quick period of time. I was undercapitalized and didn't raise enough money, I was over leveraged in that I bought all that $60 million worth of real estate at an 85% loan to value.

  Cap rates were 12-14%, they were a lot higher than they are now. As a matter of fact, I wrote a book called “Exit Plan”, and somebody was reading the book six months ago, and he called me to ask if I really bought that deal at a 13% CAP. I said yes. The funny thing is that I know the investor who just bought that deal with 4% CAP. It just goes to show you where the market is.

  
  

  You had a huge buffer with that high CAP rate, people today don’t have that much buffering in case of an additional 10% vacancy rate. Even though you were at an 85% loan to value that CAP rate is pretty high, so what happened after that?

  
  

  I just want to revisit that 85% loan to value, I don't think anybody should be in a real estate deal that they're not at 65-75% LTV. I've been looking at loans today, and some lenders sent me an email saying that they have loans at 80 and 85% LTV and I thought that's suicide.

  I had all this real estate, and 2008 comes around, it was the worst economic crisis that the country has ever seen. What happened was people started to move out of apartments, the market shifted and we had all this bad paper and foreclosures go to the market. My thought was, people are going to lose their house and they're going to need a place to live. Well, that wasn't what happened. People went home and doubled up, so our occupancies dropped. It was like hitting a brick wall, we started to come off of the rails and unwind as a company.

  
  

  By 2010, my occupancies had dropped and my NOI had dropped as a result of it. We went to some lenders and they helped us re-stabilize deals, but we still couldn't mitigate the storm. I had 38 companies at the time, and I had a number of deals that were very profitable and others that were not as profitable. So I started to take money from my profitable companies and move it into my non profitable companies. And my thought around the whole situation was, this is a recession and it tends to last 18 months. There’s a 12% correction in the marketplace, and then it bounces back. Well, this lasted for seven or eight years, it had a 40% correction in the market and people are still affected by it today. I thought if I move money between companies, and when the market comes back, I can put the money back.

  
  

  Did your lawyer tell you that you had to disclose that? Did he get charged for guiding you in the wrong direction?

  
  

  No, that was not ever part of the conversation, and I never thought I was breaking the law. They held me to a different standard because I was a licensed professional / syndicator.

  Mike Morawski

  
  

  www.mycoreintentions.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>3f3bd530-d5fd-4bf6-ac02-78860f4739e9Thu, 10 Mar 2022 06:00:00 -080018:51falsefull111811818 Ways For Investors to Find DealsWhere can you find commercial real estate deals in today's market? I will give you several ideas of how to find deals both online and offline. It's not magic, it's just work!

  You can read this entire episode here: https://bit.ly/3LUm0bH

  
  

  Websites

  
  

  Loopnet.com is a good place to start looking for commercial properties, but the most popular and more modern website is called crexi.com. Some brokers post their listings on both websites, but you can find different properties on both. On Loopnet, you may be able to find listings from brokers that have been in commercial real estate for a long time. On Crexi, you may find more properties for sale from more technologically savvy brokers.

  People You Know

  
  

  Depending on how experienced you are, you will be able to get deals from people that you know. As your network grows their deal sizes, they will be selling their smaller properties so they can get into bigger properties. Sometimes they will offer these properties to you and you can negotiate. I know many people that have bought properties from people that they knew because the seller knew that their friends would close the deal, they did not involve any brokers and the buyer got a discount.

  Brokers Mailing Lists

  
  

  Put yourself on mailing lists for your targeted asset class, from brokers that specialize in your asset class. How do you get access to these mailing lists? For example, you can search for Car Wash brokers, and you will see a few of them that only specialize in car washes, sign up for their mailing list. Type whatever asset class you want, and start putting yourself on their mailing lists on their websites. I get so many emails every single day from brokers that I signed up with a while ago who sell properties in the asset classes that I’m interested in.

  Cold Calling

  
  

  I have interviewed people before that have purchased deals by cold calling property owners, they build a relationship with these people over time. Sometimes it takes one to two years of cold calling the same people every six months or so, you do have to take good notes on what each owner tells you, for example, if they have a family, or if they tell you to call back in six months, follow up in six months. By the time you reach out to them,

  Work as a Commercial Broker

  
  

  You will get first-hand access to deals, you can even put your commission in the deal and the seller will not have to pay the other half of the commission for the entire five or 6%. They will just pay your side of it, and you can even negotiate it and say that you won’t charge them any commission if they will give you a deal.

  Follow Up on Deals That Did Not Close

  
  

  I have a document that is titled “Revisit in Q3”, it has a list of properties that I think are potentially decent deals if they stay in the market for a long time. They’re good properties but, in my opinion, overpriced, so I don’t think they will sell, and I want to see if they will still be available in three quarters, or two, so I can make an offer then.

  Build AI Models

  
  

  Artificial intelligence models can analyze properties that are a good fit for you. I met somebody that built a model for one of these companies that flip homes. What the flipping company did is, they gave all of their data on all of the best deals that they ever had so that the AI model now knows what property is available for sale today that will be a very good fit with the previous properties that sold successfully. And now, the software is...]]>Where can you find commercial real estate deals in today's market? I will give you several ideas of how to find deals both online and offline. It's not magic, it's just work!

  You can read this entire episode here: https://bit.ly/3LUm0bH

  
  

  Websites

  
  

  Loopnet.com is a good place to start looking for commercial properties, but the most popular and more modern website is called crexi.com. Some brokers post their listings on both websites, but you can find different properties on both. On Loopnet, you may be able to find listings from brokers that have been in commercial real estate for a long time. On Crexi, you may find more properties for sale from more technologically savvy brokers.

  People You Know

  
  

  Depending on how experienced you are, you will be able to get deals from people that you know. As your network grows their deal sizes, they will be selling their smaller properties so they can get into bigger properties. Sometimes they will offer these properties to you and you can negotiate. I know many people that have bought properties from people that they knew because the seller knew that their friends would close the deal, they did not involve any brokers and the buyer got a discount.

  Brokers Mailing Lists

  
  

  Put yourself on mailing lists for your targeted asset class, from brokers that specialize in your asset class. How do you get access to these mailing lists? For example, you can search for Car Wash brokers, and you will see a few of them that only specialize in car washes, sign up for their mailing list. Type whatever asset class you want, and start putting yourself on their mailing lists on their websites. I get so many emails every single day from brokers that I signed up with a while ago who sell properties in the asset classes that I’m interested in.

  Cold Calling

  
  

  I have interviewed people before that have purchased deals by cold calling property owners, they build a relationship with these people over time. Sometimes it takes one to two years of cold calling the same people every six months or so, you do have to take good notes on what each owner tells you, for example, if they have a family, or if they tell you to call back in six months, follow up in six months. By the time you reach out to them,

  Work as a Commercial Broker

  
  

  You will get first-hand access to deals, you can even put your commission in the deal and the seller will not have to pay the other half of the commission for the entire five or 6%. They will just pay your side of it, and you can even negotiate it and say that you won’t charge them any commission if they will give you a deal.

  Follow Up on Deals That Did Not Close

  
  

  I have a document that is titled “Revisit in Q3”, it has a list of properties that I think are potentially decent deals if they stay in the market for a long time. They’re good properties but, in my opinion, overpriced, so I don’t think they will sell, and I want to see if they will still be available in three quarters, or two, so I can make an offer then.

  Build AI Models

  
  

  Artificial intelligence models can analyze properties that are a good fit for you. I met somebody that built a model for one of these companies that flip homes. What the flipping company did is, they gave all of their data on all of the best deals that they ever had so that the AI model now knows what property is available for sale today that will be a very good fit with the previous properties that sold successfully. And now, the software is feeding them these properties that are a good deal and will flip for whatever percentage they’re looking for.

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>cea18628-5347-463b-860d-71ef19052ea2Thu, 24 Feb 2022 06:41:00 -080017:43falsefull11171171How to Move From Residential to Commercial InvestingWhat are the top 3 ideas on how to make the transition from residential to commercial real estate investing? Amy Johnson, commercial real estate investor and principal at Y Street Capital shares her knowledge after being in residential for six years and moving to a successful career in the commercial space.

  You can read this entire interview here: https://bit.ly/3rFwFPs

  
  

  How did you make the move from residential real estate investing and what made you think of moving to commercial real estate?

  
  

  We started in residential and went through that journey of house hacking our way through. What made that transition was really a lack of time. We got comfortable in the real estate world and we realized that doing these single units was too difficult to really scale and make it bigger. We felt like we needed to open our world up into commercial opportunities and that's when we made that switch from residential to commercial.

  What would be your top three lessons learned that you wish you knew before making the transition?

  
  

  1. Shadowing a professional. Go in, don't expect to be the professional on your first deal. Partner, or work with, or shadow somebody that has already done it. They've already gone through that, they already found the life lesson of XYZ and I'm never going to do that again. Go off of their learning curve for that. The easiest way to do that is you can usually be part of a syndication or something like that, or I've had people come and say, Hey, can I shadow you, and we can I work with you there. I'm careful with my time, but if you bring the right amount of value, maybe you bring the deal to them. We've done that with other people, they've brought us a deal, they said, I have this piece of dirt or I have this opportunity, I don't know what to do with it, but can I be part of your deal and learn from you, if I bring this to you, that's always been a win win. That will probably be my top one, shadow a professional to start.

  2. Selecting individuals that have other strengths than you. We all have different strengths and different superpowers. You need to surround yourself with other people that have different skills than you. For example, I'm terrible at Excel, it sucks the life out of me, but I love having conversations, I love networking, I can do that part. So I try to align myself with other people that are really good at the other parts. And we make a really powerful team.

  
  

  3. Try not to be a generalist, it's okay to have more than one type of asset that you're in. But if you're just chasing deals because you feel like it's a deal, and you're not mastering any of them. Maybe you're in flex industrial, then you go to storage, and then you go to retail and supermarkets or Dollar Generals, or you go to assisted living, or development. Those are all different things. They all have a very large learning curve in each of them. If somebody comes to me for retail, I'm sorry, I'm not a retail person. I don't do that. We try to stick to a bread and butter and keep to those specific things so that I'm not a generalist. We know those problems, so we know what to expect. It allows us to turn things over faster, and with less errors.

  
  

  What are some horror stories that you went through and how did you overcame them?

  
  

  The biggest one was not having the right amount of reserves. The second one was, everything takes longer than you expect it to happen. And that goes back to longer reserves. The third one is to not always rely on people's opinions of things, do your own research. The other one is that I'm never going to rely on $12-$14 an hour employees. That's probably the biggest horror story.

  Amy Johnson

  
  

  www.ystreetcapital.com

  
  

  What are the top 3 ideas on how to make the transition from residential to commercial real estate investing? Amy Johnson, commercial real estate investor and principal at Y Street Capital shares her knowledge after being in residential for six years and moving to a successful career in the commercial space.

  You can read this entire interview here: https://bit.ly/3rFwFPs

  
  

  How did you make the move from residential real estate investing and what made you think of moving to commercial real estate?

  
  

  We started in residential and went through that journey of house hacking our way through. What made that transition was really a lack of time. We got comfortable in the real estate world and we realized that doing these single units was too difficult to really scale and make it bigger. We felt like we needed to open our world up into commercial opportunities and that's when we made that switch from residential to commercial.

  What would be your top three lessons learned that you wish you knew before making the transition?

  
  

  1. Shadowing a professional. Go in, don't expect to be the professional on your first deal. Partner, or work with, or shadow somebody that has already done it. They've already gone through that, they already found the life lesson of XYZ and I'm never going to do that again. Go off of their learning curve for that. The easiest way to do that is you can usually be part of a syndication or something like that, or I've had people come and say, Hey, can I shadow you, and we can I work with you there. I'm careful with my time, but if you bring the right amount of value, maybe you bring the deal to them. We've done that with other people, they've brought us a deal, they said, I have this piece of dirt or I have this opportunity, I don't know what to do with it, but can I be part of your deal and learn from you, if I bring this to you, that's always been a win win. That will probably be my top one, shadow a professional to start.

  2. Selecting individuals that have other strengths than you. We all have different strengths and different superpowers. You need to surround yourself with other people that have different skills than you. For example, I'm terrible at Excel, it sucks the life out of me, but I love having conversations, I love networking, I can do that part. So I try to align myself with other people that are really good at the other parts. And we make a really powerful team.

  
  

  3. Try not to be a generalist, it's okay to have more than one type of asset that you're in. But if you're just chasing deals because you feel like it's a deal, and you're not mastering any of them. Maybe you're in flex industrial, then you go to storage, and then you go to retail and supermarkets or Dollar Generals, or you go to assisted living, or development. Those are all different things. They all have a very large learning curve in each of them. If somebody comes to me for retail, I'm sorry, I'm not a retail person. I don't do that. We try to stick to a bread and butter and keep to those specific things so that I'm not a generalist. We know those problems, so we know what to expect. It allows us to turn things over faster, and with less errors.

  
  

  What are some horror stories that you went through and how did you overcame them?

  
  

  The biggest one was not having the right amount of reserves. The second one was, everything takes longer than you expect it to happen. And that goes back to longer reserves. The third one is to not always rely on people's opinions of things, do your own research. The other one is that I'm never going to rely on $12-$14 an hour employees. That's probably the biggest horror story.

  Amy Johnson

  
  

  www.ystreetcapital.com

  
  

  www.infiniterealestategroup.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>a7ef06a0-58a8-4b54-a0cc-e2bb4e1bea23Thu, 10 Feb 2022 05:21:00 -080019:16falsefull11161161How to Quit Your Job and Become a Full Time Real Estate Investor?What steps should you take to be able to quit your job and become a full time real estate investor? Bronson Hill, a syndicator and investor at Bronson Equity, who not only raised $15 million for his deals, but also just quit his job shares his path with us.

  You can read this entire interview here: https://bit.ly/3olStO6

  
  

  I had zero properties when I quit, but you did the right thing and you had real estate income before quitting. Can you share how your journey went?

  
  

  I admire you as well because like a lot of people say, I’m doing it, this is my new direction, burn the boats and just quit the job and I’m just going to go 100% into it. They do mentorship or other things, and then other people are a few months short of retirement and they’ve everything set up and all of a sudden they leave but I think I was somewhere in between. But there is a range of what people feel comfortable with.

  I had this relationship with my cousin and it has become a very transformational relationship. What he said to me was, everybody that he talked to wishes they had started in multifamily sooner. That principle really is the ability to scale or the ability to use other people's money, no matter how much money you have, no matter how much money you make. I had a couple of physicians that I worked with who made over $3 million a year, but they worked 80 hours a week. They weren't really financially free, they were kind of chained to have to go do that job. If something happened to them, they were disabled, they wanted to leave, they would just lose all of that income.

  
  

  Ask yourself, if adding another house, a duplex, a small multifamily, or whatever it is, is just completely overwhelming. If it feels like just way more work, then it's not really passive. That's a good passive or active test. There's really no such thing as a passive investment, but the idea of some things that are more passive.

  
  

  Were you able to cover your expenses by the time you left? You don't have to share exact numbers.

  
  

  I live pretty modestly, especially for LA, I just rent a place here, we have $150 million in real estate assets in Florida, Alabama, Arkansas, Texas, and Georgia. For me, I was able to at 40 to 50k, now it's more than that, but I was able to say, I can cover my living expenses based on this. And then each time I do a deal, I get an acquisition fee. Now in reality, I've reinvested most of the acquisition fees back in the deals that I'm doing. But then over time, when you do deals, you'll have things start to cash out. So there's some money coming from this deal. Or everybody is rolling from this deal to another. We had a deal recently that we bought in Jacksonville in March for $27 million it was a 288 unit multifamily complex. And we just sold it in December for $37.5 million. It was a huge profit, that was a 75%-100% return. But for me, we're 1030 wanting that in the next deal. And then there are some fees when we go to the next deal. There's some opportunity there.

  When deals sell, there are opportunities there. In some ways it's kind of feast or famine, but I feel like I'm investing in the business. I'm growing, I'm learning, and I'm covering my expenses. And I'm continuing to see my net worth grow. In multifamily in particular, you're doing these long term deals, you know that the money's there, you know it's coming, but you don't always see it right away. You're taking less up front, but still with these acquisition fees, they add up enough to at least cover the business expense and cover my living expenses, and they continue to grow my net worth.

  
  

  What steps should you take to be able to quit your job and become a full time real estate investor? Bronson Hill, a syndicator and investor at Bronson Equity, who not only raised $15 million for his deals, but also just quit his job shares his path with us.

  You can read this entire interview here: https://bit.ly/3olStO6

  
  

  I had zero properties when I quit, but you did the right thing and you had real estate income before quitting. Can you share how your journey went?

  
  

  I admire you as well because like a lot of people say, I’m doing it, this is my new direction, burn the boats and just quit the job and I’m just going to go 100% into it. They do mentorship or other things, and then other people are a few months short of retirement and they’ve everything set up and all of a sudden they leave but I think I was somewhere in between. But there is a range of what people feel comfortable with.

  I had this relationship with my cousin and it has become a very transformational relationship. What he said to me was, everybody that he talked to wishes they had started in multifamily sooner. That principle really is the ability to scale or the ability to use other people's money, no matter how much money you have, no matter how much money you make. I had a couple of physicians that I worked with who made over $3 million a year, but they worked 80 hours a week. They weren't really financially free, they were kind of chained to have to go do that job. If something happened to them, they were disabled, they wanted to leave, they would just lose all of that income.

  
  

  Ask yourself, if adding another house, a duplex, a small multifamily, or whatever it is, is just completely overwhelming. If it feels like just way more work, then it's not really passive. That's a good passive or active test. There's really no such thing as a passive investment, but the idea of some things that are more passive.

  
  

  Were you able to cover your expenses by the time you left? You don't have to share exact numbers.

  
  

  I live pretty modestly, especially for LA, I just rent a place here, we have $150 million in real estate assets in Florida, Alabama, Arkansas, Texas, and Georgia. For me, I was able to at 40 to 50k, now it's more than that, but I was able to say, I can cover my living expenses based on this. And then each time I do a deal, I get an acquisition fee. Now in reality, I've reinvested most of the acquisition fees back in the deals that I'm doing. But then over time, when you do deals, you'll have things start to cash out. So there's some money coming from this deal. Or everybody is rolling from this deal to another. We had a deal recently that we bought in Jacksonville in March for $27 million it was a 288 unit multifamily complex. And we just sold it in December for $37.5 million. It was a huge profit, that was a 75%-100% return. But for me, we're 1030 wanting that in the next deal. And then there are some fees when we go to the next deal. There's some opportunity there.

  When deals sell, there are opportunities there. In some ways it's kind of feast or famine, but I feel like I'm investing in the business. I'm growing, I'm learning, and I'm covering my expenses. And I'm continuing to see my net worth grow. In multifamily in particular, you're doing these long term deals, you know that the money's there, you know it's coming, but you don't always see it right away. You're taking less up front, but still with these acquisition fees, they add up enough to at least cover the business expense and cover my living expenses, and they continue to grow my net worth.

  
  

  Bronson Hill

  
  

  www.bronsonequity.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>36f7f5c1-3e9e-4e84-b80a-ac80a630f264Thu, 03 Feb 2022 04:59:00 -080017:46falsefull11151151My Story: What Happened From When I Landed in the USA at 18 & How Did I Get to Where I am Today?I'm going to be covering a topic request from one of our listeners "What happened when I landed in this country at 18 and how did I get to where I am today, 21 years later?" 

  As you may know, I am originally from Brazil, and was very blessed to come here at 18. I landed in Silicon Valley and I still remember the first outing with my mom, she was explaining to me what the sign "Now Hiring" meant in Portuguese. I remember being so excited, because I saw "Now Hiring" everywhere that I went. In Brazil, we don't get these many opportunities. I got my first job at Mervyn's, and also worked at Blockbuster and Wells Fargo while going to college. After buying a music player with my first paycheck, I was pretty frugal and decided to start saving up. At Blockbuster, they absolutely loved me, I got promoted within one month of being there going from $7.25 an hour to $7.50 an hour. I got promoted to assistant store manager. And the reason that they loved me was that I was just working.

  
  

  Sign up for our newsletter at www.montecarlorei.com 

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>I'm going to be covering a topic request from one of our listeners "What happened when I landed in this country at 18 and how did I get to where I am today, 21 years later?" 

  As you may know, I am originally from Brazil, and was very blessed to come here at 18. I landed in Silicon Valley and I still remember the first outing with my mom, she was explaining to me what the sign "Now Hiring" meant in Portuguese. I remember being so excited, because I saw "Now Hiring" everywhere that I went. In Brazil, we don't get these many opportunities. I got my first job at Mervyn's, and also worked at Blockbuster and Wells Fargo while going to college. After buying a music player with my first paycheck, I was pretty frugal and decided to start saving up. At Blockbuster, they absolutely loved me, I got promoted within one month of being there going from $7.25 an hour to $7.50 an hour. I got promoted to assistant store manager. And the reason that they loved me was that I was just working.

  
  

  Sign up for our newsletter at www.montecarlorei.com 

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>7b5d1a01-1a4e-49e7-ad32-a6d8cf98c0feThu, 27 Jan 2022 15:43:00 -080029:30falsefull11141141I'm going to be covering a topic request from one of our listeners "What happened when I landed in this country at 18 and how did I get to where I am today, 21 years later?" As you may know, I am originally from Brazil, and was very blessed to come here at 18. I landed in Silicon Valley and I still remember the first outing with my mom, she was explaining to me what the sign "Now Hiring" meant in Portuguese. I remember being so excited, because I saw "Now Hiring" everywhere that I went. In Brazil, we don't get these many opportunities. I got my first job at Mervyn's, and also worked at Blockbuster and Wells Fargo while going to college. After buying a music player with my first paycheck, I was pretty frugal and decided to start saving up. At Blockbuster, they absolutely loved me, I got promoted within one month of being there going from $7.25 an hour to $7.50 an hour. I got promoted to assistant store manager. And the reason that they loved me was that I was just working. Sign up for our newsletter at www.montecarlorei.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support (https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support)Retail Leasing - What to Keep in Mind for Prospective TenantsJoin our 2022 goals calls here! Email us at admin@montecarlorei.com / Venmo @steffbold / or www.paypal.me/regoals

  What are some things you need to keep in mind when leasing your property? Why should you put your prospective tenant's hat on? What are vacancy rates looking like today? Raphael Collazo, a retail real estate agent, shares his insights.

  
  

  You can read this entire interview here: https://bit.ly/3fhLRv1

  
  

  Investors and commercial leasing brokers have to put a hat on of our potential tenants, why don't we go into each step of your book and dive into some areas of it?

  
  

  First we talk about why you need commercial space in the first place. I've had a lot of conversations with people who like the fact of having a commercial space, it's a validation of them having made it, but in reality, they may not even need a commercial space. If you're a web designer, why do you need a commercial space, it's more of just fluff for you. On top of that, it may not be in your budget, your business may not be able to support you having a commercial space yet. Having that conversation early on is important so that you understand that maybe it's not the right time. And that's okay, it's actually better to know that now versus you getting into a commercial lease for three to five years, and then having that financial commitment for another three to five years. 

  Then we review what you need to prepare before you get a commercial space, a lot of it is providing financials, if you're a newer business, or you haven't been around as much as some of these more established businesses, put the investor hat on, why would the landlord want to lease space to a potential business that doesn't have a track record of success, that's very risky for an investor. If there's a 2,000 square foot space, going for $2,000 a month, and you have $40,000 in reserves, your business is producing this, we can support this type of payment, it's getting ammo in the cartridge, so that as you go out and look for commercial space, you become a more attractive tenant to investors.

  
  

  Then we go through the process of narrowing down your list of criteria: how do you negotiate commercial leases, some of the provisions you need to keep in mind as you're looking at commercial spaces. And then at the end, we talk a little bit about once you get to the point of getting the lease signed, what are some of the build outs involved if you need a build out, and then we share some marketing strategies, and at the end, we have a call to action saying Now take the action, do it.

  
  

  And when they go ahead and do it, what are some of the things that they should be aware of with regards to negotiating that lease?

  
  

  As a landlord you want to pass along some of the main responsibilities over to the tenant, because you don't want to have to deal with getting calls for toilets and whatever else. That's part of the reason why you're investing in commercial real estate versus multifamily real estate. They want to be able to be a little bit more passive. Along with that, as a business owner, they don't consider the big ticket items, the landlord could pass along the responsibility for the furnace, the AC, if there's an elevator involved, maybe they're also passing along that responsibility. And you don't know that unless you read the lease.

  If you're in a multi tenant center, a lot of times you have to consider what's the competition in that center, because you don't want to be a liquor store, move into a multi tenant center, and then all of a sudden, next door, they allow another liquor store to move in. Have some form of exclusivity, and a sublease clause just in case.

  
  

  Raphael Collazo

  
  

  Join our 2022 goals calls here! Email us at admin@montecarlorei.com / Venmo @steffbold / or www.paypal.me/regoals

  What are some things you need to keep in mind when leasing your property? Why should you put your prospective tenant's hat on? What are vacancy rates looking like today? Raphael Collazo, a retail real estate agent, shares his insights.

  
  

  You can read this entire interview here: https://bit.ly/3fhLRv1

  
  

  Investors and commercial leasing brokers have to put a hat on of our potential tenants, why don't we go into each step of your book and dive into some areas of it?

  
  

  First we talk about why you need commercial space in the first place. I've had a lot of conversations with people who like the fact of having a commercial space, it's a validation of them having made it, but in reality, they may not even need a commercial space. If you're a web designer, why do you need a commercial space, it's more of just fluff for you. On top of that, it may not be in your budget, your business may not be able to support you having a commercial space yet. Having that conversation early on is important so that you understand that maybe it's not the right time. And that's okay, it's actually better to know that now versus you getting into a commercial lease for three to five years, and then having that financial commitment for another three to five years. 

  Then we review what you need to prepare before you get a commercial space, a lot of it is providing financials, if you're a newer business, or you haven't been around as much as some of these more established businesses, put the investor hat on, why would the landlord want to lease space to a potential business that doesn't have a track record of success, that's very risky for an investor. If there's a 2,000 square foot space, going for $2,000 a month, and you have $40,000 in reserves, your business is producing this, we can support this type of payment, it's getting ammo in the cartridge, so that as you go out and look for commercial space, you become a more attractive tenant to investors.

  
  

  Then we go through the process of narrowing down your list of criteria: how do you negotiate commercial leases, some of the provisions you need to keep in mind as you're looking at commercial spaces. And then at the end, we talk a little bit about once you get to the point of getting the lease signed, what are some of the build outs involved if you need a build out, and then we share some marketing strategies, and at the end, we have a call to action saying Now take the action, do it.

  
  

  And when they go ahead and do it, what are some of the things that they should be aware of with regards to negotiating that lease?

  
  

  As a landlord you want to pass along some of the main responsibilities over to the tenant, because you don't want to have to deal with getting calls for toilets and whatever else. That's part of the reason why you're investing in commercial real estate versus multifamily real estate. They want to be able to be a little bit more passive. Along with that, as a business owner, they don't consider the big ticket items, the landlord could pass along the responsibility for the furnace, the AC, if there's an elevator involved, maybe they're also passing along that responsibility. And you don't know that unless you read the lease.

  If you're in a multi tenant center, a lot of times you have to consider what's the competition in that center, because you don't want to be a liquor store, move into a multi tenant center, and then all of a sudden, next door, they allow another liquor store to move in. Have some form of exclusivity, and a sublease clause just in case.

  
  

  Raphael Collazo

  
  

  www.raphaelcollazo.com

  
  

  www.linkedin.com/in/raphaelcollazo

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>131914ce-ae05-47d4-939e-e3137fa74ad2Thu, 13 Jan 2022 06:36:00 -080019:07falsefull11131131Top Questions to Ask a General Contractor & How to Find ThemJoin our 2022 goals calls here! Email us at admin@montecarlorei.com / Venmo @steffbold / or www.paypal.me/regoals

  What questions should you ask a General Contractor (GC) when looking to hire one to build a property for you, renovate or expand it? How to even find general contractors for your projects? How should you pay them? Jeff Walston from Premise Construction will share his experience with us.

  
  

  You can read this entire interview here: https://bit.ly/3pZoZXv

  
  

  What are some of the major things that people should be aware of before hiring a general contractor?

  
  

  You need to know the right questions to ask. If you're in search for a general contractor, you can go to either your Better Business Bureau or your city commerce centers, they will know a great contractor because they've dealt with them in the past and know that they have a good track record, first and foremost. As far as questions to ask prior to starting the commercial projects:

  1. Making sure that they're fully licensed, fully insured, which is general liability, and workman's comp. Regardless if they are even going to be on the job site, you have to have that to protect everyone involved, it's very important.

  
  

  2. Their experience. If, for instance, you're hiring a contractor, and you want to do a restaurant build out, if they don't have any experience in the restaurant sector of commercial construction, maybe they have just been doing office buildings, you might have a few hiccups going through that whole process, because it's going to be a learning process for them. You need someone to know what they're doing in that specific sector.

  
  

  3. Once you figure out if they've done those projects, ask to see them, see if he can get references, ask around about their particular companies and do your research on them. It doesn't hurt to Google their company and Google their employees as well, I'd highly recommend that.

  
  

  What are some questions that people should be asking them to make a decision on which one to pick?

  
  

  If it's not down to price, if they're close in pricing, and you're just trying to figure out, who am I comfortable with, it's different for every circumstance, it's how you feel about the person that's representing the company. Some questions to consider are:

  
  

  - What expectations do you want them to have?

  
  

  - Can they meet your communication expectations?

  
  

  - Do you want daily updates? Do you want weekly updates? Do you want monthly updates?

  
  

  - Do you have project managers that are going to be managing our project daily?

  
  

  - Do you guys still perform work? Or do you subcontract everything out? And if so, how do you manage those subcontractors?

  
  

  - If they do have subcontractors that they're utilizing, you can ask them, How strong are your subcontractors? Do they show up on time? Are they managed well within their company? Get a feel of what they say about their subcontractors.

  
  

  - Is every subcontractor fully licensed and insured on your property?

  
  

  - You also want to see, from a liability standpoint, if they have any safety protocols, and if they do, what are those safety protocols, and maybe even see if you can get their safety protocol to see if everyone's following it. With any commercial property, the public safety for anyone involved in the project is vital for the people working there and the people utilizing the building later.

  
  

  - When problems arise, how do you handle it? Can you give me an example of the most...]]>Join our 2022 goals calls here! Email us at admin@montecarlorei.com / Venmo @steffbold / or www.paypal.me/regoals

  What questions should you ask a General Contractor (GC) when looking to hire one to build a property for you, renovate or expand it? How to even find general contractors for your projects? How should you pay them? Jeff Walston from Premise Construction will share his experience with us.

  
  

  You can read this entire interview here: https://bit.ly/3pZoZXv

  
  

  What are some of the major things that people should be aware of before hiring a general contractor?

  
  

  You need to know the right questions to ask. If you're in search for a general contractor, you can go to either your Better Business Bureau or your city commerce centers, they will know a great contractor because they've dealt with them in the past and know that they have a good track record, first and foremost. As far as questions to ask prior to starting the commercial projects:

  1. Making sure that they're fully licensed, fully insured, which is general liability, and workman's comp. Regardless if they are even going to be on the job site, you have to have that to protect everyone involved, it's very important.

  
  

  2. Their experience. If, for instance, you're hiring a contractor, and you want to do a restaurant build out, if they don't have any experience in the restaurant sector of commercial construction, maybe they have just been doing office buildings, you might have a few hiccups going through that whole process, because it's going to be a learning process for them. You need someone to know what they're doing in that specific sector.

  
  

  3. Once you figure out if they've done those projects, ask to see them, see if he can get references, ask around about their particular companies and do your research on them. It doesn't hurt to Google their company and Google their employees as well, I'd highly recommend that.

  
  

  What are some questions that people should be asking them to make a decision on which one to pick?

  
  

  If it's not down to price, if they're close in pricing, and you're just trying to figure out, who am I comfortable with, it's different for every circumstance, it's how you feel about the person that's representing the company. Some questions to consider are:

  
  

  - What expectations do you want them to have?

  
  

  - Can they meet your communication expectations?

  
  

  - Do you want daily updates? Do you want weekly updates? Do you want monthly updates?

  
  

  - Do you have project managers that are going to be managing our project daily?

  
  

  - Do you guys still perform work? Or do you subcontract everything out? And if so, how do you manage those subcontractors?

  
  

  - If they do have subcontractors that they're utilizing, you can ask them, How strong are your subcontractors? Do they show up on time? Are they managed well within their company? Get a feel of what they say about their subcontractors.

  
  

  - Is every subcontractor fully licensed and insured on your property?

  
  

  - You also want to see, from a liability standpoint, if they have any safety protocols, and if they do, what are those safety protocols, and maybe even see if you can get their safety protocol to see if everyone's following it. With any commercial property, the public safety for anyone involved in the project is vital for the people working there and the people utilizing the building later.

  
  

  - When problems arise, how do you handle it? Can you give me an example of the most recent one?

  Jeff Walston

  
  

  Premise Construction

  
  

  www.linkedin.com/in/jeff-walston

  
  

  jeffwalston@premiseconstruction.com

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>5104d2d7-5112-46fb-9818-461f673d1ca5Thu, 06 Jan 2022 06:56:00 -080023:53falsefull11121121Is Location Important in the Metaverse? What Makes Real Estate Valuable and How can you Monetize your Properties in the Metaverse? (Part 2)Is location, location, location important in the metaverse? How can we develop properties in that world? What makes real estate valuable in the metaverse? How can you monetize it?

  You can read this entire interview here: https://bit.ly/33IcF5a

  
  

  Let's say Facebook decides to create their own universe, how are these pieces of land going to merge together? Or not? How will that work? What if one planet becomes more popular than another planet?

  
  

  That is the trillion dollar question. Are these going to be interoperable with each other? Is one going to dominate? That remains to be seen. We're still so early with this new world that nobody knows. Personally, I've bought virtual real estate in the Sandbox, Decentraland and Netvrk. And I'm looking to invest in virtual estate in up and coming metaverse projects as well. There's a saying, Spray and pray, I've kind of adopted that strategy, but not quite. I'm doing a lot of research into these projects, and I'm exploring them, but I am looking to get a lot of exposure to it. Some people compare it to being able to go back in time and buy a city block in Manhattan 100 years ago, what would that cost today? What would the return on that be worth today? It would be absolutely astronomical and, and incomprehensible. I think it's very possible that we're looking at a similar opportunity now, where in a decade or two decades, we look back, and we could have acquired a land plot in the Sandbox or in Decentraland for only $15k-20k. And now it's, millions of dollars. You can also purchase in game assets in the Sandbox and Decentraland. You can also create them, I believe. Roblox allows you to do something similar. I haven’t played it myself, but it might be something that some of your listeners are more familiar with, especially if they have young children that play Roblox. They provide you with tools to create your own anything in game assets, it could be a sword, a speedboat, a palm tree, a desk, a bed, pretty much anything that we have in the real world you could create it in the metaverse and you can sell it.

  Why is location important when you can literally click a button and be transported to the other side of the planet over there? Are people “walking” in these universes and is that why they will be able to see Snoop Dogg’s neighbor?

  
  

  Yes. There are various ways to move through these Metaverse projects, there are portals in some of them where you can teleport your avatar from one location to another. However, those are in specific locations only. So there are going to be large stretches of land between portals, where you’re going to have to find alternate means of moving around. The obvious and most common one would be walking or running. There are also roads, you can buy cars. I’m guessing you could move around the metaverse faster by purchasing a virtual car.

  Is there anything else that we haven’t covered that you think is important for our audience to know right now?

  
  

  I would just encourage everyone to start looking into this, do your research. It’s very easy to set up an account on the Sandbox and in Decentraland, create your own avatar, start exploring and start walking around. Look at their marketplaces. See what’s for sale, how much it costs, download a digital wallet, get a MetaMask, or Coinbase wallet, or a number of other wallets. But MetaMask is the most popular one. Start getting familiar with it, because this is the future. The opportunities are massive. We’re still super early in the space. And I think virtual real estate will be in very high demand over time. I personally think that it’ll be worth more than real world real estate at some point in the future.

  Paul’s Signal Group: Is location, location, location important in the metaverse? How can we develop properties in that world? What makes real estate valuable in the metaverse? How can you monetize it?

  You can read this entire interview here: https://bit.ly/33IcF5a

  
  

  Let's say Facebook decides to create their own universe, how are these pieces of land going to merge together? Or not? How will that work? What if one planet becomes more popular than another planet?

  
  

  That is the trillion dollar question. Are these going to be interoperable with each other? Is one going to dominate? That remains to be seen. We're still so early with this new world that nobody knows. Personally, I've bought virtual real estate in the Sandbox, Decentraland and Netvrk. And I'm looking to invest in virtual estate in up and coming metaverse projects as well. There's a saying, Spray and pray, I've kind of adopted that strategy, but not quite. I'm doing a lot of research into these projects, and I'm exploring them, but I am looking to get a lot of exposure to it. Some people compare it to being able to go back in time and buy a city block in Manhattan 100 years ago, what would that cost today? What would the return on that be worth today? It would be absolutely astronomical and, and incomprehensible. I think it's very possible that we're looking at a similar opportunity now, where in a decade or two decades, we look back, and we could have acquired a land plot in the Sandbox or in Decentraland for only $15k-20k. And now it's, millions of dollars. You can also purchase in game assets in the Sandbox and Decentraland. You can also create them, I believe. Roblox allows you to do something similar. I haven’t played it myself, but it might be something that some of your listeners are more familiar with, especially if they have young children that play Roblox. They provide you with tools to create your own anything in game assets, it could be a sword, a speedboat, a palm tree, a desk, a bed, pretty much anything that we have in the real world you could create it in the metaverse and you can sell it.

  Why is location important when you can literally click a button and be transported to the other side of the planet over there? Are people “walking” in these universes and is that why they will be able to see Snoop Dogg’s neighbor?

  
  

  Yes. There are various ways to move through these Metaverse projects, there are portals in some of them where you can teleport your avatar from one location to another. However, those are in specific locations only. So there are going to be large stretches of land between portals, where you’re going to have to find alternate means of moving around. The obvious and most common one would be walking or running. There are also roads, you can buy cars. I’m guessing you could move around the metaverse faster by purchasing a virtual car.

  Is there anything else that we haven’t covered that you think is important for our audience to know right now?

  
  

  I would just encourage everyone to start looking into this, do your research. It’s very easy to set up an account on the Sandbox and in Decentraland, create your own avatar, start exploring and start walking around. Look at their marketplaces. See what’s for sale, how much it costs, download a digital wallet, get a MetaMask, or Coinbase wallet, or a number of other wallets. But MetaMask is the most popular one. Start getting familiar with it, because this is the future. The opportunities are massive. We’re still super early in the space. And I think virtual real estate will be in very high demand over time. I personally think that it’ll be worth more than real world real estate at some point in the future.

  Paul’s Signal Group: https://bit.ly/3q0DRUh

  
  

  Youtube: https://bit.ly/3ytekHf

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>29b5dbaa-b518-455a-beac-59d2f3ae457eThu, 23 Dec 2021 05:34:00 -080011:55falsefull11111111What is the Metaverse? Should You Buy Virtual Real Estate in the Metaverse? (Part 1)What is the metaverse? Should you buy real estate in the metaverse? What does that even mean? What are some ways to monetize your property? Our metaverse expert will be enlightening us on what this is all about, and why it is important to at least start learning about it, and why it could be the next big thing in real estate.

  You can read this entire episode here: https://bit.ly/3E1p4xJ

  What does that mean to own land that doesn’t exist, in a magical world?

  
  

  The ownership is via what’s called an NFT, which stands for non fungible token. It’s basically something that is digital, has scarcity, and is verifiably authentic on the blockchain. In addition to that, it’s also a way to verify ownership of a digital asset. Virtual land plots or parcels exist as entities on the blockchain, so your ownership is verifiable. That’s how it’s represented to the world. And the blockchain is a transparent public ledger. So everyone has visibility into it.

  But I’m still not understanding why I should buy a piece of land that doesn’t exist.

  
  

  There’s the appreciation component, because it exists as an NFT, you can also easily flip it on the blockchain. You can list it for sale on different entity marketplaces, the most popular and the largest being Opensea, kind of like the eBay of NFT’s.

  In addition to the appreciation, the fact that it’s easily transferable, or sellable, other reasons to purchase an own virtual real estate are that you can do much more with it in the metaverse than you can in the real world. For instance, you can advertise on it. You can advertise your own company, unlike the physical world, anyone in the world that has an internet connection is able to put eyes on those advertisements as they explore the metaverse and they happen upon your property and your billboards. The exposure opportunity is much higher. You can also rent out your property to, let’s say, people that want to host events on it. You can design and build any space, any environment that you can imagine. Unlike the real world where there are constraints.

  
  

  There are highly influential figures, celebrities, musicians that have bought up a lot of land in some of these Metaverse projects. Snoop Dogg is one example. He owns a massive section of land in the Sandbox. He has created what’s called the Snoop Verse. It’s basically a metaverse within the metaverse specific to Snoop Dogg, where he hosts live concerts where you can watch them as your avatar with other avatars and get access to other exclusive opportunities like NFT drops, play in the Snoop Dogg casino, check out his 200 car virtual car collection, get higher staking rewards on your tokens. Parcels adjacent to Snoop’s property, I think there is a string of three adjacent land parcels, if you take the minimum price $13,000 times three, you’d get $39,000. But those sold for $450,000, more than 10x the minimum price for land parcel in the Sandbox because of the proximity to this highly influential celebrity.

  
  

  Why is it worth 10x the price of minimum real estate values? Because Snoop is going to attract so much traffic to his land area, you are therefore going to get a lot more traffic to your plot of land, and so you’re going to get more eyes on it. Therefore, the advertising potential is higher, or the number of interactions you can expect on your property are much higher. You can also create games, you can rent it out, you can advertise on it. There’s no overhead costs, no insurance, no decay, no management. You don't need to clean the sheets. You don't need to vacuum it.

  
  

  Paul’s Signal Group: https://bit.ly/3q0DRUh

  
  

  Youtube: What is the metaverse? Should you buy real estate in the metaverse? What does that even mean? What are some ways to monetize your property? Our metaverse expert will be enlightening us on what this is all about, and why it is important to at least start learning about it, and why it could be the next big thing in real estate.

  You can read this entire episode here: https://bit.ly/3E1p4xJ

  What does that mean to own land that doesn’t exist, in a magical world?

  
  

  The ownership is via what’s called an NFT, which stands for non fungible token. It’s basically something that is digital, has scarcity, and is verifiably authentic on the blockchain. In addition to that, it’s also a way to verify ownership of a digital asset. Virtual land plots or parcels exist as entities on the blockchain, so your ownership is verifiable. That’s how it’s represented to the world. And the blockchain is a transparent public ledger. So everyone has visibility into it.

  But I’m still not understanding why I should buy a piece of land that doesn’t exist.

  
  

  There’s the appreciation component, because it exists as an NFT, you can also easily flip it on the blockchain. You can list it for sale on different entity marketplaces, the most popular and the largest being Opensea, kind of like the eBay of NFT’s.

  In addition to the appreciation, the fact that it’s easily transferable, or sellable, other reasons to purchase an own virtual real estate are that you can do much more with it in the metaverse than you can in the real world. For instance, you can advertise on it. You can advertise your own company, unlike the physical world, anyone in the world that has an internet connection is able to put eyes on those advertisements as they explore the metaverse and they happen upon your property and your billboards. The exposure opportunity is much higher. You can also rent out your property to, let’s say, people that want to host events on it. You can design and build any space, any environment that you can imagine. Unlike the real world where there are constraints.

  
  

  There are highly influential figures, celebrities, musicians that have bought up a lot of land in some of these Metaverse projects. Snoop Dogg is one example. He owns a massive section of land in the Sandbox. He has created what’s called the Snoop Verse. It’s basically a metaverse within the metaverse specific to Snoop Dogg, where he hosts live concerts where you can watch them as your avatar with other avatars and get access to other exclusive opportunities like NFT drops, play in the Snoop Dogg casino, check out his 200 car virtual car collection, get higher staking rewards on your tokens. Parcels adjacent to Snoop’s property, I think there is a string of three adjacent land parcels, if you take the minimum price $13,000 times three, you’d get $39,000. But those sold for $450,000, more than 10x the minimum price for land parcel in the Sandbox because of the proximity to this highly influential celebrity.

  
  

  Why is it worth 10x the price of minimum real estate values? Because Snoop is going to attract so much traffic to his land area, you are therefore going to get a lot more traffic to your plot of land, and so you’re going to get more eyes on it. Therefore, the advertising potential is higher, or the number of interactions you can expect on your property are much higher. You can also create games, you can rent it out, you can advertise on it. There’s no overhead costs, no insurance, no decay, no management. You don't need to clean the sheets. You don't need to vacuum it.

  
  

  Paul’s Signal Group: https://bit.ly/3q0DRUh

  
  

  Youtube: https://bit.ly/3ytekHf

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>4cf8a83b-14e5-453d-86ff-bb9368c9862cThu, 16 Dec 2021 08:20:00 -080013:18falsefull11101101What Could Be The Hottest Asset Classes in a Decade?What are some asset classes that I think could potentially be very successful in the next decade with regards to real estate investing?

  You can read this entire episode here: https://bit.ly/3Ibdpj2

  
  

  I have recently been pondering about all of the missed opportunities that came right in front of my face a decade ago. Things like investing in Google and Facebook, I actually met the founder of Coinbase nine years ago, who told me that he thought that there was a huge opportunity in Bitcoin. Bitcoin was worth $13.30 then, if I had put $10,000 into it, it would have been worth $45 million today. I told my friends to buy Amazon stock when it was $250 a share. I test drove the very first Tesla Roadster 11 years ago, and never thought of investing in Tesla.

  
  

  As a fully grown responsible adult that has some money to invest today, I was pondering recently, what is right now right before my eyes today, that could be huge tomorrow, just like all of these companies that I just mentioned. These things can be controversial, and you might not like it, and you may think is the stupidest thing ever, or you may simply disagree with it. But it's just what it is. And you can either learn about it, or you can try to fight it.

  
  

  Cannabis

  
  

  The first thing that I think could be a great investment is in the cannabis space. Whether you rent an industrial building to a cannabis manufacturer or deliverer or whatever their business may be, today, cannabis is only legally allowed in a handful of states. Trends, whether you like them or not, start on the coasts. Cannabis has been legalized in a few states on the coasts, eventually it will be legalized on a federal level. And those who are ahead of the curve will benefit from it, and that is happening sooner than you think. Cannabis tenants tend to pay significantly more for renting the property because of many factors that are related to it not being federally legal. Once it becomes federally legalized, and you end up having a cap rate of, say, 7% when these industrial buildings with these cannabis tenants that are paying you top dollars, you automatically add value to your property.

  Metaverse

  
  

  In the metaverse you are basically buying a "piece of real estate" in this fake world. I am looking at interviewing people that are experts in this topic, so we can all be enlightened and really learn what it means to invest in the metaverse with regards to real estate. What I learned so far is that there are companies already buying land in this 3D world that they will be able to build whatever they want. It can be a hotel, a golf course, an art gallery, a comedy show place, a sports stadium, a music stadium, and it can also be a game. It can basically be anything that the person that bought it would like to create in that world. They can charge people for admission, or a membership fee for example. And that's one of the ways to monetize it.

  Environmental

  
  

  The last example in this series is coming back to the physical world, the more realistic world. As we all know by now, the government creates tax incentives in order to incentivize a certain behavior that they want you to act upon. Like we have mentioned before they have tax incentives for real estate investors because the government does not want to build and maintain buildings. That is why real estate investors have these tax incentives. Today's incentives are in the environmental space. They are in wind farming, carbon capturing, clean energy, and a few other things that you might want to learn about.

  What do you think could be the next huge opportunity in real estate investing? Let me know below:

  
  

  What are some asset classes that I think could potentially be very successful in the next decade with regards to real estate investing?

  You can read this entire episode here: https://bit.ly/3Ibdpj2

  
  

  I have recently been pondering about all of the missed opportunities that came right in front of my face a decade ago. Things like investing in Google and Facebook, I actually met the founder of Coinbase nine years ago, who told me that he thought that there was a huge opportunity in Bitcoin. Bitcoin was worth $13.30 then, if I had put $10,000 into it, it would have been worth $45 million today. I told my friends to buy Amazon stock when it was $250 a share. I test drove the very first Tesla Roadster 11 years ago, and never thought of investing in Tesla.

  
  

  As a fully grown responsible adult that has some money to invest today, I was pondering recently, what is right now right before my eyes today, that could be huge tomorrow, just like all of these companies that I just mentioned. These things can be controversial, and you might not like it, and you may think is the stupidest thing ever, or you may simply disagree with it. But it's just what it is. And you can either learn about it, or you can try to fight it.

  
  

  Cannabis

  
  

  The first thing that I think could be a great investment is in the cannabis space. Whether you rent an industrial building to a cannabis manufacturer or deliverer or whatever their business may be, today, cannabis is only legally allowed in a handful of states. Trends, whether you like them or not, start on the coasts. Cannabis has been legalized in a few states on the coasts, eventually it will be legalized on a federal level. And those who are ahead of the curve will benefit from it, and that is happening sooner than you think. Cannabis tenants tend to pay significantly more for renting the property because of many factors that are related to it not being federally legal. Once it becomes federally legalized, and you end up having a cap rate of, say, 7% when these industrial buildings with these cannabis tenants that are paying you top dollars, you automatically add value to your property.

  Metaverse

  
  

  In the metaverse you are basically buying a "piece of real estate" in this fake world. I am looking at interviewing people that are experts in this topic, so we can all be enlightened and really learn what it means to invest in the metaverse with regards to real estate. What I learned so far is that there are companies already buying land in this 3D world that they will be able to build whatever they want. It can be a hotel, a golf course, an art gallery, a comedy show place, a sports stadium, a music stadium, and it can also be a game. It can basically be anything that the person that bought it would like to create in that world. They can charge people for admission, or a membership fee for example. And that's one of the ways to monetize it.

  Environmental

  
  

  The last example in this series is coming back to the physical world, the more realistic world. As we all know by now, the government creates tax incentives in order to incentivize a certain behavior that they want you to act upon. Like we have mentioned before they have tax incentives for real estate investors because the government does not want to build and maintain buildings. That is why real estate investors have these tax incentives. Today's incentives are in the environmental space. They are in wind farming, carbon capturing, clean energy, and a few other things that you might want to learn about.

  What do you think could be the next huge opportunity in real estate investing? Let me know below:

  
  

  linkedin.com/in/steffbold

  
  

  www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>8a9db179-d847-487a-b818-fb70432c5d23Thu, 02 Dec 2021 05:00:00 -080012:19falsefull11091091Should You Invest In a 5% Cap NNN Property? Real Example CalculationsToday we will review a real property example from a real potential buyer who wants to get into commercial real estate investing and prefers a NNN leased property. Are these investments worth it at a 5% Cap rate? Let's find out.

  Tell us a little bit about you.

  
  

  I'm in the Dallas Fort Worth metroplex area in Texas, it's a very rapidly growing area in the suburbs and since there aren't many opportunities within the metroplex, they're rare to come by. I'm a nurse practitioner, I work full time, and am looking to get into commercial real estate investing, specifically NNN leases, since it's a little bit more passive opportunity and I don't have to worry about, as they say, termites, toilets and taxes. So that helps me out in that sense. I've been doing a little bit of research and came across a potentially good opportunity in the Metroplex area, and has a very well regarded corporate tenant.

  Unfortunately, the cap rate is between 4.5 to 5% and this will be my very first investment. I'm looking to certainly grow my portfolio, and this is a true NNN, where everything is taken care of. I feel like it's great for me to learn from it, and not get too overwhelmed, just starting off. But my hesitancy with this is, since the return is a little bit lower, I'm concerned about what interest rate I would get from the banks, and if I'd be breaking even. I wanted to reach out to and see if you have any guidance, and what you would recommend for someone in my position who is a novice and strictly coming in with a foot in the door.

  
  

  I can totally understand how you are torn because, from what I understand, you're very busy with work and family, so there isn't a ton of time to manage properties and deal with leases and all of that. But at the same time, the cap rate is pretty low. I'm going to ask you a few questions, and if you don't know the answer we'll just go ask the broker at some point and take it from there. What is the downpayment looking like right now?

  
  

  It'll be at least 20%, the price is a little over $900k, and the lease doesn't expire for another 7-8 years. There are three, five year option renewals after that lease is up in about eight years.

  Are these five year options?

  
  

  Correct. Each option is five years.

  So you have potentially another 15 years on top of the eight years, correct? Are there yearly rent increases, or is the rent increasing every five years?

  
  

  The lease commencement was in August of 2009, in the years one through five there was no increase, but then after that, they've had a 6% increase. And then after that, it's going to be 8% increase every time there's a renewal.

  About 1.5% a year, increase, give and take. When does that 8% kick in?

  
  

  It doesn't kick in until after this 7-8 years is up.

  So you're going to have that 5% cap for the next seven years. And then at that point, they can either leave or renew at an 8% increase. And this is the one that is a true NNN lease, you're not taking care of anything.

  
  

  Correct. It's mailbox money, as they call it.

  If there is any money left.

  
  

  That's a good point. Exactly.

  One of the super critical things to take a look at in the lease is, I don't know about Texas, but in California the taxes can be very low if they have owned the property for X number of years. And then once you purchase it at this new price, the taxes will go up significantly. I don't know how it is in Texas, but I would definitely make sure that in the lease, if it's the case for Texas, they are okay with any new tax increase, regardless. A lot of times these major tenants will negotiate a maximum tax increase of X percent. So that's something that is your number one priority to check...]]>Today we will review a real property example from a real potential buyer who wants to get into commercial real estate investing and prefers a NNN leased property. Are these investments worth it at a 5% Cap rate? Let's find out.

  Tell us a little bit about you.

  
  

  I'm in the Dallas Fort Worth metroplex area in Texas, it's a very rapidly growing area in the suburbs and since there aren't many opportunities within the metroplex, they're rare to come by. I'm a nurse practitioner, I work full time, and am looking to get into commercial real estate investing, specifically NNN leases, since it's a little bit more passive opportunity and I don't have to worry about, as they say, termites, toilets and taxes. So that helps me out in that sense. I've been doing a little bit of research and came across a potentially good opportunity in the Metroplex area, and has a very well regarded corporate tenant.

  Unfortunately, the cap rate is between 4.5 to 5% and this will be my very first investment. I'm looking to certainly grow my portfolio, and this is a true NNN, where everything is taken care of. I feel like it's great for me to learn from it, and not get too overwhelmed, just starting off. But my hesitancy with this is, since the return is a little bit lower, I'm concerned about what interest rate I would get from the banks, and if I'd be breaking even. I wanted to reach out to and see if you have any guidance, and what you would recommend for someone in my position who is a novice and strictly coming in with a foot in the door.

  
  

  I can totally understand how you are torn because, from what I understand, you're very busy with work and family, so there isn't a ton of time to manage properties and deal with leases and all of that. But at the same time, the cap rate is pretty low. I'm going to ask you a few questions, and if you don't know the answer we'll just go ask the broker at some point and take it from there. What is the downpayment looking like right now?

  
  

  It'll be at least 20%, the price is a little over $900k, and the lease doesn't expire for another 7-8 years. There are three, five year option renewals after that lease is up in about eight years.

  Are these five year options?

  
  

  Correct. Each option is five years.

  So you have potentially another 15 years on top of the eight years, correct? Are there yearly rent increases, or is the rent increasing every five years?

  
  

  The lease commencement was in August of 2009, in the years one through five there was no increase, but then after that, they've had a 6% increase. And then after that, it's going to be 8% increase every time there's a renewal.

  About 1.5% a year, increase, give and take. When does that 8% kick in?

  
  

  It doesn't kick in until after this 7-8 years is up.

  So you're going to have that 5% cap for the next seven years. And then at that point, they can either leave or renew at an 8% increase. And this is the one that is a true NNN lease, you're not taking care of anything.

  
  

  Correct. It's mailbox money, as they call it.

  If there is any money left.

  
  

  That's a good point. Exactly.

  One of the super critical things to take a look at in the lease is, I don't know about Texas, but in California the taxes can be very low if they have owned the property for X number of years. And then once you purchase it at this new price, the taxes will go up significantly. I don't know how it is in Texas, but I would definitely make sure that in the lease, if it's the case for Texas, they are okay with any new tax increase, regardless. A lot of times these major tenants will negotiate a maximum tax increase of X percent. So that's something that is your number one priority to check there.

  
  

  Join our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>b1376f87-4e5e-4634-8c99-68eca9d6b71dThu, 18 Nov 2021 08:11:00 -080016:52falsefull11081081Top Lessons Learned from Owning $1.5 Billion in Real EstateAfter working in the industry for 30 years, and managing 5M square feet of assets worth $1.5B, what are the best pieces of advice out there? Chris Rising, co-founder of Rising Realty Partners, will share his extensive list of lessons learned.

  You can read this entire interview here: https://bit.ly/3qs9CY8

  
  

  What are some of the scariest things besides COVID that you have dealt with? And how did you get out of them?

  
  

  I do have a couple of stories but one that sticks out, it still makes me want to throw up. We were buying an asset in Pasadena, it was in office, it was after the GFC, and I got introduced to a tech celebrity who was a wonderful person, I like him a lot. He made a ton of money twice but had never been in real estate. He had hired someone to do his real estate because he wanted to diversify. We found his project that we were buying, it was a bit distressed, we were bringing in at the time a competitor to We Work, so we were going to have some leasing and the whole deal made a lot of sense. I talked to him on the phone and I said, Look, we've been underwriting this, our money goes non refundable on Friday, but if you're not there, we're not going to go non refundable. And he said, Yeah, we're going to, I think, yes. It was mumbling "yes" and I said, okay, good. I remember calling the broker and saying, let's let the money go non refundable. It was a million dollar deposit. Literally about an hour after I called the broker and the escrow, I get a call from one of this guy's representative saying, We're not 100% sold, we're going to want to look at this deal longer. I said, no, no, no, that's not how real estate works, I just relied on a commitment from your boss, and I just put a million dollars at risk. He said, Oh, what are you talking about? You can't do that on that. I had a good 24 hours before the principal called me and said, Chris, I apologize, I didn't realize that, of course I'll honor what I'm going to do.

  What are the top three biggest lessons learned in your career?

  
  

  1. The smartest person in the world is asking the most questions. And those questions sometimes come across as dumb questions. When I was young, I thought asking questions was annoying, and I shouldn't have a place for that, I should just be there and take my notes. What I realized is that people that aren't asking questions are not engaged, and probably not someone I want to do business with.

  2. You don't have to be a jerk in business. However, you also have to understand that business isn't personal. That took me a long time. We're a family company, I want everything to be great. But as long as you treat people with respect, and you're ethical, and honest, that can happen in business and it's not personal, deals can blow up. I'm always amazed how people don't realize that a Pro Forma is just a guess. We don't have crystal balls. We try to make it as educated as possible, but recognizing that it's not personal allows you to sleep at night a little bit better

  
  

  3. No matter how important all your business seems, and all that stuff, it's all very fleeting. If you're not enjoying your family, your life, it's a hard road to get to your 50s and realize that you don't have a great family, and you don't have a great thing. My father is 80 years old now, he pretty much moved on from the business. And I think of things that were so important 15 years ago, and they're just not now. The people that were important aren't in the business anymore.

  
  

  Chris Rising

  
  

  The Real Market With Chris Rising

  
  

  After working in the industry for 30 years, and managing 5M square feet of assets worth $1.5B, what are the best pieces of advice out there? Chris Rising, co-founder of Rising Realty Partners, will share his extensive list of lessons learned.

  You can read this entire interview here: https://bit.ly/3qs9CY8

  
  

  What are some of the scariest things besides COVID that you have dealt with? And how did you get out of them?

  
  

  I do have a couple of stories but one that sticks out, it still makes me want to throw up. We were buying an asset in Pasadena, it was in office, it was after the GFC, and I got introduced to a tech celebrity who was a wonderful person, I like him a lot. He made a ton of money twice but had never been in real estate. He had hired someone to do his real estate because he wanted to diversify. We found his project that we were buying, it was a bit distressed, we were bringing in at the time a competitor to We Work, so we were going to have some leasing and the whole deal made a lot of sense. I talked to him on the phone and I said, Look, we've been underwriting this, our money goes non refundable on Friday, but if you're not there, we're not going to go non refundable. And he said, Yeah, we're going to, I think, yes. It was mumbling "yes" and I said, okay, good. I remember calling the broker and saying, let's let the money go non refundable. It was a million dollar deposit. Literally about an hour after I called the broker and the escrow, I get a call from one of this guy's representative saying, We're not 100% sold, we're going to want to look at this deal longer. I said, no, no, no, that's not how real estate works, I just relied on a commitment from your boss, and I just put a million dollars at risk. He said, Oh, what are you talking about? You can't do that on that. I had a good 24 hours before the principal called me and said, Chris, I apologize, I didn't realize that, of course I'll honor what I'm going to do.

  What are the top three biggest lessons learned in your career?

  
  

  1. The smartest person in the world is asking the most questions. And those questions sometimes come across as dumb questions. When I was young, I thought asking questions was annoying, and I shouldn't have a place for that, I should just be there and take my notes. What I realized is that people that aren't asking questions are not engaged, and probably not someone I want to do business with.

  2. You don't have to be a jerk in business. However, you also have to understand that business isn't personal. That took me a long time. We're a family company, I want everything to be great. But as long as you treat people with respect, and you're ethical, and honest, that can happen in business and it's not personal, deals can blow up. I'm always amazed how people don't realize that a Pro Forma is just a guess. We don't have crystal balls. We try to make it as educated as possible, but recognizing that it's not personal allows you to sleep at night a little bit better

  
  

  3. No matter how important all your business seems, and all that stuff, it's all very fleeting. If you're not enjoying your family, your life, it's a hard road to get to your 50s and realize that you don't have a great family, and you don't have a great thing. My father is 80 years old now, he pretty much moved on from the business. And I think of things that were so important 15 years ago, and they're just not now. The people that were important aren't in the business anymore.

  
  

  Chris Rising

  
  

  The Real Market With Chris Rising

  
  

  twitter.com/chrisrising

  
  

  #retwit

  
  

  www.chrisrising.com

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>d3024308-d6b8-4726-8fe3-e80b13dd0cc8Thu, 11 Nov 2021 03:58:00 -080019:13falsefull110710712nd Largest Office Holder in LA – How Did They Manage 1.5 Yrs of Lockdown?How to manage a huge economic hit on your main asset class? How to buy and add value to properties today? Christopher Rising, co-founder of Rising Realty Partners, shares his expertise with us.

  You can read this entire interview here: https://bit.ly/3GMTaaF

  
  

  How did you deal with 1.5 yrs of lockdown (so far) when your main asset class is office in the Los Angeles area?

  
  

  What did we do from day one was, we did try to work with our tenants. When someone came to us or someone chose not to pay the rent, the first thing we would say was, give us your financials, let’s be a partner here, and let us see. You kind of smoke some people out when you do that, because I can’t tell you how many law firms felt like a lease was a one sided obligation, and they didn’t have to pay if they didn’t want to. But that’s not true. We’d start with the, Hey, show us the books. Then we went to have you applied for a PPP loan, because those were specifically designed to pay salaries and to pay rent. And then if they didn’t do that, we said, have you gone to business insurance, but we knew that they weren’t fronting any of this. But if someone worked and tried to solve a problem, we worked with them. And in fact, I would say that every one of our retail tenants, our office building, I think to a tee, we are working out deals with them now, because most of them haven’t paid rent in two years, so that we can keep them, but they also need to do things like extend their term or something. We’re not trying to be punitive, and say, you owe us late rent. We’re just trying to almost close our eyes and pretend the last two years didn’t happen. We got through it. We paid our mortgages and all that. But in return, you have to give us a little more term on your leases. But it still hasn’t been figured out. 

  I think that on the multifamily side, there are a lot of problems that are hidden right now. Because you can’t evict people, all you can do is served with a notice to pay. And I think when all of this gets lifted, you’re going to see a lot of residential tenants whose credit gets really destroyed.

  
  

  I would love to hear about your last acquisition, how did you analyze it find value add, and why did you end up purchasing it?

  
  

  I’ll talk about the last one, which was in Las Vegas, we’ve taken our industrial strategy and really focused on something called multi-tenant light industrial. I think when people talk about industrial today, they sometimes forget, there’s different forms of industrial real estate, the one that is trading at unbelievably low cap rates are the big box, logistics based industrial buildings. You think of a big Amazon center or distribution center, or just anybody who’s moving product, those are trading at very low cap rates are very hard to buy, because you have to buy them in scale. You’re not really selling one offs, it’s usually portfolios. But people are really buying the cash flow stream and the quality of that credit. So that is not an area we have participated in, even though my father when he was in development, that’s what they did. We’ve taken a different approach and focused on this multi-tenant light industrial product that really isn’t getting built much anymore, especially in major CBDs. It’s not getting built, because it’s hard to get entitled, if you’re going to build something in industrial, you’d prefer to build the big box industrial, it costs less, you get more for your money.

  The Real Market With Chris Rising

  
  

  twitter.com/chrisrising

  
  

  How to manage a huge economic hit on your main asset class? How to buy and add value to properties today? Christopher Rising, co-founder of Rising Realty Partners, shares his expertise with us.

  You can read this entire interview here: https://bit.ly/3GMTaaF

  
  

  How did you deal with 1.5 yrs of lockdown (so far) when your main asset class is office in the Los Angeles area?

  
  

  What did we do from day one was, we did try to work with our tenants. When someone came to us or someone chose not to pay the rent, the first thing we would say was, give us your financials, let’s be a partner here, and let us see. You kind of smoke some people out when you do that, because I can’t tell you how many law firms felt like a lease was a one sided obligation, and they didn’t have to pay if they didn’t want to. But that’s not true. We’d start with the, Hey, show us the books. Then we went to have you applied for a PPP loan, because those were specifically designed to pay salaries and to pay rent. And then if they didn’t do that, we said, have you gone to business insurance, but we knew that they weren’t fronting any of this. But if someone worked and tried to solve a problem, we worked with them. And in fact, I would say that every one of our retail tenants, our office building, I think to a tee, we are working out deals with them now, because most of them haven’t paid rent in two years, so that we can keep them, but they also need to do things like extend their term or something. We’re not trying to be punitive, and say, you owe us late rent. We’re just trying to almost close our eyes and pretend the last two years didn’t happen. We got through it. We paid our mortgages and all that. But in return, you have to give us a little more term on your leases. But it still hasn’t been figured out. 

  I think that on the multifamily side, there are a lot of problems that are hidden right now. Because you can’t evict people, all you can do is served with a notice to pay. And I think when all of this gets lifted, you’re going to see a lot of residential tenants whose credit gets really destroyed.

  
  

  I would love to hear about your last acquisition, how did you analyze it find value add, and why did you end up purchasing it?

  
  

  I’ll talk about the last one, which was in Las Vegas, we’ve taken our industrial strategy and really focused on something called multi-tenant light industrial. I think when people talk about industrial today, they sometimes forget, there’s different forms of industrial real estate, the one that is trading at unbelievably low cap rates are the big box, logistics based industrial buildings. You think of a big Amazon center or distribution center, or just anybody who’s moving product, those are trading at very low cap rates are very hard to buy, because you have to buy them in scale. You’re not really selling one offs, it’s usually portfolios. But people are really buying the cash flow stream and the quality of that credit. So that is not an area we have participated in, even though my father when he was in development, that’s what they did. We’ve taken a different approach and focused on this multi-tenant light industrial product that really isn’t getting built much anymore, especially in major CBDs. It’s not getting built, because it’s hard to get entitled, if you’re going to build something in industrial, you’d prefer to build the big box industrial, it costs less, you get more for your money.

  The Real Market With Chris Rising

  
  

  twitter.com/chrisrising

  
  

  www.chrisrising.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>8e374514-3ed3-4510-bb6b-1b0ccfe78ec1Thu, 04 Nov 2021 05:49:00 -080018:26falsefull110610613 Tips to Raise Capital & What is the Lifetime Value of Your Investors?How should you raise capital for your first real estate deal? What is the lifetime value of your investors? Should you get investment commitments or a deal first? Dave Dubeau has been investing in real estate since 2003 and shares his insights.

  You can read this entire episode here: https://bit.ly/3jKirbM

  
  

  Let's say we're ready to do a first raise. I have a list I have relationships, people know what I have been doing. What is the first thing that I should do?

  
  

  The first step is, in my opinion, to create a target group of prospective investors that you're going to really focus in on. If you don't have a track record with raising capital yet, who is going to invest with you? A big mistake I see a lot of people making is they go out to the general public, anybody with a pulse and a checkbook, they think could be a good prospective investor. For somebody to start investing with you, they need to know you, like you, trust you with their money. If you're going out to strangers, they don't know you, don't like you, they certainly do not trust you with their money. That's a very difficult hurdle to overcome off the get go.

  Should people ask how much they would be interested in investing before or after getting a property under contract?

  
  

  The chicken in the egg question. My personal opinion is, let's get some soft commitments from prospective investors first. Let's get our investor ducks in a row and then let's go looking for properties. Because when you have a deal on the go, yes, that's a good motivator, but the challenge is, you're desperate. You need the cash for this deal, and that desperation, whether you want it or not is going to ooze out of every pore in your body. I far prefer to have these capital conversations first, and get people to even sign off on an expression of interest. That's very powerful. It's not a legally binding document, it just says something like, I am willing and able to invest the sum up to $100,000 with Steff, in one of her upcoming real estate deals anytime within the next six months. Sign off on that, put the date on it, it's still not a guarantee, but that person is much more likely to invest with you when you've a deal than if they just said, Yes, I'm interested.

  You talk about the lifetime value of an investor, can you elaborate on that? A lot of people don't think about that, and it's very important to know.

  
  

  Let's pretend we're looking at one of your self storage facilities. The purchase price is $1.5M, you need to raise $500,000 and let's say you raise it in five $100,000 chunks. If I come into that deal with $150,000, and that gets me a quarter of the investor pool, then the question would be, how much is that asset going to be worth to Steff over the length of time that you're going to hold? Let's use a 10 year time frame just to have a book end. Over 10 years, what do you think the total gross profit on that property is going to be, the increased value in the property, the cash flow over that time, the mortgage pay down, all of these things? Let's say $2 million and let's say they get half and you get half. That means that deal is worth $1 million to Steff over that 10 year timeframe.

  You divide that by the number of investors, five, so that's $200,000. That's what that investor is worth to you for that deal. Now, are they only going to invest in one deal with you? Let's say they invest in four deals, if the average profit that they're worth to you is $200,000 and now they invest in four deals. That's $800,000. Now, let's say they're happy with the investments they're doing with you, they will refer other investors to you, and that person would be worth something similar. That's the math that everybody should be thinking about.

  
  

  
  

  
  

  ---...]]>How should you raise capital for your first real estate deal? What is the lifetime value of your investors? Should you get investment commitments or a deal first? Dave Dubeau has been investing in real estate since 2003 and shares his insights.

  You can read this entire episode here: https://bit.ly/3jKirbM

  
  

  Let's say we're ready to do a first raise. I have a list I have relationships, people know what I have been doing. What is the first thing that I should do?

  
  

  The first step is, in my opinion, to create a target group of prospective investors that you're going to really focus in on. If you don't have a track record with raising capital yet, who is going to invest with you? A big mistake I see a lot of people making is they go out to the general public, anybody with a pulse and a checkbook, they think could be a good prospective investor. For somebody to start investing with you, they need to know you, like you, trust you with their money. If you're going out to strangers, they don't know you, don't like you, they certainly do not trust you with their money. That's a very difficult hurdle to overcome off the get go.

  Should people ask how much they would be interested in investing before or after getting a property under contract?

  
  

  The chicken in the egg question. My personal opinion is, let's get some soft commitments from prospective investors first. Let's get our investor ducks in a row and then let's go looking for properties. Because when you have a deal on the go, yes, that's a good motivator, but the challenge is, you're desperate. You need the cash for this deal, and that desperation, whether you want it or not is going to ooze out of every pore in your body. I far prefer to have these capital conversations first, and get people to even sign off on an expression of interest. That's very powerful. It's not a legally binding document, it just says something like, I am willing and able to invest the sum up to $100,000 with Steff, in one of her upcoming real estate deals anytime within the next six months. Sign off on that, put the date on it, it's still not a guarantee, but that person is much more likely to invest with you when you've a deal than if they just said, Yes, I'm interested.

  You talk about the lifetime value of an investor, can you elaborate on that? A lot of people don't think about that, and it's very important to know.

  
  

  Let's pretend we're looking at one of your self storage facilities. The purchase price is $1.5M, you need to raise $500,000 and let's say you raise it in five $100,000 chunks. If I come into that deal with $150,000, and that gets me a quarter of the investor pool, then the question would be, how much is that asset going to be worth to Steff over the length of time that you're going to hold? Let's use a 10 year time frame just to have a book end. Over 10 years, what do you think the total gross profit on that property is going to be, the increased value in the property, the cash flow over that time, the mortgage pay down, all of these things? Let's say $2 million and let's say they get half and you get half. That means that deal is worth $1 million to Steff over that 10 year timeframe.

  You divide that by the number of investors, five, so that's $200,000. That's what that investor is worth to you for that deal. Now, are they only going to invest in one deal with you? Let's say they invest in four deals, if the average profit that they're worth to you is $200,000 and now they invest in four deals. That's $800,000. Now, let's say they're happy with the investments they're doing with you, they will refer other investors to you, and that person would be worth something similar. That's the math that everybody should be thinking about.

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>b4f3bc5d-2ab3-47d7-bd6a-50a211919aefThu, 28 Oct 2021 04:08:00 -080018:26falsefull11051051What to Look for in Industrial Properties + Negotiation Strategies + Best and Worst Industrial InvestmentsWhat should you look for in an industrial property that you are looking at buying? What are some of the strategies to make deals a win win for the buyer as well as the seller? Darren Smith, Principal of Solid Growth Properties LLC will share his industrial investing insights.

  You can read this entire episode here: https://bit.ly/30jr5Hb

  
  

  What do you look for in a property that you decide to buy?

  
  

  I'm looking for a property that is in an area that I know that if it goes vacant, I can get it rented without a ton of trouble. And that be like what are my rates on the property? I need to know, how much is the lease on this property? Let's say I'm buying one that already has a tenant in there, and rent is $8/sf plus NNN. If the market rate in that area is $7/sf plus NNN, I'm a little bit nervous, because if that tenant doesn't renew in a couple years, if I paid full price for it, I'm paying above market rates because the market doesn't bear that. But if I'm getting $8/sf plus NNN, but market in that area can bare $10, I'm really comfortable with that.

  What strategies that you use to make some of these deals a win win?

  
  

  There are so many creative ways of putting deals together, you have to go into the conversation with an open mind with letting the seller know you're there to figure out the best solution for them. I'll tell you a funny thing that happened in the last couple of weeks. My assistant mailed out several months worth of marketing for me on the same day, and I have had more seller conversations in the past couple of weeks than the rest of the year combined. What that has given me is this, it has helped me with my skills of talking with sellers. I've been doing it for years, but you can always improve. Two, I find the things that I keep saying over and over to different sellers. One of the things I keep saying is, Hey, you know what, I may not be the best fit to buy your property, to be honest, I buy a lot of properties, but I definitely don't buy everyone. If you can just let me ask you a couple of questions about the property, to understand that situation and then about your situation, what you're trying to accomplish, what are you hoping to get out of the sale?

  What has been your best and worst industrial investment so far and why?

  
  

  I'll start with my worst one on a flip that I tried, I'm actually still involved with this, we're at a liquidation stage right now, I'm not sure how much I'm going to lose on this but it's probably going to be a six figure number. I didn't do any homework on this one. It was a flip that I bought sight unseen. It's across the country, I've never been to that town, I was doing as a favor for a friend because he got involved with it. I sent my one of my employees over and he said, Oh yes, we can do this, we can make it happen.

  As far as my best deal, the seller of this property had been trying to sell this property for a couple of years, he was getting close to the the end of the lease with the Army Corps of Engineers. It was a government tenant that was in the building, it was in an area that's a bit more remote. He'd been trying to sell this property and couldn't do it, it was listed with a broker. I sat down and talked to him. I said, what exactly is it that you need? What are you trying to accomplish? And he said, this is the number I absolutely have to have, and I have to have that because of these things. I said, Okay, great, we can do that. How much of that do you need in cash at closing, he told me the number, it was less than 70% of what the sale price was. We were able to work out a deal where I got a 70% bank loan on that property, it took about 15 different banks, but he held]]>What should you look for in an industrial property that you are looking at buying? What are some of the strategies to make deals a win win for the buyer as well as the seller? Darren Smith, Principal of Solid Growth Properties LLC will share his industrial investing insights.

  You can read this entire episode here: https://bit.ly/30jr5Hb

  
  

  What do you look for in a property that you decide to buy?

  
  

  I'm looking for a property that is in an area that I know that if it goes vacant, I can get it rented without a ton of trouble. And that be like what are my rates on the property? I need to know, how much is the lease on this property? Let's say I'm buying one that already has a tenant in there, and rent is $8/sf plus NNN. If the market rate in that area is $7/sf plus NNN, I'm a little bit nervous, because if that tenant doesn't renew in a couple years, if I paid full price for it, I'm paying above market rates because the market doesn't bear that. But if I'm getting $8/sf plus NNN, but market in that area can bare $10, I'm really comfortable with that.

  What strategies that you use to make some of these deals a win win?

  
  

  There are so many creative ways of putting deals together, you have to go into the conversation with an open mind with letting the seller know you're there to figure out the best solution for them. I'll tell you a funny thing that happened in the last couple of weeks. My assistant mailed out several months worth of marketing for me on the same day, and I have had more seller conversations in the past couple of weeks than the rest of the year combined. What that has given me is this, it has helped me with my skills of talking with sellers. I've been doing it for years, but you can always improve. Two, I find the things that I keep saying over and over to different sellers. One of the things I keep saying is, Hey, you know what, I may not be the best fit to buy your property, to be honest, I buy a lot of properties, but I definitely don't buy everyone. If you can just let me ask you a couple of questions about the property, to understand that situation and then about your situation, what you're trying to accomplish, what are you hoping to get out of the sale?

  What has been your best and worst industrial investment so far and why?

  
  

  I'll start with my worst one on a flip that I tried, I'm actually still involved with this, we're at a liquidation stage right now, I'm not sure how much I'm going to lose on this but it's probably going to be a six figure number. I didn't do any homework on this one. It was a flip that I bought sight unseen. It's across the country, I've never been to that town, I was doing as a favor for a friend because he got involved with it. I sent my one of my employees over and he said, Oh yes, we can do this, we can make it happen.

  As far as my best deal, the seller of this property had been trying to sell this property for a couple of years, he was getting close to the the end of the lease with the Army Corps of Engineers. It was a government tenant that was in the building, it was in an area that's a bit more remote. He'd been trying to sell this property and couldn't do it, it was listed with a broker. I sat down and talked to him. I said, what exactly is it that you need? What are you trying to accomplish? And he said, this is the number I absolutely have to have, and I have to have that because of these things. I said, Okay, great, we can do that. How much of that do you need in cash at closing, he told me the number, it was less than 70% of what the sale price was. We were able to work out a deal where I got a 70% bank loan on that property, it took about 15 different banks, but he held a 30% second on that property.

  
  

  Darren Smith

  
  

  darren@solidgrowthproperties.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>a05fd744-85cd-4174-9443-20041d53d6fbThu, 14 Oct 2021 05:06:00 -080022:28falsefull11041041How to Buy Industrial Properties? What is Happening in the Industrial Space?What is the state of industrial investing today? What are some techniques you can use to buy industrial properties? Darren Smith, Principal of Solid Growth Properties shares his tips.

  You can read this entire episode here: https://bit.ly/3FrseNd

  
  

  Why did you decide to focus on industrial? What is the state of that asset class today?

  
  

  Like most investors out there, I started in the single family and dabbled in multifamily and mobile home parks. I actually got hurt really badly in mobile home parks during the last crash. I definitely took some lumps, made some money, so I was able to kind of recover but I’ve tried a lot of different things. The usual transition from people who are doing single family houses, flipping, wholesaling, rentals is to go into multifamily, maybe they get a duplex or a fourplex. And then they scale up from there into larger and larger number of units. I have several good friends who own hundreds and in some cases 1000’s of units in multifamily and are doing it very successfully. What I learned from watching them, though, that it is ultra competitive, my friends are really sharp people that are working really hard. They got really creative and they put these deals together with syndications on cap rates that I would not be comfortable doing. And I didn’t know if I could compete in that market. They’re just better than me.

  You have a different and maybe unique approach to find industrial properties, please tell us a little bit about that.

  
  

  All I did was I took the things that other people taught me on the single family side, and I just applied them to industrial real estate. I take those things, and I step them up to a higher level of quality. If you’re marketing to houses, maybe you’ll have someone from South America doing your cold calling, maybe you’ll mail them a postcard or more generic type things. Whenever I’m dealing with the commercial side, having that level of sophistication as high as you possibly can when you’re interacting with these people is important, to show your credibility.

  Are you finding properties only through mailers today?

  
  

  That is the vast majority of properties that I come across and that I’m talking with, direct marketing. That said, I do love working with brokers, two of my favorite properties came from brokers.

  A lot of times brokers are very protective of speaking to the sellers directly, how do you go about that?

  
  

  I don't go around it, I really want to work with these brokers. Just as if I'm talking with a seller, I always want to try and find out what are they trying to accomplish? What is in the seller's best interest? How do I help them? I have that same conversation with the broker, Hey, Mr. broker, Mrs. broker, I bought a lot of properties, this is kind of how I work, this is what I like to do and what I like to accomplish, what I found has been really successful in the past so that I can get you your full commission as soon as possible is if we could all just sit down and see if there's something that we could work out. I don't know if I've ever had a situation where I talked to a broker and I said, Can you go ask the seller if they're open to terms? That's a DOA conversation. The deal is dead because the first thing people say is no, I want all cash, top dollar. Well, sometimes that property may sit on the market for six months, they may want all cash top dollar, but what if maybe I could come to them and say, What if I paid you top dollar, but you held a 20% second against the property after the bank. So you're going to get 70% from the bank, you're going to get 10% of my cash, and you're going to hold 20% as a second. That...]]>What is the state of industrial investing today? What are some techniques you can use to buy industrial properties? Darren Smith, Principal of Solid Growth Properties shares his tips.

  You can read this entire episode here: https://bit.ly/3FrseNd

  
  

  Why did you decide to focus on industrial? What is the state of that asset class today?

  
  

  Like most investors out there, I started in the single family and dabbled in multifamily and mobile home parks. I actually got hurt really badly in mobile home parks during the last crash. I definitely took some lumps, made some money, so I was able to kind of recover but I’ve tried a lot of different things. The usual transition from people who are doing single family houses, flipping, wholesaling, rentals is to go into multifamily, maybe they get a duplex or a fourplex. And then they scale up from there into larger and larger number of units. I have several good friends who own hundreds and in some cases 1000’s of units in multifamily and are doing it very successfully. What I learned from watching them, though, that it is ultra competitive, my friends are really sharp people that are working really hard. They got really creative and they put these deals together with syndications on cap rates that I would not be comfortable doing. And I didn’t know if I could compete in that market. They’re just better than me.

  You have a different and maybe unique approach to find industrial properties, please tell us a little bit about that.

  
  

  All I did was I took the things that other people taught me on the single family side, and I just applied them to industrial real estate. I take those things, and I step them up to a higher level of quality. If you’re marketing to houses, maybe you’ll have someone from South America doing your cold calling, maybe you’ll mail them a postcard or more generic type things. Whenever I’m dealing with the commercial side, having that level of sophistication as high as you possibly can when you’re interacting with these people is important, to show your credibility.

  Are you finding properties only through mailers today?

  
  

  That is the vast majority of properties that I come across and that I’m talking with, direct marketing. That said, I do love working with brokers, two of my favorite properties came from brokers.

  A lot of times brokers are very protective of speaking to the sellers directly, how do you go about that?

  
  

  I don't go around it, I really want to work with these brokers. Just as if I'm talking with a seller, I always want to try and find out what are they trying to accomplish? What is in the seller's best interest? How do I help them? I have that same conversation with the broker, Hey, Mr. broker, Mrs. broker, I bought a lot of properties, this is kind of how I work, this is what I like to do and what I like to accomplish, what I found has been really successful in the past so that I can get you your full commission as soon as possible is if we could all just sit down and see if there's something that we could work out. I don't know if I've ever had a situation where I talked to a broker and I said, Can you go ask the seller if they're open to terms? That's a DOA conversation. The deal is dead because the first thing people say is no, I want all cash, top dollar. Well, sometimes that property may sit on the market for six months, they may want all cash top dollar, but what if maybe I could come to them and say, What if I paid you top dollar, but you held a 20% second against the property after the bank. So you're going to get 70% from the bank, you're going to get 10% of my cash, and you're going to hold 20% as a second. That gets you the price you're looking for.

  Darren Smith

  
  

  darren@solidgrowthproperties.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>bec1a19d-4f05-4ff2-8803-114002ee046bThu, 07 Oct 2021 05:52:00 -080016:46falsefull11031031Tax Benefits of Investing in Real EstateWhat are the tax benefits of investing in real estate? Ted Lanzaro, CPA and real estate investor shares his knowledge around tax planning while investing in real estate.

  You can read this entire interview here: https://bit.ly/2Wg8nyy

  
  

  What are some of the benefits of investing in real estate from a tax perspective?

  
  

  The biggest tax benefit of investing in real estate is that you can make net income from your investment, you get your rental income, you pay your insurance, mortgage interest, real estate tax, your other expenses, and you have money leftover. You can then apply what's called depreciation against the property. Depreciation is the rational allocation of the purchase price of the property that you can then deduct on an annual basis. Typically, residential apartment buildings depreciate over 27.5 years. For example, you pay $2,750,000 for an apartment building, you'll get $100,000 of depreciation expensive a year, which means that I could have $100,000 of net cash flow from that building offset the depreciation and have zero taxable income. But I still have $100,000 in my bank account that I get to keep that I don't have to pay taxes on.

  The other benefit is that you can leverage your investment with debt. If I buy stocks, for example, in the stock market, and I want to buy $20,000 worth of stocks, for $20,000 I buy $20,000 worth of stocks. If I have $20,000 to buy real estate I can buy a $100,000 property, you get a mortgage for the other $80,000. That gives me the ability to get a return on investment that is typically higher than what I could earn in the market, combine that with the fact that I'm not paying any taxes on it, and it's an even higher return on investment.

  
  

  When real estate professionals are able to deduct everything and pay no tax, there are some drawbacks. Can you elaborate on what some of those drawbacks can be?

  
  

  The primary one is recapture when they sell the property. That guy for example, when he goes to sell that property, he has $400,000 of recapture tax. It's a deferral, it's not an avoidance. With cost segregation you make money on the time value of money, because you're going to pay that money back when you sell the property eventually, unless you do a 1031 exchange. In this scenario, I've already warned him that somewhere down the road, when you sell the property, there's going to be a big capital gain, because your cost basis is a lot lower.

  And that's something that I'm talking with people all the time about, because everybody has been using bonus depreciation and taking huge offsets against their earned income, the ones that qualify as real estate professionals, and I keep telling them, when you sell that property, you will have to pay those taxes. Also, that bonus depreciation is actually set to phase out. Starting in 2023, it goes down from 100% bonus depreciation to 80%, then 60% in 2024, 40% in 2025, 20% in 2026 and in 2027 it's gone. The strategy now if you sell properties is I'll just go buy another, if I can't do a 1031 exchange, I'll go buy another property and just get new cost segregation and wipe out the gain on the property. That strategy has two more years of useful life, and then it's going to become a lot less valuable, and then it's going to be gone.

  
  

  What about the fact that they might not be able to get a personal loan?

  
  

  That's a really good point. I was just telling someone this exact same scenario, which is good tax strategy and good asset protection don't always correspond with good finance. Sometimes you can take so many tax deductions that you can't get a loan. Typically, banks will add back depreciation, it's not a cash flow issue, it's an allocation of the purchase price.

  Ted Lanzaro

  
  

  (203)...]]>What are the tax benefits of investing in real estate? Ted Lanzaro, CPA and real estate investor shares his knowledge around tax planning while investing in real estate.

  You can read this entire interview here: https://bit.ly/2Wg8nyy

  
  

  What are some of the benefits of investing in real estate from a tax perspective?

  
  

  The biggest tax benefit of investing in real estate is that you can make net income from your investment, you get your rental income, you pay your insurance, mortgage interest, real estate tax, your other expenses, and you have money leftover. You can then apply what's called depreciation against the property. Depreciation is the rational allocation of the purchase price of the property that you can then deduct on an annual basis. Typically, residential apartment buildings depreciate over 27.5 years. For example, you pay $2,750,000 for an apartment building, you'll get $100,000 of depreciation expensive a year, which means that I could have $100,000 of net cash flow from that building offset the depreciation and have zero taxable income. But I still have $100,000 in my bank account that I get to keep that I don't have to pay taxes on.

  The other benefit is that you can leverage your investment with debt. If I buy stocks, for example, in the stock market, and I want to buy $20,000 worth of stocks, for $20,000 I buy $20,000 worth of stocks. If I have $20,000 to buy real estate I can buy a $100,000 property, you get a mortgage for the other $80,000. That gives me the ability to get a return on investment that is typically higher than what I could earn in the market, combine that with the fact that I'm not paying any taxes on it, and it's an even higher return on investment.

  
  

  When real estate professionals are able to deduct everything and pay no tax, there are some drawbacks. Can you elaborate on what some of those drawbacks can be?

  
  

  The primary one is recapture when they sell the property. That guy for example, when he goes to sell that property, he has $400,000 of recapture tax. It's a deferral, it's not an avoidance. With cost segregation you make money on the time value of money, because you're going to pay that money back when you sell the property eventually, unless you do a 1031 exchange. In this scenario, I've already warned him that somewhere down the road, when you sell the property, there's going to be a big capital gain, because your cost basis is a lot lower.

  And that's something that I'm talking with people all the time about, because everybody has been using bonus depreciation and taking huge offsets against their earned income, the ones that qualify as real estate professionals, and I keep telling them, when you sell that property, you will have to pay those taxes. Also, that bonus depreciation is actually set to phase out. Starting in 2023, it goes down from 100% bonus depreciation to 80%, then 60% in 2024, 40% in 2025, 20% in 2026 and in 2027 it's gone. The strategy now if you sell properties is I'll just go buy another, if I can't do a 1031 exchange, I'll go buy another property and just get new cost segregation and wipe out the gain on the property. That strategy has two more years of useful life, and then it's going to become a lot less valuable, and then it's going to be gone.

  
  

  What about the fact that they might not be able to get a personal loan?

  
  

  That's a really good point. I was just telling someone this exact same scenario, which is good tax strategy and good asset protection don't always correspond with good finance. Sometimes you can take so many tax deductions that you can't get a loan. Typically, banks will add back depreciation, it's not a cash flow issue, it's an allocation of the purchase price.

  Ted Lanzaro

  
  

  (203) 922-1742

  
  

  ted@lanzarocpa.com

  
  

  www.lanzarocpa.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>dedb1ade-c0d7-406a-83dc-92a310ef2f93Tue, 28 Sep 2021 05:16:00 -080022:37falsefull11021021Short Term Rentals: Should You Invest in This Asset Class?Are short term rentals a good asset class to invest in? Tim Hubbard will share all the knowledge he has acquired over the last 10 years investing in real estate, and managing thousands of bookings online since then.

  You can read this entire interview here: https://bit.ly/3kcZ8bC

  
  

  What are some of the benefits of investing in short term rentals?

  
  

  There are quite a lot and there are some that I just realized recently, like eviction moratoriums, for example. That was never a thing with short term rentals because if someone is staying in our properties less than 30 days, normally they don't have any tenant rights. So we had quite a lot of flexibility there. Along these inflation lines, all the money that we printed to help the economy with everything that's been going on, we've had a lot of inflation, and that's one of the reasons that rents are going up. With short term rentals, we can change our rents every day. We don't get locked into a year lease and under-rent our properties, we can use tools, and there are tools to do all this. We can set up a tool that'll change our price everyday.

  The biggest reason or advantage that I've got into short term rentals is literally the fact that some of my properties making like five, eight times the amount of rent I was making with a traditional long term rental, like a single family home. Back in the day, if I was thinking that I want X amount of dollars a month to become financially free through properties, I could literally divide that number by five times. And that's the amount of short term rentals I need to accomplish the same amount of money. That was the main reason, the biggest advantage, coming down in income.

  
  

  How do you choose a market within this asset class?

  
  

  I choose the market as I have always chosen markets, based on the fundamentals, a place where people are moving to and not moving away from, where the employment is diverse, there's not just one industry, and it's landlord friendly. And that's a big thing, because aside from all the traditional fundamentals we look for, for a good real estate market, we have to take it a little further if we're looking at finding properties to do short term rentals. And the big one is regulations. But before that, I'm looking for places that has good fundamentals, where people are moving to, and there's population growth. The Sunbelt areas in the US have been growing a lot. So I think those are good areas. But then the landlord friendly one is a big one. And I found that there's a pretty good correlation between landlord friendly cities or states and short term rental regulations. If the city's very landlord friendly, then it's probably a little more likely that they're going to be more friendly towards short term rentals as well.

  What are some of the scariest things about short term rentals?

  
  

  The scariest thing that someone's going to trash my house and have a party. And that's possible, that could happen. But there are lots of ways to prevent that. There are lots of tools now like noise sensors, that can notify you automatically if the noise goes above a certain level.

  Another thing that might be scary is, when you first start, if you're taking a long term rental, for example, and you're going to turn into a short term one, you wonder, How good is this actually going to do? How do I forecast occupancy and things like that? What if I put all this furniture in there, and it's vacant all year? It can be a big investment to put all the furniture in there.

  
  

  Tim Hubbard

  
  

  www.restmethods.com

  
  

  Are short term rentals a good asset class to invest in? Tim Hubbard will share all the knowledge he has acquired over the last 10 years investing in real estate, and managing thousands of bookings online since then.

  You can read this entire interview here: https://bit.ly/3kcZ8bC

  
  

  What are some of the benefits of investing in short term rentals?

  
  

  There are quite a lot and there are some that I just realized recently, like eviction moratoriums, for example. That was never a thing with short term rentals because if someone is staying in our properties less than 30 days, normally they don't have any tenant rights. So we had quite a lot of flexibility there. Along these inflation lines, all the money that we printed to help the economy with everything that's been going on, we've had a lot of inflation, and that's one of the reasons that rents are going up. With short term rentals, we can change our rents every day. We don't get locked into a year lease and under-rent our properties, we can use tools, and there are tools to do all this. We can set up a tool that'll change our price everyday.

  The biggest reason or advantage that I've got into short term rentals is literally the fact that some of my properties making like five, eight times the amount of rent I was making with a traditional long term rental, like a single family home. Back in the day, if I was thinking that I want X amount of dollars a month to become financially free through properties, I could literally divide that number by five times. And that's the amount of short term rentals I need to accomplish the same amount of money. That was the main reason, the biggest advantage, coming down in income.

  
  

  How do you choose a market within this asset class?

  
  

  I choose the market as I have always chosen markets, based on the fundamentals, a place where people are moving to and not moving away from, where the employment is diverse, there's not just one industry, and it's landlord friendly. And that's a big thing, because aside from all the traditional fundamentals we look for, for a good real estate market, we have to take it a little further if we're looking at finding properties to do short term rentals. And the big one is regulations. But before that, I'm looking for places that has good fundamentals, where people are moving to, and there's population growth. The Sunbelt areas in the US have been growing a lot. So I think those are good areas. But then the landlord friendly one is a big one. And I found that there's a pretty good correlation between landlord friendly cities or states and short term rental regulations. If the city's very landlord friendly, then it's probably a little more likely that they're going to be more friendly towards short term rentals as well.

  What are some of the scariest things about short term rentals?

  
  

  The scariest thing that someone's going to trash my house and have a party. And that's possible, that could happen. But there are lots of ways to prevent that. There are lots of tools now like noise sensors, that can notify you automatically if the noise goes above a certain level.

  Another thing that might be scary is, when you first start, if you're taking a long term rental, for example, and you're going to turn into a short term one, you wonder, How good is this actually going to do? How do I forecast occupancy and things like that? What if I put all this furniture in there, and it's vacant all year? It can be a big investment to put all the furniture in there.

  
  

  Tim Hubbard

  
  

  www.restmethods.com

  
  

  Short Term Rental Riches Podcast

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>17676607-f598-4fe9-9c2b-c88b673f840dThu, 16 Sep 2021 04:26:00 -080019:36falsefull11011011How to Manage Properties Remotely: All of My Secrets!Sometimes you come across a property that has good potential, that you can add a lot of value, but it’s not a couple of hours away, it’s couple of flights away. I believe that today, with technology, we all can manage and operate properties remotely and I’ll be sharing with you what I have done to make things easier.

  You can read this entire episode here: https://bit.ly/3n6mOQL

  
  

  Install Nest cameras on all properties, both outside and inside the building, I can see what is happening at the properties at anytime, I can even talk to people (I’ve never done that before LOL) through the cameras. It notifies me if there’s any movement and you can change the settings to notify you as little or as much as you’d like.

  
  

  Install an alarm that notifies me when each employee arms and disarms any property. I get a notification on my phone and email. This helps my virtual assistant to match employee timesheets if we ever think there’s a discrepancy. I can also arm and disarm all of the properties from my phone.

  
  

  For the car washes I also installed a coin counter, prior to purchasing it we had no idea how much money was coming in, now I can see exactly how many quarters are coming in each day. That way when our employee collects the money, we can check against that week’s report and the bank deposits.

  
  

  Get a Grasshopper account, grasshopper.com is phone over the internet, you can download their app on your phone, your employees can download it on their phones and desktops as well and take the calls. It helps keep all communication in one place, from texts to call forwarding, all while showing only your business number to them.

  
  

  Phone Apps / Final Tips

  
  

  1. Everything that can be on autopay is on autopay, all the electricity, gas, internet. I know that some people don’t like that because some vendors may increase prices without notifying you, but when we do our accounting and bookkeeping we check all of that, so autopay makes it very worth it because it saves us a lot of time.

  Make sure to have all of these documents on your phone as well, if they’re on Google Drive, download the Google Drive App on your phone, if they’re on Dropbox, make sure to have that app too. It will make your life a lot easier,

  
  

  2. Always keep track of your money, even if you delegate all of that out, I have heard many horror stories from multi millionaires that started delegating that part out and let go of triple checking their numbers, and their people started to take advantage and they had money stolen by actual employees.

  
  

  3. Keep your employees accountable, have them send you a list of things that got done that day, have daily or weekly meetings with them, find out what’s working, what’s not working, where’s the bottleneck, what do they need help with.

  
  

  4. Download your business credit card apps on your phone, that way you will get notified every time something is charged to your business account, not that you’ll be checking every single transaction, but you will be asking your employee “What is this charge about” once in a while so that they know that you are checking.

  
  

  5. Download Venmo and Cash App so you can easily pay vendors and issue refunds if needed, instead of mailing checks.

  
  

  6. My favorite places to find talent are upwork.com, fiverr.com and thumbtack.com. Thumbtack is mostly for vendors like lawn mowers, cleaners, etc, and just like the first two, you can find the...]]>Sometimes you come across a property that has good potential, that you can add a lot of value, but it’s not a couple of hours away, it’s couple of flights away. I believe that today, with technology, we all can manage and operate properties remotely and I’ll be sharing with you what I have done to make things easier.

  You can read this entire episode here: https://bit.ly/3n6mOQL

  
  

  Install Nest cameras on all properties, both outside and inside the building, I can see what is happening at the properties at anytime, I can even talk to people (I’ve never done that before LOL) through the cameras. It notifies me if there’s any movement and you can change the settings to notify you as little or as much as you’d like.

  
  

  Install an alarm that notifies me when each employee arms and disarms any property. I get a notification on my phone and email. This helps my virtual assistant to match employee timesheets if we ever think there’s a discrepancy. I can also arm and disarm all of the properties from my phone.

  
  

  For the car washes I also installed a coin counter, prior to purchasing it we had no idea how much money was coming in, now I can see exactly how many quarters are coming in each day. That way when our employee collects the money, we can check against that week’s report and the bank deposits.

  
  

  Get a Grasshopper account, grasshopper.com is phone over the internet, you can download their app on your phone, your employees can download it on their phones and desktops as well and take the calls. It helps keep all communication in one place, from texts to call forwarding, all while showing only your business number to them.

  
  

  Phone Apps / Final Tips

  
  

  1. Everything that can be on autopay is on autopay, all the electricity, gas, internet. I know that some people don’t like that because some vendors may increase prices without notifying you, but when we do our accounting and bookkeeping we check all of that, so autopay makes it very worth it because it saves us a lot of time.

  Make sure to have all of these documents on your phone as well, if they’re on Google Drive, download the Google Drive App on your phone, if they’re on Dropbox, make sure to have that app too. It will make your life a lot easier,

  
  

  2. Always keep track of your money, even if you delegate all of that out, I have heard many horror stories from multi millionaires that started delegating that part out and let go of triple checking their numbers, and their people started to take advantage and they had money stolen by actual employees.

  
  

  3. Keep your employees accountable, have them send you a list of things that got done that day, have daily or weekly meetings with them, find out what’s working, what’s not working, where’s the bottleneck, what do they need help with.

  
  

  4. Download your business credit card apps on your phone, that way you will get notified every time something is charged to your business account, not that you’ll be checking every single transaction, but you will be asking your employee “What is this charge about” once in a while so that they know that you are checking.

  
  

  5. Download Venmo and Cash App so you can easily pay vendors and issue refunds if needed, instead of mailing checks.

  
  

  6. My favorite places to find talent are upwork.com, fiverr.com and thumbtack.com. Thumbtack is mostly for vendors like lawn mowers, cleaners, etc, and just like the first two, you can find the highest rated vendors and work with them.

  
  

  How do you manage your properties remotely? Let me know here: www,montecarlorei.com/contact-us

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>3c32b84e-21ba-4304-a349-fbfdde156e5aTue, 07 Sep 2021 05:04:00 -080021:51falsefull11001001What are the Benefits of NNN Leases and How to Find National TenantsWhat are NNN leases, what are the benefits, and what's the best way to find national tenants? Adam Carswell answers all of those questions, he has been working on NNN leases for over five years and shares his insights.

  You can read this entire interview here: https://bit.ly/2XGgCV5

  What are Net leases?

  
  

  Net lease or NNN lease to put it simply, there's no toilets, no taxes, and no termites. I find it really interesting how this particular asset class gets overlooked in the commercial real estate investment space. I think it's for a few reasons, one, there really isn't just a lot of information out there on it. And then a lot of these assets are probably a little bit lower on the cap rate side of things, if you're looking for major value add projects, where you come in and make a ton on renovating the asset, then it might not be your cup of tea, but from a cash flow and stability perspective, I don't know if there are many other commercial real estate assets that exist that are as dependable as NNN leases. Some examples are Walgreens, CVS, McDonald's, Starbucks, Advanced Autoparts, Chick-fil-A, and most national brands, typically called national tenants. So you have the amazing credit backing with a lot of these tenants and wondering whether or not someone's going to pay you on a monthly basis normally is not a concern. This is another reason why, especially if you're looking for stability and cash flow, you want to check in the mail every month from Wendy's, that's it.

  How do people typically approach a national tenant, especially if they're just starting out and they don't have experience with national tenants?

  
  

  The biggest hack in meeting the tenants and the reps that you want to work with is the networking piece. So how do you go about networking? From my observation in working with Michael, who's been in the space for close to 35 years now, the relationships are very key. If there's any sector in the world of business that tends to move slow as far as adopting technology and new ways of thinking, real estate is a slow moving beast. With that being said, you might not like it, but if you want to become sophisticated in this space very quickly, you have to start cultivating relationships with the old guys. You want the people who understand retail and have 30 plus years of experience. And a lot of them didn't have Rich Dad Poor Dad to introduce them to the real estate space, and they know all the people.

  One place that Michael brought me to was Vegas a few years ago to ICSC, the International Council of Shopping Centers annual conference, if you are thinking about getting into the retail sector, I highly recommend getting into that network, that's where all the cool kids hang out in the retail space. Going to that conference in Vegas really opened my eyes because it aggregated the entire US and international retail space into one massive networking event. You can meet reps from BP, McDonald's, all the fast food places, Walmart, and brokers from everywhere, you always want to have relationships with brokers even though people can say brokers are annoying, you still want to be friends with them.

  
  

  One company that I worked for once upon a time was Sherwin Williams. Those properties are also NNN lease deals and I've relationships with the Sherwin reps now because of that. It comes down to relationships. But if you can zone in on the actual brand reps and become friends with them, I think that could probably benefit you a little bit more than just becoming friends with brokers.

  
  

  Adam Carswell

  
  

  www.carswell.io

  
  

  Nothing But Net Podcast: What are NNN leases, what are the benefits, and what's the best way to find national tenants? Adam Carswell answers all of those questions, he has been working on NNN leases for over five years and shares his insights.

  You can read this entire interview here: https://bit.ly/2XGgCV5

  What are Net leases?

  
  

  Net lease or NNN lease to put it simply, there's no toilets, no taxes, and no termites. I find it really interesting how this particular asset class gets overlooked in the commercial real estate investment space. I think it's for a few reasons, one, there really isn't just a lot of information out there on it. And then a lot of these assets are probably a little bit lower on the cap rate side of things, if you're looking for major value add projects, where you come in and make a ton on renovating the asset, then it might not be your cup of tea, but from a cash flow and stability perspective, I don't know if there are many other commercial real estate assets that exist that are as dependable as NNN leases. Some examples are Walgreens, CVS, McDonald's, Starbucks, Advanced Autoparts, Chick-fil-A, and most national brands, typically called national tenants. So you have the amazing credit backing with a lot of these tenants and wondering whether or not someone's going to pay you on a monthly basis normally is not a concern. This is another reason why, especially if you're looking for stability and cash flow, you want to check in the mail every month from Wendy's, that's it.

  How do people typically approach a national tenant, especially if they're just starting out and they don't have experience with national tenants?

  
  

  The biggest hack in meeting the tenants and the reps that you want to work with is the networking piece. So how do you go about networking? From my observation in working with Michael, who's been in the space for close to 35 years now, the relationships are very key. If there's any sector in the world of business that tends to move slow as far as adopting technology and new ways of thinking, real estate is a slow moving beast. With that being said, you might not like it, but if you want to become sophisticated in this space very quickly, you have to start cultivating relationships with the old guys. You want the people who understand retail and have 30 plus years of experience. And a lot of them didn't have Rich Dad Poor Dad to introduce them to the real estate space, and they know all the people.

  One place that Michael brought me to was Vegas a few years ago to ICSC, the International Council of Shopping Centers annual conference, if you are thinking about getting into the retail sector, I highly recommend getting into that network, that's where all the cool kids hang out in the retail space. Going to that conference in Vegas really opened my eyes because it aggregated the entire US and international retail space into one massive networking event. You can meet reps from BP, McDonald's, all the fast food places, Walmart, and brokers from everywhere, you always want to have relationships with brokers even though people can say brokers are annoying, you still want to be friends with them.

  
  

  One company that I worked for once upon a time was Sherwin Williams. Those properties are also NNN lease deals and I've relationships with the Sherwin reps now because of that. It comes down to relationships. But if you can zone in on the actual brand reps and become friends with them, I think that could probably benefit you a little bit more than just becoming friends with brokers.

  
  

  Adam Carswell

  
  

  www.carswell.io

  
  

  Nothing But Net Podcast: https://apple.co/3kaSl17

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>da9a95ff-b436-45a4-aeb3-ff9e63d5974bThu, 19 Aug 2021 05:33:00 -080017:41falsefull199991How a 21-Year-Old Purchased 30 Units with Zero Money DownIt is 100% possible to purchase commercial real estate with no money down, Cody Davis, a 21-Year-Old shares how he already purchased 30 units with no money of his own, with seller financing, following up, and asking for it.

  Read the entire interview here: https://bit.ly/3iEbGIr

  
  

  How much money did you use to buy your properties?

  
  

  I had no money of my own in the deals and I had to come up with money. The zero down isn't quite true, because it takes money but doesn't have to be your money. So I had to come up with $125,000 for each twelveplex, that's 250k. And $90,000 for the sixplex, they were all seller financed. So they were lower down payments, but it was no money on my own.

  How did you convince the seller to carry the first loan?

  
  

  As far as convincing the seller, this is the first time I’ve ever worked with him and ever spoken to him, so I had to learn about his story. I met up with him and I asked him how he got started. He started out with a sixplex, it was his very first property. He bought it for $90,000 around 2004. But he bought it with 10% down, that was $9,000, he traded nine grand for a sixplex, he lived in one of the units, the owner financed for him. He wanted to buy the land next to it, but he didn’t have the $2,000 to buy it. This was all of his money. And today, he has a handful of properties. He is doing brand new developments, single family communities, apartment buildings.

  I just went through and asked him how he did it, what he started with, what his thoughts were on how to get started. He said, you need to find someone who will seller finance you a property. I said, Okay, will you seller finance me this property? He said, Sure.

  
  

  How did you find the $125,000 second loan?

  
  

  I asked the owner of the firm, I got this opportunity, can you help me out? We looked at the numbers and he said, Yes, it makes sense, let’s do it. He helped fund it. It’s about asking for help, it doesn’t have to be a one person show. You don’t have to be self made because you’re going to grow based off of your interactions with others.

  What were some of the things that people said no to? And how were you able to overcome that?

  
  

  I had a lot of help starting out. But the objections that I got, and it’s good to know the objections, such as you haven’t done this before, you’re young, you’ve never seen this much money in your life. Those are some of the objections. I am a Grant Cardone guy, I love to study from him. That’s just a complaint. They’re complaining that they didn’t start this young, in my mind. And so I had to flip it, I said, that’s the reason we should do this, because if you were in this position, you would want the same opportunity. Now, this is how I’m going to protect your money. Once the property stabilized, it’s worth $1M. To back that up, I got an offer and I’m going to be selling this twelveplex. As long as things move forward, we’re going to close. The financials are all good with the bank and I helped them sell a couple properties, so they’re 1031 exchanging it, but I got the value up to where I projected it would be. If they had to foreclose on me, I just presented as The property has $560,000 in debt with the seller, if you foreclose on me, you’re getting a million dollar property with a $560k debt for $125,000 in one year, that’s a good ROI, so let’s do this, just like the sixplex I purchased.

  Sign up for our newsletter here: www.montecarlorei.com

  
  

  Cody Davis

  
  

  Instagram: It is 100% possible to purchase commercial real estate with no money down, Cody Davis, a 21-Year-Old shares how he already purchased 30 units with no money of his own, with seller financing, following up, and asking for it.

  Read the entire interview here: https://bit.ly/3iEbGIr

  
  

  How much money did you use to buy your properties?

  
  

  I had no money of my own in the deals and I had to come up with money. The zero down isn't quite true, because it takes money but doesn't have to be your money. So I had to come up with $125,000 for each twelveplex, that's 250k. And $90,000 for the sixplex, they were all seller financed. So they were lower down payments, but it was no money on my own.

  How did you convince the seller to carry the first loan?

  
  

  As far as convincing the seller, this is the first time I’ve ever worked with him and ever spoken to him, so I had to learn about his story. I met up with him and I asked him how he got started. He started out with a sixplex, it was his very first property. He bought it for $90,000 around 2004. But he bought it with 10% down, that was $9,000, he traded nine grand for a sixplex, he lived in one of the units, the owner financed for him. He wanted to buy the land next to it, but he didn’t have the $2,000 to buy it. This was all of his money. And today, he has a handful of properties. He is doing brand new developments, single family communities, apartment buildings.

  I just went through and asked him how he did it, what he started with, what his thoughts were on how to get started. He said, you need to find someone who will seller finance you a property. I said, Okay, will you seller finance me this property? He said, Sure.

  
  

  How did you find the $125,000 second loan?

  
  

  I asked the owner of the firm, I got this opportunity, can you help me out? We looked at the numbers and he said, Yes, it makes sense, let’s do it. He helped fund it. It’s about asking for help, it doesn’t have to be a one person show. You don’t have to be self made because you’re going to grow based off of your interactions with others.

  What were some of the things that people said no to? And how were you able to overcome that?

  
  

  I had a lot of help starting out. But the objections that I got, and it’s good to know the objections, such as you haven’t done this before, you’re young, you’ve never seen this much money in your life. Those are some of the objections. I am a Grant Cardone guy, I love to study from him. That’s just a complaint. They’re complaining that they didn’t start this young, in my mind. And so I had to flip it, I said, that’s the reason we should do this, because if you were in this position, you would want the same opportunity. Now, this is how I’m going to protect your money. Once the property stabilized, it’s worth $1M. To back that up, I got an offer and I’m going to be selling this twelveplex. As long as things move forward, we’re going to close. The financials are all good with the bank and I helped them sell a couple properties, so they’re 1031 exchanging it, but I got the value up to where I projected it would be. If they had to foreclose on me, I just presented as The property has $560,000 in debt with the seller, if you foreclose on me, you’re getting a million dollar property with a $560k debt for $125,000 in one year, that’s a good ROI, so let’s do this, just like the sixplex I purchased.

  Sign up for our newsletter here: www.montecarlorei.com

  
  

  Cody Davis

  
  

  Instagram: codyd2020

  
  

  Facebook: www.facebook.com/michaelmccann.davis

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>b2d59893-587c-44a2-895f-031289b791bdThu, 12 Aug 2021 04:48:00 -080024:13falsefull1989815 Syndication Questions From a Podcast ListenerWhat are some good numbers to syndicate? Do you need experience? How would you go about it? We are answering questions from one of our podcast listeners about syndications and Billy Keels, a long distance real estate syndicator and investor, who syndicates US properties from Barcelona, Spain answers her questions.

  You can read this entire interview here: https://bit.ly/3ynC4vo

  
  

  When it comes to the number of partners in a limited partnership, how many is too many?

  
  

  There are two questions that you want to ask yourself. Number one, who is it that you want to serve through the syndication? And number two, what type of systems do you currently have in place, because that's going to have a direct impact on the number of partners that you have. You want to be able to have the right people that you're serving. Sometimes you may want to serve people that are only accredited investors. And that is going to make sure that you're serving someone with a specific type of syndication tool. If you want to be able to serve other people that are more sophisticated investors, then you will want to use a different type of tool, you have specific names. And I know you've talked a lot about 506(c) for accredited investors or a 506(b) for sophisticated and accredited investors.

  I am in my mid 20's, and experienced only on the brokerage side of commercial real estate. However, I am taking a commercial real estate financial modeling course to thoroughly understand the numbers, what kinds of qualities, experiences, achievements would make you feel confident enough to invest your money with someone like me, and is direct investment experience an absolute must?

  
  

  It sounds like you already have lots of experience, even in your mid 20's! I think this is such an individual question. You want to ask yourself what is the right experience for the individual for the person? At the end of the day, each one of us are very different. And we need to make sure that you as a syndicator and your team, you need to be able to understand exactly what each potential investor is looking for. As far as having direct investment experience, I'm more interested in her and her team. I want to understand if the team that she is representing has the experience on that asset class. It's not just about the individual, it's more about the team and their overall experience, to make sure that if I'm investing time, energy, capital, that the team will give me as the investor the highest probability of getting the return on whatever it is that I'm looking for. And that could be an ROI, it could be tax benefits, or whatever the case may be.

  When you consider your most successful deals, what was different?

  
  

  As a syndicator, it was being able to spend the appropriate time with each of the investors getting a very clear understanding of what each of the motivators were for the individuals that were part of the syndication. And being able to help them get a very clear picture of not just what the project was, meaning buying a certain asset. But what were the benefits and the impact, that that particular investment of their time, energy and capital was going to return not only to them, but also to the communities in which they were investing. And the impact that it was going to make on the syndication's team.

  And some basic things like making sure that there's a return on their trust and energy, which means that the transfer, the ACH, or the checks were arriving to them on time, so that they advocate to others about the positive experience, and invest again.

  
  

  Join our Goals accountability calls here:...]]>What are some good numbers to syndicate? Do you need experience? How would you go about it? We are answering questions from one of our podcast listeners about syndications and Billy Keels, a long distance real estate syndicator and investor, who syndicates US properties from Barcelona, Spain answers her questions.

  You can read this entire interview here: https://bit.ly/3ynC4vo

  
  

  When it comes to the number of partners in a limited partnership, how many is too many?

  
  

  There are two questions that you want to ask yourself. Number one, who is it that you want to serve through the syndication? And number two, what type of systems do you currently have in place, because that's going to have a direct impact on the number of partners that you have. You want to be able to have the right people that you're serving. Sometimes you may want to serve people that are only accredited investors. And that is going to make sure that you're serving someone with a specific type of syndication tool. If you want to be able to serve other people that are more sophisticated investors, then you will want to use a different type of tool, you have specific names. And I know you've talked a lot about 506(c) for accredited investors or a 506(b) for sophisticated and accredited investors.

  I am in my mid 20's, and experienced only on the brokerage side of commercial real estate. However, I am taking a commercial real estate financial modeling course to thoroughly understand the numbers, what kinds of qualities, experiences, achievements would make you feel confident enough to invest your money with someone like me, and is direct investment experience an absolute must?

  
  

  It sounds like you already have lots of experience, even in your mid 20's! I think this is such an individual question. You want to ask yourself what is the right experience for the individual for the person? At the end of the day, each one of us are very different. And we need to make sure that you as a syndicator and your team, you need to be able to understand exactly what each potential investor is looking for. As far as having direct investment experience, I'm more interested in her and her team. I want to understand if the team that she is representing has the experience on that asset class. It's not just about the individual, it's more about the team and their overall experience, to make sure that if I'm investing time, energy, capital, that the team will give me as the investor the highest probability of getting the return on whatever it is that I'm looking for. And that could be an ROI, it could be tax benefits, or whatever the case may be.

  When you consider your most successful deals, what was different?

  
  

  As a syndicator, it was being able to spend the appropriate time with each of the investors getting a very clear understanding of what each of the motivators were for the individuals that were part of the syndication. And being able to help them get a very clear picture of not just what the project was, meaning buying a certain asset. But what were the benefits and the impact, that that particular investment of their time, energy and capital was going to return not only to them, but also to the communities in which they were investing. And the impact that it was going to make on the syndication's team.

  And some basic things like making sure that there's a return on their trust and energy, which means that the transfer, the ACH, or the checks were arriving to them on time, so that they advocate to others about the positive experience, and invest again.

  
  

  Join our Goals accountability calls here: https://www.paypal.com/paypalme/regoals

  
  

  
  

  
  

  Billy Keels

  
  

  www.billykeels.com

  
  

  www.linkedin.com/in/billykeels

  
  

  Podcast: https://apple.co/3A47Fmu

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>15a3b14b-819d-46d8-832d-efc072fe3e93Tue, 03 Aug 2021 05:05:00 -080024:22falsefull197971Pro-Forma + Most Profitable Asset Classes + Best Markets to Be InWhat should you include in your pro-forma when doing a real estate development? Renat Yusufov, Managing Partner at Bullpen shares his detailed pro-forma, how should you think about it, and why. He also shares his top asset classes and markets to be in.

  Watch this deep dive here: https://bit.ly/3y9SHuk

  Watch Part 1 here: https://bit.ly/3xWrZ8p

  
  

  Read this entire interview here: https://bit.ly/3wRbFVi

  We have a non pro-forma here for stabilization. This is where it's dealer's choice, being an office product, being multi tenanted, chances are you're going to go through Argus software, you plug in your assumptions, you plug in your rent roll or your expected rent roll, and it basically does the pro-forma for you. Some people have an aversion to it, because it doesn't allow for more flexibility, however, it does allow for more detail, it's the double edged sword. My personal opinion, the more complex your office product is, meaning the more tenants you have, the more nuance you have about leasing, and staggering timelines, the more likely you prefer to go with Argus. It's a little more painful in terms of editing on the fly. But the flip side of it is that it's definitely more accurate than anything you would probably be able to build an Excel. This is a summary of where you expect to land. And a lot of this is actually pulling from Argus, Argus lets you pull in Excel tabs basically as outputs so you can integrate it back into your Excel on both the assumptions, the leasing summary, and the base rent.

  
  

  And you can change all of these numbers based on various specific locations of each property?

  
  

  Exactly. And that goes back to your building, and the south side of a certain city and state, you'll talk to the brokers who have experience there, and they'll tell you what the rents will be, they'll tell you how long it'll be on the market before you'll find a tenant, what the terms are, and the big terms being free rent, TILC, so that's tenant improvement leasing commissions, and the time it'll take to find a tenant, as well as the credit. This is really a summary. You'll have different audiences for this model, it's better to have it here than for them to have to run around the tab looking for the specific month, when you stabilize, and what the rent looks like then. I show it as a total dollars per net square foot, and dollars per gross square foot, because this is a construction project. You're building grows, regardless. But you want to show how that rent looks both net and gross.

  The goal here is, if I want to exit as an investor or as a lender, what is my risk of waiting until before stabilization? At what point during lease up do I hit the yield that I need to be? Or at what point am I operationally profitable? And the last part, the exit, the biggest toggle here is obviously cap rate, you're stabilizing a property and you're selling it for a certain yield. I put at least 6%. In a post Covid environment that we're living in, office is an interesting subject. A lot of opportunity, and a lot of hurt in some cases is happening in the office space. We're seeing a cultural revolution, frankly, on terms of office.

  
  

  The project I picked here is an open layout, high ceiling, shared amenities. I think this is where office is going, and we are just showing what kind of concept you'd probably be wanting to build today. I was reading the news today and I think 19% of New York City offices are on the market. It's a double edged sword.

  
  

  Bullpen shares his detailed pro-forma, how should you think about it, and why. He also shares his top asset classes and markets to be in.

  Watch this deep dive here: https://bit.ly/3y9SHuk

  Watch Part 1 here: https://bit.ly/3xWrZ8p

  
  

  Read this entire interview here: https://bit.ly/3wRbFVi

  We have a non pro-forma here for stabilization. This is where it's dealer's choice, being an office product, being multi tenanted, chances are you're going to go through Argus software, you plug in your assumptions, you plug in your rent roll or your expected rent roll, and it basically does the pro-forma for you. Some people have an aversion to it, because it doesn't allow for more flexibility, however, it does allow for more detail, it's the double edged sword. My personal opinion, the more complex your office product is, meaning the more tenants you have, the more nuance you have about leasing, and staggering timelines, the more likely you prefer to go with Argus. It's a little more painful in terms of editing on the fly. But the flip side of it is that it's definitely more accurate than anything you would probably be able to build an Excel. This is a summary of where you expect to land. And a lot of this is actually pulling from Argus, Argus lets you pull in Excel tabs basically as outputs so you can integrate it back into your Excel on both the assumptions, the leasing summary, and the base rent.

  
  

  And you can change all of these numbers based on various specific locations of each property?

  
  

  Exactly. And that goes back to your building, and the south side of a certain city and state, you'll talk to the brokers who have experience there, and they'll tell you what the rents will be, they'll tell you how long it'll be on the market before you'll find a tenant, what the terms are, and the big terms being free rent, TILC, so that's tenant improvement leasing commissions, and the time it'll take to find a tenant, as well as the credit. This is really a summary. You'll have different audiences for this model, it's better to have it here than for them to have to run around the tab looking for the specific month, when you stabilize, and what the rent looks like then. I show it as a total dollars per net square foot, and dollars per gross square foot, because this is a construction project. You're building grows, regardless. But you want to show how that rent looks both net and gross.

  The goal here is, if I want to exit as an investor or as a lender, what is my risk of waiting until before stabilization? At what point during lease up do I hit the yield that I need to be? Or at what point am I operationally profitable? And the last part, the exit, the biggest toggle here is obviously cap rate, you're stabilizing a property and you're selling it for a certain yield. I put at least 6%. In a post Covid environment that we're living in, office is an interesting subject. A lot of opportunity, and a lot of hurt in some cases is happening in the office space. We're seeing a cultural revolution, frankly, on terms of office.

  
  

  The project I picked here is an open layout, high ceiling, shared amenities. I think this is where office is going, and we are just showing what kind of concept you'd probably be wanting to build today. I was reading the news today and I think 19% of New York City offices are on the market. It's a double edged sword.

  
  

  Renat Yusufov

  
  

  Bullpen

  
  

  renat@bullpenre.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>651c0da5-c66a-4519-8ff3-bc1747669113Thu, 22 Jul 2021 06:14:00 -080022:21falsefull196961Everything You Should Put in Your Pro Forma CalculationsWhat should you include in your pro-forma when calculating all of the details of a real estate deal? We deep dive into a pro forma for an office development. Renat Yusufov, Managing Partner at Bullpen reviews every item, how should you think about it, and why.

  Watch the youtube deep dive here: https://bit.ly/3k6Wp3Y

  
  

  Watch Part 2 here: https://bit.ly/3y9SHuk

  Read this interview here: www.bit.ly/2VCl8TB

  
  

  Why don't we dive into an example of what you guys are doing for this particular side of the business.

  
  

  I created a template so to speak for an office development of what it would look like in today's day and age, I come from the philosophy that no two deals are ever going to be the same. Naturally, you will have certain changes. But the core of the model should more or less look alike, it's not just a financial model, it's really a weapon for when you go into battle for a project. It should be flexible, it should be something that you can present relatively simply to either your lender or any kind of investors or limited partners, etc. It should be able to adapt to whoever your audience is, the structure of a model, in my opinion, regardless of what asset class, regardless of what the business plan is, I like to always start with the dashboard. The dashboard is where most of the toggles will be, anything that's an input. And the reason for this is as you're going through the project, regardless of where the onset underwriting starts, along the way as you're talking to GC's, as you're talking to other contractors, architects, lenders, investors, business plans will be adjusted, they will be tweaked, they might be entirely revised, so it's easier for any kind of user, whether it's the partner, the principal, all the way down to the analyst, and company, or even if it's a third party looking at this, to be able to see it all in one place, the Summary tab.

  Does it typically end up being more expensive and a longer timeframe, or the opposite, when you say that none of them end up being the exact same numbers?

  
  

  In this environment, it's a mixed bag. I've been on the advisory side where people would send me a model of what they want to get done. And I'd go to the market for both a loan and the equity to figure it out with them. I've been on the private equity side, on the buy side, where somebody sends me a model, or I build it initially, and then I say, This is what we want to get delivered, this is the returns we're looking for. I would say, generally speaking, and this isn't true of everyone, people's underwriting tend to be on the aggressive side. Whether you're on the buy or the sell side, whatever model you receive, you're probably reining it in, in the sense of you think the rents may be too aggressive, or the rent growth is too aggressive, or the expenses need to be buffered up a little bit.

  One place where a lot of things might be hidden or misinterpreted, is any kind of capital expenses. People underestimate what it costs to repair or repaint the hallway, or common space in an office building, if they're buying it already built. The best way to go about this, whether you're just in the beginning of building your model, or you're trying to flesh out your business plan and get it to market, I would say is contact as many professional as possible. This is obviously a networking business, talk to the brokers about the rents what they can reasonably achieve, as you're going through your process of selecting a broker, talk to several GC's about your costs, what they can reasonably get you as far as a budget, and where you could land in terms of construction...]]>What should you include in your pro-forma when calculating all of the details of a real estate deal? We deep dive into a pro forma for an office development. Renat Yusufov, Managing Partner at Bullpen reviews every item, how should you think about it, and why.

  Watch the youtube deep dive here: https://bit.ly/3k6Wp3Y

  
  

  Watch Part 2 here: https://bit.ly/3y9SHuk

  Read this interview here: www.bit.ly/2VCl8TB

  
  

  Why don't we dive into an example of what you guys are doing for this particular side of the business.

  
  

  I created a template so to speak for an office development of what it would look like in today's day and age, I come from the philosophy that no two deals are ever going to be the same. Naturally, you will have certain changes. But the core of the model should more or less look alike, it's not just a financial model, it's really a weapon for when you go into battle for a project. It should be flexible, it should be something that you can present relatively simply to either your lender or any kind of investors or limited partners, etc. It should be able to adapt to whoever your audience is, the structure of a model, in my opinion, regardless of what asset class, regardless of what the business plan is, I like to always start with the dashboard. The dashboard is where most of the toggles will be, anything that's an input. And the reason for this is as you're going through the project, regardless of where the onset underwriting starts, along the way as you're talking to GC's, as you're talking to other contractors, architects, lenders, investors, business plans will be adjusted, they will be tweaked, they might be entirely revised, so it's easier for any kind of user, whether it's the partner, the principal, all the way down to the analyst, and company, or even if it's a third party looking at this, to be able to see it all in one place, the Summary tab.

  Does it typically end up being more expensive and a longer timeframe, or the opposite, when you say that none of them end up being the exact same numbers?

  
  

  In this environment, it's a mixed bag. I've been on the advisory side where people would send me a model of what they want to get done. And I'd go to the market for both a loan and the equity to figure it out with them. I've been on the private equity side, on the buy side, where somebody sends me a model, or I build it initially, and then I say, This is what we want to get delivered, this is the returns we're looking for. I would say, generally speaking, and this isn't true of everyone, people's underwriting tend to be on the aggressive side. Whether you're on the buy or the sell side, whatever model you receive, you're probably reining it in, in the sense of you think the rents may be too aggressive, or the rent growth is too aggressive, or the expenses need to be buffered up a little bit.

  One place where a lot of things might be hidden or misinterpreted, is any kind of capital expenses. People underestimate what it costs to repair or repaint the hallway, or common space in an office building, if they're buying it already built. The best way to go about this, whether you're just in the beginning of building your model, or you're trying to flesh out your business plan and get it to market, I would say is contact as many professional as possible. This is obviously a networking business, talk to the brokers about the rents what they can reasonably achieve, as you're going through your process of selecting a broker, talk to several GC's about your costs, what they can reasonably get you as far as a budget, and where you could land in terms of construction costs.

  
  

  Renat Yusufov: www.linkedin.com/in/renatyusufov

  
  

  www.bullpenre.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>5aa35d2c-5df6-4d11-a26b-6ea575c31552Tue, 13 Jul 2021 05:43:00 -080020:20falsefull19595110 New Tips For Real Estate Investing & a Lot More InfoWhat did I learn at the Real Estate Guys Summit on Sand event this year? A whole lot, and I'm sharing all of it with you today.

  You should read this entire episode here: https://bit.ly/3qEBczv

  
  

  Real estate strategies:

  
  

  Donate land to the city to build stadium, and you will still own all the land around the stadium.

  Buy two properties that are next to each other so you can combine operations and expenses and increase NOI, therefore you increase the value of your properties right off the gate.

  
  

  One thing they always say is for you to purchase 5-10% of your net worth in gold, just in case something really bad happens. If you are like me thinking that that gold isn’t producing any money, so I’ll just purchase stocks or real estate instead, the good news is that there are firms that will loan against gold and silver (at Prime + 2 points). What you need to keep in mind is that if gold or silver goes down in value, the firm will ask you to come up with the difference. When that happens, another strategy around that is that you can just buy more gold at that time because gold will go up later either way.

  
  

  
  

  
  

  Turn your liabilities into assets!

  
  

  All the fun expenses have to make money, your thought process should always be “what am I going to get in order to pay for X”.

  
  

  For example, Ken McElroy wanted to buy a Ferrari, he has something like $1B worth of multi-family investments, he has all the money he needs, but he still said, what can I purchase that will pay for the Ferrari. He ended up purchasing a piece of land that had a billboard in it, the piece of land cost $300,000, the billboard was making $40,000/year. He created an easement on the billboard section, which is the right to use that piece of land for however long you decide (since you're the land owner) and sold the land for $300,000! He now has $40,000 income free and clear yearly that is taking care of his Ferrari.

  Kim Kiyosaki wanted to buy an airplane. She ended up buying her airplane, the entire purchase can be deducted, plus all of the expenses of the airplane. Not only that, they are chartering the airplane when they’re not using it! So the plane is either going to be free, or they will make money off it. You can do the same thing with a boat!

  
  

  
  

  
  

  Have no money for a down payment? There are plenty of options:

  
  

  You can get money from most major credit cards, with zero fees for 10 months.

  
  

  Ask your bank lines of credits, ask to increase the lines of credits every 6 months.

  
  

  Pre-sell a product to create income (in the real estate example, for the down payment).

  
  

  Don’t ask “When should I get started” ask “How can I get started”.

  
  

  Even very successful people still get nervous when buying properties, Ken McElroy said himself that he still gets nervous when closing on a deal!

  
  

  
  

  
  

  Important things to do next:

  
  

  Create a Trust before end of year - make sure you get your CPA and an attorney together to put your Trust in place.

  Read the minutes of the Fed, they put it out 3 weeks after each meeting.

  
  

  DISC profile, have every employee take the test: https://www.123test.com/disc-personality-test/

  
  

  Sign up for Simon...]]>What did I learn at the Real Estate Guys Summit on Sand event this year? A whole lot, and I'm sharing all of it with you today.

  You should read this entire episode here: https://bit.ly/3qEBczv

  
  

  Real estate strategies:

  
  

  Donate land to the city to build stadium, and you will still own all the land around the stadium.

  Buy two properties that are next to each other so you can combine operations and expenses and increase NOI, therefore you increase the value of your properties right off the gate.

  
  

  One thing they always say is for you to purchase 5-10% of your net worth in gold, just in case something really bad happens. If you are like me thinking that that gold isn’t producing any money, so I’ll just purchase stocks or real estate instead, the good news is that there are firms that will loan against gold and silver (at Prime + 2 points). What you need to keep in mind is that if gold or silver goes down in value, the firm will ask you to come up with the difference. When that happens, another strategy around that is that you can just buy more gold at that time because gold will go up later either way.

  
  

  
  

  
  

  Turn your liabilities into assets!

  
  

  All the fun expenses have to make money, your thought process should always be “what am I going to get in order to pay for X”.

  
  

  For example, Ken McElroy wanted to buy a Ferrari, he has something like $1B worth of multi-family investments, he has all the money he needs, but he still said, what can I purchase that will pay for the Ferrari. He ended up purchasing a piece of land that had a billboard in it, the piece of land cost $300,000, the billboard was making $40,000/year. He created an easement on the billboard section, which is the right to use that piece of land for however long you decide (since you're the land owner) and sold the land for $300,000! He now has $40,000 income free and clear yearly that is taking care of his Ferrari.

  Kim Kiyosaki wanted to buy an airplane. She ended up buying her airplane, the entire purchase can be deducted, plus all of the expenses of the airplane. Not only that, they are chartering the airplane when they’re not using it! So the plane is either going to be free, or they will make money off it. You can do the same thing with a boat!

  
  

  
  

  
  

  Have no money for a down payment? There are plenty of options:

  
  

  You can get money from most major credit cards, with zero fees for 10 months.

  
  

  Ask your bank lines of credits, ask to increase the lines of credits every 6 months.

  
  

  Pre-sell a product to create income (in the real estate example, for the down payment).

  
  

  Don’t ask “When should I get started” ask “How can I get started”.

  
  

  Even very successful people still get nervous when buying properties, Ken McElroy said himself that he still gets nervous when closing on a deal!

  
  

  
  

  
  

  Important things to do next:

  
  

  Create a Trust before end of year - make sure you get your CPA and an attorney together to put your Trust in place.

  Read the minutes of the Fed, they put it out 3 weeks after each meeting.

  
  

  DISC profile, have every employee take the test: https://www.123test.com/disc-personality-test/

  
  

  Sign up for Simon Black's newsletter.

  
  

  Learn about the repo market: George Gammon.

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>8ec8e7c2-6e48-48d9-9059-9672610800ceThu, 01 Jul 2021 07:20:00 -080024:54falsefull194941What did I learn at the https://investorsummitonsand.com/ (Real Estate Guys Summit on Sand) event this year? A whole lot, and I'm sharing all of it with you today. You should read this entire episode here: https://bit.ly/3qEBczv (https://bit.ly/3qEBczv) Real estate strategies: Donate land to the city to build stadium, and you will still own all the land around the stadium. Buy two properties that are next to each other so you can combine operations and expenses and increase NOI, therefore you increase the value of your properties right off the gate. One thing they always say is for you to purchase 5-10% of your net worth in gold, just in case something really bad happens. If you are like me thinking that that gold isn’t producing any money, so I’ll just purchase stocks or real estate instead, the good news is that there are firms that will loan against gold and silver (at Prime + 2 points). What you need to keep in mind is that if gold or silver goes down in value, the firm will ask you to come up with the difference. When that happens, another strategy around that is that you can just buy more gold at that time because gold will go up later either way. Turn your liabilities into assets! All the fun expenses have to make money, your thought process should always be “what am I going to get in order to pay for X”. For example, https://kenmcelroy.com/ (Ken McElroy) wanted to buy a Ferrari, he has something like $1B worth of multi-family investments, he has all the money he needs, but he still said, what can I purchase that will pay for the Ferrari. He ended up purchasing a piece of land that had a billboard in it, the piece of land cost $300,000, the billboard was making $40,000/year. He created an easement on the billboard section, which is the right to use that piece of land for however long you decide (since you're the land owner) and sold the land for $300,000! He now has $40,000 income free and clear yearly that is taking care of his Ferrari. Kim Kiyosaki wanted to buy an airplane. She ended up buying her airplane, the entire purchase can be deducted, plus all of the expenses of the airplane. Not only that, they are chartering the airplane when they’re not using it! So the plane is either going to be free, or they will make money off it. You can do the same thing with a boat! Have no money for a down payment? There are plenty of options: You can get money from most major credit cards, with zero fees for 10 months. Ask your bank lines of credits, ask to increase the lines of credits every 6 months. Pre-sell a product to create income (in the real estate example, for the down payment). Don’t ask “When should I get started” ask “How can I get started”. Even very successful people still get nervous when buying properties, Ken McElroy said himself that he still gets nervous when closing on a deal! Important things to do next: Create a Trust before end of year - make sure you get your CPA and an attorney together to put your Trust in place. Read the https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm (minutes) of the Fed, they put it out 3 weeks after each meeting. DISC profile, have every employee take the test: https://www.123test.com/disc-personality-test/ (https://www.123test.com/disc-personality-test/) Sign up for Simon Black's https://www.sovereignman.com/ (newsletter). Learn about the repo market: https://www.youtube.com/channel/UCpvyOqtEc86X8w8_Se0t4-w (George Gammon). --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support (https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support)Where is Retail Going (According to Gen Z)Gen Z is anyone born between 1997 and 2015, they are now getting into the workforce and were the generation that was born with a phone in their hands. How are they shopping? How are they interacting? We have a discussion with four Gen Z'ers that live in different parts of the country to find out.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3qktjiy

  Where are you guys shopping today?

  
  

  D: I use Amazon quite often, whether it’s anything electronics, shirts, clothing, whatever that may be. I don’t shop in too many other places because it’s convenient.

  J: We grew up with the ease of online. So if we need something, it can be at our doorstep on the same day, one day shipping. Personally for me physical shopping and malls and retail stores, etc. has turned into a day trip, or I go and hang out with my friends. And we still shop and buy. And if we need things, maybe we’ll go out. But a lot of the time if I’m by myself and I just need a cheap pair of flip flops I’ll go on Amazon and get them the next day.

  
  

  C: I usually go to Target if I’m going to buy anything. The biggest thing for me is I that have a very unconventional sleep cycle. I’m up really late, and usually up really early as well. I’m working through the day, pretty long hours, and I need to be able to go somewhere physical, that is open later. And I’ve noticed a lot of smaller shops are restricted hours, they close at seven or eight. That doesn’t work for me because I’m working past seven or eight. And Target is open until 10, 11, or 12pm depending on the area and that’s convenient for me, I don’t like to order online.

  
  

  A: When I was younger, it was just a way to pass time, you went and you walked around Walmart and you would play with the toys and all kinds of stuff. So when it comes to actually shopping now, I just see brick and mortar stores as just ways to pass the time. If I really decided that I need something, or that I want something, I’ll go online or it because I know if I go and look and touch it feel at the store I’ll be, Oh, I don’t need it today. I’ll put it back and go and find it either online when I have a coupon, or when they’re running a sale or something like that. I can wait and I don’t need it today.

  
  

  
  

  
  

  If you owned a piece of retail today, what would you put in there?

  
  

  C: I would section off a corner of it for virtual office. As far as other retail, I would put something just for me because I have a weird living scheduling as far as when I’m up, and out and about and shopping. I would try and resonate with that because I know there are other entrepreneurs and folks like that, that live a less conventional daily schedule. I would put something in there that’s open 24/7.

  J: on popular online marketers like Lululemon or Gymshark.

  
  

  D: Warehouse for Amazon items where I'd be a seller.

  
  

  A: People think of these certain brands like Gucci and Prada as making it. I would want to come up with a way to get as much of these different brands more accessible to these people because I’ve also learned through different ways, it’s very niche to be able to go in there.

  
  

  Cody Davis: instagram.com/codyd2020

  
  

  Jake Pinkerton: instagram.com/jakerton.22

  
  

  Daniel...]]>Gen Z is anyone born between 1997 and 2015, they are now getting into the workforce and were the generation that was born with a phone in their hands. How are they shopping? How are they interacting? We have a discussion with four Gen Z'ers that live in different parts of the country to find out.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3qktjiy

  Where are you guys shopping today?

  
  

  D: I use Amazon quite often, whether it’s anything electronics, shirts, clothing, whatever that may be. I don’t shop in too many other places because it’s convenient.

  J: We grew up with the ease of online. So if we need something, it can be at our doorstep on the same day, one day shipping. Personally for me physical shopping and malls and retail stores, etc. has turned into a day trip, or I go and hang out with my friends. And we still shop and buy. And if we need things, maybe we’ll go out. But a lot of the time if I’m by myself and I just need a cheap pair of flip flops I’ll go on Amazon and get them the next day.

  
  

  C: I usually go to Target if I’m going to buy anything. The biggest thing for me is I that have a very unconventional sleep cycle. I’m up really late, and usually up really early as well. I’m working through the day, pretty long hours, and I need to be able to go somewhere physical, that is open later. And I’ve noticed a lot of smaller shops are restricted hours, they close at seven or eight. That doesn’t work for me because I’m working past seven or eight. And Target is open until 10, 11, or 12pm depending on the area and that’s convenient for me, I don’t like to order online.

  
  

  A: When I was younger, it was just a way to pass time, you went and you walked around Walmart and you would play with the toys and all kinds of stuff. So when it comes to actually shopping now, I just see brick and mortar stores as just ways to pass the time. If I really decided that I need something, or that I want something, I’ll go online or it because I know if I go and look and touch it feel at the store I’ll be, Oh, I don’t need it today. I’ll put it back and go and find it either online when I have a coupon, or when they’re running a sale or something like that. I can wait and I don’t need it today.

  
  

  
  

  
  

  If you owned a piece of retail today, what would you put in there?

  
  

  C: I would section off a corner of it for virtual office. As far as other retail, I would put something just for me because I have a weird living scheduling as far as when I’m up, and out and about and shopping. I would try and resonate with that because I know there are other entrepreneurs and folks like that, that live a less conventional daily schedule. I would put something in there that’s open 24/7.

  J: on popular online marketers like Lululemon or Gymshark.

  
  

  D: Warehouse for Amazon items where I'd be a seller.

  
  

  A: People think of these certain brands like Gucci and Prada as making it. I would want to come up with a way to get as much of these different brands more accessible to these people because I’ve also learned through different ways, it’s very niche to be able to go in there.

  
  

  Cody Davis: instagram.com/codyd2020

  
  

  Jake Pinkerton: instagram.com/jakerton.22

  
  

  Daniel Finnie: instagram.com/danielfinnie_music

  
  

  Adrienne Wilson: instagram.com/_adriennelouise_

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>bad0e8e6-c9de-4538-a81f-4db47533b252Thu, 24 Jun 2021 04:53:00 -080024:30falsefull19393136-48% Cash on Cash? What Asset Class is That?!What is happening with the car wash and self storage investments? This is an update on the portfolio of properties that we purchased about seven months ago.

  
  

  
  

  You can read this entire episode here: https://bit.ly/34J3Llm

  
  

  
  

  
  

  The first 2 months:

  
  

  Within nine days of closing, one of the roofs caved in one of the car washes because of snow. Thank God for insurance, Nationwide in this case, was phenomenal, it’s during those hard times that you don't want to be dealing with an insurance company that does not want to pay out. They released the funds within two or three weeks of the incident. About 20 days later, my main employee quit without any notice. And at that time, I thought this was potentially a blessing in disguise because we thought we found someone much better within a day of the main person quitting. And it turned out that this new person was actually not a great solution for that particular job. This person was just not doing the job. So within a couple of months, I was able to fire that person. A lesson reminder is that you should hire slow and fire fast.

  3 months – now (total of 7 months)

  
  

  I want to give it one full year before deciding if this asset class is an interesting asset class to invest in or not. It has a lot of moving parts. We are in the process of automating as much as possible, delegating as much as possible, and creating processes as much as possible, and want to see what the results will look like once all of that is in place. And then we’ll make a decision on, is carwash a good asset class to invest in, or not. In terms of time, I today spend at the very least one to two hours a day working on the car washes alone, the tasks vary greatly, it can be anything from ordering a test of the mud, all the way through what chemicals do we need to purchase, all the way to issuing refunds to customers. The way to be very successful is for you to have a system in place so that anyone can come in and do the job. The goal is not only if something happens with me, but also if something happens with any of the employees because everyone has to be “replaceable”. The business has to run without us in case something happens to anybody.

  
  

  
  

  
  

  The returns

  
  

  We are at the moment averaging about 36 to 48 percent cash on cash return. This is counting our mortgage expense that also is building equity for us, which is how we’re supposed to calculate cash on cash. We expect this to only grow with time because of all of these implementations that we’re going to be doing. These properties do not have any outside investors, we don’t need to do any distributions.

  Should we continue or not?

  
  

  Our time is so limited in this world that is this an asset class that you want to be working on? Do you want to be dealing with employees that might not be as professional as someone you might work with in the corporate world? Do you want to be dealing with zillions of moving parts, we literally have, seven months in, about 40 different SKU’s for things that we need to buy for the carwash. And that’s not counting anything that is not carwash specific. When we compare this with the self storage, that is probably one to two hours a week worth of work.

  
  

  There were several other things that I dealt with during these last seven months:

  
  

  1. The roof still has not been fixed because the construction company took many months to get the things approved by the city

  
  

  2. We had theft

  
  

  3. We went through the freeze where some pipes froze

  
  

  4. We had employees putting more hours than they were working

  
  

  5. We had one very bad vendor...]]>What is happening with the car wash and self storage investments? This is an update on the portfolio of properties that we purchased about seven months ago.

  
  

  
  

  You can read this entire episode here: https://bit.ly/34J3Llm

  
  

  
  

  
  

  The first 2 months:

  
  

  Within nine days of closing, one of the roofs caved in one of the car washes because of snow. Thank God for insurance, Nationwide in this case, was phenomenal, it’s during those hard times that you don't want to be dealing with an insurance company that does not want to pay out. They released the funds within two or three weeks of the incident. About 20 days later, my main employee quit without any notice. And at that time, I thought this was potentially a blessing in disguise because we thought we found someone much better within a day of the main person quitting. And it turned out that this new person was actually not a great solution for that particular job. This person was just not doing the job. So within a couple of months, I was able to fire that person. A lesson reminder is that you should hire slow and fire fast.

  3 months – now (total of 7 months)

  
  

  I want to give it one full year before deciding if this asset class is an interesting asset class to invest in or not. It has a lot of moving parts. We are in the process of automating as much as possible, delegating as much as possible, and creating processes as much as possible, and want to see what the results will look like once all of that is in place. And then we’ll make a decision on, is carwash a good asset class to invest in, or not. In terms of time, I today spend at the very least one to two hours a day working on the car washes alone, the tasks vary greatly, it can be anything from ordering a test of the mud, all the way through what chemicals do we need to purchase, all the way to issuing refunds to customers. The way to be very successful is for you to have a system in place so that anyone can come in and do the job. The goal is not only if something happens with me, but also if something happens with any of the employees because everyone has to be “replaceable”. The business has to run without us in case something happens to anybody.

  
  

  
  

  
  

  The returns

  
  

  We are at the moment averaging about 36 to 48 percent cash on cash return. This is counting our mortgage expense that also is building equity for us, which is how we’re supposed to calculate cash on cash. We expect this to only grow with time because of all of these implementations that we’re going to be doing. These properties do not have any outside investors, we don’t need to do any distributions.

  Should we continue or not?

  
  

  Our time is so limited in this world that is this an asset class that you want to be working on? Do you want to be dealing with employees that might not be as professional as someone you might work with in the corporate world? Do you want to be dealing with zillions of moving parts, we literally have, seven months in, about 40 different SKU’s for things that we need to buy for the carwash. And that’s not counting anything that is not carwash specific. When we compare this with the self storage, that is probably one to two hours a week worth of work.

  
  

  There were several other things that I dealt with during these last seven months:

  
  

  1. The roof still has not been fixed because the construction company took many months to get the things approved by the city

  
  

  2. We had theft

  
  

  3. We went through the freeze where some pipes froze

  
  

  4. We had employees putting more hours than they were working

  
  

  5. We had one very bad vendor experience

  
  

  6. At one point, I was actually fearing for my life

  
  

  7. We had money missing from the people that were collecting the cash

  
  

  
  

  
  

  What do you want to hear in the next episodes? Let me know here: admin@montecarlorei.com

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>0e99af8e-40b0-4ad9-9581-93d13fa31509Thu, 03 Jun 2021 06:15:00 -080018:54falsefull192921What Are Some Best Practices for Raising Funds?What are some of the best practices for raising funds? How to go about finding a partner? AdaPia d’Errico, principal and VP of strategy at Alpha Investing, shares her experience with us.

  You can read this entire interview here: https://bit.ly/3fiThiB

  
  

  What are some of your best practices for raising funds?

  
  

  The best practice is going to be to be a genuine person, I often use the word authentic. Even though that can be a bit of a strange word, what I really mean by authenticity is being genuine, being a real person. And a lot of that comes with humility. And for me personally, that means being myself, there's always this expectation that somebody should have all the answers and be an expert and be able to make guarantees, which of course we know, in any kind of investing is just not something you want to do. You can't make guarantees.

  And I think a real best practice is to take the time to get to know somebody and to be a real person when you're knowing them, not like an old 1980s style of sales. Simply, this is who I am. This is this is my background. This is what we do in a really specific scenario. For example, this was our worst deal. This is what went wrong. This is what we learned from it. Because we get things wrong. I'm not going to sit here and tell you that every project that we've invested in has knocked it out of the park, including senior living, we've had a couple that aren't performing to pro forma. Why did that happen? Those are important things for investors to understand and to know. Especially having conversations with people, there's a lot to be said for automating the process, for letting people almost be without needing to talk to you. And you can do a lot of that, but there is something to be said about taking some time to have phone calls with people.

  
  

  We always require an initial phone call to understand who would like to work with us, because we are referral based. We're very highly selective even with our investors. And that's important to us, because having the right kind of investors allows us to bring better investments. Building those relationships with those investors helps because they need to know that they can ask me a question. Because if they can't ask me a question, then it means that I can't help them earn trust, if they can't ask a question, they might not invest, and they might miss out on an opportunity. So those are really important things, just running people all the time through a chat bot, or Zendesk, while it is potentially more efficient, it's not as effective as just picking up the phone or spending some time giving bespoke answers, especially in real estate, especially on the equity side, right? It's there's complicated things to talk about. And there's, there's a lot of moving parts to be able to explain to somebody.

  
  

  What's important is really being holistic in your approach to an investor, being a real, genuine person and being willing to speak about the things that went wrong and not trying to put on a facade of expert, or perfection, or we're the best, nobody's going to believe you.

  
  

  How did you find a partner?

  
  

  When my whole life broke down, I had to get super clear on who am I, and what do I want. I wanted great business partners and I manifested them. I have been in the most amazing partnership with them for the past three years.

  AdaPia d’Errico

  
  

  www.alphai.com

  
  

  What are some of the best practices for raising funds? How to go about finding a partner? AdaPia d’Errico, principal and VP of strategy at Alpha Investing, shares her experience with us.

  You can read this entire interview here: https://bit.ly/3fiThiB

  
  

  What are some of your best practices for raising funds?

  
  

  The best practice is going to be to be a genuine person, I often use the word authentic. Even though that can be a bit of a strange word, what I really mean by authenticity is being genuine, being a real person. And a lot of that comes with humility. And for me personally, that means being myself, there's always this expectation that somebody should have all the answers and be an expert and be able to make guarantees, which of course we know, in any kind of investing is just not something you want to do. You can't make guarantees.

  And I think a real best practice is to take the time to get to know somebody and to be a real person when you're knowing them, not like an old 1980s style of sales. Simply, this is who I am. This is this is my background. This is what we do in a really specific scenario. For example, this was our worst deal. This is what went wrong. This is what we learned from it. Because we get things wrong. I'm not going to sit here and tell you that every project that we've invested in has knocked it out of the park, including senior living, we've had a couple that aren't performing to pro forma. Why did that happen? Those are important things for investors to understand and to know. Especially having conversations with people, there's a lot to be said for automating the process, for letting people almost be without needing to talk to you. And you can do a lot of that, but there is something to be said about taking some time to have phone calls with people.

  
  

  We always require an initial phone call to understand who would like to work with us, because we are referral based. We're very highly selective even with our investors. And that's important to us, because having the right kind of investors allows us to bring better investments. Building those relationships with those investors helps because they need to know that they can ask me a question. Because if they can't ask me a question, then it means that I can't help them earn trust, if they can't ask a question, they might not invest, and they might miss out on an opportunity. So those are really important things, just running people all the time through a chat bot, or Zendesk, while it is potentially more efficient, it's not as effective as just picking up the phone or spending some time giving bespoke answers, especially in real estate, especially on the equity side, right? It's there's complicated things to talk about. And there's, there's a lot of moving parts to be able to explain to somebody.

  
  

  What's important is really being holistic in your approach to an investor, being a real, genuine person and being willing to speak about the things that went wrong and not trying to put on a facade of expert, or perfection, or we're the best, nobody's going to believe you.

  
  

  How did you find a partner?

  
  

  When my whole life broke down, I had to get super clear on who am I, and what do I want. I wanted great business partners and I manifested them. I have been in the most amazing partnership with them for the past three years.

  AdaPia d’Errico

  
  

  www.alphai.com

  
  

  www.linkedin.com/in/adapia

  
  

  Productive Intuition: Connecting To The Subtle

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>6c11fc84-4305-40f5-a316-ee2338e12d4cTue, 25 May 2021 05:14:00 -080020:13falsefull191911Is Senior Assisted Living an Interesting Asset Class? What Makes for a Good Operator?Why is senior assisted living an interesting asset class? What makes for a good operator? What are the challenges in this space? AdaPia d'Errico, principal and VP of strategy at Alpha Investing, shares her insights.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3vZkDjq

  
  

  
  

  
  

  As the firm that is fundraising and looking for an operator and a really good property. What do you look for in the operator to partner up with?

  
  

  What we're looking for in an operator is a lot of experience. The operator that we are currently working with is a national company, they have the reach, they have the operational capabilities they have in house management. Vertically integrated is really important. Not just a sponsor that wants to purchase the building, because they think it's great cash flow, or they're going to flip it at a profit later, the management of the operations is really important. So we like sponsors that are also operating, because that vertical integration is really important to fully realize the value that's in the transaction. Because it's not just the real estate, and yes, there's cash flows, but you can really add value, and you can maximize those cash flows through a reduction of expenses, through making sure that occupancy is stable and steady, which is one of the biggest challenges in this space, occupancy, in addition to labor.

  
  

  
  

  
  

  There has to be an understanding of how to operate it, of the local area as well, because although you might think that you can just apply one big giant national brand, to something like senior living, the truth is that you actually can't and that's just proven out, it's very localized. There needs to be an understanding of that local market, how it operates, who's there. A lot of research needs to go into that.

  
  

  
  

  
  

  What are some of the biggest challenges in the space?

  
  

  Some of them have really been highlighted because of COVID. Some of the challenges arise from maintaining the expenses within range. And COVID really exacerbated expenses in multiple ways. Just PP alone, was a much bigger expense, like all the extra safety and medical equipment that was required. Labor is a big thing. There are some some facilities that really were unable to keep it all together because they couldn't keep staff for various reasons. And although COVID was a very acute thing to happen to the industry, it did highlight some weakness there and the importance of labor, the importance of the staff and their safety. You have your nurses and your people walking away because they don't feel safe. Your residents are not getting care. This is a people business at the end of the day. We're investors and everything like that. But you need to place a primary focus on the quality of life of the residents. And that's something that we know our operator does. And it's really important to us when we invest with somebody, because that piece is what's forgotten, is the people that are there. And that's not okay.

  
  

  
  

  
  

  It sounds like an asset class with a ton of moving parts. And also at the same time, it sounds like a great time to get into it, from what I'm gathering.

  
  

  Historically, Senior Living has some of the strongest performance relative to other asset classes. Senior living has actually outperformed every other asset class over the past 10 years, except for industrial. Industrial has actually generated higher returns in a one, three, and five year period. But senior living has outperformed everything over the past 10 years.

  
  

  
  

  
  

  Why is senior assisted living an interesting asset class? What makes for a good operator? What are the challenges in this space? AdaPia d'Errico, principal and VP of strategy at Alpha Investing, shares her insights.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3vZkDjq

  
  

  
  

  
  

  As the firm that is fundraising and looking for an operator and a really good property. What do you look for in the operator to partner up with?

  
  

  What we're looking for in an operator is a lot of experience. The operator that we are currently working with is a national company, they have the reach, they have the operational capabilities they have in house management. Vertically integrated is really important. Not just a sponsor that wants to purchase the building, because they think it's great cash flow, or they're going to flip it at a profit later, the management of the operations is really important. So we like sponsors that are also operating, because that vertical integration is really important to fully realize the value that's in the transaction. Because it's not just the real estate, and yes, there's cash flows, but you can really add value, and you can maximize those cash flows through a reduction of expenses, through making sure that occupancy is stable and steady, which is one of the biggest challenges in this space, occupancy, in addition to labor.

  
  

  
  

  
  

  There has to be an understanding of how to operate it, of the local area as well, because although you might think that you can just apply one big giant national brand, to something like senior living, the truth is that you actually can't and that's just proven out, it's very localized. There needs to be an understanding of that local market, how it operates, who's there. A lot of research needs to go into that.

  
  

  
  

  
  

  What are some of the biggest challenges in the space?

  
  

  Some of them have really been highlighted because of COVID. Some of the challenges arise from maintaining the expenses within range. And COVID really exacerbated expenses in multiple ways. Just PP alone, was a much bigger expense, like all the extra safety and medical equipment that was required. Labor is a big thing. There are some some facilities that really were unable to keep it all together because they couldn't keep staff for various reasons. And although COVID was a very acute thing to happen to the industry, it did highlight some weakness there and the importance of labor, the importance of the staff and their safety. You have your nurses and your people walking away because they don't feel safe. Your residents are not getting care. This is a people business at the end of the day. We're investors and everything like that. But you need to place a primary focus on the quality of life of the residents. And that's something that we know our operator does. And it's really important to us when we invest with somebody, because that piece is what's forgotten, is the people that are there. And that's not okay.

  
  

  
  

  
  

  It sounds like an asset class with a ton of moving parts. And also at the same time, it sounds like a great time to get into it, from what I'm gathering.

  
  

  Historically, Senior Living has some of the strongest performance relative to other asset classes. Senior living has actually outperformed every other asset class over the past 10 years, except for industrial. Industrial has actually generated higher returns in a one, three, and five year period. But senior living has outperformed everything over the past 10 years.

  
  

  
  

  
  

  AdaPia d'Errico

  
  

  www.alphai.com

  
  

  Linkedin: www.linkedin.com/in/adapia

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>ea7b4765-4783-4722-ae45-a43d997fc42aTue, 11 May 2021 17:07:00 -080014:35falsefull190901How to Add Value in Self Storage? How to Differentiate Against the Competition?With so many people interested in buying or building self storage facilities, how do you find one, and add value to a facility? How do you differentiate from the competition? Clair Hoover, an experienced operator with over 20 years managing self storage facilities shares some golden tips.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3vv9eYq

  The cap rates are very compressed for self storage, how do you go about purchasing them nowadays?

  
  

  You do what everybody has had to do in tight times and in every part of real estate, you end up looking at more properties and bidding on less. A year ago, for every 20 properties we looked at, we would put an offer on one. I’m guessing right now it’s closer to 100 properties that we look at before we find one that we think to even barely buy. It’s a challenging time. I think patience is part of it. But also we want to keep growing. So we keep sorting through every haystack we can find, trying to find some bargain buys.

  What are some value add methods for self storage facilities, since you have so much experience there.

  
  

  When we buy a property we like to see what we call the triple play. We like to see upside on rate management, we like to see upside on occupancy, and we like to see upside on expansion opportunities. We will settle for two out of three, but we rarely would buy something that doesn’t have those opportunities available.

  The biggest mistake we see today would be under-managing rate management, there are so many opportunities there, you will actually find people in self storage who brag about 100% occupancy. They’ll brag about the fact that they have the lowest price option in their market. Think through the math on what I just said and what they’re laying on the table. I love meeting people like that I love making an offer on their property, a lot of upside on rate management.

  
  

  Another one is, a lot of people are missing admin fees, it’s become customary, in our markets at least, to be charging admin fees. It covers some of your costs to put a client in and it’s accepted by the market. So again, you’re just letting money on the table. And you mentioned cap rates, when you started talking about $2,000 a year or even 10,000 in admin fees, you take out a five or even a four percent cap in some markets, that’s serious cash being left on the table by not maximizing that.

  
  

  The other two other upsides I mentioned already were occupancy. If you’re low occupancy, I would invest in marketing, you’ve to fill that facility up, that’s dead dollars on the table. The last one, a lot of people say is not available to them, but it often is, and that’s expansion capability. If you’re on a five acre parcel, and it’s maxed out, you’re not thinking outside the box, there has to be some land within a mile or two of you somewhere that you could add more storage to and you probably don’t need to increase your labor costs. You can probably run both facilities out of one office if needed.

  
  

  Another one is tenant insurance. If you’re not selling tenant insurance, there’s a good chance your tenants aren’t covered. And it’s not a matter of if, it’s a matter of when you’re going to have an issue whether it be a fire, or a flood, or wind damage, something’s going to hurt your tenants belongings.

  
  

  How do you differentiate yourself from other facilities in order to increase your occupancy?

  
  

  It can be different in different markets. I would say automation today is probably the best way to differentiate yourself. You’ve to be one of the strongest digital marketers in your market. If you're not, you're probably alienating anyone under the age of 40. And quite a few of us over 40 are going to write you...]]>With so many people interested in buying or building self storage facilities, how do you find one, and add value to a facility? How do you differentiate from the competition? Clair Hoover, an experienced operator with over 20 years managing self storage facilities shares some golden tips.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3vv9eYq

  The cap rates are very compressed for self storage, how do you go about purchasing them nowadays?

  
  

  You do what everybody has had to do in tight times and in every part of real estate, you end up looking at more properties and bidding on less. A year ago, for every 20 properties we looked at, we would put an offer on one. I’m guessing right now it’s closer to 100 properties that we look at before we find one that we think to even barely buy. It’s a challenging time. I think patience is part of it. But also we want to keep growing. So we keep sorting through every haystack we can find, trying to find some bargain buys.

  What are some value add methods for self storage facilities, since you have so much experience there.

  
  

  When we buy a property we like to see what we call the triple play. We like to see upside on rate management, we like to see upside on occupancy, and we like to see upside on expansion opportunities. We will settle for two out of three, but we rarely would buy something that doesn’t have those opportunities available.

  The biggest mistake we see today would be under-managing rate management, there are so many opportunities there, you will actually find people in self storage who brag about 100% occupancy. They’ll brag about the fact that they have the lowest price option in their market. Think through the math on what I just said and what they’re laying on the table. I love meeting people like that I love making an offer on their property, a lot of upside on rate management.

  
  

  Another one is, a lot of people are missing admin fees, it’s become customary, in our markets at least, to be charging admin fees. It covers some of your costs to put a client in and it’s accepted by the market. So again, you’re just letting money on the table. And you mentioned cap rates, when you started talking about $2,000 a year or even 10,000 in admin fees, you take out a five or even a four percent cap in some markets, that’s serious cash being left on the table by not maximizing that.

  
  

  The other two other upsides I mentioned already were occupancy. If you’re low occupancy, I would invest in marketing, you’ve to fill that facility up, that’s dead dollars on the table. The last one, a lot of people say is not available to them, but it often is, and that’s expansion capability. If you’re on a five acre parcel, and it’s maxed out, you’re not thinking outside the box, there has to be some land within a mile or two of you somewhere that you could add more storage to and you probably don’t need to increase your labor costs. You can probably run both facilities out of one office if needed.

  
  

  Another one is tenant insurance. If you’re not selling tenant insurance, there’s a good chance your tenants aren’t covered. And it’s not a matter of if, it’s a matter of when you’re going to have an issue whether it be a fire, or a flood, or wind damage, something’s going to hurt your tenants belongings.

  
  

  How do you differentiate yourself from other facilities in order to increase your occupancy?

  
  

  It can be different in different markets. I would say automation today is probably the best way to differentiate yourself. You’ve to be one of the strongest digital marketers in your market. If you're not, you're probably alienating anyone under the age of 40. And quite a few of us over 40 are going to write you off.

  Clair Hoover

  
  

  clairhoover@comcast.net

  
  

  www.freedomstoragemanagement.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>18ac5416-0d42-4225-8c50-0e44a5252656Thu, 29 Apr 2021 05:02:00 -080020:35falsefull189891How to Buy Value Add Industrial Real Estate & Biggest Lessons LearnedHow to add value to industrial investing, an asset class full of competition? What were some of the major lessons learned getting into the industrial asset class? Monick Halm, founder of Real Estate Investor Goddesses will be sharing her insights.

  You can read this entire interview here: https://bit.ly/32GC1N0

  What are some value add strategies in industrial?

  There's a niche in industrial that we do called a sale leaseback, and sale leaseback is this, there's a company that has a facility that they are using and they want to sell, mostly because they want to get the equity out of it. But they still want to use it. So they sell it and then they lease it right back. This is very, very niche, very few people do this. And because it's so unusual and so few people do it, that really is the value add. We'll buy it and then the seller becomes a tenant, usually with a 20 year lease, built in rent increases, NNN. They're paying rent, property taxes, insurance, and maintenance. If there's an issue with the toilet, they fix the toilet, if there's an issue with the roof, they'll fix the roof.

  We will typically sell it in four to six years to an institutional buyer, a pension fund or insurance company. They love these deals with an industrial tenant already in place with several years of steady rent, payment history with 15 to 17 years left on the lease. They'll buy those all day, everyday but they do not do the sale leaseback, so that is where the value is added. We also buy these slightly below market so we have built in equity. We rent it slightly below market as well to the seller/tenant which also gives us room, that's how we're adding value.

  And the one risk is in that tenant. So we do a lot of due diligence on the company to make sure that they're a super good bet, a good risk. They're well capitalized, they're very strong companies. The youngest company we've done one of these deals with is 17 years old. I think we've had one of those as old as 80 something years. They're very strong companies that are not going anywhere.

  Besides digging deep into these tenants, are there any other lessons that you can share that you learned in this asset class so far?

  With our 109 spots in Houston, we have our various industrial park, those parks are flex warehouse space. Some of it is a little bit like retail. We have all different types of tenants. We have three churches, bakers, garages, all different types of tenants.Those tenants had mixed success during the pandemic, and the economic fallout of all of that. Churches couldn't meet, so it was hard for our churches to pay rent, the retail type spaces weren't able to do business and the other ones were fine. What's nice about that is we had 109 tenants, we have a mix of different things. Some are good, some are not bad, some didn't do as well. The lesson we learned, is having that variety of different tenants and really working with them and staying in communication with them, helping them to access some of the federal money that was available for businesses, that helped allay the risks. In our sale leasebacks, we actually had no problem with those companies. They were all essential businesses. A lot of them, like our food ones, were doing more business in it than ever. They were great.

  And when you had a certain percentage of your tenants not paying, did you have to raise more funds? How did you deal with that?

  We were fine. We had to get creative, stay in communication with them. We had to help our tenants be able to access cash so they could stay in business. We did have a couple that closed their doors and weren't able to last, there were enough that survived. On that particular deal, we paused distributions but we definitely did not need to get extra cash.

  
  

  Monick Halm

  www.reigoddesses.com

  Podcast: https://apple.co/2Parmai

  
  

  ---

  
  

  Support this podcast: How to add value to industrial investing, an asset class full of competition? What were some of the major lessons learned getting into the industrial asset class? Monick Halm, founder of Real Estate Investor Goddesses will be sharing her insights.

  You can read this entire interview here: https://bit.ly/32GC1N0

  What are some value add strategies in industrial?

  There's a niche in industrial that we do called a sale leaseback, and sale leaseback is this, there's a company that has a facility that they are using and they want to sell, mostly because they want to get the equity out of it. But they still want to use it. So they sell it and then they lease it right back. This is very, very niche, very few people do this. And because it's so unusual and so few people do it, that really is the value add. We'll buy it and then the seller becomes a tenant, usually with a 20 year lease, built in rent increases, NNN. They're paying rent, property taxes, insurance, and maintenance. If there's an issue with the toilet, they fix the toilet, if there's an issue with the roof, they'll fix the roof.

  We will typically sell it in four to six years to an institutional buyer, a pension fund or insurance company. They love these deals with an industrial tenant already in place with several years of steady rent, payment history with 15 to 17 years left on the lease. They'll buy those all day, everyday but they do not do the sale leaseback, so that is where the value is added. We also buy these slightly below market so we have built in equity. We rent it slightly below market as well to the seller/tenant which also gives us room, that's how we're adding value.

  And the one risk is in that tenant. So we do a lot of due diligence on the company to make sure that they're a super good bet, a good risk. They're well capitalized, they're very strong companies. The youngest company we've done one of these deals with is 17 years old. I think we've had one of those as old as 80 something years. They're very strong companies that are not going anywhere.

  Besides digging deep into these tenants, are there any other lessons that you can share that you learned in this asset class so far?

  With our 109 spots in Houston, we have our various industrial park, those parks are flex warehouse space. Some of it is a little bit like retail. We have all different types of tenants. We have three churches, bakers, garages, all different types of tenants.Those tenants had mixed success during the pandemic, and the economic fallout of all of that. Churches couldn't meet, so it was hard for our churches to pay rent, the retail type spaces weren't able to do business and the other ones were fine. What's nice about that is we had 109 tenants, we have a mix of different things. Some are good, some are not bad, some didn't do as well. The lesson we learned, is having that variety of different tenants and really working with them and staying in communication with them, helping them to access some of the federal money that was available for businesses, that helped allay the risks. In our sale leasebacks, we actually had no problem with those companies. They were all essential businesses. A lot of them, like our food ones, were doing more business in it than ever. They were great.

  And when you had a certain percentage of your tenants not paying, did you have to raise more funds? How did you deal with that?

  We were fine. We had to get creative, stay in communication with them. We had to help our tenants be able to access cash so they could stay in business. We did have a couple that closed their doors and weren't able to last, there were enough that survived. On that particular deal, we paused distributions but we definitely did not need to get extra cash.

  
  

  Monick Halm

  www.reigoddesses.com

  Podcast: https://apple.co/2Parmai

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>82267ca7-a869-4f73-9f5a-285c201eaac1Thu, 22 Apr 2021 05:22:00 -080019:15falsefull188881From Broke to Retired in 4 Years Through Real Estate InvestingWhat does it take from having a negative net worth to retiring within 4 years through real estate investing? Michael Manthei shares his journey, along with some of the top advices he would give us today, and some of the biggest challenges that he encountered throughout that journey.

  
  

  
  

  You can read this entire interview here: https://bit.ly/2Qr3waJ

  
  

  
  

  
  

  What are a couple of advices that you would want people to know, let’s say for back then, what was going through your head and what would you want someone that was in your situation to know in order for them to get their career started?

  
  

  The action taking is a huge one for me. The other one is to get around positive people, generosity minded people that want to help, that was huge for me, I started going to local free meetups and just meeting people. And there were a couple of people in those groups that would walk properties with me, give me advice, that was a huge deal. I was always one that wanted to do everything on my own. And I’m realizing more and more throughout life, that that’s fine, and you can be successful that way. But working with other people is also an amazing way to add strength to your picture. If you have a certain skill set, and you work with someone that has a complementary skill set, that can be a beautiful partnership. With partnerships, you have to be very deliberate with, you don’t want to enter them flippantly. But if you really get to know the other person, and being open to working together can be a shortcut to success as well.

  What were some of the biggest challenges that you faced during this journey?

  
  

  Staying encouraged, and maintaining belief is challenging. If you have something in your heart that is greater than what you see around you, and what your peer circle is. That's probably why you're listening to something like this, it takes courage to break through the average of the people you're closest to, and enter a new realm of wealth and success. Just managing that, and staying encouraged is a huge part of the battle. That's more on the mindset side.

  On something more practical, we started with such little capital, that it took every penny we had just to get into the next building. And I thought that we would just fund any renovations that were needed out of cash flow, which is fine. But you can't fund a renovation and live off of the same cash flow. You can't spend it in more than one place. If you're running a pro forma, and that's something that you need to be good at in this business, you typically put, in some of the older properties in our local city, 10-15% for maintenance and repairs. There were some years that even on a very large portfolio, I was spending 30 and 40% of the gross income on repairs, because I was buying buildings that had a deficit in deferred maintenance. It has worked out, we've made the repairs and dug out from that. We quality buildings now. But that made things tight for a while. And it's a great practice to make sure you have all the money upfront to correct any deferred maintenance. That's something we do today, if a building needs something, we raise additional capital and make sure the deal can support that and get that done at the beginning. I didn't really have that luxury when we got started. But we definitely had to work hard to still make it through.

  
  

  
  

  
  

  What made you start thinking about real estate investing?

  
  

  Like a lot of people, I read a little purple book. That was the first entry point that completely rocked my world. And I'm referring to Rich Dad, Poor Dad. It just blew my mind that people thought that way. I didn't grow up in a family that talked about money, or had any wealth.

  Michael...]]>What does it take from having a negative net worth to retiring within 4 years through real estate investing? Michael Manthei shares his journey, along with some of the top advices he would give us today, and some of the biggest challenges that he encountered throughout that journey.

  
  

  
  

  You can read this entire interview here: https://bit.ly/2Qr3waJ

  
  

  
  

  
  

  What are a couple of advices that you would want people to know, let’s say for back then, what was going through your head and what would you want someone that was in your situation to know in order for them to get their career started?

  
  

  The action taking is a huge one for me. The other one is to get around positive people, generosity minded people that want to help, that was huge for me, I started going to local free meetups and just meeting people. And there were a couple of people in those groups that would walk properties with me, give me advice, that was a huge deal. I was always one that wanted to do everything on my own. And I’m realizing more and more throughout life, that that’s fine, and you can be successful that way. But working with other people is also an amazing way to add strength to your picture. If you have a certain skill set, and you work with someone that has a complementary skill set, that can be a beautiful partnership. With partnerships, you have to be very deliberate with, you don’t want to enter them flippantly. But if you really get to know the other person, and being open to working together can be a shortcut to success as well.

  What were some of the biggest challenges that you faced during this journey?

  
  

  Staying encouraged, and maintaining belief is challenging. If you have something in your heart that is greater than what you see around you, and what your peer circle is. That's probably why you're listening to something like this, it takes courage to break through the average of the people you're closest to, and enter a new realm of wealth and success. Just managing that, and staying encouraged is a huge part of the battle. That's more on the mindset side.

  On something more practical, we started with such little capital, that it took every penny we had just to get into the next building. And I thought that we would just fund any renovations that were needed out of cash flow, which is fine. But you can't fund a renovation and live off of the same cash flow. You can't spend it in more than one place. If you're running a pro forma, and that's something that you need to be good at in this business, you typically put, in some of the older properties in our local city, 10-15% for maintenance and repairs. There were some years that even on a very large portfolio, I was spending 30 and 40% of the gross income on repairs, because I was buying buildings that had a deficit in deferred maintenance. It has worked out, we've made the repairs and dug out from that. We quality buildings now. But that made things tight for a while. And it's a great practice to make sure you have all the money upfront to correct any deferred maintenance. That's something we do today, if a building needs something, we raise additional capital and make sure the deal can support that and get that done at the beginning. I didn't really have that luxury when we got started. But we definitely had to work hard to still make it through.

  
  

  
  

  
  

  What made you start thinking about real estate investing?

  
  

  Like a lot of people, I read a little purple book. That was the first entry point that completely rocked my world. And I'm referring to Rich Dad, Poor Dad. It just blew my mind that people thought that way. I didn't grow up in a family that talked about money, or had any wealth.

  Michael Manthei

  
  

  www.investelevate.com

  
  

  Generational Wealth Conference: https://bit.ly/32eQQpR

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>16efb455-262e-4c2d-b495-fd94197d0c74Thu, 15 Apr 2021 04:58:00 -080016:28falsefull187871Top Things to Negotiate in Retail Leases, How to Add Value in Retail, What's N, NN, NNN Leases?What is going on in the single tenant retail space? What are the top things you should negotiate in retail leases? We cover a lot of ground in the retail space with Randy Blankstein, President of the Net Lease Advisory firm The Boulder Group.

  You can read this interview here: https://bit.ly/3lPrrw5

  
  

  
  

  
  

  What is the difference between N, NN and NNN leases?

  
  

  In single net properties, which we typically don't see in our sector, but certainly exists in the marketplace, usually the tenant pays rent and the property taxes and that's it. It's not the majority in the sector, but for single net it's rent and property taxes. That's it. For double net, which is the majority of the sector, double and triple net are equal, the tenant pays taxes, insurance, and some type of maintenance. For example, we have some freestanding property, let's use Walgreens as an example, who used to be a double net, but now it's a triple net lease, they converted a while back. When they were double net properties, the tenant was paying the taxes, the insurance and some maintenance. Walgreens carved out roof structure and parking lot as landlord responsibilities, which is pretty common for double net leases. And sometimes there's maintenance obligation of the tenant, and then replacement is the landlord's obligation. And sometimes the landlord has all those responsibilities, but on double net leases there's some type of shared responsibility, or landlord responsibility for those issues. For true triple net leases, the tenant is paying for everything. They pay for maintenance, repairs, taxes, insurance, everything is paid by the tenant, so there's very little to do, and you just pretty much own a property that just gives you a return without having to do any kind of management of the property. It's completely passive.

  
  

  
  

  
  

  What are some super important things that you think landlords should definitely negotiate in these kind of leases?

  
  

  There's 10's of things you can talk to on lease negotiations. But really, you need to focus on two things, because ultimately, a lease is only as good as the credit and financials behind the tenant, and/or the individual's success at this location. Even if it's a large public company, you still need to know that this location is ok, so that you have a strong renewal probability, that's what you're trying to figure out. So what you really need is store sales reporting for this individual location, you really want to know that the rental sales is in line with the tenant average with the market average, and that this is a strong performing location that has a high renewal probability, because that's the biggest risk of that leased property is, will they renew at the end of the lease term. So knowing store sales takes a lot of risk out of it. A lot of lenders want them and a lot of buyers want them. So it's really important to get to store sales. Also for private tenants, franchisees, other people that aren't public, you really need the tenants corporate financials, because even though this location may be doing well, or average, it's still backed by whatever parent is ultimately the guarantee on the lease. So you need to understand the strength of that guarantor, a 25 unit franchisee, some have a great balance sheet, some not so good. So you really need to know where the corporate stands. If I had a choice between the two, I would want my individual store sales first, because even if it's a bad franchisee, if this is their best location, they'll close the other locations first, and yours will still be standing, even if the corporation isn't doing well.

  Randy Blankstein

  
  

  www.bouldergroup.com

  
  

  What is going on in the single tenant retail space? What are the top things you should negotiate in retail leases? We cover a lot of ground in the retail space with Randy Blankstein, President of the Net Lease Advisory firm The Boulder Group.

  You can read this interview here: https://bit.ly/3lPrrw5

  
  

  
  

  
  

  What is the difference between N, NN and NNN leases?

  
  

  In single net properties, which we typically don't see in our sector, but certainly exists in the marketplace, usually the tenant pays rent and the property taxes and that's it. It's not the majority in the sector, but for single net it's rent and property taxes. That's it. For double net, which is the majority of the sector, double and triple net are equal, the tenant pays taxes, insurance, and some type of maintenance. For example, we have some freestanding property, let's use Walgreens as an example, who used to be a double net, but now it's a triple net lease, they converted a while back. When they were double net properties, the tenant was paying the taxes, the insurance and some maintenance. Walgreens carved out roof structure and parking lot as landlord responsibilities, which is pretty common for double net leases. And sometimes there's maintenance obligation of the tenant, and then replacement is the landlord's obligation. And sometimes the landlord has all those responsibilities, but on double net leases there's some type of shared responsibility, or landlord responsibility for those issues. For true triple net leases, the tenant is paying for everything. They pay for maintenance, repairs, taxes, insurance, everything is paid by the tenant, so there's very little to do, and you just pretty much own a property that just gives you a return without having to do any kind of management of the property. It's completely passive.

  
  

  
  

  
  

  What are some super important things that you think landlords should definitely negotiate in these kind of leases?

  
  

  There's 10's of things you can talk to on lease negotiations. But really, you need to focus on two things, because ultimately, a lease is only as good as the credit and financials behind the tenant, and/or the individual's success at this location. Even if it's a large public company, you still need to know that this location is ok, so that you have a strong renewal probability, that's what you're trying to figure out. So what you really need is store sales reporting for this individual location, you really want to know that the rental sales is in line with the tenant average with the market average, and that this is a strong performing location that has a high renewal probability, because that's the biggest risk of that leased property is, will they renew at the end of the lease term. So knowing store sales takes a lot of risk out of it. A lot of lenders want them and a lot of buyers want them. So it's really important to get to store sales. Also for private tenants, franchisees, other people that aren't public, you really need the tenants corporate financials, because even though this location may be doing well, or average, it's still backed by whatever parent is ultimately the guarantee on the lease. So you need to understand the strength of that guarantor, a 25 unit franchisee, some have a great balance sheet, some not so good. So you really need to know where the corporate stands. If I had a choice between the two, I would want my individual store sales first, because even if it's a bad franchisee, if this is their best location, they'll close the other locations first, and yours will still be standing, even if the corporation isn't doing well.

  Randy Blankstein

  
  

  www.bouldergroup.com

  
  

  www.linkedin.com/in/randyblankstein/

  
  

  
  

  
  

  Join our goal setting weekly calls ($20/month): www.paypal.me/regoals

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>d1e4bc4d-0b65-49c9-a334-5546c5dfec9cThu, 25 Mar 2021 19:09:00 -080019:49falsefull186861What Will Office Space Look Like in the Near Future?What are companies looking for right now? Benjamin Osgood will share insights coming directly from office tenants. He has brokered over $250M in real estate transactions and is the founder of Recreate Commercial.

  You can read this entire interview here: https://bit.ly/30DLrrv

  
  

  
  

  
  

  What will office look like in the near future?

  
  

  We've learned from COVID that we all don't necessarily need an office for work, because as the pandemic has shown us, we can work anywhere if we need to, give us a laptop and a wifi connection, and we're good from the work side of things. I think that's going to be a trend that we'll continue to see. But we've also learned on the other side of that that we still need a physical place to come in, meet with our team, foster our company culture, mentees need a place to be mentored. Conversely, supervisors want to see their people working, they want to make sure that, even though the Slack channel is green, the light is on, that they're actually working.

  
  

  
  

  
  

  But then also, we're rethinking what is the workspace used for? Is it for work that is heads down? No, totally not. We need a place to come in, collaborate, innovate, throw ideas on a whiteboard, get over caffeinated, hang out with our team. We're tribal people, we want that human connection, I want that human connection. Most people want that human connection. I think most companies are going to need a physical space. And we can't forget that the office is very much a commodity in both hiring and employee retention. We know that companies want that really cool place to come work, there's a reason why those employees stay there and why culture is so integral to a company success, and zoom meetings have their limitations.

  
  

  
  

  
  

  We're also thinking that maybe we don't need to spend so much of our lives commuting. And maybe we don't need to go into the office five days a week. We're definitely seeing an office space that's configured differently. For one, is it going to be dense, linear benching? Probably not. Even pre COVID, we knew that that was not the greatest way to work, it was simply a way to hedge against very expensive rent. Pack as many people into as dense of a space as you can. It's going to be more collaborative, more soft seating, more whiteboards on casters, maybe more of a residential feel with plants and furniture that reflects a more chill and welcoming environment rather than just heads down linear benching. One thing our clients are saying is, We realize we're taxed on working from home 100% of the time, it has lost its charm, but also, not commuting five days a week is pretty cool, too. So we are anticipating and predicting a hybrid.

  
  

  
  

  
  

  How do you think that will affect how much office space companies will look for? Do you think it'll be the same, or smaller?

  
  

  I think it's zero sum. On one hand, we are decreasing our densities. So by way of example, pre pandemic, especially in major cities, like New York, Chicago and San Francisco, we were planning for 150 square feet per employee. And now that's almost upended. it's at about 325 sf per employee, which is more than double the square footage. The space is being configured much differently. Now we're taking that same square footage, but rather than line it out with just rows of linear benching, it's more soft seating. It's like, Grab that corner over there with your team, grab your tablet, or laptops or whatnot, grab a coffee, let's talk, let's collaborate, let's innovate. You just need more space for that type of use.

  What are companies looking for right now? Benjamin Osgood will share insights coming directly from office tenants. He has brokered over $250M in real estate transactions and is the founder of Recreate Commercial.

  You can read this entire interview here: https://bit.ly/30DLrrv

  
  

  
  

  
  

  What will office look like in the near future?

  
  

  We've learned from COVID that we all don't necessarily need an office for work, because as the pandemic has shown us, we can work anywhere if we need to, give us a laptop and a wifi connection, and we're good from the work side of things. I think that's going to be a trend that we'll continue to see. But we've also learned on the other side of that that we still need a physical place to come in, meet with our team, foster our company culture, mentees need a place to be mentored. Conversely, supervisors want to see their people working, they want to make sure that, even though the Slack channel is green, the light is on, that they're actually working.

  
  

  
  

  
  

  But then also, we're rethinking what is the workspace used for? Is it for work that is heads down? No, totally not. We need a place to come in, collaborate, innovate, throw ideas on a whiteboard, get over caffeinated, hang out with our team. We're tribal people, we want that human connection, I want that human connection. Most people want that human connection. I think most companies are going to need a physical space. And we can't forget that the office is very much a commodity in both hiring and employee retention. We know that companies want that really cool place to come work, there's a reason why those employees stay there and why culture is so integral to a company success, and zoom meetings have their limitations.

  
  

  
  

  
  

  We're also thinking that maybe we don't need to spend so much of our lives commuting. And maybe we don't need to go into the office five days a week. We're definitely seeing an office space that's configured differently. For one, is it going to be dense, linear benching? Probably not. Even pre COVID, we knew that that was not the greatest way to work, it was simply a way to hedge against very expensive rent. Pack as many people into as dense of a space as you can. It's going to be more collaborative, more soft seating, more whiteboards on casters, maybe more of a residential feel with plants and furniture that reflects a more chill and welcoming environment rather than just heads down linear benching. One thing our clients are saying is, We realize we're taxed on working from home 100% of the time, it has lost its charm, but also, not commuting five days a week is pretty cool, too. So we are anticipating and predicting a hybrid.

  
  

  
  

  
  

  How do you think that will affect how much office space companies will look for? Do you think it'll be the same, or smaller?

  
  

  I think it's zero sum. On one hand, we are decreasing our densities. So by way of example, pre pandemic, especially in major cities, like New York, Chicago and San Francisco, we were planning for 150 square feet per employee. And now that's almost upended. it's at about 325 sf per employee, which is more than double the square footage. The space is being configured much differently. Now we're taking that same square footage, but rather than line it out with just rows of linear benching, it's more soft seating. It's like, Grab that corner over there with your team, grab your tablet, or laptops or whatnot, grab a coffee, let's talk, let's collaborate, let's innovate. You just need more space for that type of use.

  Benjamin Osgood

  
  

  www.recreatecre.com

  
  

  
  

  
  

  Join our fb group here: www.facebook.com/groups/montecarlorei/

  
  

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>fb9f3dd4-3bee-4e57-af0a-9a9d9be6d641Thu, 11 Mar 2021 07:42:00 -080021:46falsefull1858515 Reasons to Invest in the Medical Office SpaceWhat's happening in the medical office space and why is it a good asset class to invest in? We are getting insights from Catherine House, National Healthcare Chair for the firm SVN. She is responsible for coordinating healthcare related commercial real estate activities in medical and dental office buildings.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3c47Vau

  
  

  
  

  
  

  Why is the medical office space popular right now?

  
  

  1. For those people who are looking for safety, and I think there's an element of a flight to safety for people who are interested in this sector, if you're looking for distressed asset opportunities, this is probably not going to be the right sector for you to be focusing on. There's a number of reasons for that. And if you actually look at the Medical Office fundamentals, there's some really interesting trends. If you look at rent growth, for example, I'm specifically looking at hospital affiliated medical office, the average rent continued to gradually increase throughout 2020. And they're predicted to continue increasing in 2021. So the national medical office rent is currently approximately $26 per square foot. And we've positive rent growth, currently at less than 2% nationally.

  
  

  
  

  
  

  2. The other fundamentals to look at is occupancy. Occupancy for on campus is currently 93.3%, and 92.6% for hospital affiliated off campus medical office buildings. Occupancy trends have been very steady. And they're actually forecast to remain steady throughout 2021. If you compare that with our predictions that we were just talking about for regular office, we're talking about very stable metrics with vacancy below 10%, and predicted to remain below 10%.

  
  

  
  

  
  

  3. The other thing that we're seeing is absorption rates are outpacing completions. If you look at cap rates, another great fundamentals to take a look at, we actually saw them decline in 2020. And declining cap rates, and steady rents actually mean an increase in the underlying value of the assets. So, based on RCA's data, the quarterly average MOB cap rate actually remains between 6.3 and 7%, since the beginning of 2015. So it's steady, it's safe. For investors interested in a safe steady investment, this particular sector was getting a lot of interest.

  What is driving all of that demand?

  
  

  1. One of the key reasons is that medical office is an essential sector that really remained open for business throughout the pandemic.

  
  

  2, It's also an area where it is extremely difficult to do it remotely. For the most part, if you need to see your physician, you need to physically go into the office. Whilst there has been an uptick in trends, such as telemedicine, which is a very fascinating area to get into that I'm not sure we have time for today, in general, there is still that demand for in person visits.

  
  

  3. And many physicians did have their income impacted in 2020, one of the reasons for that is a lot of the elective surgeries and procedures that are actually the most lucrative, many people actually put those off. So the revenue for the year and 2020 was down.

  
  

  4. But in the long run, that businesses survived and actually are predicting to be extremely busy in 2021 and beyond.

  
  

  5. And that's not even getting into some of the demographic trends that we're seeing with the aging baby boomers. There's a correlation as one gets older for an increased need for medical services. So we're actually expecting the demand for medical office to continue to grow significantly over the next 10 years plus.

  
  

  
  

  
  

  What's happening in the medical office space and why is it a good asset class to invest in? We are getting insights from Catherine House, National Healthcare Chair for the firm SVN. She is responsible for coordinating healthcare related commercial real estate activities in medical and dental office buildings.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3c47Vau

  
  

  
  

  
  

  Why is the medical office space popular right now?

  
  

  1. For those people who are looking for safety, and I think there's an element of a flight to safety for people who are interested in this sector, if you're looking for distressed asset opportunities, this is probably not going to be the right sector for you to be focusing on. There's a number of reasons for that. And if you actually look at the Medical Office fundamentals, there's some really interesting trends. If you look at rent growth, for example, I'm specifically looking at hospital affiliated medical office, the average rent continued to gradually increase throughout 2020. And they're predicted to continue increasing in 2021. So the national medical office rent is currently approximately $26 per square foot. And we've positive rent growth, currently at less than 2% nationally.

  
  

  
  

  
  

  2. The other fundamentals to look at is occupancy. Occupancy for on campus is currently 93.3%, and 92.6% for hospital affiliated off campus medical office buildings. Occupancy trends have been very steady. And they're actually forecast to remain steady throughout 2021. If you compare that with our predictions that we were just talking about for regular office, we're talking about very stable metrics with vacancy below 10%, and predicted to remain below 10%.

  
  

  
  

  
  

  3. The other thing that we're seeing is absorption rates are outpacing completions. If you look at cap rates, another great fundamentals to take a look at, we actually saw them decline in 2020. And declining cap rates, and steady rents actually mean an increase in the underlying value of the assets. So, based on RCA's data, the quarterly average MOB cap rate actually remains between 6.3 and 7%, since the beginning of 2015. So it's steady, it's safe. For investors interested in a safe steady investment, this particular sector was getting a lot of interest.

  What is driving all of that demand?

  
  

  1. One of the key reasons is that medical office is an essential sector that really remained open for business throughout the pandemic.

  
  

  2, It's also an area where it is extremely difficult to do it remotely. For the most part, if you need to see your physician, you need to physically go into the office. Whilst there has been an uptick in trends, such as telemedicine, which is a very fascinating area to get into that I'm not sure we have time for today, in general, there is still that demand for in person visits.

  
  

  3. And many physicians did have their income impacted in 2020, one of the reasons for that is a lot of the elective surgeries and procedures that are actually the most lucrative, many people actually put those off. So the revenue for the year and 2020 was down.

  
  

  4. But in the long run, that businesses survived and actually are predicting to be extremely busy in 2021 and beyond.

  
  

  5. And that's not even getting into some of the demographic trends that we're seeing with the aging baby boomers. There's a correlation as one gets older for an increased need for medical services. So we're actually expecting the demand for medical office to continue to grow significantly over the next 10 years plus.

  
  

  
  

  
  

  Catherine House

  
  

  www.svn.com

  
  

  catherine.house@svn.com

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>742bf72a-4eaa-4d79-ba71-beaddea8e083Thu, 04 Mar 2021 06:13:00 -080017:14falsefull184841What's Happening with Office?What is happening in the office space in large cities like San Francisco? What has happened in the last year? What is happening right now? Will we ever see any deals? Reuben Torenberg, vice president at CBRE, will share his insights.

  You can read this interview here: https://bit.ly/2MgPK8T

  
  

  
  

  
  

  I've been dying to speak with someone in the office space that is focused in large cities like San Francisco, to see what has happened with office over the last year, do you mind sharing with us what is going on in your world?

  
  

  It has definitely been a change from anything we've experienced in our career. The market has been placed completely on pause since March of last year due to the pandemic. As soon as it happened, as in many other large Metro cities, there was a mandate from the city that stated no one can occupy office space. Since then, all the technology companies locally have at first tried to defer their rent or get free rent with landlords. And unfortunately, they were not very successful because these landlords also have bills to pay, they have mortgages to pay, they have to keep up the operation of their building.

  Since then, just over 8.5 million square feet of sublease space has been placed on the market. As the months went by, rates dropped from the mid to high 80s to mid to high 70s. Then a couple more months passed and rates dropped to the low 70s, then a few more months passed and rates have dropped into the 60s. Now, for subleases, we are seeing rates at 30% lower than what they were back in March 2020.

  
  

  
  

  
  

  I assume that there aren't too many defaults yet, is that correct?

  
  

  That is correct. There hasn't been too many defaults, what some companies have tried to do is cut their losses and seek a termination. Although landlords had been very hesitant to do so because of all the uncertainty going forward, if you were to terminate, and landlords had other tenants waiting in the wings, that's one thing. And you can agree to a termination with a penalty of a couple months rent and feel confident that you'll get the space leased again. But without any end in sight, it's certainly much harder to have those conversations. At least 80% of these technology companies still have their space in the sublease market, or are hoping to come to an agreement with a growing technology company who can use the space once shelter in place is lifted, and rid themselves of remaining obligation without suffering too much pain.

  
  

  Is it safe to assume that landlords are not hurting right now? And nobody's trying to sell their office building?

  
  

  Yes, I would say they aren't hurting as much as they likely will be if this continues in another year, just because the market has been so hot over the last five years that they've been able to get deals at the rates that they want for long term to lock in security for the building. And those who are going to sell their buildings right now are looking at a pretty difficult selling market. So what we're really seeing mostly is landlords trying to hold on, and get past the uncertainty of the virus and see how efficacious the vaccine is before going back into into the market to sell their buildings.

  
  

  
  

  
  

  And what is the sentiment regarding office in general in your world?

  
  

  I certainly think that they will eventually bounce back. But the trend right now is leaning towards satellite offices in secondary metros like Austin, Salt Lake City, Denver, and even Miami. These companies want to retain their talent and give them a place to work besides their homes.

  
  

  
  

  
  

  Reuben...]]>What is happening in the office space in large cities like San Francisco? What has happened in the last year? What is happening right now? Will we ever see any deals? Reuben Torenberg, vice president at CBRE, will share his insights.

  You can read this interview here: https://bit.ly/2MgPK8T

  
  

  
  

  
  

  I've been dying to speak with someone in the office space that is focused in large cities like San Francisco, to see what has happened with office over the last year, do you mind sharing with us what is going on in your world?

  
  

  It has definitely been a change from anything we've experienced in our career. The market has been placed completely on pause since March of last year due to the pandemic. As soon as it happened, as in many other large Metro cities, there was a mandate from the city that stated no one can occupy office space. Since then, all the technology companies locally have at first tried to defer their rent or get free rent with landlords. And unfortunately, they were not very successful because these landlords also have bills to pay, they have mortgages to pay, they have to keep up the operation of their building.

  Since then, just over 8.5 million square feet of sublease space has been placed on the market. As the months went by, rates dropped from the mid to high 80s to mid to high 70s. Then a couple more months passed and rates dropped to the low 70s, then a few more months passed and rates have dropped into the 60s. Now, for subleases, we are seeing rates at 30% lower than what they were back in March 2020.

  
  

  
  

  
  

  I assume that there aren't too many defaults yet, is that correct?

  
  

  That is correct. There hasn't been too many defaults, what some companies have tried to do is cut their losses and seek a termination. Although landlords had been very hesitant to do so because of all the uncertainty going forward, if you were to terminate, and landlords had other tenants waiting in the wings, that's one thing. And you can agree to a termination with a penalty of a couple months rent and feel confident that you'll get the space leased again. But without any end in sight, it's certainly much harder to have those conversations. At least 80% of these technology companies still have their space in the sublease market, or are hoping to come to an agreement with a growing technology company who can use the space once shelter in place is lifted, and rid themselves of remaining obligation without suffering too much pain.

  
  

  Is it safe to assume that landlords are not hurting right now? And nobody's trying to sell their office building?

  
  

  Yes, I would say they aren't hurting as much as they likely will be if this continues in another year, just because the market has been so hot over the last five years that they've been able to get deals at the rates that they want for long term to lock in security for the building. And those who are going to sell their buildings right now are looking at a pretty difficult selling market. So what we're really seeing mostly is landlords trying to hold on, and get past the uncertainty of the virus and see how efficacious the vaccine is before going back into into the market to sell their buildings.

  
  

  
  

  
  

  And what is the sentiment regarding office in general in your world?

  
  

  I certainly think that they will eventually bounce back. But the trend right now is leaning towards satellite offices in secondary metros like Austin, Salt Lake City, Denver, and even Miami. These companies want to retain their talent and give them a place to work besides their homes.

  
  

  
  

  
  

  Reuben Torenberg

  
  

  reuben.torenberg@cbre.com

  
  

  https://www.linkedin.com/in/reuben-torenberg-b985b646/

  
  

  
  

  
  

  Subscribe to our newsletter here: montecarlorei.com

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>42d847b6-c8f3-4d68-a083-7961ce2a69d0Tue, 23 Feb 2021 05:20:00 -080015:29falsefull183831Top Things to Watch Out For in a Title CommitmentWhat are the major issues that can arise on a title commitment? We talk with Mindi McLain, attorney and co-owner of Wright Law.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3rPVNjT

  
  

  
  

  
  

  Tell us some of the biggest issues that you have found in a title report before.

  
  

  I have had some big messes, I don't even know how to describe how messed up a property can be. Deals that are too good to be true are typically not true. I've had a few deals where, especially if you're buying something from a family that has been in a family for a long time, and then somebody down the road decides they want to sell it, most of the problems that you see are with people that have died in the chain of title ad nothing's been done. There hasn't been a probate of their state, there hasn't been an affidavit of heirship. You're trying to build a family tree, and it has 80 branches, and they had 12 kids. I've had a lot of them, especially small deals, but we had to just go and find all these heirs that were lost. I look for the lost heirs and say, Hey, did you know that you have a 1/64th interest in this property? And would you mind signing this deed? So those can be wrecks, but it can usually be worked out.

  
  

  
  

  
  

  Another issue is a family, and several people have died. And we find that one of the heirs is a minor, meaning they're under the age of 18. But they've come into title on a property. In Texas, you can get around that, but you have to get a court order allowing a parent to sell that property on behalf of the minor. And then the proceeds from the sale have to go into the court registry, and then it sits there until they turn 18. And then they can go and cash out their inheritance. That happens if someone dies and their heir just happens to be seven or eight years old, or 14 years old. They still are an owner of that property, but legally, they don't have capacity to own property or to sell property. And so you have to involve a parent or a guardian.

  
  

  
  

  
  

  Some of the worst things I’ve seen are people buying property and not fully reviewing everything that’s in Schedule B and then finding out that there’s a restriction on their property that they didn’t know about. The title company is not going to necessarily tell you hey, you can’t use this property that looks like a retail store, you can’t use it for retail. They’re just going to note in their commitment that there’s no restriction, or a deed, or subject to whatever it was in this document. If you go back and read it, and you bought a property and you wanted to use it for a funeral home, and then you later found out that there’s actually a restriction on that property that says it can’t be a funeral home, or whatever you wanted it to be, then you have a problem because the purpose that you wanted that property for you cannot do it legally because there’s a restriction. And that wouldn’t be a covered claim, if that restriction was an exception to your policy.

  
  

  
  

  
  

  Also leases, some people will see that there’s a memorandum of a lease recorded, and they won’t really dig into what the lease actually says and ask the seller, Can I see that lease ahead of time? And maybe the tenant either had an option to purchase a property or a right of first refusal or something like that. And they come back later and say, actually, you didn’t have a right to buy this, I had a right to buy it. So they try to undo the sale.

  People are getting savvy to all the ways that you can generate income from rural properties. And so that includes not just oil and gas leases, and mineral production, but also solar farms, wind farms, all types of alternative energies.

  
  

  
  

  
  

  Mindi...]]>What are the major issues that can arise on a title commitment? We talk with Mindi McLain, attorney and co-owner of Wright Law.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3rPVNjT

  
  

  
  

  
  

  Tell us some of the biggest issues that you have found in a title report before.

  
  

  I have had some big messes, I don't even know how to describe how messed up a property can be. Deals that are too good to be true are typically not true. I've had a few deals where, especially if you're buying something from a family that has been in a family for a long time, and then somebody down the road decides they want to sell it, most of the problems that you see are with people that have died in the chain of title ad nothing's been done. There hasn't been a probate of their state, there hasn't been an affidavit of heirship. You're trying to build a family tree, and it has 80 branches, and they had 12 kids. I've had a lot of them, especially small deals, but we had to just go and find all these heirs that were lost. I look for the lost heirs and say, Hey, did you know that you have a 1/64th interest in this property? And would you mind signing this deed? So those can be wrecks, but it can usually be worked out.

  
  

  
  

  
  

  Another issue is a family, and several people have died. And we find that one of the heirs is a minor, meaning they're under the age of 18. But they've come into title on a property. In Texas, you can get around that, but you have to get a court order allowing a parent to sell that property on behalf of the minor. And then the proceeds from the sale have to go into the court registry, and then it sits there until they turn 18. And then they can go and cash out their inheritance. That happens if someone dies and their heir just happens to be seven or eight years old, or 14 years old. They still are an owner of that property, but legally, they don't have capacity to own property or to sell property. And so you have to involve a parent or a guardian.

  
  

  
  

  
  

  Some of the worst things I’ve seen are people buying property and not fully reviewing everything that’s in Schedule B and then finding out that there’s a restriction on their property that they didn’t know about. The title company is not going to necessarily tell you hey, you can’t use this property that looks like a retail store, you can’t use it for retail. They’re just going to note in their commitment that there’s no restriction, or a deed, or subject to whatever it was in this document. If you go back and read it, and you bought a property and you wanted to use it for a funeral home, and then you later found out that there’s actually a restriction on that property that says it can’t be a funeral home, or whatever you wanted it to be, then you have a problem because the purpose that you wanted that property for you cannot do it legally because there’s a restriction. And that wouldn’t be a covered claim, if that restriction was an exception to your policy.

  
  

  
  

  
  

  Also leases, some people will see that there’s a memorandum of a lease recorded, and they won’t really dig into what the lease actually says and ask the seller, Can I see that lease ahead of time? And maybe the tenant either had an option to purchase a property or a right of first refusal or something like that. And they come back later and say, actually, you didn’t have a right to buy this, I had a right to buy it. So they try to undo the sale.

  People are getting savvy to all the ways that you can generate income from rural properties. And so that includes not just oil and gas leases, and mineral production, but also solar farms, wind farms, all types of alternative energies.

  
  

  
  

  
  

  Mindi McLain

  
  

  www.wrightlawtx.com

  
  

  mindi@wrightlawtx.com

  
  

  
  

  
  

  Subscribe to our newsletter here: www.montecarlorei.com

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>64a7a3bb-6836-4278-802e-99fc021e7b36Fri, 12 Feb 2021 00:52:00 -080018:09falsefull182821What is a Title Report? What Should you Watch Out For in a Title Commitment? What is a Survey?What is a title commitment? What is a survey? What should you watch out for in a title commitment? We talk with Mindi McLain, attorney and co-owner of Wright Law.

  
  

  
  

  You can read this entire interview here: https://bit.ly/3jdLsLz

  What is a title report? What is a survey? And what does it do for you when you're purchasing a property?

  
  

  Title work means you're looking back in the records, so that when you buy a piece of property, you know that you have good title to, that you'll become the owner and you know exactly what is going to affect that property. There are lots of different things you can order from a title insurance company. Some people will call it a title report, some people will call it a title run. Most often what you want from them is what's called a title commitment. A title report is usually just a short one or two page document, it says title is vested in this person or entity. Here's the legal description and there might be a lien against it. 

  A title commitment is the most comprehensive title instrument that you might want if you're going to look at buying a property and most contracts are going to reference a title commitment. The title insurance company that you choose will take your contract, open title on it, and they'll look at who the owner is, what sort of easements, encumbrances, liens, problems are out there, and what needs to be done or fixed before closing, so that if you're the buyer, when you close, you have good title to the property. And when that commitment then closes, it becomes what's known as title insurance.

  
  

  Surveys go hand in hand with the title commitment, but that's actually sending a licensed surveyor out to their property to look at what's on the ground. The title commitment doesn't do that, the title examiner does not visit your property and actually take a look at it. They're just looking at records, whatever is publicly available, but the surveyor is actually going to go out and visit your property, he's going to measure whatever you ask him to, the boundaries, or the improvements that are there.

  
  

  What are some of the things that people should really watch out for in the title report and the survey?

  
  

  I spend most of my time reviewing Schedule B, those are the exceptions to the policy, followed by Schedule C, the requirements. The first mistake that people make is getting the commitment, and not even really reviewing it or never getting past Schedule A. The second thing that they do is they review Schedule B, but they don't really dig into what it says. So it's going to say, these are things that are excluded from your policy, it's not going to give you the whole summary and analysis of what those things are. If you don't ask, what is that document recorded you'll never know what that document said. There could be an easement recorded, a lease recorded, or a deed recorded. But you'll want to ask the title company for copies of those documents.

  This is where the survey can come in handy. If you get a title commitment, and it has 18 easements listed, or it has a right of way deed or something like that, your surveyor can take that Schedule B and those documents and he can locate those easements or those roadways on the ground, and then show you where they are on your survey. 

  
  

  The same with the survey, if you get it back and you have questions, you want to make sure your title commitment and your survey go hand in hand and that your surveyor has actually reviewed your title commitment and that he or she has included those documents that need to be included on the survey. That way you know where it's at, and your survey can actually be part of your title insurance.

  
  

  Mindi McLain

  
  

  https://bit.ly/3jdLsLz

  What is a title report? What is a survey? And what does it do for you when you're purchasing a property?

  
  

  Title work means you're looking back in the records, so that when you buy a piece of property, you know that you have good title to, that you'll become the owner and you know exactly what is going to affect that property. There are lots of different things you can order from a title insurance company. Some people will call it a title report, some people will call it a title run. Most often what you want from them is what's called a title commitment. A title report is usually just a short one or two page document, it says title is vested in this person or entity. Here's the legal description and there might be a lien against it. 

  A title commitment is the most comprehensive title instrument that you might want if you're going to look at buying a property and most contracts are going to reference a title commitment. The title insurance company that you choose will take your contract, open title on it, and they'll look at who the owner is, what sort of easements, encumbrances, liens, problems are out there, and what needs to be done or fixed before closing, so that if you're the buyer, when you close, you have good title to the property. And when that commitment then closes, it becomes what's known as title insurance.

  
  

  Surveys go hand in hand with the title commitment, but that's actually sending a licensed surveyor out to their property to look at what's on the ground. The title commitment doesn't do that, the title examiner does not visit your property and actually take a look at it. They're just looking at records, whatever is publicly available, but the surveyor is actually going to go out and visit your property, he's going to measure whatever you ask him to, the boundaries, or the improvements that are there.

  
  

  What are some of the things that people should really watch out for in the title report and the survey?

  
  

  I spend most of my time reviewing Schedule B, those are the exceptions to the policy, followed by Schedule C, the requirements. The first mistake that people make is getting the commitment, and not even really reviewing it or never getting past Schedule A. The second thing that they do is they review Schedule B, but they don't really dig into what it says. So it's going to say, these are things that are excluded from your policy, it's not going to give you the whole summary and analysis of what those things are. If you don't ask, what is that document recorded you'll never know what that document said. There could be an easement recorded, a lease recorded, or a deed recorded. But you'll want to ask the title company for copies of those documents.

  This is where the survey can come in handy. If you get a title commitment, and it has 18 easements listed, or it has a right of way deed or something like that, your surveyor can take that Schedule B and those documents and he can locate those easements or those roadways on the ground, and then show you where they are on your survey. 

  
  

  The same with the survey, if you get it back and you have questions, you want to make sure your title commitment and your survey go hand in hand and that your surveyor has actually reviewed your title commitment and that he or she has included those documents that need to be included on the survey. That way you know where it's at, and your survey can actually be part of your title insurance.

  
  

  Mindi McLain

  
  

  www.wrightlawtx.com

  
  

  mindi@wrightlawtx.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>6674fc1c-49cc-4810-83b7-91d4356501b5Thu, 04 Feb 2021 05:15:00 -080019:39falsefull181811How to Deal With Major Problems in Real Estate InvestingClosing on a property the same day that the president declares a national emergency? Our friend Loe Hornbuckle checked that off on his real estate investing career last year. How did him and his team solve the problem that was about to arise?

  You can read this entire interview here: https://bit.ly/2Mx2xUw

  
  

  You closed on a property when COVID hit. This can be something that can happen at any point in time in different types of versions. It can be the economy or anything else. How did you guys overcome this problem?

  
  

  I don’t think I’ll ever forget this, because how many people can claim that they closed a major real estate transaction on the day the President of the United States put the United States in a state of national emergency? Literally, the day we are closing on the deal, the President’s on TV saying we’re entering a state of national emergency and, like a lot of people, you’re in California, you have earthquakes, you have fires, there are all kinds of city and state emergencies, but I’ve never seen a national emergency before. So I didn’t know what that meant, or what was going on. All I know, is that I closed a very large real estate transaction, by some standard, $18 million is pretty large, on the day that the president is on TV, basically saying the sky is falling. 

  because our construction was being done in phasing, we went ahead and figured out what our three targets were, what we needed at a minimum to close the deal in terms of investor equity. Then the second question was, what do we need to do phases one and two? And the next question was, what do we need to do all three phases? So we broke the project up into a few different metrics When you're doing a raise, people always focus on the ceiling, how much money you're going to raise. The question that we asked ourselves was, what's the minimum amount of money that we can raise in order to not have the project be delayed? And so we came up with those three numbers.

  
  

  Are there any other tips that you can give our listeners on how to deal with unplanned situations like this one?

  
  

  If you were to think about all the things that it takes to write a business plan, I think the first thing you have to be is you have to be realistic. When you're realistic, and you're writing a business plan, one of the questions you should ask yourself is, how could this go wrong? What are the problems this deal could have, and then try to be creative and pre plan. So much about people that write business plans, it's all optimism. For example, if we just assumed, that we were going to raise this money, no problem, we hadn't set the floor, then we potentially could have had to rewrite the operating agreement, and that could have caused other investors to be spooked. Instead, we just said, Hey, this is the minimum amount we're going to raise, this is the maximum amount we're going to raise.

  Always go through your business plan and just think through things that that could happen, maybe you won't raise all the money, maybe you'll have some price increases. You're going to need to have a healthy contingency, and things like that. A lot of what made us successful on this project, or come to a successful conclusion, really dealt with going in being realistic. And then also asking, Where can we have problems? And if we do have these problems, what's our plan in case we face them? Because having that in your back pocket, and when something does happen, you've already kind of planned for it. It helps a lot in the moment because you don't feel like you're being blindsided by something you couldn't see coming.

  
  

  Loe Hornbuckle

  
  

  loe@goodhorncapital.com

  
  

  Closing on a property the same day that the president declares a national emergency? Our friend Loe Hornbuckle checked that off on his real estate investing career last year. How did him and his team solve the problem that was about to arise?

  You can read this entire interview here: https://bit.ly/2Mx2xUw

  
  

  You closed on a property when COVID hit. This can be something that can happen at any point in time in different types of versions. It can be the economy or anything else. How did you guys overcome this problem?

  
  

  I don’t think I’ll ever forget this, because how many people can claim that they closed a major real estate transaction on the day the President of the United States put the United States in a state of national emergency? Literally, the day we are closing on the deal, the President’s on TV saying we’re entering a state of national emergency and, like a lot of people, you’re in California, you have earthquakes, you have fires, there are all kinds of city and state emergencies, but I’ve never seen a national emergency before. So I didn’t know what that meant, or what was going on. All I know, is that I closed a very large real estate transaction, by some standard, $18 million is pretty large, on the day that the president is on TV, basically saying the sky is falling. 

  because our construction was being done in phasing, we went ahead and figured out what our three targets were, what we needed at a minimum to close the deal in terms of investor equity. Then the second question was, what do we need to do phases one and two? And the next question was, what do we need to do all three phases? So we broke the project up into a few different metrics When you're doing a raise, people always focus on the ceiling, how much money you're going to raise. The question that we asked ourselves was, what's the minimum amount of money that we can raise in order to not have the project be delayed? And so we came up with those three numbers.

  
  

  Are there any other tips that you can give our listeners on how to deal with unplanned situations like this one?

  
  

  If you were to think about all the things that it takes to write a business plan, I think the first thing you have to be is you have to be realistic. When you're realistic, and you're writing a business plan, one of the questions you should ask yourself is, how could this go wrong? What are the problems this deal could have, and then try to be creative and pre plan. So much about people that write business plans, it's all optimism. For example, if we just assumed, that we were going to raise this money, no problem, we hadn't set the floor, then we potentially could have had to rewrite the operating agreement, and that could have caused other investors to be spooked. Instead, we just said, Hey, this is the minimum amount we're going to raise, this is the maximum amount we're going to raise.

  Always go through your business plan and just think through things that that could happen, maybe you won't raise all the money, maybe you'll have some price increases. You're going to need to have a healthy contingency, and things like that. A lot of what made us successful on this project, or come to a successful conclusion, really dealt with going in being realistic. And then also asking, Where can we have problems? And if we do have these problems, what's our plan in case we face them? Because having that in your back pocket, and when something does happen, you've already kind of planned for it. It helps a lot in the moment because you don't feel like you're being blindsided by something you couldn't see coming.

  
  

  Loe Hornbuckle

  
  

  loe@goodhorncapital.com

  
  

  www.goodhorncapital.com

  Subscribe to our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>ada9ae82-8ae3-42d6-929b-3ac8c3730ef2Wed, 27 Jan 2021 04:37:00 -080022:35falsefull180801Real Estate Goal Setting 2021: Using SMART Methodology to Achieve Real Estate Investing GoalsIn this episode I talk about setting goals for your investing this year. I think 2021 will be a great year for a lot of investors, and you guys have been taking the time to learn as much as you can. 2021 will be a great year to put all of that to work.

  You can read this entire episode here: https://bit.ly/3b93z3h

  
  

  First we need to look back at our 2020 goals, and what got accomplished and what didn't. I accomplished about 50% of my goals, and looking back, the biggest issue I see in not accomplishing the rest of my goals (guess what, it was not Covid!) is that my official accountability buddy and I did not follow up on our calls. And that was both of us, we did not hold each other accountable with our calls and our goals. Another serious part of this is that I did not block part of my day to really look at what is the most important thing that I can do that day, to help me get closer to my goals and take a couple of hours to just do that before getting into emails, before everything else. When we're having this one or two hours for ourselves in the morning, I think it's really important to always include the thought of how can I increase this by 100 times? Some people say 10 times. And I think 100 is even more powerful, it gets you thinking outside of your box, for instance who is my wealthiest friend who would be super interested in investing in real estate? Or what is the property that is going to give me the most return for my time? Not carwashes, I can tell you that!

  
  

  Let's talk about one of the most popular forms of goal setting. And that is called SMART methodology, having Specific, Measurable, Attainable, Relevant and Time-Bound goals. So let me give you one example of one of my goals for this year:

  
  

  Specific: I want to partner up with a friend who is an architect and has a lot of experience in not only remodeling things, but also adding things to spaces, and not only in the single family space, but also in other commercial and multifamily space. So we want to start small, and we want to build this relationship and grow from there. So that is the goal to get into the real value add through development and improvement of a property business.

  
  

  Measurable: What is a measurable number for that? I want to buy and exit 12 properties, or 12 units with this friend in the Bay Area, which is where we live this year, we're going to be buying homes, or multi unit properties. At some point, she will take care of the renovations and the additions. I'll take care of the rest. And then we're going to exit.

  
  

  Attainable: Are 12 units attainable? Yes. She said that she will be comfortable managing even 10 projects at a time. So 12 projects in one year, I think is very doable.

  
  

  Relevant: Is it relevant? Yes. Homes right now are selling like hotcakes. And this is also a great way for us to not only make sure that we work well together, and also for us to be able to see and learn what other areas we can grow exponentially.

  
  

  Time-Bound: The last part of the smart format of goal setting is for your goal to be time bound. So we are already in January. I think it's realistic that we start with one property by February, we'll start to reach out to lenders and real estate agents to help us with the properties, and then fundraise whatever we need for the project and start working with the contractors.

  2021 will be incredible for real estate investing!

  
  

  Subscribe to our Goal Accountability Group here:

  
  

  www.paypal.me/regoals

  
  

  - Send $20 for Jan OR

  
  

  - Send $200 for the whole year (2 months...]]>In this episode I talk about setting goals for your investing this year. I think 2021 will be a great year for a lot of investors, and you guys have been taking the time to learn as much as you can. 2021 will be a great year to put all of that to work.

  You can read this entire episode here: https://bit.ly/3b93z3h

  
  

  First we need to look back at our 2020 goals, and what got accomplished and what didn't. I accomplished about 50% of my goals, and looking back, the biggest issue I see in not accomplishing the rest of my goals (guess what, it was not Covid!) is that my official accountability buddy and I did not follow up on our calls. And that was both of us, we did not hold each other accountable with our calls and our goals. Another serious part of this is that I did not block part of my day to really look at what is the most important thing that I can do that day, to help me get closer to my goals and take a couple of hours to just do that before getting into emails, before everything else. When we're having this one or two hours for ourselves in the morning, I think it's really important to always include the thought of how can I increase this by 100 times? Some people say 10 times. And I think 100 is even more powerful, it gets you thinking outside of your box, for instance who is my wealthiest friend who would be super interested in investing in real estate? Or what is the property that is going to give me the most return for my time? Not carwashes, I can tell you that!

  
  

  Let's talk about one of the most popular forms of goal setting. And that is called SMART methodology, having Specific, Measurable, Attainable, Relevant and Time-Bound goals. So let me give you one example of one of my goals for this year:

  
  

  Specific: I want to partner up with a friend who is an architect and has a lot of experience in not only remodeling things, but also adding things to spaces, and not only in the single family space, but also in other commercial and multifamily space. So we want to start small, and we want to build this relationship and grow from there. So that is the goal to get into the real value add through development and improvement of a property business.

  
  

  Measurable: What is a measurable number for that? I want to buy and exit 12 properties, or 12 units with this friend in the Bay Area, which is where we live this year, we're going to be buying homes, or multi unit properties. At some point, she will take care of the renovations and the additions. I'll take care of the rest. And then we're going to exit.

  
  

  Attainable: Are 12 units attainable? Yes. She said that she will be comfortable managing even 10 projects at a time. So 12 projects in one year, I think is very doable.

  
  

  Relevant: Is it relevant? Yes. Homes right now are selling like hotcakes. And this is also a great way for us to not only make sure that we work well together, and also for us to be able to see and learn what other areas we can grow exponentially.

  
  

  Time-Bound: The last part of the smart format of goal setting is for your goal to be time bound. So we are already in January. I think it's realistic that we start with one property by February, we'll start to reach out to lenders and real estate agents to help us with the properties, and then fundraise whatever we need for the project and start working with the contractors.

  2021 will be incredible for real estate investing!

  
  

  Subscribe to our Goal Accountability Group here:

  
  

  www.paypal.me/regoals

  
  

  - Send $20 for Jan OR

  
  

  - Send $200 for the whole year (2 months off)

  
  

  Calls will be on Thursdays 2-3pm PST, 5-6pm EST, depending on how many people join, we may have an alternative time as well.

  
  

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>83a16921-dfe5-40f1-a191-6c6fec4b93f5Tue, 05 Jan 2021 07:18:00 -080013:57falsefull179791Mastermind Call: What Are Top Investors Dealing With Right Now (Multiple Asset Classes)This is our December 2020 Mastermind call. Our guests were Todd Sulzinger (mobile home parks), Victor Menasce (development, various asset classes) and Adriana Finnie (single family investing).

  You can read this entire interview here: https://bit.ly/3mFeOCs

  
  

  Steffany Boldrini (Self Storage, Car Washes)

  
  

  I have been dealing with a new asset class that I invested in, and that is carwash. I was put through the wringer right away, within nine days of closing, one of the roofs caved due to snow, money has been already been stolen, and within 20 days of closing, and my maintenance guy quit without giving any notice. Thankfully, I was able to hire someone within a day. I'll be doing a couple of episodes on why car washes, what did we do to them within this last month, and how we are managing it from far away. What I can tell right now, is that it's a very hands on asset class with a lot of moving parts.

  Todd Sulzinger (Mobile Home Parks)

  
  

  One of the biggest things that is still impacting us is our inability to process evictions. I have properties in Georgia and Tennessee that are landlord friendly states, and in Georgia in particular, we had the courts closed in March, they opened back up at the end of July. And we had to start the eviction process on several people. We had several people that after a couple months process before we got a court date, they moved out just before their eviction was filed. Other people were still going through the process, we've got a couple of tenants now that have been in the park for almost a year that haven't paid rent. And we really have our hands tied.

  Victor Menasce (Development, Various)

  
  

  We've been busy with a number of new projects. And as you probably know, we also get a fair number of requests to consult on new development. For example we're doing a 150 unit apartment building up in Spokane, Washington for our client, we're doing a 60 unit townhouse subdivision just outside of Boise, Idaho, we are doing a boat and RV storage facility up in Austin, Texas. So we decided to formalize the consulting division and officially make it a core part of the business. And that's going to allow us to train the future leadership in the company. We're not going to accept every client by any means, but only those that we would say are intentionally congruent with that which we're already doing.

  Adriana Finnie (Single Family Homes)

  
  

  We're in single family homes in California, Ohio, Michigan, and Alabama. We started in California, but in the last three years, we decided that the rules are getting a little too dumb and that it's time to get out. So we've done it in a very leisurely way. We keep waiting for somebody to move, and then we put the house on the market. It has worked nicely until this year when nobody wanted to move for any particular reason. The biggest challenge is evictions.

  Join our facebook group here: www.facebook.com/groups/montecarlorei

  
  

  Todd Sulzinger: www.blueelminvestments.com

  
  

  Victor Menasce: www.victorjm.com

  
  

  This is our December 2020 Mastermind call. Our guests were Todd Sulzinger (mobile home parks), Victor Menasce (development, various asset classes) and Adriana Finnie (single family investing).

  You can read this entire interview here: https://bit.ly/3mFeOCs

  
  

  Steffany Boldrini (Self Storage, Car Washes)

  
  

  I have been dealing with a new asset class that I invested in, and that is carwash. I was put through the wringer right away, within nine days of closing, one of the roofs caved due to snow, money has been already been stolen, and within 20 days of closing, and my maintenance guy quit without giving any notice. Thankfully, I was able to hire someone within a day. I'll be doing a couple of episodes on why car washes, what did we do to them within this last month, and how we are managing it from far away. What I can tell right now, is that it's a very hands on asset class with a lot of moving parts.

  Todd Sulzinger (Mobile Home Parks)

  
  

  One of the biggest things that is still impacting us is our inability to process evictions. I have properties in Georgia and Tennessee that are landlord friendly states, and in Georgia in particular, we had the courts closed in March, they opened back up at the end of July. And we had to start the eviction process on several people. We had several people that after a couple months process before we got a court date, they moved out just before their eviction was filed. Other people were still going through the process, we've got a couple of tenants now that have been in the park for almost a year that haven't paid rent. And we really have our hands tied.

  Victor Menasce (Development, Various)

  
  

  We've been busy with a number of new projects. And as you probably know, we also get a fair number of requests to consult on new development. For example we're doing a 150 unit apartment building up in Spokane, Washington for our client, we're doing a 60 unit townhouse subdivision just outside of Boise, Idaho, we are doing a boat and RV storage facility up in Austin, Texas. So we decided to formalize the consulting division and officially make it a core part of the business. And that's going to allow us to train the future leadership in the company. We're not going to accept every client by any means, but only those that we would say are intentionally congruent with that which we're already doing.

  Adriana Finnie (Single Family Homes)

  
  

  We're in single family homes in California, Ohio, Michigan, and Alabama. We started in California, but in the last three years, we decided that the rules are getting a little too dumb and that it's time to get out. So we've done it in a very leisurely way. We keep waiting for somebody to move, and then we put the house on the market. It has worked nicely until this year when nobody wanted to move for any particular reason. The biggest challenge is evictions.

  Join our facebook group here: www.facebook.com/groups/montecarlorei

  
  

  Todd Sulzinger: www.blueelminvestments.com

  
  

  Victor Menasce: www.victorjm.com

  
  

  Adriana Finnie: www.linkedin.com/in/adriana-finnie-4578ab12/

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>57289027-000f-42c1-96bf-4c7725affd54Tue, 22 Dec 2020 05:55:00 -080028:13falsefull178781Step by Step: Purchasing a Portfolio of PropertiesIn this part I will cover getting the loan for the portfolio of properties, the LLC formation, hiring, as well as dealing with challenges.

  You can read this entire episode here: https://bit.ly/341nXip

  
  

  Loan

  
  

  The first lender that gave us a loan approval initially gave us a loan approval with an extremely unreasonable request, which was to basically tie up cash until we pay out the loan, this gave us no reason to get a loan. What I did when I got that news was that I asked to set up a call right away with the loan agent. We got on a call, I explained everything, not only from the property side, but also from my experience side and how, we have a ton of mentors, how I have access to hundreds of people, and all of that. You really need to show them that you are resourceful, that you are a professional and also a lot of times that you were successful in your previous career. It was a quick call, it was I think, a 15 minute call. After that, the loan officer scheduled a call with the president of the bank, and I told him the exact same thing. I asked them if they had any questions, etc. Shortly after that, we got the approval, that was probably the next day or two.

  LLC

  
  

  First I decided to break it down into two LLC's, one for the car washes and one for the Self Storage. This is purely for liability reasons. And with this decision, we had to change our closing date by about seven to 10 days. Because the lender had to rewrite all of the loan documents, the title company had to rewrite everything and divide into two entities. So that took a little bit longer. Ideally, in the future, you need to make that decision in the beginning, because we also had to sign another offer, breaking it down into two entities, even though when I signed the offer, it was under our name and/or assignee, which means we can assign this to anybody.

  Hiring

  
  

  We had someone in mind, but that person didn't even return my call when I left him a message, and the real estate agent had to remind him to call me back. So that was the very first red flag for me. And then after that, he showed up late for our very first meeting on site. And that was my second and last red flag. Some of you may know this, but there is a saying that says "hire slow, fire fast". You should take your time in finding the right person for the job, and do a really good job with the interview. And there are great resources out there. One of the books that I love is called "Hired", highlight everything that you can in that book, it is super helpful for hiring. And then on the firing fast side, people do not change. And I have seen that over and over again. And because this guy wasn't returning my very first call after we had agreed on him managing the property, and he was also late for our very first meeting, those were huge red flags for me. I decided not to work with that person.

  Challenges

  
  

  Nine days after closing on the properties, the roof in one of the car washes caved because of snow. Honestly, I was not scared when he told me that. I said, Okay, this is part of the game. Nine days, whoo. I'm thrown in the wringer. I made a claim with the insurance company right away. And I cannot talk much yet about the insurance because the project has not being completed. But all I can say is that I am very pleased with Nationwide, they really are by your side. This company has been phenomenal with the claim that we made literally nine days after closing. About 20 days later, the main maintenance guy quit. I started searching for staffing agencies in the city, posted an ad on Craigslist, and hired someone the next day. It was a blessing in disguise.

  Subscribe to]]>In this part I will cover getting the loan for the portfolio of properties, the LLC formation, hiring, as well as dealing with challenges.

  You can read this entire episode here: https://bit.ly/341nXip

  
  

  Loan

  
  

  The first lender that gave us a loan approval initially gave us a loan approval with an extremely unreasonable request, which was to basically tie up cash until we pay out the loan, this gave us no reason to get a loan. What I did when I got that news was that I asked to set up a call right away with the loan agent. We got on a call, I explained everything, not only from the property side, but also from my experience side and how, we have a ton of mentors, how I have access to hundreds of people, and all of that. You really need to show them that you are resourceful, that you are a professional and also a lot of times that you were successful in your previous career. It was a quick call, it was I think, a 15 minute call. After that, the loan officer scheduled a call with the president of the bank, and I told him the exact same thing. I asked them if they had any questions, etc. Shortly after that, we got the approval, that was probably the next day or two.

  LLC

  
  

  First I decided to break it down into two LLC's, one for the car washes and one for the Self Storage. This is purely for liability reasons. And with this decision, we had to change our closing date by about seven to 10 days. Because the lender had to rewrite all of the loan documents, the title company had to rewrite everything and divide into two entities. So that took a little bit longer. Ideally, in the future, you need to make that decision in the beginning, because we also had to sign another offer, breaking it down into two entities, even though when I signed the offer, it was under our name and/or assignee, which means we can assign this to anybody.

  Hiring

  
  

  We had someone in mind, but that person didn't even return my call when I left him a message, and the real estate agent had to remind him to call me back. So that was the very first red flag for me. And then after that, he showed up late for our very first meeting on site. And that was my second and last red flag. Some of you may know this, but there is a saying that says "hire slow, fire fast". You should take your time in finding the right person for the job, and do a really good job with the interview. And there are great resources out there. One of the books that I love is called "Hired", highlight everything that you can in that book, it is super helpful for hiring. And then on the firing fast side, people do not change. And I have seen that over and over again. And because this guy wasn't returning my very first call after we had agreed on him managing the property, and he was also late for our very first meeting, those were huge red flags for me. I decided not to work with that person.

  Challenges

  
  

  Nine days after closing on the properties, the roof in one of the car washes caved because of snow. Honestly, I was not scared when he told me that. I said, Okay, this is part of the game. Nine days, whoo. I'm thrown in the wringer. I made a claim with the insurance company right away. And I cannot talk much yet about the insurance because the project has not being completed. But all I can say is that I am very pleased with Nationwide, they really are by your side. This company has been phenomenal with the claim that we made literally nine days after closing. About 20 days later, the main maintenance guy quit. I started searching for staffing agencies in the city, posted an ad on Craigslist, and hired someone the next day. It was a blessing in disguise.

  Subscribe to our newsletter here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>3885141e-62c1-4b58-99e8-516a38a704e4Thu, 10 Dec 2020 06:42:00 -080016:46falsefull17777199 Tips to Analyzing and Closing a Portfolio of PropertiesI will be talking about a project that I have been working on for a year and that closed about a month ago.

  You can read this entire episode here: www.bit.ly/3g9laZd

  
  

  This property came into my inbox because I have been getting alerts for self storage properties for sale. It was a portfolio of one Self Storage property and three self serve car washes. It took 84 back and forth email messages, plus some phone calls to get all the information that we needed to analyze the property, to agree on a price, and also one year from my first communication with them to the closing.

  
  

  Things to ask for:

  
  

  - Profit and loss statement

  
  

  - Tax returns for the last 2 yrs

  
  

  - Detailed explanations on expenses

  
  

  - What does it entail to manage and operate car washes

  
  

  - Price for rental units on self storage

  
  

  - Phase I report

  
  

  - A list of multiple questions regarding the property, age of roofs, type of floor (asphalt, concrete), type of building, age of buildings, etc

  
  

  
  

  
  

  Due Diligence period:

  
  

  - Ongoing list of questions and follow up questions

  
  

  - Recommendations for local lenders and credit unions

  
  

  - Recommendations for local real estate attorney to review title and surveys

  
  

  - How much would it cost to add credit card machines to the car washes

  
  

  - Information for all the service providers that they currently use

  
  

  - Finding a local property manager for both sets of properties

  Example of things that you always must follow up on, until it gets 100% completed:

  
  

  - I had to get quotes for putting internet in all of the car washes for not only the credit cards, but also for the cameras that I was going to be installing. And it turned out that for all of the car washes I had to get a different internet provider because not a single one of them could provide service in more than one car wash, they just did not have service in the other properties areas. That probably took three full days worth of work to find the best internet provider for every single location.

  
  

  - I searched for the best provider for the Self Storage Facility that was 1. affordable 2. could take online rentals 3. could take credit card/bank payments. The previous owner did not have a website, and they were sending out paper invoices to all of their renters. So I had to get someone to create a website for us, and also to be able to accept rent, accept credit cards and also have people be able to lease things online. I found this very young startup that fit every single need for the property. And because they were so young, I really had to beg for them to take me as a customer. And that took a lot of following up, I said, Guys, I'm with you, I know it's not going to be perfect, but I really think we can be a very good first few customers. So let's get this going. And we got them to agree to that.

  
  

  - I had to follow up with the guy that agreed to be a property manager and was not even responding to my phone calls.

  
  

  - I had to follow up with the insurance company, I wanted to continue working with the same insurance that was the provider for the previous owner, because it was a good price, plus that insurance provider already had all of the information for the car washes. After three weeks of not getting a quote and also following up with the agent, she tells me whoops, the underwriter thought this was a renewal and send it to the wrong person in the office. And this was one week before closing. So I started Googling for highly rated insurance providers in that whole area and got quotes from everybody that I could get my hands on, We also had to make sure that this provider was real and reliable (there are horror stories about insurance...]]>I will be talking about a project that I have been working on for a year and that closed about a month ago.

  You can read this entire episode here: www.bit.ly/3g9laZd

  
  

  This property came into my inbox because I have been getting alerts for self storage properties for sale. It was a portfolio of one Self Storage property and three self serve car washes. It took 84 back and forth email messages, plus some phone calls to get all the information that we needed to analyze the property, to agree on a price, and also one year from my first communication with them to the closing.

  
  

  Things to ask for:

  
  

  - Profit and loss statement

  
  

  - Tax returns for the last 2 yrs

  
  

  - Detailed explanations on expenses

  
  

  - What does it entail to manage and operate car washes

  
  

  - Price for rental units on self storage

  
  

  - Phase I report

  
  

  - A list of multiple questions regarding the property, age of roofs, type of floor (asphalt, concrete), type of building, age of buildings, etc

  
  

  
  

  
  

  Due Diligence period:

  
  

  - Ongoing list of questions and follow up questions

  
  

  - Recommendations for local lenders and credit unions

  
  

  - Recommendations for local real estate attorney to review title and surveys

  
  

  - How much would it cost to add credit card machines to the car washes

  
  

  - Information for all the service providers that they currently use

  
  

  - Finding a local property manager for both sets of properties

  Example of things that you always must follow up on, until it gets 100% completed:

  
  

  - I had to get quotes for putting internet in all of the car washes for not only the credit cards, but also for the cameras that I was going to be installing. And it turned out that for all of the car washes I had to get a different internet provider because not a single one of them could provide service in more than one car wash, they just did not have service in the other properties areas. That probably took three full days worth of work to find the best internet provider for every single location.

  
  

  - I searched for the best provider for the Self Storage Facility that was 1. affordable 2. could take online rentals 3. could take credit card/bank payments. The previous owner did not have a website, and they were sending out paper invoices to all of their renters. So I had to get someone to create a website for us, and also to be able to accept rent, accept credit cards and also have people be able to lease things online. I found this very young startup that fit every single need for the property. And because they were so young, I really had to beg for them to take me as a customer. And that took a lot of following up, I said, Guys, I'm with you, I know it's not going to be perfect, but I really think we can be a very good first few customers. So let's get this going. And we got them to agree to that.

  
  

  - I had to follow up with the guy that agreed to be a property manager and was not even responding to my phone calls.

  
  

  - I had to follow up with the insurance company, I wanted to continue working with the same insurance that was the provider for the previous owner, because it was a good price, plus that insurance provider already had all of the information for the car washes. After three weeks of not getting a quote and also following up with the agent, she tells me whoops, the underwriter thought this was a renewal and send it to the wrong person in the office. And this was one week before closing. So I started Googling for highly rated insurance providers in that whole area and got quotes from everybody that I could get my hands on, We also had to make sure that this provider was real and reliable (there are horror stories about insurance companies being outside of the country and never paying things out), make sure the insurance provider is rated A++.

  Subscribe to our newsletter at the top of the page here: www.montecarlorei.com

  
  

  
  

  
  

  ---

  
  

  Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

  ]]>90e7bef2-4ade-44fd-b24c-19cee602287bThu, 03 Dec 2020 06:39:00 -080018:30falsefull176761Getting Started With Real Estate SyndicationHow should you fundraise? What are the best practices? Ben Kogut, partner at HJH Investments will share his extensive experience with fundraising for syndications.

  You can read this entire interview here: https://montecarlorei.com/getting-started-with-real-estate-syndication/

  Walk us through your first syndication raise. What did you do? How long did it take for you to raise the funds? What were the results? Lessons learned?
  It all starts with the deal, making sure that the deal itself is solid. And for me, a good deal looks like predictable cash flow. Generally speaking, that means that we have a high credit tenant with a long term lease, or multiple long term leases, something to that extent. And so making sure that all the numbers, the debt, that we structure our deals where we have a high net worth individual sign on the debt, and that the assets are in an area that we think are going to appreciate.

  On my first deal that started with my relationships. People that I've known throughout my involvement in real estate for the past 15 plus years, plus people that I know throughout my involvement in the community, I basically just started there by talking to people, Hey, here's the deal. Here's what I like about the deal. Here's what I don't like about the deal. And here's what you may expect by potentially investing in a deal like this.

  But the best advice I could say if anybody's thinking, Okay, I want to raise money or I'm thinking about one day raising money. Then now is the time to start telling people within your sphere of influence. The people that already know that you're a smart, capable individual, and that you're working on a deal, or you have a deal, Hey, would you be somebody that would be interested in investing with me once I get a deal, and I think a deal will look like this, whatever that is. If you're in triple net properties the way I am, or if you're in multifamily, or all the other different asset classes, which there are many.

  Now that you're raising all of your funds in less than a month, what are some of the best practices for fundraising for a syndication?
  1. Putting together a clear and concise investment deck, to make sure that people understand what it is that that we're trying to accomplish.
  2. This is a new addition to my practice, I've been putting together a short video where I just stand in front of the property, and I talk about it. What are we seeing here. Some people really care about what the property looks like. Some people could care less. They don't care where it is. They want to know what are the leases, who are the tenants, what are the terms? What kind of debt do we have? If I am going to put this much money in, how much am I going to get out and when. I'm trying to provide that type of data to a broad range of people.
  3. Communicating with with your investors. Right now we have upwards of 180, or close to 200 existing investors amongst our portfolio, that's always the best place to start.
  4. Another piece of advice I could give people, that I struggled with at the beginning, but is really good advice that someone gave to me is to be indifferent. To be indifferent to whether or not somebody invests in that deal or on you. Completely indifferent. I really do not care if you invest in this deal or not. It really set me free, it really takes the pressure off. I don't want anybody feel pressured to come into a deal.
  
  Ben Kogut
  www.linkedin.com/in/benkogut
  www.hjhinvestments.com

  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: How should you fundraise? What are the best practices? Ben Kogut, partner at HJH Investments will share his extensive experience with fundraising for syndications.

  You can read this entire interview here: https://montecarlorei.com/getting-started-with-real-estate-syndication/

  Walk us through your first syndication raise. What did you do? How long did it take for you to raise the funds? What were the results? Lessons learned?
  It all starts with the deal, making sure that the deal itself is solid. And for me, a good deal looks like predictable cash flow. Generally speaking, that means that we have a high credit tenant with a long term lease, or multiple long term leases, something to that extent. And so making sure that all the numbers, the debt, that we structure our deals where we have a high net worth individual sign on the debt, and that the assets are in an area that we think are going to appreciate.

  On my first deal that started with my relationships. People that I've known throughout my involvement in real estate for the past 15 plus years, plus people that I know throughout my involvement in the community, I basically just started there by talking to people, Hey, here's the deal. Here's what I like about the deal. Here's what I don't like about the deal. And here's what you may expect by potentially investing in a deal like this.

  But the best advice I could say if anybody's thinking, Okay, I want to raise money or I'm thinking about one day raising money. Then now is the time to start telling people within your sphere of influence. The people that already know that you're a smart, capable individual, and that you're working on a deal, or you have a deal, Hey, would you be somebody that would be interested in investing with me once I get a deal, and I think a deal will look like this, whatever that is. If you're in triple net properties the way I am, or if you're in multifamily, or all the other different asset classes, which there are many.

  Now that you're raising all of your funds in less than a month, what are some of the best practices for fundraising for a syndication?
  1. Putting together a clear and concise investment deck, to make sure that people understand what it is that that we're trying to accomplish.
  2. This is a new addition to my practice, I've been putting together a short video where I just stand in front of the property, and I talk about it. What are we seeing here. Some people really care about what the property looks like. Some people could care less. They don't care where it is. They want to know what are the leases, who are the tenants, what are the terms? What kind of debt do we have? If I am going to put this much money in, how much am I going to get out and when. I'm trying to provide that type of data to a broad range of people.
  3. Communicating with with your investors. Right now we have upwards of 180, or close to 200 existing investors amongst our portfolio, that's always the best place to start.
  4. Another piece of advice I could give people, that I struggled with at the beginning, but is really good advice that someone gave to me is to be indifferent. To be indifferent to whether or not somebody invests in that deal or on you. Completely indifferent. I really do not care if you invest in this deal or not. It really set me free, it really takes the pressure off. I don't want anybody feel pressured to come into a deal.
  
  Ben Kogut
  www.linkedin.com/in/benkogut
  www.hjhinvestments.com

  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>86b5e75e-b679-4d79-a6f9-ddc5613911f1Tue, 27 Oct 2020 06:00:00 -080021:06falsefull175751Legal Strategies to Protect Your Real Estate AssetsWhat are the legal aspects of forming your LLC when investing in commercial real estate? We are talking with Garrett Sutton, a corporate attorney, asset protection expert and best selling author who has sold more than 900,000 books to guide entrepreneurs and investors.

  You can read this entire interview here: https://montecarlorei.com/llc-strategies-to-protect-your-real-estate-assets/

  How should a real estate investor organize their LLC’s for best protection?
  We like having an LLC set up in the state where the property is located. If you buy a property in Oregon, we set up an Oregon LLC to be on title to the Oregon property. And in all 50 states if a tenant sues, or the law where the property is located is going to apply, if we have a number of LLC’s and we want to protect against the outside attack, that tenant suing is the inside attack, they have a claim directly against the LLC that holds the real estate, the outside attack is you get in a car wreck. It has nothing to do with the real estate but your insurance doesn’t cover the claim. And in that case, we like Wyoming and Nevada to own the Oregon LLC. If you have a property in Utah, we’d have an Utah LLC.

  Let’s dive into all of the documentation that you guys will be sending us after an LLC is formed.
  We submit the Articles of Organization to the state. It’s a very short form because this one document is a matter of public record. Anybody can look it up and see what’s on it. We don’t want to put too much information on that.
  Then behind that public document, you’re going to have the Operating Agreement, which is the roadmap for how you’re going to operate the LLC. Who are the members of the LLC? What percentages do they own? When are we going to have meetings? Can we have telephonic meetings?
  The Certificate of Formation comes back from the state saying, Yes, you’re formed, and the filing.
  The EIN stands for Employer Identification Number. That’s like a social security number for your business.
  We also have minutes of the first meeting.
  The membership certificate is like a stock certificate.

  How does an investor pays himself with an LLC?
  If you have real estate, and you’re just holding and receiving income from real estate, and we consider it passive, then the money would flow from the LLC to you as a distribution and you’re going to owe tax on that as well. You’d write a check from the LLC, to you personally and then you would cash that check and put it into your personal bank account. So we’d have money coming into the LLC from rents, let’s say you own a duplex, the rents come into the LLC, you pay all the expenses at the LLC level, and then you make a distribution from the LLC to yourself. 

  What else is important for our audience to know?
  1. Every year you have to pay a fee to the state, like we mentioned, Wyoming is $50 a year.
  2. You have to have a Registered Agent in the state where you’ve set up the LLC and a state where you’ve qualified to do business, like a Wyoming LLC qualified in California, you’d have to have a Registered Agent in Wyoming and California in that case.
  3. You need to have the separate bank account, as we mentioned, you can’t co-mingle funds.
  4. You need to do the minutes every year.
  5. You need to make sure that on all documentation, you’re using XYZ LLC and you’re signing as manager, not as a personal owner of the property.

  Garrett Sutton
  (800) 600-1760
  www.corporatedirect.com
  
  Join our newsletter here: www.montecarlorei.com

  ...]]>What are the legal aspects of forming your LLC when investing in commercial real estate? We are talking with Garrett Sutton, a corporate attorney, asset protection expert and best selling author who has sold more than 900,000 books to guide entrepreneurs and investors.

  You can read this entire interview here: https://montecarlorei.com/llc-strategies-to-protect-your-real-estate-assets/

  How should a real estate investor organize their LLC’s for best protection?
  We like having an LLC set up in the state where the property is located. If you buy a property in Oregon, we set up an Oregon LLC to be on title to the Oregon property. And in all 50 states if a tenant sues, or the law where the property is located is going to apply, if we have a number of LLC’s and we want to protect against the outside attack, that tenant suing is the inside attack, they have a claim directly against the LLC that holds the real estate, the outside attack is you get in a car wreck. It has nothing to do with the real estate but your insurance doesn’t cover the claim. And in that case, we like Wyoming and Nevada to own the Oregon LLC. If you have a property in Utah, we’d have an Utah LLC.

  Let’s dive into all of the documentation that you guys will be sending us after an LLC is formed.
  We submit the Articles of Organization to the state. It’s a very short form because this one document is a matter of public record. Anybody can look it up and see what’s on it. We don’t want to put too much information on that.
  Then behind that public document, you’re going to have the Operating Agreement, which is the roadmap for how you’re going to operate the LLC. Who are the members of the LLC? What percentages do they own? When are we going to have meetings? Can we have telephonic meetings?
  The Certificate of Formation comes back from the state saying, Yes, you’re formed, and the filing.
  The EIN stands for Employer Identification Number. That’s like a social security number for your business.
  We also have minutes of the first meeting.
  The membership certificate is like a stock certificate.

  How does an investor pays himself with an LLC?
  If you have real estate, and you’re just holding and receiving income from real estate, and we consider it passive, then the money would flow from the LLC to you as a distribution and you’re going to owe tax on that as well. You’d write a check from the LLC, to you personally and then you would cash that check and put it into your personal bank account. So we’d have money coming into the LLC from rents, let’s say you own a duplex, the rents come into the LLC, you pay all the expenses at the LLC level, and then you make a distribution from the LLC to yourself. 

  What else is important for our audience to know?
  1. Every year you have to pay a fee to the state, like we mentioned, Wyoming is $50 a year.
  2. You have to have a Registered Agent in the state where you’ve set up the LLC and a state where you’ve qualified to do business, like a Wyoming LLC qualified in California, you’d have to have a Registered Agent in Wyoming and California in that case.
  3. You need to have the separate bank account, as we mentioned, you can’t co-mingle funds.
  4. You need to do the minutes every year.
  5. You need to make sure that on all documentation, you’re using XYZ LLC and you’re signing as manager, not as a personal owner of the property.

  Garrett Sutton
  (800) 600-1760
  www.corporatedirect.com
  
  Join our newsletter here: www.montecarlorei.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>7e64fec2-55e5-4bc4-948d-d431bcf7c32aWed, 14 Oct 2020 06:24:55 -080022:01falsefull174741Mastermind Call: What Are Top Investors Doing During This Crisis (Multiple Asset Classes)This is a transcript of our 4th Mastermind Call with a group of experienced investors to understand where each investor is and how they are dealing with the Covid-19 lockdown and its consequences.

  You can read this entire episode here: https://montecarlorei.com/mastermind-call-what-are-top-investors-doing-during-this-crisis-multiple-asset-classes/

  Self Storage and Retail
  Going into month 7 of the quarantine in San Francisco, some places are being allowed to reopen at limited capacity such as nail salons and hair dressers, still there is no indoor dining allowed, although restaurants may be able to reopen at 25% capacity at the end of the month. A lot of restaurants and boutique gyms have permanently closed. There are a lot of vacant retail space for rent in all areas of the city. As far as housing, new, high end condos that are located near the large company offices are selling for 25% less than a year ago. Apartments for rent are between 15-30% cheaper than this time last year.

  Mobile Home Park Operator
  He is seeing that buyers are taking a little bit more time and there seems to be less frenzy about trying to acquire parks. A lot of people are looking, but they’re taking their time to buy. Part of it is that without that sense of a frenzy, people feel like they can take their time, it’s not as critical to get an offer out and to get a park under contract because they think it will still be there a month or two down the road. And that’s combined with some sentiment that people feel like they can wait for a little bit and hope that they might be able to find more motivated sellers over the next three to six months.

  Multi-Family Investor
  He is also taking it slow and being patient. He was starting to get a little bit more comfortable with everything around August and started to be a little more aggressive in the acquisition side, mainly looking in the Charlotte market. He thinks that the Charlotte market is really great long term, especially in light of everything going on. He thinks that the diversity of employment there is really good and sees that as a good long term market, but he stepped back a little bit when that CDC moratorium came down.

  Senior Living / Assisted Living
  They’ve been dealing with a lot of changes in the visitation front. As far as operationally, they are going to see a lot of interesting deal flow in the assisted living memory care, skilled nursing space. They’re at a demographic trough that’s going to exist for a little while. That’s where the baby boomers don’t need care yet. And their parents and people that are older than them are passing away faster than they’re being replaced. They’re at that point now for the next couple of years, where it’s going to be a little bit of a demographic challenge in this business, and then it will turn pretty sharply.

  Developer
  The past month has been definitely unexpected. They’ve a number of projects in Lake Charles, Louisiana, that got hammered by Hurricane Laura and they got to see how well the site would perform under heavy rain conditions and it performed well, including a tropical storm that came through recently. The last month has been dealing with that situation, and it has opened up more opportunities. So overall, it’s actually been good for them. They’re still seeing opportunity for new construction. They’ve three projects that they’re doing. It’s never a straight line, there are always surprises, like lenders doing the bait and switch thing pretty liberally, saying that they’ll give you amazing terms, and the loan committee comes back with this concern. So the interest rate is going up. Apart from that, it’s business as usual. They’re being very careful not to make major long term commitments unless they really see very strong market fundamentals. They’re still bullish in some markets. 

  ---...]]>This is a transcript of our 4th Mastermind Call with a group of experienced investors to understand where each investor is and how they are dealing with the Covid-19 lockdown and its consequences.

  You can read this entire episode here: https://montecarlorei.com/mastermind-call-what-are-top-investors-doing-during-this-crisis-multiple-asset-classes/

  Self Storage and Retail
  Going into month 7 of the quarantine in San Francisco, some places are being allowed to reopen at limited capacity such as nail salons and hair dressers, still there is no indoor dining allowed, although restaurants may be able to reopen at 25% capacity at the end of the month. A lot of restaurants and boutique gyms have permanently closed. There are a lot of vacant retail space for rent in all areas of the city. As far as housing, new, high end condos that are located near the large company offices are selling for 25% less than a year ago. Apartments for rent are between 15-30% cheaper than this time last year.

  Mobile Home Park Operator
  He is seeing that buyers are taking a little bit more time and there seems to be less frenzy about trying to acquire parks. A lot of people are looking, but they’re taking their time to buy. Part of it is that without that sense of a frenzy, people feel like they can take their time, it’s not as critical to get an offer out and to get a park under contract because they think it will still be there a month or two down the road. And that’s combined with some sentiment that people feel like they can wait for a little bit and hope that they might be able to find more motivated sellers over the next three to six months.

  Multi-Family Investor
  He is also taking it slow and being patient. He was starting to get a little bit more comfortable with everything around August and started to be a little more aggressive in the acquisition side, mainly looking in the Charlotte market. He thinks that the Charlotte market is really great long term, especially in light of everything going on. He thinks that the diversity of employment there is really good and sees that as a good long term market, but he stepped back a little bit when that CDC moratorium came down.

  Senior Living / Assisted Living
  They’ve been dealing with a lot of changes in the visitation front. As far as operationally, they are going to see a lot of interesting deal flow in the assisted living memory care, skilled nursing space. They’re at a demographic trough that’s going to exist for a little while. That’s where the baby boomers don’t need care yet. And their parents and people that are older than them are passing away faster than they’re being replaced. They’re at that point now for the next couple of years, where it’s going to be a little bit of a demographic challenge in this business, and then it will turn pretty sharply.

  Developer
  The past month has been definitely unexpected. They’ve a number of projects in Lake Charles, Louisiana, that got hammered by Hurricane Laura and they got to see how well the site would perform under heavy rain conditions and it performed well, including a tropical storm that came through recently. The last month has been dealing with that situation, and it has opened up more opportunities. So overall, it’s actually been good for them. They’re still seeing opportunity for new construction. They’ve three projects that they’re doing. It’s never a straight line, there are always surprises, like lenders doing the bait and switch thing pretty liberally, saying that they’ll give you amazing terms, and the loan committee comes back with this concern. So the interest rate is going up. Apart from that, it’s business as usual. They’re being very careful not to make major long term commitments unless they really see very strong market fundamentals. They’re still bullish in some markets. 

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>4c5714cf-4f7e-4e9d-abbc-b1c4660bf3d2Wed, 30 Sep 2020 04:32:26 -080020:57falsefull173731How to Grow Your Real Estate Network & How to Start Your Investing CareerNobody gets anywhere alone, everyone that is successful has gotten there with the help of many, many people. I'll also talk about how you can start your real estate career from zero and get your first deal done.

  You can read this entire episode here: https://montecarlorei.com/how-to-grow-your-real-estate-network-and-how-to-start-your-investing-career/

  How to Grow Your Network:

  1. Join Meetups in your area, even if they’re only doing online events, start attending them and getting to know people in your area.
  2. Go to as many real estate events and conferences as you can. You want to meet as many people as possible, make a note on their business card of what they focus on, make a note on what you guys talked about, if they have kids or what are their hobbies. When you get home, transfer all your contacts to a spreadsheet, or a contact management app, and send them an email saying that it was great meeting them, and add them on Linkedin.
  3. Make a name for yourself, start to be active in any platform such as Linkedin, Biggerpockets, Facebook groups. You want to join real estate groups in any of these platforms. Spend a few minutes everyday commenting on posts, and sharing insights.
  4. Check in with your network every few months. This can be done via email, Linkedin, Facebook if you added them there, but the best of all is always a phone call. I’ve created a couple of partnerships simply by checking in on people on a regular basis and seeing how they are doing.
  
  

  How to Get Your Commercial Real Estate Investing Career Started:

  1. Become a commercial real estate agent. You can focus on selling or leasing properties.
  2. You can start working for a real estate investment firm. I met someone that literally started as a secretary and worked her way up to a partner.
  3. Start investing in syndications, this allows you to invest a small amount of money, and at the same time familiarize yourself with the paperwork, terminology, how companies evaluate deals, how they pitch deals, etc.
  4. If you know someone that is a successful commercial real estate investor, you can have them be your mentor. Just make sure that you add value to that person, like bringing them deals based on their requirements.
  5. Build relationships with commercial agents in the area. Start joining their mailing lists, start asking for OM’s (offering memorandum). This way they will familiarize themselves with your name and you’ll start to learn who may be a good broker to work with.
  6. Start playing the Cashflow game by Robert Kiyosaki, it’s a very good game for you to start understanding how real estate investing works and how you can grow your net worth. You can either buy the board game, and invite your fellow real estate friends to play with you, or you can play on their website for free.
  
  

  How to Make Your First Investment if You Have No money:

  1. After you find a good property, and have shown to your network that you are learning all you can, invite friends and family to invest with you.
  2. If no friends or family are interested in joining you, partner up with someone experienced. If you have a property under contract, you can always give a significant percentage of the deal to that person, just so you can have the deal under your name and you can show your future investors what you have done with that first property.
  
  

  Buy and/or Play the Cashflow game here: Nobody gets anywhere alone, everyone that is successful has gotten there with the help of many, many people. I'll also talk about how you can start your real estate career from zero and get your first deal done.

  You can read this entire episode here: https://montecarlorei.com/how-to-grow-your-real-estate-network-and-how-to-start-your-investing-career/

  How to Grow Your Network:

  1. Join Meetups in your area, even if they’re only doing online events, start attending them and getting to know people in your area.
  2. Go to as many real estate events and conferences as you can. You want to meet as many people as possible, make a note on their business card of what they focus on, make a note on what you guys talked about, if they have kids or what are their hobbies. When you get home, transfer all your contacts to a spreadsheet, or a contact management app, and send them an email saying that it was great meeting them, and add them on Linkedin.
  3. Make a name for yourself, start to be active in any platform such as Linkedin, Biggerpockets, Facebook groups. You want to join real estate groups in any of these platforms. Spend a few minutes everyday commenting on posts, and sharing insights.
  4. Check in with your network every few months. This can be done via email, Linkedin, Facebook if you added them there, but the best of all is always a phone call. I’ve created a couple of partnerships simply by checking in on people on a regular basis and seeing how they are doing.
  
  

  How to Get Your Commercial Real Estate Investing Career Started:

  1. Become a commercial real estate agent. You can focus on selling or leasing properties.
  2. You can start working for a real estate investment firm. I met someone that literally started as a secretary and worked her way up to a partner.
  3. Start investing in syndications, this allows you to invest a small amount of money, and at the same time familiarize yourself with the paperwork, terminology, how companies evaluate deals, how they pitch deals, etc.
  4. If you know someone that is a successful commercial real estate investor, you can have them be your mentor. Just make sure that you add value to that person, like bringing them deals based on their requirements.
  5. Build relationships with commercial agents in the area. Start joining their mailing lists, start asking for OM’s (offering memorandum). This way they will familiarize themselves with your name and you’ll start to learn who may be a good broker to work with.
  6. Start playing the Cashflow game by Robert Kiyosaki, it’s a very good game for you to start understanding how real estate investing works and how you can grow your net worth. You can either buy the board game, and invite your fellow real estate friends to play with you, or you can play on their website for free.
  
  

  How to Make Your First Investment if You Have No money:

  1. After you find a good property, and have shown to your network that you are learning all you can, invite friends and family to invest with you.
  2. If no friends or family are interested in joining you, partner up with someone experienced. If you have a property under contract, you can always give a significant percentage of the deal to that person, just so you can have the deal under your name and you can show your future investors what you have done with that first property.
  
  

  Buy and/or Play the Cashflow game here: https://www.richdad.com/products/cashflow-the-board-game

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>900b2054-7dd5-4419-9a74-71ed00d6a1c9Thu, 17 Sep 2020 05:30:13 -080015:01falsefull172721How is Retail Performing? How to Project Revenue in Retail?How are retail investors dealing with everything that is happening? What kinds of things are they looking at repurposing retail spaces for? How are they projecting revenues? Chris Ressa, COO at DLC Management Corporation shares some insights.

  You can read this entire interview here: https://montecarlorei.com/how-is-retail-performing/

  What's going on in the retail space?
  There are certain places that are on fire and doing really well, and there are certain places that are challenged. Right now the most challenged is the enclosed mall. And we like to say we're in the same industry, but a different business. Most of my tenants today don't have a lot of exposure. They don't operate in a in a mall, we own either grocery anchored or what we would call power centers. A Walmart anchored, a Target anchored center with a TJ Maxx, Home Goods, a McDonald's on a pad in the parking lot. If you think about who the tenants are in those centers, they're very different than in those open air, strip centers. They're very different than the tenants you see in the enclosed mall. The enclosed mall was a destinational, retail fashion oriented shopping venue. That has shifted, it used to be driven by the department stores. the enclosed model is going through a massive transformation, the open air is going through some transformation, but there's a lot of positive transformation.

  What kinds of things are retail property owners looking at repurposing retail space for?
  In the pre pandemic, what you were seeing was this buzzword experiential retailing, which was theater and entertainment venues, but they were really going to iconic destinational retail properties, where that's not the everyday retail property in America. The everyday retail property is where someone goes and gets their nails done and picks up their groceries and grabs a slice of pizza and whatnot. And I don't know that there's going to be a huge transformation. I think that there's obviously going to be repurposing, you see a lot of the enclosed mall operators talking about maybe making deals with Amazon distribution, etc. There's going to be some of that mixed use stuff. I don't know that that's at scale.

  How are you projecting revenues? Are you projecting with additional vacancy in mind?
  The way we're looking at it is we're trying to assign a probability to the durability of the cash flow stream. When you're investing in retail properties, that's probably a key piece. If you think about any retailer, whomever it is, whether it's Walmart or TJ Maxx, or Starbucks, how successful is this location? How does that location fit into their grander plans? What do you expect will happen when they come up for renewal? Will they stay? Will they leave the market? Will they want to move down the road?

  How are you managing things through Covid?
  We had a three pillar approach through the pandemic. We called it the ate's: communicate, accommodate, and mitigate.ommunicate, accommodate, and mitigate. We need to do whatever we could to mitigate the virus, sanitize, clean our properties, and make them safe environments to shop. We needed to accommodate and work with our tenants where we could, and try to cut deals. And then we needed to communicate and continue open lines of communication. If there's anything that's positive that has happened through the pandemic is that we've had opened up the lines of communication with our tenants, our lenders, and everybody from a work from home environment more than they've ever been.

  Chris Ressa
  #ressa on Linkedin
  Retail Retold Podcast

  Join our facebook group here: How are retail investors dealing with everything that is happening? What kinds of things are they looking at repurposing retail spaces for? How are they projecting revenues? Chris Ressa, COO at DLC Management Corporation shares some insights.

  You can read this entire interview here: https://montecarlorei.com/how-is-retail-performing/

  What's going on in the retail space?
  There are certain places that are on fire and doing really well, and there are certain places that are challenged. Right now the most challenged is the enclosed mall. And we like to say we're in the same industry, but a different business. Most of my tenants today don't have a lot of exposure. They don't operate in a in a mall, we own either grocery anchored or what we would call power centers. A Walmart anchored, a Target anchored center with a TJ Maxx, Home Goods, a McDonald's on a pad in the parking lot. If you think about who the tenants are in those centers, they're very different than in those open air, strip centers. They're very different than the tenants you see in the enclosed mall. The enclosed mall was a destinational, retail fashion oriented shopping venue. That has shifted, it used to be driven by the department stores. the enclosed model is going through a massive transformation, the open air is going through some transformation, but there's a lot of positive transformation.

  What kinds of things are retail property owners looking at repurposing retail space for?
  In the pre pandemic, what you were seeing was this buzzword experiential retailing, which was theater and entertainment venues, but they were really going to iconic destinational retail properties, where that's not the everyday retail property in America. The everyday retail property is where someone goes and gets their nails done and picks up their groceries and grabs a slice of pizza and whatnot. And I don't know that there's going to be a huge transformation. I think that there's obviously going to be repurposing, you see a lot of the enclosed mall operators talking about maybe making deals with Amazon distribution, etc. There's going to be some of that mixed use stuff. I don't know that that's at scale.

  How are you projecting revenues? Are you projecting with additional vacancy in mind?
  The way we're looking at it is we're trying to assign a probability to the durability of the cash flow stream. When you're investing in retail properties, that's probably a key piece. If you think about any retailer, whomever it is, whether it's Walmart or TJ Maxx, or Starbucks, how successful is this location? How does that location fit into their grander plans? What do you expect will happen when they come up for renewal? Will they stay? Will they leave the market? Will they want to move down the road?

  How are you managing things through Covid?
  We had a three pillar approach through the pandemic. We called it the ate's: communicate, accommodate, and mitigate.ommunicate, accommodate, and mitigate. We need to do whatever we could to mitigate the virus, sanitize, clean our properties, and make them safe environments to shop. We needed to accommodate and work with our tenants where we could, and try to cut deals. And then we needed to communicate and continue open lines of communication. If there's anything that's positive that has happened through the pandemic is that we've had opened up the lines of communication with our tenants, our lenders, and everybody from a work from home environment more than they've ever been.

  Chris Ressa
  #ressa on Linkedin
  Retail Retold Podcast

  Join our facebook group here: https://facebook.com/groups/montecarlorei

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>e6ead3cc-0680-4d8c-b95d-9f31a8cd4dc7Thu, 10 Sep 2020 04:53:17 -080022:21falsefull171711How to Start Real Estate Investing & How to Determine What's a Good Project to Take On as a SolopreneurHow do you start your career in commercial real estate, what kind of properties should you look for, and how to manage your properties during Covid-19? Eric Wang, a commercial real estate investor shares how he started his commercial real estate investing career and how he is successfully investing as a solopreneur.

  You can read this entire interview here: https://bit.ly/3lDR4j1

  A lot of our listeners can relate to where you are, running your own business. I would love to hear how do you determine a good project to take on, especially in the Bay Area?
  Obviously today with the Coronavirus and people moving out of the Bay Area, it’s really difficult right now, but I just don’t want to be too forgetful of the history of the Bay Area. In the past 10 years, it was undoubtedly one of the strongest markets in the world. But as far as up until today, which have been my recent projects in the past few years, my approach has very much been influenced by the value investing, the Warren Buffett approach where, I don’t need to swing at every deal, I can just take my time. I don’t have 10, 50, $100 million in equity that I need to get out of the door. I can be patient and wait. Looking back, I ended up allowing a lot of good deals pass by, but the ones that I did pursue, I felt good about.

  Let’s take one or two examples from beginning to end. How did you analyze a particular commercial project? Why did you decide to take it on, what did you do with it? What were the scary parts? And how did you exit, if you have exited them?
  One good example is the live work loft project I invested in. It was multiple lofts, essentially multifamily, but it’s non traditional in the sense that these weren’t little apartment boxes. They were artist lofts. And at that time in 2015, Lake Merritt in Oakland was a really booming market. More attention was coming around the lake, it was starting to already get expensive. Just east of that in this quiet neighborhood, there wasn’t yet much attention there. The reason why I was able to get it early on was because there wasn’t as much attention in that neighborhood. And now in recent years, or today, there’s been focus and investment all over the Bay Area and further deep East Oakland. But at that time, it wasn’t that clear.

  So it’s this path of growth mentality, the location was in the path of growth, outside of Lake Merritt. I acquired that and the goal was to transition these very large units, these lofts from very cheap space used for artists, or for construction people, people who had all different sorts of crafts and hobbies in these spaces, and small businesses as well, to transition that into more lifestyle. We provided some of the basic things, like bike parking, put on a new roof, upgraded the kitchen interior finishes, they were just plywood type finishes. And we got a lot of great tenants.

  Was it zoned live work already when you purchased it?
  Yes, it was already zoned that way. And I didn’t need to change anything about the zoning. The major value add there was just upgrading the use, just making it more efficiently used and presentable for the market of people that were moving into the area at that time.

  And you didn’t do a ton of construction. You did not make these lofts smaller.
  No, we thought about that, but we saw the demand and we saw the rental pop already just from improvements that we made. So we didn’t feel the need to do that. It was mostly interior renovations and common area improvements and basic building upgrades.

  And then you rented it out, and then you sold it?
  Yes, he was another operator.

  Eric Wang
  eric@revprojects.com
  www.revprojects.com

  Subscribe to our newsletter here: www.montecarlorei.com

  ...]]>How do you start your career in commercial real estate, what kind of properties should you look for, and how to manage your properties during Covid-19? Eric Wang, a commercial real estate investor shares how he started his commercial real estate investing career and how he is successfully investing as a solopreneur.

  You can read this entire interview here: https://bit.ly/3lDR4j1

  A lot of our listeners can relate to where you are, running your own business. I would love to hear how do you determine a good project to take on, especially in the Bay Area?
  Obviously today with the Coronavirus and people moving out of the Bay Area, it’s really difficult right now, but I just don’t want to be too forgetful of the history of the Bay Area. In the past 10 years, it was undoubtedly one of the strongest markets in the world. But as far as up until today, which have been my recent projects in the past few years, my approach has very much been influenced by the value investing, the Warren Buffett approach where, I don’t need to swing at every deal, I can just take my time. I don’t have 10, 50, $100 million in equity that I need to get out of the door. I can be patient and wait. Looking back, I ended up allowing a lot of good deals pass by, but the ones that I did pursue, I felt good about.

  Let’s take one or two examples from beginning to end. How did you analyze a particular commercial project? Why did you decide to take it on, what did you do with it? What were the scary parts? And how did you exit, if you have exited them?
  One good example is the live work loft project I invested in. It was multiple lofts, essentially multifamily, but it’s non traditional in the sense that these weren’t little apartment boxes. They were artist lofts. And at that time in 2015, Lake Merritt in Oakland was a really booming market. More attention was coming around the lake, it was starting to already get expensive. Just east of that in this quiet neighborhood, there wasn’t yet much attention there. The reason why I was able to get it early on was because there wasn’t as much attention in that neighborhood. And now in recent years, or today, there’s been focus and investment all over the Bay Area and further deep East Oakland. But at that time, it wasn’t that clear.

  So it’s this path of growth mentality, the location was in the path of growth, outside of Lake Merritt. I acquired that and the goal was to transition these very large units, these lofts from very cheap space used for artists, or for construction people, people who had all different sorts of crafts and hobbies in these spaces, and small businesses as well, to transition that into more lifestyle. We provided some of the basic things, like bike parking, put on a new roof, upgraded the kitchen interior finishes, they were just plywood type finishes. And we got a lot of great tenants.

  Was it zoned live work already when you purchased it?
  Yes, it was already zoned that way. And I didn’t need to change anything about the zoning. The major value add there was just upgrading the use, just making it more efficiently used and presentable for the market of people that were moving into the area at that time.

  And you didn’t do a ton of construction. You did not make these lofts smaller.
  No, we thought about that, but we saw the demand and we saw the rental pop already just from improvements that we made. So we didn’t feel the need to do that. It was mostly interior renovations and common area improvements and basic building upgrades.

  And then you rented it out, and then you sold it?
  Yes, he was another operator.

  Eric Wang
  eric@revprojects.com
  www.revprojects.com

  Subscribe to our newsletter here: www.montecarlorei.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>78e41bc8-06de-41cb-b3ee-8c97941cf630Tue, 01 Sep 2020 05:44:24 -080021:11falsefull170701Opportunities in Real Estate: How do You Pick Which Ones to Work on? Where do You Look for Stranded Assets?How do you decide which opportunities to work on as we find stranded assets? We are continuing our conversation with Victor Menasce, he shares excellent insights into his methodology.

  You can read this entire interview here: https://bit.ly/327vMRL

  When you look at a property, what’s your thought process of figuring out how can I add value to this, and create something out of nothing?
  Whenever I look at a property, I’m always thinking in terms of highest and best use. I’m looking to see what are all of the assets. I’m looking at zoning, I’m looking at what zoning has been approved around it or across the street around the corner to see if there’s any precedent for changing the zoning on that particular property. The zoning is always what is the property right now. It’s not what it could be in the future. So if it was a corner store, it’s zoned commercial for corner stores. But across the street, there’s a 20 story building, chances are good that you might get rezoned for a 20 story building. So you have to look to see what else has been done in the area. One of my favorites is something called conservation easements. There is a tax regulation called IRC 170(h) that allows you to donate a piece of land to conservation in perpetuity. And in exchange for that you get a tax deduction. Not what you paid for it, but for its value according to its highest and best use. Now, remember, this property has to have real wilderness conservation value, you're not going to take a parking lot in Pittsburgh and return it to wilderness ever. It has to be something that has real legitimate conservation value. But imagine it has minerals underneath it, maybe it has oil. What if you could get a tax deduction, you could say, It has a nice lake on it, I'm going to donate this to conservation. It has to be donated to a 501c3 land trust. And then you get a tax deduction for the oil that you never pump.

  How do you pick which ones to take on?
  You have to be selective. I'm looking at an opportunity right now, in our market there's a shortage of industrial land. And there's an acute need for contractors, and builders to store building materials. A place where they can put down a half dozen C Can containers and they can store lumber. If they can get a deal on building materials, whether it's siding, or lumber, anything that it's going to be in short supply that they need over the next 8, 10, 12 months, because we're definitely in a supply chain constrained environment. They need that space.

  I'm in the middle of striking a deal right now with a landowner who has some land, they don't know what to do with it. I'm probably not even going to buy the land, I'll probably end up just leasing it. And then put security fence around it, put down some C Can containers, provide secure access and lease out these spots to different builders as an outdoor storage facility. It doesn't have to be climate controlled, they can drive in with their trucks and trailers and load up. And I'm solving a business problem for a very low startup cost.

  Do you have a process of how you go about your day?
  These things come in when they come in and you look at them and try and give a quick no if you can. I don't spend too much time looking at things. If there's too many moving parts, if there's too much risk of it coming together, then we'll pass on it and pass on it very quickly. As far as the other ones, we'll get with the team and we'll see how would we put this together. They literally come in every day of the week. So we have to dispatch them fairly quickly. And some of them have a gestation period. Sometimes they come together in a matter of weeks, and sometimes in months.

  Victor Menasce
  victor@victorjm.com
  http://victorjm.com/

  --- Support this]]>How do you decide which opportunities to work on as we find stranded assets? We are continuing our conversation with Victor Menasce, he shares excellent insights into his methodology.

  You can read this entire interview here: https://bit.ly/327vMRL

  When you look at a property, what’s your thought process of figuring out how can I add value to this, and create something out of nothing?
  Whenever I look at a property, I’m always thinking in terms of highest and best use. I’m looking to see what are all of the assets. I’m looking at zoning, I’m looking at what zoning has been approved around it or across the street around the corner to see if there’s any precedent for changing the zoning on that particular property. The zoning is always what is the property right now. It’s not what it could be in the future. So if it was a corner store, it’s zoned commercial for corner stores. But across the street, there’s a 20 story building, chances are good that you might get rezoned for a 20 story building. So you have to look to see what else has been done in the area. One of my favorites is something called conservation easements. There is a tax regulation called IRC 170(h) that allows you to donate a piece of land to conservation in perpetuity. And in exchange for that you get a tax deduction. Not what you paid for it, but for its value according to its highest and best use. Now, remember, this property has to have real wilderness conservation value, you're not going to take a parking lot in Pittsburgh and return it to wilderness ever. It has to be something that has real legitimate conservation value. But imagine it has minerals underneath it, maybe it has oil. What if you could get a tax deduction, you could say, It has a nice lake on it, I'm going to donate this to conservation. It has to be donated to a 501c3 land trust. And then you get a tax deduction for the oil that you never pump.

  How do you pick which ones to take on?
  You have to be selective. I'm looking at an opportunity right now, in our market there's a shortage of industrial land. And there's an acute need for contractors, and builders to store building materials. A place where they can put down a half dozen C Can containers and they can store lumber. If they can get a deal on building materials, whether it's siding, or lumber, anything that it's going to be in short supply that they need over the next 8, 10, 12 months, because we're definitely in a supply chain constrained environment. They need that space.

  I'm in the middle of striking a deal right now with a landowner who has some land, they don't know what to do with it. I'm probably not even going to buy the land, I'll probably end up just leasing it. And then put security fence around it, put down some C Can containers, provide secure access and lease out these spots to different builders as an outdoor storage facility. It doesn't have to be climate controlled, they can drive in with their trucks and trailers and load up. And I'm solving a business problem for a very low startup cost.

  Do you have a process of how you go about your day?
  These things come in when they come in and you look at them and try and give a quick no if you can. I don't spend too much time looking at things. If there's too many moving parts, if there's too much risk of it coming together, then we'll pass on it and pass on it very quickly. As far as the other ones, we'll get with the team and we'll see how would we put this together. They literally come in every day of the week. So we have to dispatch them fairly quickly. And some of them have a gestation period. Sometimes they come together in a matter of weeks, and sometimes in months.

  Victor Menasce
  victor@victorjm.com
  http://victorjm.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>e0c4bbac-315d-4271-b541-3489d287e875Thu, 20 Aug 2020 06:03:59 -080016:12falsefull169691What is a Stranded Asset? 2 Examples of How to Find Opportunities in Stranded Assets.What are some ideas of how to think outside the box and negotiate real estate deals during these times? We asked Victor Menasce, host of The Real Estate Espresso Podcast, author of Magnetic Capital, and experienced investor and developer.

  You can read this entire interview here: https://montecarlorei.com/what-is-a-stranded-asset-how-to-look-for-opportunities-in-stranded-assets/

  What is a stranded asset? And then we can jump into some examples of stranded assets.
  I'd like to make a distinction in defining the stranded asset. Most of the time people are thinking about distressed assets. Now, in a lot of cases, those distressed assets haven't appeared on the market yet, or if they are, it's really just the very beginning. We're in the midst of a moratorium on evictions, a moratorium on foreclosures. But we know there's a backlog at this stage of millions of distressed properties. I read a report last week that showed that 4.5 million homes in the United States are in either in default or in forbearance. And that happened literally in a very short time period. Now, if you think about the entire financial crisis that took five, six years to play out, a total of 10 million distressed properties, we have gotten half of that in just a few months. So the speed with which this market is gone into distress is unprecedented. A lot of money's sitting on the sidelines today just waiting for those distressed assets, whether it's single family homes, hotels, office buildings, retail, there's going to be a ton of distressed assets on the market and all the money will be chasing those distressed assets.

  Now the stranded asset is an asset that is a perfectly good asset. What makes it stranded is you can't get to it from here. One of the examples that I give is the following, there's a there's a lighthouse in Prince Edward Island called the Baywatch lighthouse. And you can actually book this lighthouse on Airbnb, and you can stay in it on for the weekend. It's in all the tourism brochures and that would be a wonderful income producing asset. Now, if you take that same lighthouse and you put it out in the middle of the Atlantic, and it's a little bit stormy, and it's not very safe to get to, it might be another very good asset from the perspective that it would be great to spend the weekend, that would be a unique experience, but it's stranded because you can't get to it from here, where it's difficult to get to it, it's inaccessible in some way. And that's what distinguishes a stranded asset.

  Now, we know that there are a lot of restaurants out there that are shutting down, because they've gone through several months now with no revenue, or insufficient revenue. In some cases, the owners are simply tired. I've come across several restaurants just in my own home community, where there's no reason for them to shut down other than the owner is 75 years old, and he doesn't want to go through the energy of restarting again. 

  there are going to be a lot of commercial kitchens for sale, those are maybe distressed assets. Maybe they just shut down because they decided that they're getting out of the business. Those aren't distressed assets. They're just stranded assets. But there's an even more important stranded asset, and that is the relationship between the customer and the menu. You pay them a royalty for every sale, and you deliver their favorite items.

  Victor Menasce
  http://victorjm.com/
  
  Subscribe to our newsletter here: http://montecarlorei.com/

  ---...]]>What are some ideas of how to think outside the box and negotiate real estate deals during these times? We asked Victor Menasce, host of The Real Estate Espresso Podcast, author of Magnetic Capital, and experienced investor and developer.

  You can read this entire interview here: https://montecarlorei.com/what-is-a-stranded-asset-how-to-look-for-opportunities-in-stranded-assets/

  What is a stranded asset? And then we can jump into some examples of stranded assets.
  I'd like to make a distinction in defining the stranded asset. Most of the time people are thinking about distressed assets. Now, in a lot of cases, those distressed assets haven't appeared on the market yet, or if they are, it's really just the very beginning. We're in the midst of a moratorium on evictions, a moratorium on foreclosures. But we know there's a backlog at this stage of millions of distressed properties. I read a report last week that showed that 4.5 million homes in the United States are in either in default or in forbearance. And that happened literally in a very short time period. Now, if you think about the entire financial crisis that took five, six years to play out, a total of 10 million distressed properties, we have gotten half of that in just a few months. So the speed with which this market is gone into distress is unprecedented. A lot of money's sitting on the sidelines today just waiting for those distressed assets, whether it's single family homes, hotels, office buildings, retail, there's going to be a ton of distressed assets on the market and all the money will be chasing those distressed assets.

  Now the stranded asset is an asset that is a perfectly good asset. What makes it stranded is you can't get to it from here. One of the examples that I give is the following, there's a there's a lighthouse in Prince Edward Island called the Baywatch lighthouse. And you can actually book this lighthouse on Airbnb, and you can stay in it on for the weekend. It's in all the tourism brochures and that would be a wonderful income producing asset. Now, if you take that same lighthouse and you put it out in the middle of the Atlantic, and it's a little bit stormy, and it's not very safe to get to, it might be another very good asset from the perspective that it would be great to spend the weekend, that would be a unique experience, but it's stranded because you can't get to it from here, where it's difficult to get to it, it's inaccessible in some way. And that's what distinguishes a stranded asset.

  Now, we know that there are a lot of restaurants out there that are shutting down, because they've gone through several months now with no revenue, or insufficient revenue. In some cases, the owners are simply tired. I've come across several restaurants just in my own home community, where there's no reason for them to shut down other than the owner is 75 years old, and he doesn't want to go through the energy of restarting again. 

  there are going to be a lot of commercial kitchens for sale, those are maybe distressed assets. Maybe they just shut down because they decided that they're getting out of the business. Those aren't distressed assets. They're just stranded assets. But there's an even more important stranded asset, and that is the relationship between the customer and the menu. You pay them a royalty for every sale, and you deliver their favorite items.

  Victor Menasce
  http://victorjm.com/
  
  Subscribe to our newsletter here: http://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>e07eb55d-b35f-4667-a4ea-c47a95428d44Tue, 11 Aug 2020 04:54:37 -080017:09falsefull168681What is CMBS? What are the Delinquency Rates Today? What can Investors do to Take Advantage of Commercial Real Estate Deals in the Future?Today we learn what is CMBS, how are the delinquency rates of CMBS loans in each asset class, how does it differ from the 2008 rates, and what can investors do to prepare to take advantage of commercial real estate deals in the future. Jyoti Yadav, CMBS analyst at Trepp shares insights.

  You can read this entire interview here: https://montecarlorei.com/what-is-cmbs-how-are-delinquency-rates-today-what-can-investors-do-to-take-advantage-of-commercial-real-estate-deals-in-the-future/

  What is CMBS?
  CMBS stands for commercial mortgage backed securities. It's essentially a financing vehicle to provide loans, or financing to commercial real estate property owners. This is not the only option available in the entire universe, CMBS accounts for 15 to 20% of the lending universe. It competes with insurance companies, banks and other financial institutions to provide loans to the commercial real estate industry. What happens in the market is that a bank, let's suppose entity A will provide, let's say, 10 loans to property owners across America, different property types, different geographic locations. That bank, if it has provided, let's say 100 million dollars worth of loans, will pull all of those loans together, that means the monthly mortgage payment that the borrowers are making to lenders. They'll pull all of that together and issue bonds which will be sold to investors.

  What is the current state of CMBS today?
  Since COVID, whatever happened before March 2020, was a completely different story. The market was performing in a completely different way. And now after let's say late March, the situation has drastically changed. What is really happening is that there isn't as aggressive lending out there in the commercial real estate space. Lenders are extremely cautious. They want to really analyze the property. Let's suppose I am lending to office space in Houston, Texas. Before this crisis when oil prices were not that low, and the market was doing okay, they would look at the tenant roster, they would see who the tenants are and, most of the time there were no issues. Now in Texas, energy companies have been battered and the credit quality of the tenant has become an issue, you do not know if the current tenant of the property will continue its lease. You do not know if they will continue to make payments and that is really making lenders take a step back and understand who should they lend money to, and all sorts of analysis they need to do. Because of that, we have not really seen a lot of lending for hotels, of course, because hotels have suffered a lot and are still suffering a lot. So, there is a lot of hesitation in lending. And even when there is lending, there's a lot of analysis that's going on, and this also has increased the cost of borrowing for borrowers.

  How are the different asset classes doing, the different property types performing in the CMBS world?
  The June delinquency report that we published had a delinquency rate of 10.32%. This means that more than $50 billion worth of loans are behind on their payment, and there is distress in the sector. If we compare it to an earlier crisis, in the last financial crisis, the number was 10.34%. So we are fairly close to the peak that we have ever seen.

  How long did it take to get to this 10% in 2008 because we are just four or five months into COVID?
  10.34%, was in July 2012, the crisis started in 2007/2008, so it took some time for us to reach that number. Fast forward to April 2020, that number was 2.29%. And now in June of 2020, it's at about 10%. So it was a very fast increase.

  Jyoti Yadav
  info@trepp.com

  --- Support this...]]>Today we learn what is CMBS, how are the delinquency rates of CMBS loans in each asset class, how does it differ from the 2008 rates, and what can investors do to prepare to take advantage of commercial real estate deals in the future. Jyoti Yadav, CMBS analyst at Trepp shares insights.

  You can read this entire interview here: https://montecarlorei.com/what-is-cmbs-how-are-delinquency-rates-today-what-can-investors-do-to-take-advantage-of-commercial-real-estate-deals-in-the-future/

  What is CMBS?
  CMBS stands for commercial mortgage backed securities. It's essentially a financing vehicle to provide loans, or financing to commercial real estate property owners. This is not the only option available in the entire universe, CMBS accounts for 15 to 20% of the lending universe. It competes with insurance companies, banks and other financial institutions to provide loans to the commercial real estate industry. What happens in the market is that a bank, let's suppose entity A will provide, let's say, 10 loans to property owners across America, different property types, different geographic locations. That bank, if it has provided, let's say 100 million dollars worth of loans, will pull all of those loans together, that means the monthly mortgage payment that the borrowers are making to lenders. They'll pull all of that together and issue bonds which will be sold to investors.

  What is the current state of CMBS today?
  Since COVID, whatever happened before March 2020, was a completely different story. The market was performing in a completely different way. And now after let's say late March, the situation has drastically changed. What is really happening is that there isn't as aggressive lending out there in the commercial real estate space. Lenders are extremely cautious. They want to really analyze the property. Let's suppose I am lending to office space in Houston, Texas. Before this crisis when oil prices were not that low, and the market was doing okay, they would look at the tenant roster, they would see who the tenants are and, most of the time there were no issues. Now in Texas, energy companies have been battered and the credit quality of the tenant has become an issue, you do not know if the current tenant of the property will continue its lease. You do not know if they will continue to make payments and that is really making lenders take a step back and understand who should they lend money to, and all sorts of analysis they need to do. Because of that, we have not really seen a lot of lending for hotels, of course, because hotels have suffered a lot and are still suffering a lot. So, there is a lot of hesitation in lending. And even when there is lending, there's a lot of analysis that's going on, and this also has increased the cost of borrowing for borrowers.

  How are the different asset classes doing, the different property types performing in the CMBS world?
  The June delinquency report that we published had a delinquency rate of 10.32%. This means that more than $50 billion worth of loans are behind on their payment, and there is distress in the sector. If we compare it to an earlier crisis, in the last financial crisis, the number was 10.34%. So we are fairly close to the peak that we have ever seen.

  How long did it take to get to this 10% in 2008 because we are just four or five months into COVID?
  10.34%, was in July 2012, the crisis started in 2007/2008, so it took some time for us to reach that number. Fast forward to April 2020, that number was 2.29%. And now in June of 2020, it's at about 10%. So it was a very fast increase.

  Jyoti Yadav
  info@trepp.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>48fb4d71-da91-4931-a0fa-d67fead5dab1Thu, 30 Jul 2020 06:40:35 -080026:53falsefull167671Live Real Estate Mastermind: How are Multiple Asset Classes PerformingFor the first time ever, we recorded our monthly Mastermind Call with several experienced real estate investors across multiple asset classes. Joining us in this month's mastermind were Beth Azor, Victor Menasce, Andrew Lanoie, Todd Sulzinger, Christian Cascone, RK Kliebenstein. Each investor shares what they are currently going through in their specific situation, market, and asset class.

  Watch the entire recording here: https://youtu.be/-HUUIv1hDmA
  Read the entire transcript here: https://rb.gy/frif7o

  Steff Boldrini, Retail, Self Storage
  San Francisco is a ghost town. Nobody wants to quarantine in four walls with no access to work at a coffee shop or in common areas of their buildings. There are deals in the rental space that are completely unheard of and we would have never imagined they would be happening like one to two months off, and as much as 30% rent decrease.

  Andrew Lanoie, Mobile Home Parks
  In general have been down a little bit, not too bad. A lot of parts of our business have have been frozen, we sent our construction company home. And as everyone knows, some of the lending dried up a little bit, some lenders are back, and some stayed the same through all this. We're just figuring out how to get back into acquisition mode, and all of the Capex and all the projects and things that we have in our world for our portfolio.

  Todd Sulzinger, Mobile Home Parks
  In our parks, we've had some struggles with collections as well, I have parks in Georgia and Tennessee and we've had more issues with collections in Georgia. It has been a combination of some tenants who were affected by COVID related situations where they lost their jobs due to the pandemic. And in those situations, we reached out to them and said, If you actually were then please fill out this form, and get proof from your employer that your job was affected by the pandemic. In other cases, we've had people really take advantage of the fact that the courts have been closed.

  Beth Azor, Retail
  I own six retail shopping centers, we've had a ton of retail bankruptcies from Tuesday Morning, Pier One, Ascena is about to file, 24 Hour Fitness, GNC Gold's Gym, Starbucks will close 400 stores. The national dealmaking will be on hold until 2021 because of the inability to travel, anyone that owns shopping centers looking to fill retail space in the next 6-9months, will be focusing on local and regional players. 

  Victor Menasce, Developer
  We are making some progress on getting debt for new construction and even some equity as well. It's tougher than it was. We're not doing anything in retail or office, thankfully. But in the multi-family and senior housing asset classes, we are able to find both debt and equity. For the moment, it appears as though rent collections in multi-family are pretty strong.

  RK Kliebenstein, Self Storage
  Our industry has always been regarded as recession resilient. Delinquency is now hovering somewhere between 5 and 7%. We look at it as not being devastating, but certainly as being cautionary. When money from the Cares Act runs out that will be a better tell.

  Christian Cascone, Developer, Multi-Family
  The market just has gotten too unpredictable at this point. There's capital being injected in the wrong places and we feel like it's causing some problems as far as the free market is essentially dead at this point. We're trying to see if there's going to be some opportunities down the road for high quality assets and great locations in the US, 12-18 months from now. We're seeing opportunity zones get hot again, as people have huge capital gains that they're able to deploy into,
  
  Join our newsletter here: www.montecarlorei.com

  ---]]>For the first time ever, we recorded our monthly Mastermind Call with several experienced real estate investors across multiple asset classes. Joining us in this month's mastermind were Beth Azor, Victor Menasce, Andrew Lanoie, Todd Sulzinger, Christian Cascone, RK Kliebenstein. Each investor shares what they are currently going through in their specific situation, market, and asset class.

  Watch the entire recording here: https://youtu.be/-HUUIv1hDmA
  Read the entire transcript here: https://rb.gy/frif7o

  Steff Boldrini, Retail, Self Storage
  San Francisco is a ghost town. Nobody wants to quarantine in four walls with no access to work at a coffee shop or in common areas of their buildings. There are deals in the rental space that are completely unheard of and we would have never imagined they would be happening like one to two months off, and as much as 30% rent decrease.

  Andrew Lanoie, Mobile Home Parks
  In general have been down a little bit, not too bad. A lot of parts of our business have have been frozen, we sent our construction company home. And as everyone knows, some of the lending dried up a little bit, some lenders are back, and some stayed the same through all this. We're just figuring out how to get back into acquisition mode, and all of the Capex and all the projects and things that we have in our world for our portfolio.

  Todd Sulzinger, Mobile Home Parks
  In our parks, we've had some struggles with collections as well, I have parks in Georgia and Tennessee and we've had more issues with collections in Georgia. It has been a combination of some tenants who were affected by COVID related situations where they lost their jobs due to the pandemic. And in those situations, we reached out to them and said, If you actually were then please fill out this form, and get proof from your employer that your job was affected by the pandemic. In other cases, we've had people really take advantage of the fact that the courts have been closed.

  Beth Azor, Retail
  I own six retail shopping centers, we've had a ton of retail bankruptcies from Tuesday Morning, Pier One, Ascena is about to file, 24 Hour Fitness, GNC Gold's Gym, Starbucks will close 400 stores. The national dealmaking will be on hold until 2021 because of the inability to travel, anyone that owns shopping centers looking to fill retail space in the next 6-9months, will be focusing on local and regional players. 

  Victor Menasce, Developer
  We are making some progress on getting debt for new construction and even some equity as well. It's tougher than it was. We're not doing anything in retail or office, thankfully. But in the multi-family and senior housing asset classes, we are able to find both debt and equity. For the moment, it appears as though rent collections in multi-family are pretty strong.

  RK Kliebenstein, Self Storage
  Our industry has always been regarded as recession resilient. Delinquency is now hovering somewhere between 5 and 7%. We look at it as not being devastating, but certainly as being cautionary. When money from the Cares Act runs out that will be a better tell.

  Christian Cascone, Developer, Multi-Family
  The market just has gotten too unpredictable at this point. There's capital being injected in the wrong places and we feel like it's causing some problems as far as the free market is essentially dead at this point. We're trying to see if there's going to be some opportunities down the road for high quality assets and great locations in the US, 12-18 months from now. We're seeing opportunity zones get hot again, as people have huge capital gains that they're able to deploy into,
  
  Join our newsletter here: www.montecarlorei.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>d8f63bcc-1f35-44c0-adc0-fcaaf1625e02Thu, 23 Jul 2020 06:16:05 -080038:41falsefull166661How To Invest in Land? Pros and Cons of Land InvestingWhat does it entail to invest in land? Where are the opportunities and how can you monetize land investing? Today we are talking with Ryan Pettitt from Prosperity Aid.

  You can read this interview here: https://montecarlorei.com/how-to-invest-in-land-and-what-are-the-pros-and-cons-of-land-investing/

  Tell us what your experience has been with regards to investing in land.
  When we first got started we were introduced to some folks in the industry. One Mark Podolski with the Land Geek, and then also to Jack and Jill with Land Academy, understanding the premise behind investing in land and creating a business around it. And this is undeveloped raw land specifically, and looking for those opportunities to resell and generate cash flow from it. Like any investments, you can either do it actively or passively. So we had the passive experience and our goal was to expand into active investing and creating a business structure around it, so that was the first venture into doing that. But we first got started with finding opportunities to buy vacant land below market value, and find an end buyer and continuing to sell it below that market value to be competitive in the marketplace, and ultimately being able to sell it to them as a flip transaction, or creating cash flow by fronting the capital and collecting monthly payments. So that's how we get started with the business. And then there are opportunities within land to expand beyond just the parcel itself, because you can look at ways that you can turn it into a more productive and sustainable piece of property and doing things like a better use with agriculture, potential developments, a lot of people land bank and so there's a lot of different routes that you can go within the land that can be considered an investment, either from an active or passive standpoint.

  Are there any tax advantages of holding land, as there are with commercial properties?
  If you talk about land itself, it's actually not an incentivized asset, you can't collect appreciation on it. And the purpose of the land being vacant is that there are no structures on it. So there's nothing that you could utilize from a taxation standpoint. However, as you look into different opportunities to change the use or classification, for example agriculture, you can always make those improvements to the land and create some tax incentives. Right now, there's actually a huge push in the marketplace to continue to focus on agricultural land, farming use because of the need of our surrounding communities and access to those fresh fruits and vegetables. The government is actually providing grants and low interest loans as an incentive to develop those properties and create something that is sustainable. The land itself is not but then you change it into a better use, and then you can realize some tax advantages from that.
  
  What are the potential downsides of investing in land?
  It's not a tax advantage asset on its own. You have to create those opportunities, and especially as we talk about cashflow, that's not something that resonates with a lot of folks that invest in structures. But you can generate that cash flow by holding that property and being able to collect monthly payments. 

  The other thing is that a lot of folks believe that this can be set up very passively from a business perspective. And I'd say that there are a lot of moving parts and there are a lot of intricacies to the business that it takes some time to establish those structures, those processes, and it's definitely a very active business and a lot involved with it.

  Ryan Pettitt
  ryan@prosperityaid.com

  Subscribe to our newsletter here: www.montecarlorei.com

  ]]>What does it entail to invest in land? Where are the opportunities and how can you monetize land investing? Today we are talking with Ryan Pettitt from Prosperity Aid.

  You can read this interview here: https://montecarlorei.com/how-to-invest-in-land-and-what-are-the-pros-and-cons-of-land-investing/

  Tell us what your experience has been with regards to investing in land.
  When we first got started we were introduced to some folks in the industry. One Mark Podolski with the Land Geek, and then also to Jack and Jill with Land Academy, understanding the premise behind investing in land and creating a business around it. And this is undeveloped raw land specifically, and looking for those opportunities to resell and generate cash flow from it. Like any investments, you can either do it actively or passively. So we had the passive experience and our goal was to expand into active investing and creating a business structure around it, so that was the first venture into doing that. But we first got started with finding opportunities to buy vacant land below market value, and find an end buyer and continuing to sell it below that market value to be competitive in the marketplace, and ultimately being able to sell it to them as a flip transaction, or creating cash flow by fronting the capital and collecting monthly payments. So that's how we get started with the business. And then there are opportunities within land to expand beyond just the parcel itself, because you can look at ways that you can turn it into a more productive and sustainable piece of property and doing things like a better use with agriculture, potential developments, a lot of people land bank and so there's a lot of different routes that you can go within the land that can be considered an investment, either from an active or passive standpoint.

  Are there any tax advantages of holding land, as there are with commercial properties?
  If you talk about land itself, it's actually not an incentivized asset, you can't collect appreciation on it. And the purpose of the land being vacant is that there are no structures on it. So there's nothing that you could utilize from a taxation standpoint. However, as you look into different opportunities to change the use or classification, for example agriculture, you can always make those improvements to the land and create some tax incentives. Right now, there's actually a huge push in the marketplace to continue to focus on agricultural land, farming use because of the need of our surrounding communities and access to those fresh fruits and vegetables. The government is actually providing grants and low interest loans as an incentive to develop those properties and create something that is sustainable. The land itself is not but then you change it into a better use, and then you can realize some tax advantages from that.
  
  What are the potential downsides of investing in land?
  It's not a tax advantage asset on its own. You have to create those opportunities, and especially as we talk about cashflow, that's not something that resonates with a lot of folks that invest in structures. But you can generate that cash flow by holding that property and being able to collect monthly payments. 

  The other thing is that a lot of folks believe that this can be set up very passively from a business perspective. And I'd say that there are a lot of moving parts and there are a lot of intricacies to the business that it takes some time to establish those structures, those processes, and it's definitely a very active business and a lot involved with it.

  Ryan Pettitt
  ryan@prosperityaid.com

  Subscribe to our newsletter here: www.montecarlorei.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>f95169fe-c92f-4b4a-a0de-2e65d61f5c53Thu, 16 Jul 2020 06:21:44 -080018:47falsefull165651How to Evaluate a Self Storage Property? What do REIT's Look For When Buying Your Property?How to evaluate a self storage property? What do self storage REITs look for when buying new properties? Kris Benson, Chief Investment Officer for Reliant Investments shares some insights into this recession resistant asset class.

  You can read this entire interview here: https://montecarlorei.com/how-to-evaluate-a-self-storage-property-what-do-reits-look-for-when-buying-new-properties/

  What are some of the things that you look for in a property before making an investment?
  Where we start is the market and we’re looking at very similar demographics to what you may look for any asset class. Traffic count is a big one, understanding how many cars are going by per day in storage is interesting in that the market is really the one, three, and five mile radius around your facility. That’s the data that really matters. Because people typically are not traveling too much farther than that to come to a storage facility. We don’t have amenities, it’s a garage. There’s not necessarily specific amenities people will travel to like they may for a multi-family property or an apartment. Population growth, job growth, average income, median household value, those are some of the pieces that we’re looking at to understand who the potential tenant may be, and the strength of the market. And then, a big component of it is understanding the competitive set in that particular market as well. Who are the competitors going to be? Are they going to be institutional REITs or is it going to be a mom and pop competitive set? So we try to build a story around each one of the properties we’re purchasing. So it’s a number of different data points that we bring together.

  What are some of the ways that you add value, or look at adding value in a particular property?
  On our side it’s different for each property that we are looking at. We don’t go into a particular value add strategy and it’s the same for every property. We’ve sold 36 properties, and the majority of those have been sold to the REIT’s. So we look at each property with a lens of what our exit could be. Sometimes we may go into a facility that’s cash flowing currently, and maybe it’s been operated by a mom and pop owner and they have some additional acreage that they’ve not capitalized on and we may build it do an expansion. We could build an additional 15,000 square feet and get that leased up.

  Our goal is to try to grow the NOI on that particular property. That can be one value added strategy. What’s interesting about storage is that the marketplace is very fragmented. The REIT’s own about 20 to 25% of the market and the rest is very much fragmented between regional operators like us at Reliant, and operators, like mom and pop shops who have one or two facilities. And usually in those mom and pop operated facilities, there’s a lot of low hanging fruit to glean additional revenues. And so sometimes the value add is building out some ancillary income streams like doing U-Haul truck rentals, or a retail component where we’re selling locks boxes, those types of items where maybe the mom and pop operator just didn’t capitalize on that opportunity. So, we look at each property differently and then as we underwrite we add what that value add is, or business plan may be.

  When you look at exiting to a REIT, what do they look for in your properties when they are purchasing them?
  Typically they’re looking for a market presence in an area that they think has upside, that will help them grow their portfolio, where they don't take construction risk.
  
  Kris Benson https://www.reliantinvestments.com/

  Subscribe to our newsletter here: How to evaluate a self storage property? What do self storage REITs look for when buying new properties? Kris Benson, Chief Investment Officer for Reliant Investments shares some insights into this recession resistant asset class.

  You can read this entire interview here: https://montecarlorei.com/how-to-evaluate-a-self-storage-property-what-do-reits-look-for-when-buying-new-properties/

  What are some of the things that you look for in a property before making an investment?
  Where we start is the market and we’re looking at very similar demographics to what you may look for any asset class. Traffic count is a big one, understanding how many cars are going by per day in storage is interesting in that the market is really the one, three, and five mile radius around your facility. That’s the data that really matters. Because people typically are not traveling too much farther than that to come to a storage facility. We don’t have amenities, it’s a garage. There’s not necessarily specific amenities people will travel to like they may for a multi-family property or an apartment. Population growth, job growth, average income, median household value, those are some of the pieces that we’re looking at to understand who the potential tenant may be, and the strength of the market. And then, a big component of it is understanding the competitive set in that particular market as well. Who are the competitors going to be? Are they going to be institutional REITs or is it going to be a mom and pop competitive set? So we try to build a story around each one of the properties we’re purchasing. So it’s a number of different data points that we bring together.

  What are some of the ways that you add value, or look at adding value in a particular property?
  On our side it’s different for each property that we are looking at. We don’t go into a particular value add strategy and it’s the same for every property. We’ve sold 36 properties, and the majority of those have been sold to the REIT’s. So we look at each property with a lens of what our exit could be. Sometimes we may go into a facility that’s cash flowing currently, and maybe it’s been operated by a mom and pop owner and they have some additional acreage that they’ve not capitalized on and we may build it do an expansion. We could build an additional 15,000 square feet and get that leased up.

  Our goal is to try to grow the NOI on that particular property. That can be one value added strategy. What’s interesting about storage is that the marketplace is very fragmented. The REIT’s own about 20 to 25% of the market and the rest is very much fragmented between regional operators like us at Reliant, and operators, like mom and pop shops who have one or two facilities. And usually in those mom and pop operated facilities, there’s a lot of low hanging fruit to glean additional revenues. And so sometimes the value add is building out some ancillary income streams like doing U-Haul truck rentals, or a retail component where we’re selling locks boxes, those types of items where maybe the mom and pop operator just didn’t capitalize on that opportunity. So, we look at each property differently and then as we underwrite we add what that value add is, or business plan may be.

  When you look at exiting to a REIT, what do they look for in your properties when they are purchasing them?
  Typically they’re looking for a market presence in an area that they think has upside, that will help them grow their portfolio, where they don't take construction risk.
  
  Kris Benson https://www.reliantinvestments.com/

  Subscribe to our newsletter here: http://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>fc12e20e-6b75-4e15-878c-21e222752c1fTue, 07 Jul 2020 17:22:11 -080014:38falsefull1646418 Action Items to Take Today for Your Real Estate InvestmentsToday we are recapping the highlights of a 3 day virtual conference that I attended recently. We'll cover:
  1. The state of this crisis and what the outlook is.
  2. How you can leverage the 3 loan options from the government and what does each of them mean.
  3. Things that you can do today and what you should be thinking about for the future.
  
  

  You can read this entire episode here: https://montecarlorei.com/action-items-to-take-today-for-your-real-estate-investments/

  Three loans available:

  1. PPP – Originally: you had to use it within 8 weeks from the time you got the loan, you needed to use 75% of it for payroll, and 25% for rent, mortgage, utilities. There were no payroll tax deferral if you took the PPP.
     Now: you have 24 weeks to use it, and the number is 60/40: 60% must be used for payroll, and 40% for rent, mortgage, utilities. And now you can defer 50% of payroll taxes until December 31st.
  2. EIDL – gives you $10,000 per employee. When you apply for this grant, you’re applying for the loan, and the SBA is granting these loans, the maximum amount you can get is $150,000 per company, regardless of the number of employees. If you have a management company and a real estate company, you get $300,000. You have 1 year deferral, so you don’t have to pay the loan for 1 year. This is a 30 year loan, at 3.75% interest. Pay close attention to terms of the loan, and get the opinion of an SBA expert.
  3. Main Street loan – it’s backed by the Fed, not an SBA loan. There’s no 500 employee limit, talk to your banker for clarity.
  
  

  All 3 of these loans are bank loans, you have to go to the bank and apply, and the SBA pays the bank back.

  You can get both PPP and EIDL. If you already got the PPP, you can also get the EIDL.

  What are the things that you can do today, from looking at your existing properties to how you can negotiate for new properties. And what you should be thinking about for the future.
  Stay away from auctions that will come up because lots of people are looking for that.

  Hotels are at 22% occupancy, there will be lots of defaults on hotels. Lots of major hotel operators have reserves until October, they have $700-800 fixed cost per door per month.

  Example of a deal someone just closed: It was a stadium, that cost about $13M to build, it is not being used currently, and has an income from a cell tower on the property, the income from that is $50,000/year. The seller has been trying to sell for just over $1M, two of the previous offers fell through. They came in and offered $900,000 cash, they sold cell tower right away for $700k at closing ($50k income/month at 7% cap) and now they purchased an entire stadium for $200,000!

  Action Items To Take For Your Real Estate Investments:
  As far as your existing properties: trim fat and cut expenses
  As far as preparing yourself for the future:
  Look into Captive Insurance – need to learn more about it, but it sound like it’s something that you could do to prevent future problems like this shutdown. Will do a podcast about what it is.
  Invest in Blue cities in Red states.
  Look at Industrial – Instacart can pick up from industrial instead of supermarket
  Become valuable to valuable people.
  Help people solve complex problems.
  Now is a great time to build a great team.
  Ask yourself “How can I?”

  The state of this crisis and what the outlook is:
  This is far worse than 2008.
  The implications of this debt is ultra low interest rates, forever.
  There will be lots of opportunities in 6, 12, 18 months.

  Subscribe to our newsletter at the top of the page here: Today we are recapping the highlights of a 3 day virtual conference that I attended recently. We'll cover:

  1. The state of this crisis and what the outlook is.
  2. How you can leverage the 3 loan options from the government and what does each of them mean.
  3. Things that you can do today and what you should be thinking about for the future.
  
  

  You can read this entire episode here: https://montecarlorei.com/action-items-to-take-today-for-your-real-estate-investments/

  Three loans available:

  1. PPP – Originally: you had to use it within 8 weeks from the time you got the loan, you needed to use 75% of it for payroll, and 25% for rent, mortgage, utilities. There were no payroll tax deferral if you took the PPP.
     Now: you have 24 weeks to use it, and the number is 60/40: 60% must be used for payroll, and 40% for rent, mortgage, utilities. And now you can defer 50% of payroll taxes until December 31st.
  2. EIDL – gives you $10,000 per employee. When you apply for this grant, you’re applying for the loan, and the SBA is granting these loans, the maximum amount you can get is $150,000 per company, regardless of the number of employees. If you have a management company and a real estate company, you get $300,000. You have 1 year deferral, so you don’t have to pay the loan for 1 year. This is a 30 year loan, at 3.75% interest. Pay close attention to terms of the loan, and get the opinion of an SBA expert.
  3. Main Street loan – it’s backed by the Fed, not an SBA loan. There’s no 500 employee limit, talk to your banker for clarity.
  
  

  All 3 of these loans are bank loans, you have to go to the bank and apply, and the SBA pays the bank back.

  You can get both PPP and EIDL. If you already got the PPP, you can also get the EIDL.

  What are the things that you can do today, from looking at your existing properties to how you can negotiate for new properties. And what you should be thinking about for the future.
  Stay away from auctions that will come up because lots of people are looking for that.

  Hotels are at 22% occupancy, there will be lots of defaults on hotels. Lots of major hotel operators have reserves until October, they have $700-800 fixed cost per door per month.

  Example of a deal someone just closed: It was a stadium, that cost about $13M to build, it is not being used currently, and has an income from a cell tower on the property, the income from that is $50,000/year. The seller has been trying to sell for just over $1M, two of the previous offers fell through. They came in and offered $900,000 cash, they sold cell tower right away for $700k at closing ($50k income/month at 7% cap) and now they purchased an entire stadium for $200,000!

  Action Items To Take For Your Real Estate Investments:
  As far as your existing properties: trim fat and cut expenses
  As far as preparing yourself for the future:
  Look into Captive Insurance – need to learn more about it, but it sound like it’s something that you could do to prevent future problems like this shutdown. Will do a podcast about what it is.
  Invest in Blue cities in Red states.
  Look at Industrial – Instacart can pick up from industrial instead of supermarket
  Become valuable to valuable people.
  Help people solve complex problems.
  Now is a great time to build a great team.
  Ask yourself “How can I?”

  The state of this crisis and what the outlook is:
  This is far worse than 2008.
  The implications of this debt is ultra low interest rates, forever.
  There will be lots of opportunities in 6, 12, 18 months.

  Subscribe to our newsletter at the top of the page here: http://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>c2b06171-9f75-4a34-982b-dd09733e2a88Thu, 25 Jun 2020 06:00:00 -080020:07falsefull163631Step by Step Guide to Ride This Recession and What Asset Classes Could Thrive? Russell Gray Explains (Part 2)We continue our conversation with Russell Gray, the co-host of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986.

  You can read this entire interview here: https://montecarlorei.com/how-can-investors-prepare-to-ride-this-recession-and-what-asset-classes-could-thrive/

  How can investors prepare to ride this recession since we are in the early stages, and hopefully there's still some preparation that they can do?
  There's a thing in business called a SWOT analysis where you do a strengths, weakness, opportunities and threats assessment on whatever you're doing. If I would have done that, in 2008, I would have recognized some of the vulnerabilities that ultimately took me down. So I think that's the first thing you have to do, you have to just look at your portfolio, you have to say, What if interest rates went up? What if rents went down? What if vacancies went up? What if this local market economy changes?

  You just have to begin to go through and ask yourself, what are some of the things you're hearing, what are some of the possible or probable outcomes of what's going on and how will my portfolio respond to that. 

  And then begin to take corrective action, you're probably going to realize that you've got some things in your portfolio that are marginal, they're not really that strong. You might want to think about getting rid of those. That's what my buddy Kenny McElroy did. Coming into this, he just began to look at his portfolio and say, I'm going take everything that isn't top performing, super strong, great market, great tenant, great management, great property condition, anything that isn't top tier. They're all good, but I'm going to take the bottom few, and I'm going to get rid of them. I'm going to get liquid because I think the market is going to turn and I think there's going to be opportunity. And that's number two, get liquid now. Getting liquid can be selling things and sitting on some cash. It could be borrowing. Well, the borrowing is good if you still have equity and you still have good credit, documentable income and there are loans available for the types of properties that you have. And you can lock those rates and payments in long term. Now is a great time to do that. I think you might be a little bit late to the party. But if you can do it, I would definitely be doing it. Some people say, Why would you want to increase debt in the middle of all of this that's going on? Don't look at it as increasing debt, look at it as increasing liquidity, because the equity is probably going to end up disappearing for a period of time.

  As prices fall, your debt is not going to fall, your equity gets eaten up. So if you can liquidate that equity and protect it from the market that serves you in a couple of different ways, when in a downturn, when things are tight and things go wrong, it's always good to have some cash.

  Number two is if credit markets fall apart, which I think is a likely outcome and that doesn't mean they're going to be gone forever, but it'll be like it was in 2008, where things get tight. We're already starting to see some of that. Then being liquid gives you a competitive advantage. The debt coming out of the marketplace is going to cause prices to drop because not as many people can compete because they can't get funding. But if you have cash, then you can take advantage of those lower prices. And when funding comes back, then that puts air back in the pricing and equity happens. And you end up with a boost of equity. You can't have that boost if you aren't able to buy when air is out of the market, and then ride it up.

  Russell Gray
  https://realestateguysradio.com/
  Join our newsletter here: http://montecarlorei.com/

  ---]]>We continue our conversation with Russell Gray, the co-host of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986.

  You can read this entire interview here: https://montecarlorei.com/how-can-investors-prepare-to-ride-this-recession-and-what-asset-classes-could-thrive/

  How can investors prepare to ride this recession since we are in the early stages, and hopefully there's still some preparation that they can do?
  There's a thing in business called a SWOT analysis where you do a strengths, weakness, opportunities and threats assessment on whatever you're doing. If I would have done that, in 2008, I would have recognized some of the vulnerabilities that ultimately took me down. So I think that's the first thing you have to do, you have to just look at your portfolio, you have to say, What if interest rates went up? What if rents went down? What if vacancies went up? What if this local market economy changes?

  You just have to begin to go through and ask yourself, what are some of the things you're hearing, what are some of the possible or probable outcomes of what's going on and how will my portfolio respond to that. 

  And then begin to take corrective action, you're probably going to realize that you've got some things in your portfolio that are marginal, they're not really that strong. You might want to think about getting rid of those. That's what my buddy Kenny McElroy did. Coming into this, he just began to look at his portfolio and say, I'm going take everything that isn't top performing, super strong, great market, great tenant, great management, great property condition, anything that isn't top tier. They're all good, but I'm going to take the bottom few, and I'm going to get rid of them. I'm going to get liquid because I think the market is going to turn and I think there's going to be opportunity. And that's number two, get liquid now. Getting liquid can be selling things and sitting on some cash. It could be borrowing. Well, the borrowing is good if you still have equity and you still have good credit, documentable income and there are loans available for the types of properties that you have. And you can lock those rates and payments in long term. Now is a great time to do that. I think you might be a little bit late to the party. But if you can do it, I would definitely be doing it. Some people say, Why would you want to increase debt in the middle of all of this that's going on? Don't look at it as increasing debt, look at it as increasing liquidity, because the equity is probably going to end up disappearing for a period of time.

  As prices fall, your debt is not going to fall, your equity gets eaten up. So if you can liquidate that equity and protect it from the market that serves you in a couple of different ways, when in a downturn, when things are tight and things go wrong, it's always good to have some cash.

  Number two is if credit markets fall apart, which I think is a likely outcome and that doesn't mean they're going to be gone forever, but it'll be like it was in 2008, where things get tight. We're already starting to see some of that. Then being liquid gives you a competitive advantage. The debt coming out of the marketplace is going to cause prices to drop because not as many people can compete because they can't get funding. But if you have cash, then you can take advantage of those lower prices. And when funding comes back, then that puts air back in the pricing and equity happens. And you end up with a boost of equity. You can't have that boost if you aren't able to buy when air is out of the market, and then ride it up.

  Russell Gray
  https://realestateguysradio.com/
  Join our newsletter here: http://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>514d26ee-2920-4d08-b4f0-bd65be802344Tue, 16 Jun 2020 05:00:00 -080022:25falsefull162621Could This Downturn be Worse Than 2008? Russell Gray Explains Why (Part 1)https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>7e6f5d79-2921-4c04-bde1-739dc6a8b776Thu, 04 Jun 2020 15:27:48 -080016:52falsefull161611Today we get insights from Russell Gray, one of the hosts of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986. You can read this entire interview here: https://montecarlorei.com/why-this-downturn-could-be-worse-than-2008-russell-gray-explains/ I would love to hear your thoughts on what you’re seeing is happening right now in commercial real estate. On one side of the commercial real estate ledger, you had retail spaces under tremendous distress because their retail customers, the demographic they served, companies like JC Penney, whose business models were being completely disrupted, these anchor tenants like Sears and Kmart, were just getting wiped out by people ordering online. On the flip side of that, on the industrial side, you saw warehouse and distribution and logistics, just going through the roof. And so there’s always going to be winners and losers in this current environment. You’ve a lot of people changing the way they behave. Companies are finding out that they can have a remote workforce and actually get things done. They may decide, hey, we don’t need all this fancy office space, people would prefer to live at home, or work at home. So maybe we’re going to cut back. I think that if you’re in the office space, you need to really look at the nature of the work that the companies are doing. And does it require physical proximity and collaboration? Or is it something that could be moved to a more diverse workforce, people working at home? You could be vulnerable. Why do you think this will be worse than 2008? COVID-19 hit and now the Fed balance sheet is over 7 trillion. It has nearly doubled just in the four months that we’ve had COVID-19. So on the one hand, you’ve the powers that be the Federal Reserve and the Treasury way in front of the crisis as opposed to 2008 where they were way behind. That’s the good news. The bad news is, this is so much bigger because it isn’t just a small percentage of subprime borrowers that are having a hard time making payments. You have major corporations like Hertz, companies that have been in business for 100 years that are declaring bankruptcy. And the quote in the article that I just read, in fact, I featured it in today’s newsletter is, “No business is structured for zero revenue”. So what we have is a health crisis that turned into an economic crisis, which means that we shut the economy down. It's like having a giant heart attack. And if you can imagine currency, money stopped, like blood stops flowing because the heart stops beating, the economic heartbeat stops beating, the blood stops flowing, then, individual cells, people, and organizations, or organs, they all start to die. And if you don't get the heart started quickly and get the blood flowing quickly, then you get permanent damage. And it remains to be seen if that's going to happen. But when those payments stop being made, then the debt goes bad. And now we're right back where we were at 2008, but much, much bigger. And the problem is everything we did wrong leading into 2008 with the margin and the rehypothecation occasion of the debt in Wall Street, the derivatives are worse today, global debt is worse today than it was in 2008. And the cessation of payments and the defaults and the bad debt out there is much bigger. So just based on that alone, it says that this is probably going to be worse. Russell Gray https://realestateguysradio.com/ Join our newsletter here: http://montecarlorei.com/ --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>Mastermind: What Are Top Investors Doing During This Crisis (Multiple Asset Classes)This is our second mastermind call with a group of experienced investors to understand where each investor is, and how they are dealing with the Covid-19 quarantine and its consequences on their properties. We had nearly 200 years of real estate investing experience in the call.

  You can read this entire episode here: https://montecarlorei.com/multiple-asset-classes-mastermind-what-are-top-investors-doing-during-this-crisis/

  Mixed Use, Construction, Senior Housing, Multi-family, Short Term Rental Investor
  Even though businesses are starting to reopen, that doesn’t mean that we have conquered Covid-19. From the capital perspective, for new construction loans, out of the 15 insurance companies that lend in the real estate space, 13 have stopped altogether. The largest one laid off the entire loan origination staff. They don’t plan to get back to loan originations for a while. Capital for construction is almost non-existent unless it’s with HUD. If you go with a bridge lender it’s expensive: Libor + 9 + floor on Libor rate, which is what was happening in 2008/2009. 

  There is not a lot of appetite for new deals unless they’re deeply distressed, it will take time for deals to start to emerge. People that are trying to do deals now look desperate and lacking in perspective of where the market is really heading. He would be patient.

  Passive Investor (since 2002)
  This guest invests in stabilized assets. He said that it takes time for prices to come down, and from his experience, it can take 1-2 yrs for things to hit bottom. He has been sitting on the sidelines until prices drop since late 2016 across all asset classes. He pushed his operators to sell in 17, 18, 19. He thinks that rents will be down, vacancies will go up and cap rates will go up. He is skeptical at looking for things this year, unless it’s very unique. He will be waiting for vacancy levels, market rents, and market prices and will see if cap rates will adjust. Even if the cap rate is better, we don’t know what the NOI will be in one or two years, it may be lower then.

  He has been hearing that syndicators are getting about 1/3 of the normal responses for deals, another syndicator dropped his minimum investment for the first time ever. He will be on the sidelines regardless of what’s happening to the economy in the short term, but more because the election that is coming up, and how this may have an impact in real estate.

  Diversified Portfolio Investor
  Their multi-family properties are performing well (B-class), in April and May they performed better than anticipated. Some of the people that lost their jobs have higher income now with unemployment.

  Medical office: they reached out to tenants and offered rent relief proactively, about 50% of tenants took them up on it. Their properties are in areas that are now reopening, they will reach out to the tenants in June and find out what is happening and if they need any further assistance.

  NNN properties: they are performing very well. Some investors still need to place their cash somewhere. Looking forward to understanding where’s the most pain for the most extreme distressed properties. Pricing hasn’t changed yet, price expectations from sellers haven’t come down to meet price expectations from buyers yet.

  Multi-family Investor and Broker
  The 2 deals that he was working on during the pandemic actually ended up closing, despite the fact that banks asked for more reserves. The sellers gave concessions, about 8% concession on the price, the seller also put up escrow money and provided insurance on the income over the next 6 mos.

  Subscribe to our newsletter at the top here: This is our second mastermind call with a group of experienced investors to understand where each investor is, and how they are dealing with the Covid-19 quarantine and its consequences on their properties. We had nearly 200 years of real estate investing experience in the call.

  You can read this entire episode here: https://montecarlorei.com/multiple-asset-classes-mastermind-what-are-top-investors-doing-during-this-crisis/

  Mixed Use, Construction, Senior Housing, Multi-family, Short Term Rental Investor
  Even though businesses are starting to reopen, that doesn’t mean that we have conquered Covid-19. From the capital perspective, for new construction loans, out of the 15 insurance companies that lend in the real estate space, 13 have stopped altogether. The largest one laid off the entire loan origination staff. They don’t plan to get back to loan originations for a while. Capital for construction is almost non-existent unless it’s with HUD. If you go with a bridge lender it’s expensive: Libor + 9 + floor on Libor rate, which is what was happening in 2008/2009. 

  There is not a lot of appetite for new deals unless they’re deeply distressed, it will take time for deals to start to emerge. People that are trying to do deals now look desperate and lacking in perspective of where the market is really heading. He would be patient.

  Passive Investor (since 2002)
  This guest invests in stabilized assets. He said that it takes time for prices to come down, and from his experience, it can take 1-2 yrs for things to hit bottom. He has been sitting on the sidelines until prices drop since late 2016 across all asset classes. He pushed his operators to sell in 17, 18, 19. He thinks that rents will be down, vacancies will go up and cap rates will go up. He is skeptical at looking for things this year, unless it’s very unique. He will be waiting for vacancy levels, market rents, and market prices and will see if cap rates will adjust. Even if the cap rate is better, we don’t know what the NOI will be in one or two years, it may be lower then.

  He has been hearing that syndicators are getting about 1/3 of the normal responses for deals, another syndicator dropped his minimum investment for the first time ever. He will be on the sidelines regardless of what’s happening to the economy in the short term, but more because the election that is coming up, and how this may have an impact in real estate.

  Diversified Portfolio Investor
  Their multi-family properties are performing well (B-class), in April and May they performed better than anticipated. Some of the people that lost their jobs have higher income now with unemployment.

  Medical office: they reached out to tenants and offered rent relief proactively, about 50% of tenants took them up on it. Their properties are in areas that are now reopening, they will reach out to the tenants in June and find out what is happening and if they need any further assistance.

  NNN properties: they are performing very well. Some investors still need to place their cash somewhere. Looking forward to understanding where’s the most pain for the most extreme distressed properties. Pricing hasn’t changed yet, price expectations from sellers haven’t come down to meet price expectations from buyers yet.

  Multi-family Investor and Broker
  The 2 deals that he was working on during the pandemic actually ended up closing, despite the fact that banks asked for more reserves. The sellers gave concessions, about 8% concession on the price, the seller also put up escrow money and provided insurance on the income over the next 6 mos.

  Subscribe to our newsletter at the top here: https://montecarlorei.com/ 

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>ea439063-d85c-4192-ac54-d3758a4720cbTue, 26 May 2020 05:17:24 -080019:39falsefull160601What are Delaware Statutory Trusts? (DST's)What are DST's and how are they different from other forms of real estate syndications? Can you 1031 exchange out of a DST? Jason Salmon, Senior Vice President and Managing Director of Real Estate Analytics at Kay Properties and Investments LLC shares some insights with us.

  You can read this entire interview here: https://montecarlorei.com/what-are-dsts-1031-exchange/

  What is a DST and how is it different than syndications and REIT's?
  Most upfront would be the 1031 eligibility, REIT's are not eligible for 1031 exchange straight away. There's always a way through different channels to eventually get there. But apples to apples, one cannot 1031 exchange directly into a REIT and the DST through what's called revenue ruling 2004-86 is on the books and there's a way for people to 1031 exchange in. Additionally, when that real estate is sold, they have the opportunity to do another 1031 exchange out moving forward. In and of itself, a DST is a syndication, but it's a hybrid because it's a really specialized sort of syndication whereby it is 1031 eligible. And in many cases, syndications of different sorts, whether it be partnerships or LLC's or any which way in that format would not be a 1031 vehicle for fractional, partial ownership. Those entities themselves could do a 1031. But if it's made up of private fractional ownership, it doesn't fly. So from a 1031 exchange standpoint, I think that's the linchpin of everything there. Notwithstanding from a direct cash investment standpoint, they all could work in similar ways, REITs could be public or private. They take on different complexions that way. If it's a syndication in and of itself could be put together, it could be friends and family. Whereas the DST, at least the DST space that we dwell in would have multiple layers of due diligence on various levels, specifically the real estate, the deal itself, and then the asset manager, or the sponsor firm running the deal just to be able to have that deal, see the light of day if it passes that due diligence. It's just a little bit different format. But again, going back to the beginning, I would contend that the 1031 eligible eligibility is the biggest differentiator.

  I did not know that the accredited investors themselves could not 1031 into another property in a standard syndication. That's very important to know because it has significant tax implications.
  They could all go together, theoretically, if it was a partnership or an LLC. But as far as being comprised of multiple partial or fractional ownership, that's where it wouldn't pencil.

  Can you talk about how asset managers don't get any returns? They pass everything to the investors.
  There is a cost of doing business generally. But in the Delaware Statutory Trust structure on the back end, unlike most syndications, there is no waterfall. Basically, they can't profit share at the back end, there is a disposition fee that is built in. Those have varying degrees. I wouldn't be able to cite it on this call. It would be deal specific, but it's there and it's akin to closing costs. Like anything else. But it wouldn't be like your typical two and twenty model or some kind of promote on the back end, because structurally in the DST they cannot profit share. So if a 100 million dollar deal was sold for one hundred and twenty million dollars after four or five years, if that was a net number, net of closing costs and all the associated closing fees, then the investors would indeed get their pro rata share of those proceeds. That's the bottom line for how DST's are structured.
  
  Jason Salmon
  jason@kpi1031.com
  
  Subscribe to our weekly newsletter here: http://montecarlorei.com/

  ---...]]>What are DST's and how are they different from other forms of real estate syndications? Can you 1031 exchange out of a DST? Jason Salmon, Senior Vice President and Managing Director of Real Estate Analytics at Kay Properties and Investments LLC shares some insights with us.

  You can read this entire interview here: https://montecarlorei.com/what-are-dsts-1031-exchange/

  What is a DST and how is it different than syndications and REIT's?
  Most upfront would be the 1031 eligibility, REIT's are not eligible for 1031 exchange straight away. There's always a way through different channels to eventually get there. But apples to apples, one cannot 1031 exchange directly into a REIT and the DST through what's called revenue ruling 2004-86 is on the books and there's a way for people to 1031 exchange in. Additionally, when that real estate is sold, they have the opportunity to do another 1031 exchange out moving forward. In and of itself, a DST is a syndication, but it's a hybrid because it's a really specialized sort of syndication whereby it is 1031 eligible. And in many cases, syndications of different sorts, whether it be partnerships or LLC's or any which way in that format would not be a 1031 vehicle for fractional, partial ownership. Those entities themselves could do a 1031. But if it's made up of private fractional ownership, it doesn't fly. So from a 1031 exchange standpoint, I think that's the linchpin of everything there. Notwithstanding from a direct cash investment standpoint, they all could work in similar ways, REITs could be public or private. They take on different complexions that way. If it's a syndication in and of itself could be put together, it could be friends and family. Whereas the DST, at least the DST space that we dwell in would have multiple layers of due diligence on various levels, specifically the real estate, the deal itself, and then the asset manager, or the sponsor firm running the deal just to be able to have that deal, see the light of day if it passes that due diligence. It's just a little bit different format. But again, going back to the beginning, I would contend that the 1031 eligible eligibility is the biggest differentiator.

  I did not know that the accredited investors themselves could not 1031 into another property in a standard syndication. That's very important to know because it has significant tax implications.
  They could all go together, theoretically, if it was a partnership or an LLC. But as far as being comprised of multiple partial or fractional ownership, that's where it wouldn't pencil.

  Can you talk about how asset managers don't get any returns? They pass everything to the investors.
  There is a cost of doing business generally. But in the Delaware Statutory Trust structure on the back end, unlike most syndications, there is no waterfall. Basically, they can't profit share at the back end, there is a disposition fee that is built in. Those have varying degrees. I wouldn't be able to cite it on this call. It would be deal specific, but it's there and it's akin to closing costs. Like anything else. But it wouldn't be like your typical two and twenty model or some kind of promote on the back end, because structurally in the DST they cannot profit share. So if a 100 million dollar deal was sold for one hundred and twenty million dollars after four or five years, if that was a net number, net of closing costs and all the associated closing fees, then the investors would indeed get their pro rata share of those proceeds. That's the bottom line for how DST's are structured.
  
  Jason Salmon
  jason@kpi1031.com
  
  Subscribe to our weekly newsletter here: http://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>a5333dcf-c34e-45cf-9b34-63a2068bff2dThu, 14 May 2020 05:39:33 -080020:48falsefull159591Which Areas Are Good to Invest in Real Estate Today?What is happening to retail during Covid-19? What is happening to offices? Which REITs could be good investments right now? Which areas are going to thrive, or not, during this crisis? Which asset classes should you keep in mind? Deidre Woollard is a writer and editor for Million Acres with two decades of experience covering all aspects of real estate.

  You can read this entire interview here: https://montecarlorei.com/which-areas-are-good-to-invest-in-commercial-real-estate-today/

  What are you seeing is happening in commercial real estate nowadays?
  I think there's a lot of things happening right now. Certainly the biggest impact is definitely being felt in commercial across the hospitality and retail with so many closures in different states. We're starting to open up in various areas, but it's all still very tentative. And one of the things I think that everyone is worried about is is a secondary outbreak and another round of closures.

  What do you think is going to happen to the real estate market, given your thoughts of where the shutdown is going, and if we’re going to have a second outbreak?
  I certainly think it’s challenging, definitely certain sectors are being affected more than others and some sectors are benefiting a little bit. One of the things that we’re seeing is industrial real estate, there’s an ongoing need for last mile warehousing. Industrial was the top performing sector last year, and it will probably be a relatively strong sector this year. Whereas hospitality and retail are being very heavily affected. The revenue per room in hotels is at historic lows, and it’ll be a slow recovery for some of those sectors.

  If you had unlimited funds to invest today, when do you think you would deploy that? And in which asset classes would you focus on?
  One of the interesting things is that everyone is watching the residential real estate market and looking for prices to drop, and it doesn’t seem like that’s going to happen anytime soon, because supply and demand are pretty well matched right now. One of the sectors that we’ve been looking at over Million Acres is multi-family real estate investment trusts, for example. Multi-family was already predicted to have a pretty strong year this year. There’s obviously a lot of demographics that support multi-family continuing to grow. Household formation is on the rise. I feel like multi-family is still going to be strong, especially in those markets where you have a lot of tech employment. Places like Seattle, Charlotte is a good example. Southern states have really seen a lot of people moving in and so you when you have that high population, those are good spots for multi-family.

  What do you think will happen to the retail sector?
  It's an interesting sector because there are different parts of retail that will be strong and different parts that will suffer more. Simon Property Group is reopening some of their malls. As they’re doing this, they’re starting to put different rules in place in terms of how many people you can have in the mall, or an individual store, having hand sanitizers available, and things like that. But how much foot traffic can you have in a store? And how much foot traffic do you need in order to pay your rent? Cheesecake Factory stopped paying rent in April. The Gap had stopped paying rent. So the large malls are definitely having difficulty.

  Deidre Woollard
  Deidre.Woollard@fool.com

  Join our facebook group here: https://facebook.com/groups/montecarlorei

  --- Support this podcast: What is happening to retail during Covid-19? What is happening to offices? Which REITs could be good investments right now? Which areas are going to thrive, or not, during this crisis? Which asset classes should you keep in mind? Deidre Woollard is a writer and editor for Million Acres with two decades of experience covering all aspects of real estate.

  You can read this entire interview here: https://montecarlorei.com/which-areas-are-good-to-invest-in-commercial-real-estate-today/

  What are you seeing is happening in commercial real estate nowadays?
  I think there's a lot of things happening right now. Certainly the biggest impact is definitely being felt in commercial across the hospitality and retail with so many closures in different states. We're starting to open up in various areas, but it's all still very tentative. And one of the things I think that everyone is worried about is is a secondary outbreak and another round of closures.

  What do you think is going to happen to the real estate market, given your thoughts of where the shutdown is going, and if we’re going to have a second outbreak?
  I certainly think it’s challenging, definitely certain sectors are being affected more than others and some sectors are benefiting a little bit. One of the things that we’re seeing is industrial real estate, there’s an ongoing need for last mile warehousing. Industrial was the top performing sector last year, and it will probably be a relatively strong sector this year. Whereas hospitality and retail are being very heavily affected. The revenue per room in hotels is at historic lows, and it’ll be a slow recovery for some of those sectors.

  If you had unlimited funds to invest today, when do you think you would deploy that? And in which asset classes would you focus on?
  One of the interesting things is that everyone is watching the residential real estate market and looking for prices to drop, and it doesn’t seem like that’s going to happen anytime soon, because supply and demand are pretty well matched right now. One of the sectors that we’ve been looking at over Million Acres is multi-family real estate investment trusts, for example. Multi-family was already predicted to have a pretty strong year this year. There’s obviously a lot of demographics that support multi-family continuing to grow. Household formation is on the rise. I feel like multi-family is still going to be strong, especially in those markets where you have a lot of tech employment. Places like Seattle, Charlotte is a good example. Southern states have really seen a lot of people moving in and so you when you have that high population, those are good spots for multi-family.

  What do you think will happen to the retail sector?
  It's an interesting sector because there are different parts of retail that will be strong and different parts that will suffer more. Simon Property Group is reopening some of their malls. As they’re doing this, they’re starting to put different rules in place in terms of how many people you can have in the mall, or an individual store, having hand sanitizers available, and things like that. But how much foot traffic can you have in a store? And how much foot traffic do you need in order to pay your rent? Cheesecake Factory stopped paying rent in April. The Gap had stopped paying rent. So the large malls are definitely having difficulty.

  Deidre Woollard
  Deidre.Woollard@fool.com

  Join our facebook group here: https://facebook.com/groups/montecarlorei

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>e5351020-4238-4724-bcc0-38565c6bb1a3Tue, 05 May 2020 05:38:27 -080017:35falsefull158581Is Now a Good Time to Buy Commercial Real Estate?Today I am covering what I think is going to happen to the economy, which will inevitably affect real estate prices.

  You can read this entire episode here: https://montecarlorei.com/is-now-a-good-time-to-buy-commercial-real-estate/

  If you are a listener of this podcast, you know that common sense is not common. And up until now I am not seeing a lot of common sense thinking out there. Starting with how the stock market is doing. Stocks are very high given what is happening in the world. On top of that, I don’t see too many people talking about the consequences of how everything is interconnected. And they’re not talking about how, in my opinion, this will trickle down to what I think will be a very bad recession.

  For all of you who have been taking the time to hone your skills, to learn, to make connections in the real estate world, to build your reputation: congratulations, our time has finally arrived. Why? It pretty much consists of four factors that are all correlated: rents going down, vacancy going up, cap rates going up and lending getting tight – which is exactly what is happening right now, and will continue to happen.

  So why do I think things will get bad because of the Coronavirus / Covid-19? It’s simple, everything is interconnected, let’s take just one example: if people cannot hold large events for at least one year, that alone is already a huge portion of our economy, so how can that be? It’s simple, it trickles down to everything else. Let’s take some industries that are connected to holding large events: the music industry with concerts, sporting events, conferences, the entire economy of Las Vegas, and every company that depends on holding live events, for example Tony Robbins. Most of the employees that work for these industries, will be let go or furloughed. These employees all have bills to pay, food to buy, they have kids, mortgages, rent, etc. Even with unemployment checks, they won’t be splurging, going to restaurants, or going on trips. And with that, the restaurant business gets hurt, the travel industry, and that is obviously already happening, (Airbnb just got $2 billion dollars in loans at half of their last valuation, and they’re paying 10% in interest on that money!), the clothing industry also goes down, and every industry that is related to disposable income: nail salons, massages, buying new cars, etc. And now all of the employees in these industries get hurt: they are let go, or get furloughed. And these companies not only let go of employees, but they also cut their costs, they won’t be investing much in new technology, in advertising, etc,

  That trickles down to the tech industry. I get a daily digest of what’s going on in the tech world, and today alone, the digest had the following news: Netflix sales are up, another tech company is cutting the salary of all staff by 25%, another tech company furloughs 600 people, another let go of 13% of its workforce.

  This is how everything is interconnected.

  Listen to our How You Can Lose 50% of Your Property Value in One Downturn episode: https://podcasts.apple.com/us/podcast/how-you-can-lose-50-your-property-value-in-one-downturn/id1451874700?i=1000454715311
  Join our facebook group discussion here: https://www.facebook.com/groups/montecarlorei
  Contact us here: Today I am covering what I think is going to happen to the economy, which will inevitably affect real estate prices.

  You can read this entire episode here: https://montecarlorei.com/is-now-a-good-time-to-buy-commercial-real-estate/

  If you are a listener of this podcast, you know that common sense is not common. And up until now I am not seeing a lot of common sense thinking out there. Starting with how the stock market is doing. Stocks are very high given what is happening in the world. On top of that, I don’t see too many people talking about the consequences of how everything is interconnected. And they’re not talking about how, in my opinion, this will trickle down to what I think will be a very bad recession.

  For all of you who have been taking the time to hone your skills, to learn, to make connections in the real estate world, to build your reputation: congratulations, our time has finally arrived. Why? It pretty much consists of four factors that are all correlated: rents going down, vacancy going up, cap rates going up and lending getting tight – which is exactly what is happening right now, and will continue to happen.

  So why do I think things will get bad because of the Coronavirus / Covid-19? It’s simple, everything is interconnected, let’s take just one example: if people cannot hold large events for at least one year, that alone is already a huge portion of our economy, so how can that be? It’s simple, it trickles down to everything else. Let’s take some industries that are connected to holding large events: the music industry with concerts, sporting events, conferences, the entire economy of Las Vegas, and every company that depends on holding live events, for example Tony Robbins. Most of the employees that work for these industries, will be let go or furloughed. These employees all have bills to pay, food to buy, they have kids, mortgages, rent, etc. Even with unemployment checks, they won’t be splurging, going to restaurants, or going on trips. And with that, the restaurant business gets hurt, the travel industry, and that is obviously already happening, (Airbnb just got $2 billion dollars in loans at half of their last valuation, and they’re paying 10% in interest on that money!), the clothing industry also goes down, and every industry that is related to disposable income: nail salons, massages, buying new cars, etc. And now all of the employees in these industries get hurt: they are let go, or get furloughed. And these companies not only let go of employees, but they also cut their costs, they won’t be investing much in new technology, in advertising, etc,

  That trickles down to the tech industry. I get a daily digest of what’s going on in the tech world, and today alone, the digest had the following news: Netflix sales are up, another tech company is cutting the salary of all staff by 25%, another tech company furloughs 600 people, another let go of 13% of its workforce.

  This is how everything is interconnected.

  Listen to our How You Can Lose 50% of Your Property Value in One Downturn episode: https://podcasts.apple.com/us/podcast/how-you-can-lose-50-your-property-value-in-one-downturn/id1451874700?i=1000454715311
  Join our facebook group discussion here: https://www.facebook.com/groups/montecarlorei
  Contact us here: https://montecarlorei.com/contact-us/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>151fd3cf-1a54-46aa-908e-a13ebe1e1d2bThu, 23 Apr 2020 12:51:15 -080021:31falsefull157571New Lending Requirements with Covid-19 and What You Can Do About ItCommercial loans are what brings your real estate deals to life, and given the fact that the Coronavirus has affected lending significantly, we are keeping a pulse on what is going on, and what the potential impacts will be in real estate. Some topics we are curious about are: How should borrowers prepare for lending as we start to come out of this? What will likely happen in the lending industry over the next 6+ months? How should loan contracts look like moving forward? Billy Brown will help us with some answers.

  You can read this entire episode here: https://montecarlorei.com/how-is-lending-changing-with-covid-19-and-what-are-the-impacts-in-real-estate-prices/

  Has much changed in the lending industry over the last two weeks?
  Agency debt: if you haven't talked to your agency debt lender, do. Right now they are up and running, but expect delays in that, especially if you're putting contracts or offers in properties right now. Expect at least a 90 day close. And you're going to need escrow for 12 to 18 months of payments and reserves at closing. So your raise is going to be much higher. They're going to scrutinize properties left and right, as far as your rent rolls and payments and all of that are getting scrutinized, with good reason.
  Bank lenders or depository lenders: right now they are scrambling. They were already low on deposits. And they’re going to get lower. So lending for them is going to be tighter for a couple reasons. One is the fact that you’ve the SBA program which is running through the depository lenders that they’re going to have to facilitate. People don’t understand what’s going on with that process so they don’t know how to even answer questions. The other part of it is the forbearance from the existing loans.
  Non bank lenders, lenders that actually do the more unique things, Non-QM lenders, hedge fund type of lending where they create loans, balance sheet them, and then sell off the notes to Wall Street. Wall Street doesn’t buy anything right now.

  How should borrowers prepare for lending as we start to come out of this?
  It really depends on where you’re at in the process, if you’re in the middle of a purchase, or even a refinance that you’re trying to close the next 30 days. You have to ask yourself a lot of serious questions around your third party risk. Are your tenants going to be able to pay? If they can’t pay, do you have enough reserves to be able to withstand 6, 12, 18 months of lower income. We’ve seen some lenders on good properties, on a refinance, say that they’re going to refinance more properties worth this, we do believe is going to be a shorter recovery. But what we’re going to do is just protect you and us we’re going to ask for payments, we’re going to cash you out, but we’re going to ask for payments to make sure that we’re paid, that you’re paid, as well as CapX and all that. They’re not going to release funds for you to go pay off credit cards, or go buy another property.

  If you’re in the middle of a purchase, the lender is your friend. Find out what information do we need to have to make sure that the asset I’m buying is still going to be a good asset after this is done.

  If you’re not a buyer right now, and think that some sales will be going on. What do you need to do to get prepared? The first thing is let’s get your finances in order. Get your loan package already prepared. Organize all your documents, your taxes, W-2’s, 1099’s, pay stubs, bank statements, PFS, all of that into one place where it’s easy to access.

  Billy Brown
  www.billybrown.me

  Join our conversation here: https://facebook.com/groups/montecarlorei

  --- Support]]>Commercial loans are what brings your real estate deals to life, and given the fact that the Coronavirus has affected lending significantly, we are keeping a pulse on what is going on, and what the potential impacts will be in real estate. Some topics we are curious about are: How should borrowers prepare for lending as we start to come out of this? What will likely happen in the lending industry over the next 6+ months? How should loan contracts look like moving forward? Billy Brown will help us with some answers.

  You can read this entire episode here: https://montecarlorei.com/how-is-lending-changing-with-covid-19-and-what-are-the-impacts-in-real-estate-prices/

  Has much changed in the lending industry over the last two weeks?
  Agency debt: if you haven't talked to your agency debt lender, do. Right now they are up and running, but expect delays in that, especially if you're putting contracts or offers in properties right now. Expect at least a 90 day close. And you're going to need escrow for 12 to 18 months of payments and reserves at closing. So your raise is going to be much higher. They're going to scrutinize properties left and right, as far as your rent rolls and payments and all of that are getting scrutinized, with good reason.
  Bank lenders or depository lenders: right now they are scrambling. They were already low on deposits. And they’re going to get lower. So lending for them is going to be tighter for a couple reasons. One is the fact that you’ve the SBA program which is running through the depository lenders that they’re going to have to facilitate. People don’t understand what’s going on with that process so they don’t know how to even answer questions. The other part of it is the forbearance from the existing loans.
  Non bank lenders, lenders that actually do the more unique things, Non-QM lenders, hedge fund type of lending where they create loans, balance sheet them, and then sell off the notes to Wall Street. Wall Street doesn’t buy anything right now.

  How should borrowers prepare for lending as we start to come out of this?
  It really depends on where you’re at in the process, if you’re in the middle of a purchase, or even a refinance that you’re trying to close the next 30 days. You have to ask yourself a lot of serious questions around your third party risk. Are your tenants going to be able to pay? If they can’t pay, do you have enough reserves to be able to withstand 6, 12, 18 months of lower income. We’ve seen some lenders on good properties, on a refinance, say that they’re going to refinance more properties worth this, we do believe is going to be a shorter recovery. But what we’re going to do is just protect you and us we’re going to ask for payments, we’re going to cash you out, but we’re going to ask for payments to make sure that we’re paid, that you’re paid, as well as CapX and all that. They’re not going to release funds for you to go pay off credit cards, or go buy another property.

  If you’re in the middle of a purchase, the lender is your friend. Find out what information do we need to have to make sure that the asset I’m buying is still going to be a good asset after this is done.

  If you’re not a buyer right now, and think that some sales will be going on. What do you need to do to get prepared? The first thing is let’s get your finances in order. Get your loan package already prepared. Organize all your documents, your taxes, W-2’s, 1099’s, pay stubs, bank statements, PFS, all of that into one place where it’s easy to access.

  Billy Brown
  www.billybrown.me

  Join our conversation here: https://facebook.com/groups/montecarlorei

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>f25b8e6e-4830-413b-b19f-1f201f93f90aThu, 16 Apr 2020 07:06:59 -080022:00falsefull156561Step by Step Actions for Self Storage Operators to Take During This DownturnWhat is the state of the self storage market in this environment? What should operators prepare for? Where should you look for opportunities? We talked with RK Kliebenstein, President of Coast to Coast Storage, an industry veteran with over 30 yrs of experience.
  
  You can read this entire episode here: https://montecarlorei.com/step-by-step-actions-for-self-storage-operators-to-take-during-downturn/
  
  How should the operators prepare for this potential economic hit?
  For storage managers, your health comes first. I know that that’s going to be an unpopular position with some of the owner operators as employers, that their staff would perhaps not come to work, but I think that we can work from home in many cases, we don’t have to have a lot of contact with the public. But more than anything else, I honestly believe that a self storage manager’s first responsibility Is to themselves, and their family. Going to work in an unnecessary capacity is not a recommendation that I would give them. If it’s safe for them to go to work because they don’t have public contact, and they’re not in high contact with places and objects that have been touched by the public, that’s a consideration, certainly, but I know a lot of offices have just said that they’re not going to have contact with tenants directly. They’re open via chat, email, telephone.

  For storage owners, it’s a different consideration as we now go into where are you at in the debt cycle. Those stores that are in highly competitive markets, where they themselves or their competitors are in lease up and there are a lot of vacant spaces, and those in the third category, the very high levered owners are going to be the hardest hit by the event and will have to make the toughest decisions. I don’t know that we’re going to see the real effect of this for perhaps 60 or 90 days as loan clauses with MAC clauses in them (Materially Adverse Condition clauses) begin to be in effect from the lenders and then also the consideration of force majeure clauses, which don’t occur in self storage month to month rental agreements, but certainly would occur in finance arrangements and contracts. It will be interesting to see how that all begins to play out and how the Self Storage sector may fare against other asset class type of lending. Keeping in mind, Self Storage has notoriously had the lowest foreclosure rates, regardless of economic conditions of any other asset class. The only one that ever has come really, really close to it are NNN leases and with triple A credit companies, and also, interestingly enough mobile home parks.
  
  Loans
  What I’m seeing in terms of new loans right now is interesting. The CMBS market, securitized loans, for self storage at least, has pretty much collapsed completely. The bond market being unstable, and that being where these loans are sold, until that bond market is firmed up and we know where the pricing is going to be, I would say the CMBS market is likely to be on hold. I’ve even seen them because of the Material Adverse Conditions or MAC clauses commitments that were set to fund over the last 10 to 15 days. We’ve seen a number of different reactions to the current environment but I think the CMBS market is basically collapsed. I think the only viable market right now is the life insurance company market, they seem to still be quoting, and closing loans that were in process. I think that their underwriting has changed a bit. But that market is still a little bit active. When the first reaction to the turn in the economy was to lower the Fed rate, that actually put a lot of lenders in a position to increase the interest rate floors.
  
  RK Kliebenstein
  rk@askrk.com
  www.askrk.com

  --- Support this podcast: What is the state of the self storage market in this environment? What should operators prepare for? Where should you look for opportunities? We talked with RK Kliebenstein, President of Coast to Coast Storage, an industry veteran with over 30 yrs of experience.
  
  You can read this entire episode here: https://montecarlorei.com/step-by-step-actions-for-self-storage-operators-to-take-during-downturn/
  
  How should the operators prepare for this potential economic hit?
  For storage managers, your health comes first. I know that that’s going to be an unpopular position with some of the owner operators as employers, that their staff would perhaps not come to work, but I think that we can work from home in many cases, we don’t have to have a lot of contact with the public. But more than anything else, I honestly believe that a self storage manager’s first responsibility Is to themselves, and their family. Going to work in an unnecessary capacity is not a recommendation that I would give them. If it’s safe for them to go to work because they don’t have public contact, and they’re not in high contact with places and objects that have been touched by the public, that’s a consideration, certainly, but I know a lot of offices have just said that they’re not going to have contact with tenants directly. They’re open via chat, email, telephone.

  For storage owners, it’s a different consideration as we now go into where are you at in the debt cycle. Those stores that are in highly competitive markets, where they themselves or their competitors are in lease up and there are a lot of vacant spaces, and those in the third category, the very high levered owners are going to be the hardest hit by the event and will have to make the toughest decisions. I don’t know that we’re going to see the real effect of this for perhaps 60 or 90 days as loan clauses with MAC clauses in them (Materially Adverse Condition clauses) begin to be in effect from the lenders and then also the consideration of force majeure clauses, which don’t occur in self storage month to month rental agreements, but certainly would occur in finance arrangements and contracts. It will be interesting to see how that all begins to play out and how the Self Storage sector may fare against other asset class type of lending. Keeping in mind, Self Storage has notoriously had the lowest foreclosure rates, regardless of economic conditions of any other asset class. The only one that ever has come really, really close to it are NNN leases and with triple A credit companies, and also, interestingly enough mobile home parks.
  
  Loans
  What I’m seeing in terms of new loans right now is interesting. The CMBS market, securitized loans, for self storage at least, has pretty much collapsed completely. The bond market being unstable, and that being where these loans are sold, until that bond market is firmed up and we know where the pricing is going to be, I would say the CMBS market is likely to be on hold. I’ve even seen them because of the Material Adverse Conditions or MAC clauses commitments that were set to fund over the last 10 to 15 days. We’ve seen a number of different reactions to the current environment but I think the CMBS market is basically collapsed. I think the only viable market right now is the life insurance company market, they seem to still be quoting, and closing loans that were in process. I think that their underwriting has changed a bit. But that market is still a little bit active. When the first reaction to the turn in the economy was to lower the Fed rate, that actually put a lot of lenders in a position to increase the interest rate floors.
  
  RK Kliebenstein
  rk@askrk.com
  www.askrk.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>80c06722-21ce-4779-8a15-1a9b85e22396Thu, 09 Apr 2020 05:36:28 -080032:36falsefull155551What Are Top Investors Doing During This Crisis (Multiple Asset Classes Mastermind)With over 200 years of combined real estate investing experience in one call, we hosted a mastermind call with several highly experienced investors, and multiple asset classes. They are investors in retail, office, industrial, mobile home park, multi-family. Below are the takeaways.
  
  You can read the entire call script here: https://montecarlorei.com/steps-to-take-during-a-crisis-all-asset-classes-top-investors-mastermind/
  
  Timing
  Lots of people have a wait and see attitude. Others are taking a hands on approach and reaching out to tenants in advance. It's in times like this, that fortunes get made. That's exactly what Warren Buffett does. He has a ton of cash available for situations like this. George Ross, who has been working with Trump for several years said that now it's a great time to buy, all you need is courage.
  
  Retail
  Reality is starting to sink in as tenants don't pay rent, some tenants are saying they won't pay rent for at least 4 months. Some investors are saying that the most realistic datapoint will actually be on May 1st. We are working through lots of loan reworks as well as lease amendments are being negotiated. We're interpreting the CARES Act that was recently passed, updating all of our tenants on what they can apply for through the SBA and really trying to dial in on the loan forgiveness for April and May. So that has been a huge initiative of ours. We've a lot of legal documents and collaborating with other like minded folks across the country to figure out best practices. We were under contract in a deal, thank God, our money didn't go hard. We got in front of this guy a few weeks, we asked for an extension. But we are seeing some slowdown in CMBS and that was one of the vehicles that we were going to use, which required us to pivot a little bit and rethink this. Trammell Crow executives were sending memos to one another and the same message was sent over and over again from some of the best guys in the business: not getting over leveraged, staying lean and focused, hiring the right people, and just really doubling down on the fundamentals of the business.
  
  Developer 
  I did survive the 2009 crisis, and was heavy in real estate when that happened and watched a number of people get wiped out. This is very different, it's not the same at all. But this is interesting times. I'm not a typical value add guy. I've worked in all spaces, I'm hearing from people all over the country in all different types of properties in different classes and with different challenges and different issues right now. And the one common theme is it's too early to tell really anything, we just don't know. It depends on how far and how deep this goes. We do know that the capital markets are a little tight right now, and the rules are changing daily with that, in terms of what they're asking for and covenants and reserves. And they're getting down now to where they're underwriting specific assets and specific markets by the street and block on refinances, and especially cash out refinance, and acquisitions. So the credit markets are getting very interesting.
  
  Senior Housing, Hospitality, Multi-Family (Developer and Operator)
  We are in an environment where the rules have changed and we don't know what they are. Until we know what the new rules are, it's going to be very difficult to play the game. Oftentimes you see people trying to play a new game by the old rules. And if they do, they'll get crushed. It really is like no other game. We're trying to do something that's unprecedented.
  
  Join the conversation here: https://www.facebook.com/groups/montecarlorei
  What are you doing to prepare for what's ahead?
  ---]]>With over 200 years of combined real estate investing experience in one call, we hosted a mastermind call with several highly experienced investors, and multiple asset classes. They are investors in retail, office, industrial, mobile home park, multi-family. Below are the takeaways.
  
  You can read the entire call script here: https://montecarlorei.com/steps-to-take-during-a-crisis-all-asset-classes-top-investors-mastermind/
  
  Timing
  Lots of people have a wait and see attitude. Others are taking a hands on approach and reaching out to tenants in advance. It's in times like this, that fortunes get made. That's exactly what Warren Buffett does. He has a ton of cash available for situations like this. George Ross, who has been working with Trump for several years said that now it's a great time to buy, all you need is courage.
  
  Retail
  Reality is starting to sink in as tenants don't pay rent, some tenants are saying they won't pay rent for at least 4 months. Some investors are saying that the most realistic datapoint will actually be on May 1st. We are working through lots of loan reworks as well as lease amendments are being negotiated. We're interpreting the CARES Act that was recently passed, updating all of our tenants on what they can apply for through the SBA and really trying to dial in on the loan forgiveness for April and May. So that has been a huge initiative of ours. We've a lot of legal documents and collaborating with other like minded folks across the country to figure out best practices. We were under contract in a deal, thank God, our money didn't go hard. We got in front of this guy a few weeks, we asked for an extension. But we are seeing some slowdown in CMBS and that was one of the vehicles that we were going to use, which required us to pivot a little bit and rethink this. Trammell Crow executives were sending memos to one another and the same message was sent over and over again from some of the best guys in the business: not getting over leveraged, staying lean and focused, hiring the right people, and just really doubling down on the fundamentals of the business.
  
  Developer 
  I did survive the 2009 crisis, and was heavy in real estate when that happened and watched a number of people get wiped out. This is very different, it's not the same at all. But this is interesting times. I'm not a typical value add guy. I've worked in all spaces, I'm hearing from people all over the country in all different types of properties in different classes and with different challenges and different issues right now. And the one common theme is it's too early to tell really anything, we just don't know. It depends on how far and how deep this goes. We do know that the capital markets are a little tight right now, and the rules are changing daily with that, in terms of what they're asking for and covenants and reserves. And they're getting down now to where they're underwriting specific assets and specific markets by the street and block on refinances, and especially cash out refinance, and acquisitions. So the credit markets are getting very interesting.
  
  Senior Housing, Hospitality, Multi-Family (Developer and Operator)
  We are in an environment where the rules have changed and we don't know what they are. Until we know what the new rules are, it's going to be very difficult to play the game. Oftentimes you see people trying to play a new game by the old rules. And if they do, they'll get crushed. It really is like no other game. We're trying to do something that's unprecedented.
  
  Join the conversation here: https://www.facebook.com/groups/montecarlorei
  What are you doing to prepare for what's ahead?
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>53c28deb-f7c0-42e7-a5b0-a1555d7248a3Thu, 02 Apr 2020 19:27:19 -080036:36falsefull154541State of Commercial Loans During the Coronavirus: What are the Available Options?What is happening with lending during these times? We are having a timely conversation with John Pascal, Managing Director of Paramount Capital Advisors a highly experienced professional that has been through a few downturns and has some timely advice.
  
  You can read the entire interview here: https://montecarlorei.com/state-of-commercial-loans-during-the-coronavirus-what-are-the-available-options/
  
  As of today, and we know that things can change tomorrow for the better or worse, what is happening in the lending world?
  In a nutshell, it’s ugly. In general, from the bank’s perspective as it relates to some of the real estate types that are more sensitive to economic issues such as hotels, and retail to a lesser extent, they’re basically pressing the pause button. With respect to hotels, what you’re seeing is a lot of hotels are closing. Last week, hotels were maybe doing a little bit of revenue, and now they’ve basically closed. So you have a really unique situation where lenders really just don’t know how to evaluate new opportunities. Because the big question is, how quickly will come out of this, and what the environment will look like, over the next 3 to 12 months, as it relates to the hospitality. As it relates to retail, you have a situation where restaurants and larger retailers, who had issues, or some credit issues before, what are they going to look like over the next year? If you’re a grocery retail center, you certainly have a higher likelihood of getting financing because obviously grocers are one of the businesses that are really flourishing in this environment.
  
  In terms of creative solutions, if people find deals at this point in time, what are some creative lending solutions that you might recommend people looking for, or negotiating?
  Depending on the product type, I’d say, hotel is very difficult. If you’re buying a hotel or refinancing a hotel, I think the best option is through an SBA program, probably 7(a) because banks can securitize a good portion of the loan and get it off their balance sheet. As it relates to other product types, there are dead funds out there that are lending today. They’re being obviously more thoughtful about what they’ll lend on and looking for existing cash flow a good sponsorship, etc. But those debt funds will tend to be a little bit more expensive, maybe in the 7-10% range, non recourse. So those options are still available, those are typically floating rate. So there are lenders out there that are still lending, looking to take advantage of the lack of conventional capital market today.
  
  What are your thoughts on what you think will happen in the next six months to a year?
  I think that the economy will bounce back. It's just a question of time, for how long it takes to get back there. I think you're going to see V shaped recovery and I think it may take three to six months to get there. And I'm not suggesting it's going to be a full recovery. But I think you're going to see businesses ramp back up fairly quickly. I think there certainly is going to be casualties. And I think there's certainly going to be caution on the part of businesses, small businesses, etc, to ramp back up. But I do think you'll see a pretty significant recovery. The government is going to keep rates low for a while.
  
  John Pascal
  www.paramountcapitaladvisors.com
  john@paramountcapitaladvisors.com
  (312) 767-3320
  
  To join our facebook group and share/learn some tips, go to: https://facebook.com/groups/montecarlorei
  ---...]]>What is happening with lending during these times? We are having a timely conversation with John Pascal, Managing Director of Paramount Capital Advisors a highly experienced professional that has been through a few downturns and has some timely advice.
  
  You can read the entire interview here: https://montecarlorei.com/state-of-commercial-loans-during-the-coronavirus-what-are-the-available-options/
  
  As of today, and we know that things can change tomorrow for the better or worse, what is happening in the lending world?
  In a nutshell, it’s ugly. In general, from the bank’s perspective as it relates to some of the real estate types that are more sensitive to economic issues such as hotels, and retail to a lesser extent, they’re basically pressing the pause button. With respect to hotels, what you’re seeing is a lot of hotels are closing. Last week, hotels were maybe doing a little bit of revenue, and now they’ve basically closed. So you have a really unique situation where lenders really just don’t know how to evaluate new opportunities. Because the big question is, how quickly will come out of this, and what the environment will look like, over the next 3 to 12 months, as it relates to the hospitality. As it relates to retail, you have a situation where restaurants and larger retailers, who had issues, or some credit issues before, what are they going to look like over the next year? If you’re a grocery retail center, you certainly have a higher likelihood of getting financing because obviously grocers are one of the businesses that are really flourishing in this environment.
  
  In terms of creative solutions, if people find deals at this point in time, what are some creative lending solutions that you might recommend people looking for, or negotiating?
  Depending on the product type, I’d say, hotel is very difficult. If you’re buying a hotel or refinancing a hotel, I think the best option is through an SBA program, probably 7(a) because banks can securitize a good portion of the loan and get it off their balance sheet. As it relates to other product types, there are dead funds out there that are lending today. They’re being obviously more thoughtful about what they’ll lend on and looking for existing cash flow a good sponsorship, etc. But those debt funds will tend to be a little bit more expensive, maybe in the 7-10% range, non recourse. So those options are still available, those are typically floating rate. So there are lenders out there that are still lending, looking to take advantage of the lack of conventional capital market today.
  
  What are your thoughts on what you think will happen in the next six months to a year?
  I think that the economy will bounce back. It's just a question of time, for how long it takes to get back there. I think you're going to see V shaped recovery and I think it may take three to six months to get there. And I'm not suggesting it's going to be a full recovery. But I think you're going to see businesses ramp back up fairly quickly. I think there certainly is going to be casualties. And I think there's certainly going to be caution on the part of businesses, small businesses, etc, to ramp back up. But I do think you'll see a pretty significant recovery. The government is going to keep rates low for a while.
  
  John Pascal
  www.paramountcapitaladvisors.com
  john@paramountcapitaladvisors.com
  (312) 767-3320
  
  To join our facebook group and share/learn some tips, go to: https://facebook.com/groups/montecarlorei
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/episodes/State-of-Commercial-Loans-During-the-Coronavirus-What-are-the-Available-Options-ebuur7Thu, 26 Mar 2020 05:54:04 -080019:07falsefull153531How Will the Coronavirus Impact the Real Estate Market?The black swan has arrived in our economy, the Coronavirus has taken an unprecedented, unanticipated curve in our economy. What will the impacts be in the commercial real estate market? We talked with experienced real estate investors that have been through a few economic downturns to get their perspective on what we should do during this time. We spoke with George Ross, he has done more real estate deals in New York City than virtually anyone else alive today. We also noted thoughts from other notable investors like Neal Bawa and Kathy Fettke.
  
  You can read this entire episode here: https://montecarlorei.com/how-will-the-coronavirus-impact-the-real-estate-market/
  
  What are specific steps that we can take to prepare ourselves? If we currently own commercial properties, should we start talking to banks, or any other ideas?
  No, wait. Banks will talk to you, because they don’t know what to do either. Imagine, for example, that a bank has so many millions of dollars in mortgages in houses and all the people stopped paying. Now, what does the bank do? Well, they’re not going to be solvent. This is money that they anticipated coming in. And they don’t have it. So what do you do? The banks don’t know what to do. That’s where they come to the government and say, hey, here’s my problem. I don’t know what the end result is, but I do feel that, and I feel very strongly about it, that ultimately the government will come in and step in and help the banks if they have a need. They’ll pump a tremendous amount of money in. And we’re talking about trillions if necessary. We only know it’s necessary once the effect has become critical. It’s not a big problem if somebody misses a payment for a month on a mortgage. What happens if they miss it for a year? Now you’re talking about an entirely different situation. What happens if they never have the money to repay it?
  
  Do you also think we should wait if we think now is the right time to buy real estate?
  Where are you going to get the money? If you went out to buy a piece of property, you’ll want to get a bank loan. They’re going to be very hesitant because they’re not going to want to make loans. They should, they have plenty of money. But they don’t want to make loans. I don’t know the answer to it. But if you had some money sitting there, or you can raise the money yourself from savings, or from refinancing debt that you have, and you have excess money – that’s your down payment. So don’t put up a lot of cash. Just put a down payment, take an option to buy. I wouldn’t go haywire. But if a deal comes up that you think is really good, you’ll get unbelievable negotiating position because they’ll panic.
  
  And those who panic just overreact. I can see overreaction in certain instances, but I can’t see overreaction when it comes to real estate. It has a long history with ups and downs. If the seller is very nervous and wants to do the deal, you’ll get some fantastic deals. You’ll be able to buy property with no cash. But you will have some kind of agreement to pay with something down. People will want to get out of it because it’s not money making. the money that I was anticipating, therefore, they don’t like that and they say let that be somebody else’s headache. Somebody buys and says, okay, I’ll take the headache. But they’re not going to pay cash dollars upfront because they have the headache. Somehow they’re going to have to solve that problem. But would it be a good time? Absolutely.
  
  To join Victor Menasce’s mastermind go to: http://www.victorjm.com/mastermind-series/
  To join our newsletter go to: https://montecarlorei.com/ and subscribe at the top of the page
  ---...]]>The black swan has arrived in our economy, the Coronavirus has taken an unprecedented, unanticipated curve in our economy. What will the impacts be in the commercial real estate market? We talked with experienced real estate investors that have been through a few economic downturns to get their perspective on what we should do during this time. We spoke with George Ross, he has done more real estate deals in New York City than virtually anyone else alive today. We also noted thoughts from other notable investors like Neal Bawa and Kathy Fettke.
  
  You can read this entire episode here: https://montecarlorei.com/how-will-the-coronavirus-impact-the-real-estate-market/
  
  What are specific steps that we can take to prepare ourselves? If we currently own commercial properties, should we start talking to banks, or any other ideas?
  No, wait. Banks will talk to you, because they don’t know what to do either. Imagine, for example, that a bank has so many millions of dollars in mortgages in houses and all the people stopped paying. Now, what does the bank do? Well, they’re not going to be solvent. This is money that they anticipated coming in. And they don’t have it. So what do you do? The banks don’t know what to do. That’s where they come to the government and say, hey, here’s my problem. I don’t know what the end result is, but I do feel that, and I feel very strongly about it, that ultimately the government will come in and step in and help the banks if they have a need. They’ll pump a tremendous amount of money in. And we’re talking about trillions if necessary. We only know it’s necessary once the effect has become critical. It’s not a big problem if somebody misses a payment for a month on a mortgage. What happens if they miss it for a year? Now you’re talking about an entirely different situation. What happens if they never have the money to repay it?
  
  Do you also think we should wait if we think now is the right time to buy real estate?
  Where are you going to get the money? If you went out to buy a piece of property, you’ll want to get a bank loan. They’re going to be very hesitant because they’re not going to want to make loans. They should, they have plenty of money. But they don’t want to make loans. I don’t know the answer to it. But if you had some money sitting there, or you can raise the money yourself from savings, or from refinancing debt that you have, and you have excess money – that’s your down payment. So don’t put up a lot of cash. Just put a down payment, take an option to buy. I wouldn’t go haywire. But if a deal comes up that you think is really good, you’ll get unbelievable negotiating position because they’ll panic.
  
  And those who panic just overreact. I can see overreaction in certain instances, but I can’t see overreaction when it comes to real estate. It has a long history with ups and downs. If the seller is very nervous and wants to do the deal, you’ll get some fantastic deals. You’ll be able to buy property with no cash. But you will have some kind of agreement to pay with something down. People will want to get out of it because it’s not money making. the money that I was anticipating, therefore, they don’t like that and they say let that be somebody else’s headache. Somebody buys and says, okay, I’ll take the headache. But they’re not going to pay cash dollars upfront because they have the headache. Somehow they’re going to have to solve that problem. But would it be a good time? Absolutely.
  
  To join Victor Menasce’s mastermind go to: http://www.victorjm.com/mastermind-series/
  To join our newsletter go to: https://montecarlorei.com/ and subscribe at the top of the page
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/episodes/How-Will-the-Coronavirus-Impact-the-Real-Estate-Market-eblpc5Thu, 19 Mar 2020 07:13:28 -080018:52falsefull152521How to Overcome Paralysis by Analysis in Your Real Estate InvestmentsWhat makes investing in commercial real estate attractive in the United States, how to get over paralysis by analysis and how to find a great business partner? We are interviewing Reed Goossens, author of Investing in the US, the Ultimate Guide to US Real Estate.
  
  You can read this entire interview here: https://montecarlorei.com/how-to-overcome-paralysis-by-analysis-in-your-real-estate-investments/
  
  Let’s talk about paralysis by analysis. What would you recommend people doing? How much do you recommend people learning in order for them to buy their first property?
  Analysis paralysis is needed. And I think I’d rather be at the analysis paralysis stage than not doing anything other than jumping in too soon. You always have to start with education, education, education, education. And even today with 1,800 units in multi-family, I’m still learning, and continue to learn. It’s really important, if you are getting into this game, to understand how to underwrite deals, because that is the most important thing. If you don’t know what a deal looks like, you won’t know how to act. You don’t know how to go get it under contract. Understanding the numbers behind a particular commercial is really, really important. Understanding how the income is generated, how revenue is generated from a property, whether it be from a multifamily, or a hotel, a warehouse, self-storage, whatever it might be, you need to understand how the top line is created and how do you increase that top line. The second thing you need to understand is what expenses do each individual assets in the commercial “sector”.

  Multifamily has different expenses than a hotel, and the hotel has different expenses than a self-storage facility. So you need to understand line by line what those expenses are. You need to understand how to read a P&L statement. Once you know how to read a profit loss statement, you want to understand how to generate revenue and reduce expenses, or maintain expenses at a reasonable rate. That’s how you learn how to increase the net operating income and thus the cash flow and thus the overall value of the asset. If you don’t know how to do that, then you need to start there.

  If you do know how to do that and you’re trying to get out of your own way for analysis paralysis, you have to surround yourself with people who are doing it, because analysis paralysis just means that you are too scared. You haven’t seen or experienced enough things or people around you to order to be confident to go do it. So the analogy I like is, if you’ve ever been jumping off a diving platform at a pool and it might an intimidating diving platform, it’s fun, it’s scary, but, your friend does it first and then you’re like, oh, he did it, I can do it. It’s the same thing with analysis paralysis. If you’re not surrounding herself with people who are actually doing commercial real estate deals, then you’re not going to have the confidence to go and do it yourself. But what it does mean is if you are surrounding yourself with people who are doing commercial real estate deals, maybe you can learn from them. Maybe they can be a mentor of yours to give you credibility, to give you the confidence to go out and be an operator. The analysis paralysis can be overcome by understanding numbers, understanding how to find deals and surrounding yourself with the right people in order to be successful, in order to use their credibility or to ride on their coattails towards helping you become a successful operator. If that’s what you want to be.
  
  Reed Goossens
  reedgoossens.com
  info@reedgoossens.com

  --- Support this podcast: What makes investing in commercial real estate attractive in the United States, how to get over paralysis by analysis and how to find a great business partner? We are interviewing Reed Goossens, author of Investing in the US, the Ultimate Guide to US Real Estate.
  
  You can read this entire interview here: https://montecarlorei.com/how-to-overcome-paralysis-by-analysis-in-your-real-estate-investments/
  
  Let’s talk about paralysis by analysis. What would you recommend people doing? How much do you recommend people learning in order for them to buy their first property?
  Analysis paralysis is needed. And I think I’d rather be at the analysis paralysis stage than not doing anything other than jumping in too soon. You always have to start with education, education, education, education. And even today with 1,800 units in multi-family, I’m still learning, and continue to learn. It’s really important, if you are getting into this game, to understand how to underwrite deals, because that is the most important thing. If you don’t know what a deal looks like, you won’t know how to act. You don’t know how to go get it under contract. Understanding the numbers behind a particular commercial is really, really important. Understanding how the income is generated, how revenue is generated from a property, whether it be from a multifamily, or a hotel, a warehouse, self-storage, whatever it might be, you need to understand how the top line is created and how do you increase that top line. The second thing you need to understand is what expenses do each individual assets in the commercial “sector”.

  Multifamily has different expenses than a hotel, and the hotel has different expenses than a self-storage facility. So you need to understand line by line what those expenses are. You need to understand how to read a P&L statement. Once you know how to read a profit loss statement, you want to understand how to generate revenue and reduce expenses, or maintain expenses at a reasonable rate. That’s how you learn how to increase the net operating income and thus the cash flow and thus the overall value of the asset. If you don’t know how to do that, then you need to start there.

  If you do know how to do that and you’re trying to get out of your own way for analysis paralysis, you have to surround yourself with people who are doing it, because analysis paralysis just means that you are too scared. You haven’t seen or experienced enough things or people around you to order to be confident to go do it. So the analogy I like is, if you’ve ever been jumping off a diving platform at a pool and it might an intimidating diving platform, it’s fun, it’s scary, but, your friend does it first and then you’re like, oh, he did it, I can do it. It’s the same thing with analysis paralysis. If you’re not surrounding herself with people who are actually doing commercial real estate deals, then you’re not going to have the confidence to go and do it yourself. But what it does mean is if you are surrounding yourself with people who are doing commercial real estate deals, maybe you can learn from them. Maybe they can be a mentor of yours to give you credibility, to give you the confidence to go out and be an operator. The analysis paralysis can be overcome by understanding numbers, understanding how to find deals and surrounding yourself with the right people in order to be successful, in order to use their credibility or to ride on their coattails towards helping you become a successful operator. If that’s what you want to be.
  
  Reed Goossens
  reedgoossens.com
  info@reedgoossens.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/episodes/How-to-Overcome-Paralysis-by-Analysis-in-Your-Real-Estate-Investments-eber2nThu, 12 Mar 2020 07:00:00 -080020:47falsefull151511Things to Do When You’re in Contract to Purchase a Commercial PropertyWhat happens as soon as you get in contract to purchase a property? What are some of the things that you need to keep in mind? What do you need to do and how do you need to organize yourself?
  
  You can read this entire episode here: https://montecarlorei.com/things-to-do-when-youre-in-contract-to-purchase-a-commercial-property/
  
  The first step is to have something really simple, like a word document where you will have all of the information on the property in this document. My document has:
  - The contact info for the real estate agents.
  - The timeline for the deal.
  - The link to the property listing.
  - How many days I have until closing.
  - A link to all of the documents for the due diligence.
  - All of the information from the lenders that I have so far and that I have contacted.
  - A list of potential property managers for this property.
  - My to do list for the next week.
  - Things that the real estate agent owes me in terms of documents.
  - A list of things that are outstanding that I need to take care of in terms of hiring people, or asking for recommendations for lawyers.
  - A list of "surprises" that you find out during the due diligence process.
  
  Week 1
  - Reach out to a couple of lenders and finalize a loan application.
  - Look for a few more lenders that are local to the area, as well as about three national banks.
  - Break down the finances for the lender, and this is going to be breaking down what you're going to do to the property to increase value. For example, we can increase rents on the property by about five to 10 percent (this is self-storage). We can also decrease vacancy. This is going to have to be completely broken down into an excel sheet, by unit.
  - Pick a shortlist of inspectors for this property that are local and that can deliver the inspection within a few days of having it done.
  - Review a copy of the existing management contract.
  - Find a lawyer that is local and familiar with that states laws.
  - Find a copy of the state's lease which is a standard lease for that state.
  - Get all the documentation for that income and expenses for the last two years for this property. And this will also be for the lender.
  - Look for potential new property managers, if that is our plan.
  
  Week 2
  - Have the lawyer review the management contract and make any adjustments for the actual lease contract for the units.
  - Finalize the profit and loss statement and our projected vacancy for that first year.
  - Finalize how we're going to structure the payment for a potential contractor that will work on renting the vacant units.
  - Finalize the loan packages for the banks.
  - Call the remainder lenders that are on our list that we found on the first week.
  - Look for an insurance company, and we might just continue using the same insurance company that is insuring the property to make things easier. So we need to get their contact information.

  Week 3
  - Make sure that we get the final inspection reports from the inspectors.
  - Start narrowing down the list of lenders that will move forward with this property.

  Week 4
  This week is currently open for the items that will come up during weeks 1, 2 and 3. We're going to be dealing with whatever we uncover, or still need at that time.
  
  Week 5
  - Finalize things with the lender and we will be looking at the miscellaneous things that we need to get done after we close on the property.
  - Find phone centers that are familiar with taking calls for self-storage properties.
  
  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: What happens as soon as you get in contract to purchase a property? What are some of the things that you need to keep in mind? What do you need to do and how do you need to organize yourself?
  
  You can read this entire episode here: https://montecarlorei.com/things-to-do-when-youre-in-contract-to-purchase-a-commercial-property/
  
  The first step is to have something really simple, like a word document where you will have all of the information on the property in this document. My document has:
  - The contact info for the real estate agents.
  - The timeline for the deal.
  - The link to the property listing.
  - How many days I have until closing.
  - A link to all of the documents for the due diligence.
  - All of the information from the lenders that I have so far and that I have contacted.
  - A list of potential property managers for this property.
  - My to do list for the next week.
  - Things that the real estate agent owes me in terms of documents.
  - A list of things that are outstanding that I need to take care of in terms of hiring people, or asking for recommendations for lawyers.
  - A list of "surprises" that you find out during the due diligence process.
  
  Week 1
  - Reach out to a couple of lenders and finalize a loan application.
  - Look for a few more lenders that are local to the area, as well as about three national banks.
  - Break down the finances for the lender, and this is going to be breaking down what you're going to do to the property to increase value. For example, we can increase rents on the property by about five to 10 percent (this is self-storage). We can also decrease vacancy. This is going to have to be completely broken down into an excel sheet, by unit.
  - Pick a shortlist of inspectors for this property that are local and that can deliver the inspection within a few days of having it done.
  - Review a copy of the existing management contract.
  - Find a lawyer that is local and familiar with that states laws.
  - Find a copy of the state's lease which is a standard lease for that state.
  - Get all the documentation for that income and expenses for the last two years for this property. And this will also be for the lender.
  - Look for potential new property managers, if that is our plan.
  
  Week 2
  - Have the lawyer review the management contract and make any adjustments for the actual lease contract for the units.
  - Finalize the profit and loss statement and our projected vacancy for that first year.
  - Finalize how we're going to structure the payment for a potential contractor that will work on renting the vacant units.
  - Finalize the loan packages for the banks.
  - Call the remainder lenders that are on our list that we found on the first week.
  - Look for an insurance company, and we might just continue using the same insurance company that is insuring the property to make things easier. So we need to get their contact information.

  Week 3
  - Make sure that we get the final inspection reports from the inspectors.
  - Start narrowing down the list of lenders that will move forward with this property.

  Week 4
  This week is currently open for the items that will come up during weeks 1, 2 and 3. We're going to be dealing with whatever we uncover, or still need at that time.
  
  Week 5
  - Finalize things with the lender and we will be looking at the miscellaneous things that we need to get done after we close on the property.
  - Find phone centers that are familiar with taking calls for self-storage properties.
  
  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>db6fb58c-098d-43ac-9cf6-e473827efcc4Thu, 05 Mar 2020 20:45:06 -080016:21falsefull1505013 Tips for Hiring a Commercial Real Estate PhotographerWhen you're ready to sell your commercial property, it is a wise idea to hire a professional photographer. What should you look for when hiring a professional commercial real estate photographer? What are some technologies that could be useful in marketing your properties visually? We are interviewing Brian Balduf, CEO and co-founder of VHT Studios, a visual marketing company with over 1,000 photographers and videographers, focused in real estate.
  
  You can read this episode here: https://montecarlorei.com/top-tips-for-hiring-a-commercial-real-estate-photographer/
  
  What are some tips for screening a good photographer and videographer that has focused in commercial real estate?
  I would say the most important thing in screening or choosing a partner or provider for photography or video is look at their experience. Anybody could push a button on a camera and take a picture. But that's not the point here. The point is you want to impact, make an impression, create a perception and sell or rent the property. So you're really looking for a return on your investment. The best way to do that is to see what they've done before that's similar. Not just their work, not just photographs of weddings, or puppies, or things like that. Show me what you've done with properties that are similar to mine. Whether it's a hotel, a retail location, or a manufacturing location. I want to see it. You also want to work with that photographer on what are you trying to convey? What are you trying to present to potential buyers and renters? What's the story of this property? What are the highlights or features of this property that should be focused on and make sure that they understand that. That they're not just coming through and taking pictures to take pictures. You want to show it in its best light, make great first impressions and appeal to certain audiences.
  
  Third, I would say, is understanding your licenses and rights to use those photographs. The way it works in the United States is the producer or creator of the visual assets or the intellectual property owns it and owns all the rights. Unless they give rights to you, and you always want that in writing so it's very clear. Here's what I can and can't do with these photographs. It's a very big topic in the industry today because I think a lot of people assume that once they have the photographs I can do anything I want, but that's not necessarily true. The license could be restricted to just print, just brochures in magazines, or it could be restricted to just the Internet. If it's not in writing, you really don't have it. You need to ask for it and have that agreement. So I think those are three important things in screening a photographer: the quality of their work experience, their ability to understand your story and your audience, and getting those licenses in writing.
  
  How do photographers charge for commercial properties? Is it per square foot? Per room? How does that work?
  That’s a good question. Generally, it’s per photograph. So you’ll have a rate for the artist, photographer, a pilot to come out to the property. Think of that as a session fee. So you pay them to come out and shoot everything that’s applicable. Everything that makes sense. And then on the back end, you proof those photographs and get to choose the ones that you want to license. And it’s just a per photograph license fee. So it’s a combination of those two. The range could go anywhere from a couple hundred to a couple of thousand dollars depending on the size of the property. How many photographs are being taken and the mix of services.
  
  Brian Balduf
  https://vht.com/
  --- Support...]]>When you're ready to sell your commercial property, it is a wise idea to hire a professional photographer. What should you look for when hiring a professional commercial real estate photographer? What are some technologies that could be useful in marketing your properties visually? We are interviewing Brian Balduf, CEO and co-founder of VHT Studios, a visual marketing company with over 1,000 photographers and videographers, focused in real estate.
  
  You can read this episode here: https://montecarlorei.com/top-tips-for-hiring-a-commercial-real-estate-photographer/
  
  What are some tips for screening a good photographer and videographer that has focused in commercial real estate?
  I would say the most important thing in screening or choosing a partner or provider for photography or video is look at their experience. Anybody could push a button on a camera and take a picture. But that's not the point here. The point is you want to impact, make an impression, create a perception and sell or rent the property. So you're really looking for a return on your investment. The best way to do that is to see what they've done before that's similar. Not just their work, not just photographs of weddings, or puppies, or things like that. Show me what you've done with properties that are similar to mine. Whether it's a hotel, a retail location, or a manufacturing location. I want to see it. You also want to work with that photographer on what are you trying to convey? What are you trying to present to potential buyers and renters? What's the story of this property? What are the highlights or features of this property that should be focused on and make sure that they understand that. That they're not just coming through and taking pictures to take pictures. You want to show it in its best light, make great first impressions and appeal to certain audiences.
  
  Third, I would say, is understanding your licenses and rights to use those photographs. The way it works in the United States is the producer or creator of the visual assets or the intellectual property owns it and owns all the rights. Unless they give rights to you, and you always want that in writing so it's very clear. Here's what I can and can't do with these photographs. It's a very big topic in the industry today because I think a lot of people assume that once they have the photographs I can do anything I want, but that's not necessarily true. The license could be restricted to just print, just brochures in magazines, or it could be restricted to just the Internet. If it's not in writing, you really don't have it. You need to ask for it and have that agreement. So I think those are three important things in screening a photographer: the quality of their work experience, their ability to understand your story and your audience, and getting those licenses in writing.
  
  How do photographers charge for commercial properties? Is it per square foot? Per room? How does that work?
  That’s a good question. Generally, it’s per photograph. So you’ll have a rate for the artist, photographer, a pilot to come out to the property. Think of that as a session fee. So you pay them to come out and shoot everything that’s applicable. Everything that makes sense. And then on the back end, you proof those photographs and get to choose the ones that you want to license. And it’s just a per photograph license fee. So it’s a combination of those two. The range could go anywhere from a couple hundred to a couple of thousand dollars depending on the size of the property. How many photographs are being taken and the mix of services.
  
  Brian Balduf
  https://vht.com/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>62bf91cf-e50f-4977-beb3-8e41035fa2acThu, 27 Feb 2020 07:00:00 -080016:37falsefull149491300 Ways to Buy, Sell or Exchange Real EstateIn his first podcast interview ever, Robert Steele, author of 300 Ways to Buy, Sell or Exchange Real Estate, shares some of his top tips for buying, selling and exchanging commercial real estate.
  
  You can read this entire interview here: https://montecarlorei.com/300-ways-to-buy-sell-or-exchange-real-estate/
  
  Let's go over the first two strategies of your book, which you mention are the most important ones to get
  The first one is called "Unpriced". The pricing is only in the eyes of the beholder. I encourage people to list their property unpriced - any price agreeable to the seller. They can give a range, $1,000,000 - $1,250,000 or $750,000 - $1,500,000. It's a range, perhaps, but the basic thing is unpriced. The person owning the real estate is trying to accomplish something. Now, if it's cashflow, you want a return of some sort, how much do you want? What is the target that you need to accomplish? Now, when they get into numbers, they get into cap rate sheets and things like that. In a pure exchanging, the cap rates go away. And it's what the person is trying to accomplish.
  
  I'll take you to number two in the book, which is called Creation of Wealth. You have a home, you have equity, and you'd like to buy another house, let's say, to rent it. So you have choices that you either have the cash in the bank or you could refinance your house or you could borrow a second on your house. The second would give you cash and you could go buy another house with it, or a duplex. By the same token, you could create a second on the house. That's the creation of wealth. Very simply, you could put a note in a trust deed, or computer and type out a note for fifty thousand dollars secured by a trust deed on your house in which you would trade that trust deed to somebody else that had another house that would take your trust deed so you could use a trust deed that you created without using any cash. Simply it's a piece of paper secured by the equity in your home. It's recorded against your title. It's a piece of paper and the piece of paper says I'll make certain payments on it at a certain interest rate. What you're doing is you're using part of your equity in order to buy another property, which you're not going through a bank, you're creating it yourself.
  
  In this economy, what are some of the strategies that you recommend us keeping in mind?
  I'd keep in mind the crypto currency, you could have a tremendous amount of wealth tied up in that cryptocurrency. If you go out of that crypto currency, you're going to be taxed. But if you deal with people in the exchange field that are knowledgeable in exchange rules, they can help you because they can take a million dollars worth of your cryptocurrency and then you don't go out of title. You keep it because that's the goose laying the golden eggs. You want to keep that. You can use that as security to buy some real estate. A knowledgeable broker could say, we'll take a million dollars worth of your cryptocurrency, use it as security and wrap it in what's called a blanket mortgage over the crypto currency and the real estate. So you're able to use it as though it's a million dollar down payment without going out of title. Now, the person on the other side has the security of that million dollars. You have to perform on your payments and your obligations, or you would lose it. The currency could be used as the source of security for your down payment into to three or four million dollars worth of real estate without going out of title.
  
  Robert Steele
  (760) 522-5362
  itsinfinite123@gmail.com
  https://www.amazon.com/Steele-Ways-Sell-Exchange-Estate/dp/098951904X
  
  
  --- Support this]]>In his first podcast interview ever, Robert Steele, author of 300 Ways to Buy, Sell or Exchange Real Estate, shares some of his top tips for buying, selling and exchanging commercial real estate.
  
  You can read this entire interview here: https://montecarlorei.com/300-ways-to-buy-sell-or-exchange-real-estate/
  
  Let's go over the first two strategies of your book, which you mention are the most important ones to get
  The first one is called "Unpriced". The pricing is only in the eyes of the beholder. I encourage people to list their property unpriced - any price agreeable to the seller. They can give a range, $1,000,000 - $1,250,000 or $750,000 - $1,500,000. It's a range, perhaps, but the basic thing is unpriced. The person owning the real estate is trying to accomplish something. Now, if it's cashflow, you want a return of some sort, how much do you want? What is the target that you need to accomplish? Now, when they get into numbers, they get into cap rate sheets and things like that. In a pure exchanging, the cap rates go away. And it's what the person is trying to accomplish.
  
  I'll take you to number two in the book, which is called Creation of Wealth. You have a home, you have equity, and you'd like to buy another house, let's say, to rent it. So you have choices that you either have the cash in the bank or you could refinance your house or you could borrow a second on your house. The second would give you cash and you could go buy another house with it, or a duplex. By the same token, you could create a second on the house. That's the creation of wealth. Very simply, you could put a note in a trust deed, or computer and type out a note for fifty thousand dollars secured by a trust deed on your house in which you would trade that trust deed to somebody else that had another house that would take your trust deed so you could use a trust deed that you created without using any cash. Simply it's a piece of paper secured by the equity in your home. It's recorded against your title. It's a piece of paper and the piece of paper says I'll make certain payments on it at a certain interest rate. What you're doing is you're using part of your equity in order to buy another property, which you're not going through a bank, you're creating it yourself.
  
  In this economy, what are some of the strategies that you recommend us keeping in mind?
  I'd keep in mind the crypto currency, you could have a tremendous amount of wealth tied up in that cryptocurrency. If you go out of that crypto currency, you're going to be taxed. But if you deal with people in the exchange field that are knowledgeable in exchange rules, they can help you because they can take a million dollars worth of your cryptocurrency and then you don't go out of title. You keep it because that's the goose laying the golden eggs. You want to keep that. You can use that as security to buy some real estate. A knowledgeable broker could say, we'll take a million dollars worth of your cryptocurrency, use it as security and wrap it in what's called a blanket mortgage over the crypto currency and the real estate. So you're able to use it as though it's a million dollar down payment without going out of title. Now, the person on the other side has the security of that million dollars. You have to perform on your payments and your obligations, or you would lose it. The currency could be used as the source of security for your down payment into to three or four million dollars worth of real estate without going out of title.
  
  Robert Steele
  (760) 522-5362
  itsinfinite123@gmail.com
  https://www.amazon.com/Steele-Ways-Sell-Exchange-Estate/dp/098951904X
  
  
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>03a765c2-2e2b-40a3-b9d3-fcc921deef2dThu, 20 Feb 2020 07:48:11 -080023:41falsefull1484814 Steps for Community Engagement for Your Real Estate ProjectWhat are some key things you must do when doing community engagement for your real estate project? Ilana Lipsett details 4 steps that are a must for every development, in any community.
  
  You can read this episode here: https://montecarlorei.com/4-steps-for-community-engagement-for-your-development/
  
  When you get a community engagement project, what is the first thing that you do?
  I have a four step process that I like to lay out when I’m starting a project. The first is, get curious, show up and listen. And before the showing up and listening, it’s important to observe, ask questions and listen. People are the experts of their own experience, and that’s your job as a community engagement practitioner to deeply and empathetically understand what their experience is. So in order to show up, you have to ask who is already here, who has been here before, who’s showing up at your meetings at city hall, who’s responding to requests to meet and who’s not. And so a big part of that is showing up everywhere. Get to know local businesses, shop there, spend time there. You’ll start to meet regulars and hear stories, go to neighborhood meetings, go to town halls, go to gatherings. Before you start knocking on doors, it’s important to build those relationships by showing up in public and meeting people. And through that, you can evaluate if you need to be invited and go with a local leader who can introduce you to their neighbors or who can introduce you at a community meeting. Having buy in from the local leadership is really important.
  
  Having an established relationship before you do that. And so by showing that you want to be part of the community, by going to local events to block parties, to coffee shops, to bars, to whatever it is, it shows people that you are there and that you’re committed. And a key part of that is to not offer solutions yet. You’re still in this curiosity phase and getting a sense of who is here. What’s the history of the area? What has already happened? What already exists here that builds or holds community, whether those are events or meetings or parks. I feel like this may seem like an obvious thing to say, but you’d be surprised at how many post-mortems I’ve heard where developers say, oh, the biggest lesson learned was that we needed to talk to people and include them in the process.
  
  If the community has so much input and part of it is against what the developer was looking for, what happens?
  Part of it comes down to being honest and transparent about what you are and what you’re not, and what you can do and what you won’t do. When you do community engagement, one of the challenging components of it is that you aren’t necessarily going to get input that will be conducive to what you’re trying to do or you won’t necessarily get input that’s helpful or you’ll get input that is challenging your core beliefs or your vision or your mission. Part of it is not necessarily incorporating all of those pieces of the input that you’re getting, but it’s understanding how to best respond to them and how to best respond to the community. Transparency and communication is one of the most important things in addressing that. Having your community engagement process in place allows you to build relationships with your neighbors, with the community, with community leaders, so that when they do ask the hard questions or if somebody does come in with an objection, you’re able to respond to them in a way in which you are showing them respect, that you’ve listened to them and they’re showing you respect that they’ll understand and accept your answer.
  
  Ilana Lipsett
  ilipsett@iftf.org
  www.iftf.org
  ---...]]>What are some key things you must do when doing community engagement for your real estate project? Ilana Lipsett details 4 steps that are a must for every development, in any community.
  
  You can read this episode here: https://montecarlorei.com/4-steps-for-community-engagement-for-your-development/
  
  When you get a community engagement project, what is the first thing that you do?
  I have a four step process that I like to lay out when I’m starting a project. The first is, get curious, show up and listen. And before the showing up and listening, it’s important to observe, ask questions and listen. People are the experts of their own experience, and that’s your job as a community engagement practitioner to deeply and empathetically understand what their experience is. So in order to show up, you have to ask who is already here, who has been here before, who’s showing up at your meetings at city hall, who’s responding to requests to meet and who’s not. And so a big part of that is showing up everywhere. Get to know local businesses, shop there, spend time there. You’ll start to meet regulars and hear stories, go to neighborhood meetings, go to town halls, go to gatherings. Before you start knocking on doors, it’s important to build those relationships by showing up in public and meeting people. And through that, you can evaluate if you need to be invited and go with a local leader who can introduce you to their neighbors or who can introduce you at a community meeting. Having buy in from the local leadership is really important.
  
  Having an established relationship before you do that. And so by showing that you want to be part of the community, by going to local events to block parties, to coffee shops, to bars, to whatever it is, it shows people that you are there and that you’re committed. And a key part of that is to not offer solutions yet. You’re still in this curiosity phase and getting a sense of who is here. What’s the history of the area? What has already happened? What already exists here that builds or holds community, whether those are events or meetings or parks. I feel like this may seem like an obvious thing to say, but you’d be surprised at how many post-mortems I’ve heard where developers say, oh, the biggest lesson learned was that we needed to talk to people and include them in the process.
  
  If the community has so much input and part of it is against what the developer was looking for, what happens?
  Part of it comes down to being honest and transparent about what you are and what you’re not, and what you can do and what you won’t do. When you do community engagement, one of the challenging components of it is that you aren’t necessarily going to get input that will be conducive to what you’re trying to do or you won’t necessarily get input that’s helpful or you’ll get input that is challenging your core beliefs or your vision or your mission. Part of it is not necessarily incorporating all of those pieces of the input that you’re getting, but it’s understanding how to best respond to them and how to best respond to the community. Transparency and communication is one of the most important things in addressing that. Having your community engagement process in place allows you to build relationships with your neighbors, with the community, with community leaders, so that when they do ask the hard questions or if somebody does come in with an objection, you’re able to respond to them in a way in which you are showing them respect, that you’ve listened to them and they’re showing you respect that they’ll understand and accept your answer.
  
  Ilana Lipsett
  ilipsett@iftf.org
  www.iftf.org
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>cc78504c-c5bf-46f2-bf41-c6f36dc97d69Thu, 13 Feb 2020 07:22:31 -080022:13falsefull147471How to Find & Analyze a Real Estate Market Learn how to find, analyze and learn more about micro markets for your real estate investments. Victor Menasce has been investing in real estate for the last nine years in both Canada and the United States, and has done all kinds of commercial projects.
  
  You can read this entire episode here: https://montecarlorei.com/how-to-find-and-analyze-a-market-for-your-real-estate-investments/
  
  What are some market conditions that people should be looking for in real estate?
  I’m not actually a real estate person per se. I really think of myself more as a business person. When you talk to real estate people, they tend to get wrapped around the axle talking about things like comparable sales and things like that. And that’s useful, but it’s not the whole picture. I’m a much bigger believer in the fundamentals of the very simple law of supply and demand. If you’ve an excess of supply and a shortage of demand, you can predict what’s going to happen. Prices are going to fall if you have a shortage of supply and an excess of demand. And those conditions are going to persist. You have a really robust market from the point of view of an investor or developer, because there’s going to always be upward pressure on prices, upward pressure on rent, upward pressure on valuations. And that’s what I look for. I want to find markets, and when I say markets, I really mean micro markets. Micro markets where those conditions persist, they exist. They’re not artificial. They’re going to be there for a long time for some good reason.
  
  How do you come across these locations, typically? Is it someone that just mentions it to you, or you come across an article?
  It’s almost always through a conversation where someone will say something and we’ll say, that’s intriguing, and then look into it a little bit deeper and see if there’s really something there. Not only to see if those market conditions are there, but who else is in the market? Is it a market where it’s a closed market and there’s only two or three players? Or is it one that is open to other folks coming into the market and adding some capacity. We talk to a lot of investors every day, and I think most listeners of your show would agree that today, there’s more money chasing deals than there are in fact opportunities, at least at a decent price. And because there’s so much money chasing deals, prices are getting bid up into the stratosphere. Prices are getting bid up to levels that frankly don’t make sense. And my calculator works the same this year as it did two years ago, as it did four years ago. And it’s funny how for some investors the math changes, and it shouldn’t.
  
  When you are assessing a particular property, how do you approach it from it being a fit for the monetary goals of the project?
  Our focus is on things that are recession resistant, recession proof. I don’t want to be subject to the vagaries of a market cycle. For that reason, I won’t go into retail, for example, if I have a vacancy in a retail strip mall, that location could be vacant for a year or two if I’m waiting for that perfect tenant who’s looking for exactly that square footage. And then of course, you’ve got to do tenant improvements, you’ve got to do a build out. So you really are looking for that needle in a haystack type of perfect fit. One way is to find them. The second way is to manufacture them out of thin air, to create them.
  
  Victor Menasce
  victorjm.com
  Magnetic Capital – How To Raise All The Money You Need For ANY Worthy Venture
  ...]]>Learn how to find, analyze and learn more about micro markets for your real estate investments. Victor Menasce has been investing in real estate for the last nine years in both Canada and the United States, and has done all kinds of commercial projects.
  
  You can read this entire episode here: https://montecarlorei.com/how-to-find-and-analyze-a-market-for-your-real-estate-investments/
  
  What are some market conditions that people should be looking for in real estate?
  I’m not actually a real estate person per se. I really think of myself more as a business person. When you talk to real estate people, they tend to get wrapped around the axle talking about things like comparable sales and things like that. And that’s useful, but it’s not the whole picture. I’m a much bigger believer in the fundamentals of the very simple law of supply and demand. If you’ve an excess of supply and a shortage of demand, you can predict what’s going to happen. Prices are going to fall if you have a shortage of supply and an excess of demand. And those conditions are going to persist. You have a really robust market from the point of view of an investor or developer, because there’s going to always be upward pressure on prices, upward pressure on rent, upward pressure on valuations. And that’s what I look for. I want to find markets, and when I say markets, I really mean micro markets. Micro markets where those conditions persist, they exist. They’re not artificial. They’re going to be there for a long time for some good reason.
  
  How do you come across these locations, typically? Is it someone that just mentions it to you, or you come across an article?
  It’s almost always through a conversation where someone will say something and we’ll say, that’s intriguing, and then look into it a little bit deeper and see if there’s really something there. Not only to see if those market conditions are there, but who else is in the market? Is it a market where it’s a closed market and there’s only two or three players? Or is it one that is open to other folks coming into the market and adding some capacity. We talk to a lot of investors every day, and I think most listeners of your show would agree that today, there’s more money chasing deals than there are in fact opportunities, at least at a decent price. And because there’s so much money chasing deals, prices are getting bid up into the stratosphere. Prices are getting bid up to levels that frankly don’t make sense. And my calculator works the same this year as it did two years ago, as it did four years ago. And it’s funny how for some investors the math changes, and it shouldn’t.
  
  When you are assessing a particular property, how do you approach it from it being a fit for the monetary goals of the project?
  Our focus is on things that are recession resistant, recession proof. I don’t want to be subject to the vagaries of a market cycle. For that reason, I won’t go into retail, for example, if I have a vacancy in a retail strip mall, that location could be vacant for a year or two if I’m waiting for that perfect tenant who’s looking for exactly that square footage. And then of course, you’ve got to do tenant improvements, you’ve got to do a build out. So you really are looking for that needle in a haystack type of perfect fit. One way is to find them. The second way is to manufacture them out of thin air, to create them.
  
  Victor Menasce
  victorjm.com
  Magnetic Capital – How To Raise All The Money You Need For ANY Worthy Venture
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>b4f0cc7c-4bd0-4d77-86cd-852aebf06418Thu, 06 Feb 2020 08:00:00 -080017:05falsefull146461How to Go From Residential to Commercial PropertiesIn this episode we learn how to move from residential investing to commercial / mixed use investing. Hanna Azar has been an investor since 2012 and currently manages a family portfolio of approximately 91 units, of which he co-owns 50.
  
  You can read this episode here: https://montecarlorei.com/how-to-go-from-residential-investing-to-commercial-properties/
  
  What was your first deal like, and how did you transition to value add properties?
  Luckily for me I was in college in 2008 during the recession, and decided to buy a single family home in Palo Alto. I was a senior in college, I was 20, 21 years old, and that was my first investment in real estate. I bought it mainly for cashflow purposes when I underwrote the deal and I thought of appreciation as a bonus. But I quickly realized that appreciation in real estate is really what drives most of the value and most of the investment. And that's where I started shifting gears. I read a book by Manny Khoshbin, who is also a value investor developer, called How to Build Your Hundred Million Dollar Real Estate Portfolio. It definitely changed my mindset of what real estate is, what you can do with it, and how you should focus your investments and time.
  
  What drove you to move from residential properties into mixed use?
  I basically got the idea from the book, a lot of it just looking at the market, looking at where people were moving in the city and knowing that the scalability will eventually be the best strategy in the long run.
  
  Do you have any particular tips for people that are getting into real estate or that are beginners? What should they be doing and looking at?
  I think everyone's path in real estate is definitely different. I would say, all else being equal, I would start small, get your hands dirty, assess risks as much as you can before jumping into a deal. Go to meetups, listen to podcasts like yours as well, and try digging deep as much as you can before pulling the trigger. I would read as many books as possible look into ways that you could add value and find a niche.
  
  And I think that's sort of what we created in San Francisco with the properties that we've been buying, which most of them are in the Mission District. So we kind of felt like we have local knowledge. We know the buildings better, we know ways of adding value that works for our business model. I would say just try adding value, locate niches as much as possible, and try to force appreciation as much as you can, which is something I hope I illustrated. You should never wait to buy real estate, and just hope something will go up and buying it at risky prices.
  
  I would say look for properties, try to force appreciation through some kind of value add mechanism which in commercial real estate is obviously increasing NOI and look for scalability as much as possible. There are a lot of inefficiencies in real estate, which is the reason why I like it so much. There's all kinds of information gaps. There are ways that you can locate a seller before it hits the market. The pricing on the real estate is not efficient as well like the stock market, a broker might price something high on because he is out of the area, or he might price it too low, and it might be during the holiday season like it is now and not too many buyers show up because they're traveling. If you dig deeper, you'll definitely be able to find the inefficiencies.
  
  How to Build Your $100M Real Estate Portfolio: https://tinyurl.com/rgtyvmg
  Confessions of a Real Estate Entrepreneur: https://tinyurl.com/ufp73vv
  
  Hanna Azar
  hannajazar@gmail.com
  ...]]>In this episode we learn how to move from residential investing to commercial / mixed use investing. Hanna Azar has been an investor since 2012 and currently manages a family portfolio of approximately 91 units, of which he co-owns 50.
  
  You can read this episode here: https://montecarlorei.com/how-to-go-from-residential-investing-to-commercial-properties/
  
  What was your first deal like, and how did you transition to value add properties?
  Luckily for me I was in college in 2008 during the recession, and decided to buy a single family home in Palo Alto. I was a senior in college, I was 20, 21 years old, and that was my first investment in real estate. I bought it mainly for cashflow purposes when I underwrote the deal and I thought of appreciation as a bonus. But I quickly realized that appreciation in real estate is really what drives most of the value and most of the investment. And that's where I started shifting gears. I read a book by Manny Khoshbin, who is also a value investor developer, called How to Build Your Hundred Million Dollar Real Estate Portfolio. It definitely changed my mindset of what real estate is, what you can do with it, and how you should focus your investments and time.
  
  What drove you to move from residential properties into mixed use?
  I basically got the idea from the book, a lot of it just looking at the market, looking at where people were moving in the city and knowing that the scalability will eventually be the best strategy in the long run.
  
  Do you have any particular tips for people that are getting into real estate or that are beginners? What should they be doing and looking at?
  I think everyone's path in real estate is definitely different. I would say, all else being equal, I would start small, get your hands dirty, assess risks as much as you can before jumping into a deal. Go to meetups, listen to podcasts like yours as well, and try digging deep as much as you can before pulling the trigger. I would read as many books as possible look into ways that you could add value and find a niche.
  
  And I think that's sort of what we created in San Francisco with the properties that we've been buying, which most of them are in the Mission District. So we kind of felt like we have local knowledge. We know the buildings better, we know ways of adding value that works for our business model. I would say just try adding value, locate niches as much as possible, and try to force appreciation as much as you can, which is something I hope I illustrated. You should never wait to buy real estate, and just hope something will go up and buying it at risky prices.
  
  I would say look for properties, try to force appreciation through some kind of value add mechanism which in commercial real estate is obviously increasing NOI and look for scalability as much as possible. There are a lot of inefficiencies in real estate, which is the reason why I like it so much. There's all kinds of information gaps. There are ways that you can locate a seller before it hits the market. The pricing on the real estate is not efficient as well like the stock market, a broker might price something high on because he is out of the area, or he might price it too low, and it might be during the holiday season like it is now and not too many buyers show up because they're traveling. If you dig deeper, you'll definitely be able to find the inefficiencies.
  
  How to Build Your $100M Real Estate Portfolio: https://tinyurl.com/rgtyvmg
  Confessions of a Real Estate Entrepreneur: https://tinyurl.com/ufp73vv
  
  Hanna Azar
  hannajazar@gmail.com
  415-875-0177
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>9c791e7a-2d50-4397-a27e-a438f5aa142aThu, 30 Jan 2020 08:13:22 -080016:36falsefull145451How to Find Great Leasing AgentsHow to find the best retail leasing agents for your vacant space? What questions should you be asking them? Beth Azor has over thirty years of experience in leasing, managing, developing, redeveloping and teaching commercial real estate leasing agents all over the country.
  
  You can read this interview here: https://montecarlorei.com/how-to-find-a-great-retail-leasing-agent/
  
  What makes for a great retail leasing broker?
  Someone that's not afraid to ask the tough questions. How much is it going to cost for you to open your business? For example, the daycare said $80/sf. And I said, OK, the building is ten thousand square feet. That's eight hundred thousand dollars. Then it's asking the second tough question, do you have the eight hundred thousand. As anyone in real estate, our time is our commodity. We need to maximize that to the best of our ability. So not being afraid to ask the tough questions. Also following up. Once in a blue moon, I'll help a friend who wants to open a location and I'll call a bunch of landlords or shopping center owners trying to find space. And it blows my mind how many people do not return phone calls. So: not being afraid to ask the tough questions, asking a lot of questions, because telling and selling and asking is, and then following up. I think those are the two most important qualities.
  
  Is there a specific set of questions that are important for us to ask them?
  Yes, asking them for a copy of their deal sheet for the last 12 months, or 18 months and then asking them which of those deals were new tenants versus renewal tenants? And then for all of those new tenants, how did you find them? Was it a call in off of the sign? Was it a cooperating broker? Was it a cold call? Was it a prospect, or was it a social media post? So really drilling down on how they found the prospect, because that is going to give you a clear path and understanding as to how they're going to lease your property. Are they just going to put up a sign and expect calls to come in? Or are they going to be extremely proactive in getting the business? Those are truly the most important questions. And then you have to feel good and have an instinctual feel that you can work with this person. And I would also ask that person for other clients that they work for that you can call and get a reference. Are they proactive? Do they call back? How are the negotiations? Do they negotiate on my behalf? Or are they always calling me and saying, well, we should give this guy an extra month's free or some tenant improvement money. Are they a true owners rep? Or do they want to be working on behalf of the tenant? Those would be the questions that I would ask a retail leasing broker that I might be considering hiring.
  
  What should a landlord keep in mind in order to be their tenants favorite landlord?
  Keeping the property clean, keeping it well lit, a very well lit and safe and secure shopping center is very important. I think my tenants like me, but if I don’t get the rent on the second of the month, they get a late fee. Now I’ve trained them. Being consistent is very important because you shouldn’t play favorites and give one tenant one thing and another tenant not the same thing. And certainly listening to your clients, for example mobile to go in the retail world is huge. You have to be reading up on that and thinking, how can I do something differently? How can I help my customers get more sales?
  
  www.bethazor.com
  https://www.linkedin.com/groups/8851653/
  https://www.youtube.com/channel/UCswCXcTept82Ob6WmsCCtxw
  --- ]]>How to find the best retail leasing agents for your vacant space? What questions should you be asking them? Beth Azor has over thirty years of experience in leasing, managing, developing, redeveloping and teaching commercial real estate leasing agents all over the country.
  
  You can read this interview here: https://montecarlorei.com/how-to-find-a-great-retail-leasing-agent/
  
  What makes for a great retail leasing broker?
  Someone that's not afraid to ask the tough questions. How much is it going to cost for you to open your business? For example, the daycare said $80/sf. And I said, OK, the building is ten thousand square feet. That's eight hundred thousand dollars. Then it's asking the second tough question, do you have the eight hundred thousand. As anyone in real estate, our time is our commodity. We need to maximize that to the best of our ability. So not being afraid to ask the tough questions. Also following up. Once in a blue moon, I'll help a friend who wants to open a location and I'll call a bunch of landlords or shopping center owners trying to find space. And it blows my mind how many people do not return phone calls. So: not being afraid to ask the tough questions, asking a lot of questions, because telling and selling and asking is, and then following up. I think those are the two most important qualities.
  
  Is there a specific set of questions that are important for us to ask them?
  Yes, asking them for a copy of their deal sheet for the last 12 months, or 18 months and then asking them which of those deals were new tenants versus renewal tenants? And then for all of those new tenants, how did you find them? Was it a call in off of the sign? Was it a cooperating broker? Was it a cold call? Was it a prospect, or was it a social media post? So really drilling down on how they found the prospect, because that is going to give you a clear path and understanding as to how they're going to lease your property. Are they just going to put up a sign and expect calls to come in? Or are they going to be extremely proactive in getting the business? Those are truly the most important questions. And then you have to feel good and have an instinctual feel that you can work with this person. And I would also ask that person for other clients that they work for that you can call and get a reference. Are they proactive? Do they call back? How are the negotiations? Do they negotiate on my behalf? Or are they always calling me and saying, well, we should give this guy an extra month's free or some tenant improvement money. Are they a true owners rep? Or do they want to be working on behalf of the tenant? Those would be the questions that I would ask a retail leasing broker that I might be considering hiring.
  
  What should a landlord keep in mind in order to be their tenants favorite landlord?
  Keeping the property clean, keeping it well lit, a very well lit and safe and secure shopping center is very important. I think my tenants like me, but if I don’t get the rent on the second of the month, they get a late fee. Now I’ve trained them. Being consistent is very important because you shouldn’t play favorites and give one tenant one thing and another tenant not the same thing. And certainly listening to your clients, for example mobile to go in the retail world is huge. You have to be reading up on that and thinking, how can I do something differently? How can I help my customers get more sales?
  
  www.bethazor.com
  https://www.linkedin.com/groups/8851653/
  https://www.youtube.com/channel/UCswCXcTept82Ob6WmsCCtxw
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>83a9fee2-6eaf-40cd-aebc-4c26c38479f8Thu, 23 Jan 2020 08:00:00 -080023:30falsefull144441How to Analyze a Commercial PropertyIn this analysis, I will be using a real property that I came across. It is a self-storage portfolio in Missouri. They had four properties and an additional property was in a strip mall, so they were leasing it. This property was interesting because it was in one of our target markets.
  
  You can read this entire episode here: https://montecarlorei.com/how-to-analyze-a-commercial-property/
  
  We asked for the offering memorandum, sometimes the OM is readily available on the website that you find the property, sometimes you just need to sign a non-disclosure agreement before getting it. The first thing we do when analyzing a property is taking all of the financial analysis numbers and putting into a spreadsheet. That’s all of the existing income, and all of the expenses on the Excel spreadsheet. Everything is broken down as it shows in the OM.

  Some of the expenses for this particular property are: online advertising expenses, bank charges, employee benefits, insurance, here is a line item for the leased property that is on the trip center, payroll expenses, management fees, security expenses, telephone expenses, repair expenses, general and admin, utilities and the most important one, property taxes. Property taxes are the expenses that can kill deals for inexperienced investors. Why? Because the real estate agent is going to put the existing property taxes on their analysis. And typically you are buying the property for a higher price than what the seller bought it for. And so property taxes can double and sometimes triple as it is in this example. And if you don’t realize that until the last minute, or even until after you purchased the property, that can be a huge problem. So in this example, the real estate agent put the existing property taxes, and for a 3 million dollar property, these taxes were $20,000 per year.
  
  I asked the real estate agent, what do you estimate the property taxes will be at the $3 million purchase price? And the real estate agent answered $61,000. That is three times what they had in their financial analysis. This is something that you really need to be watching out for, for these type of deals, and also for other asset classes. As we have talked about before in the retail world, even though your tenants will pay for that tax, you really want to be considering if they can afford to pay for these additional taxes. And in the retail example, a lot of times they may have in their lease that the only increase in tax that they’re willing to pay is an additional 10 percent per year, for example. And 10 percent per year isn’t going to cut it if your property taxes are being tripled.
  
  Contact me here: https://montecarlorei.com/contact-us/
  Subscribe to our newsletter on top of our website.

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>In this analysis, I will be using a real property that I came across. It is a self-storage portfolio in Missouri. They had four properties and an additional property was in a strip mall, so they were leasing it. This property was interesting because it was in one of our target markets.
  
  You can read this entire episode here: https://montecarlorei.com/how-to-analyze-a-commercial-property/
  
  We asked for the offering memorandum, sometimes the OM is readily available on the website that you find the property, sometimes you just need to sign a non-disclosure agreement before getting it. The first thing we do when analyzing a property is taking all of the financial analysis numbers and putting into a spreadsheet. That’s all of the existing income, and all of the expenses on the Excel spreadsheet. Everything is broken down as it shows in the OM.

  Some of the expenses for this particular property are: online advertising expenses, bank charges, employee benefits, insurance, here is a line item for the leased property that is on the trip center, payroll expenses, management fees, security expenses, telephone expenses, repair expenses, general and admin, utilities and the most important one, property taxes. Property taxes are the expenses that can kill deals for inexperienced investors. Why? Because the real estate agent is going to put the existing property taxes on their analysis. And typically you are buying the property for a higher price than what the seller bought it for. And so property taxes can double and sometimes triple as it is in this example. And if you don’t realize that until the last minute, or even until after you purchased the property, that can be a huge problem. So in this example, the real estate agent put the existing property taxes, and for a 3 million dollar property, these taxes were $20,000 per year.
  
  I asked the real estate agent, what do you estimate the property taxes will be at the $3 million purchase price? And the real estate agent answered $61,000. That is three times what they had in their financial analysis. This is something that you really need to be watching out for, for these type of deals, and also for other asset classes. As we have talked about before in the retail world, even though your tenants will pay for that tax, you really want to be considering if they can afford to pay for these additional taxes. And in the retail example, a lot of times they may have in their lease that the only increase in tax that they’re willing to pay is an additional 10 percent per year, for example. And 10 percent per year isn’t going to cut it if your property taxes are being tripled.
  
  Contact me here: https://montecarlorei.com/contact-us/
  Subscribe to our newsletter on top of our website.

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>b60e7f2c-9220-4d7e-971c-b17c1d0e7b55Thu, 16 Jan 2020 10:01:11 -080018:29falsefull143431<p>In this analysis, I will be using a real property that I came across. It is a self-storage portfolio in Missouri. They had four properties and an additional property was in a strip mall, so they were leasing it. This property was interesting because it was in one of our target markets.<br> <br> You can read this entire episode here: <a href="https://montecarlorei.com/how-to-analyze-a-commercial-property/">https://montecarlorei.com/how-to-analyze-a-commercial-property/</a><br> <br> We asked for the offering memorandum, sometimes the OM is readily available on the website that you find the property, sometimes you just need to sign a non-disclosure agreement before getting it. The first thing we do when analyzing a property is taking all of the financial analysis numbers and putting into a spreadsheet. That’s all of the existing income, and all of the expenses on the Excel spreadsheet. Everything is broken down as it shows in the OM.</p> <p>Some of the expenses for this particular property are: online advertising expenses, bank charges, employee benefits, insurance, here is a line item for the leased property that is on the trip center, payroll expenses, management fees, security expenses, telephone expenses, repair expenses, general and admin, utilities and the most important one, property taxes. Property taxes are the expenses that can kill deals for inexperienced investors. Why? Because the real estate agent is going to put the existing property taxes on their analysis. And typically you are buying the property for a higher price than what the seller bought it for. And so property taxes can double and sometimes triple as it is in this example. And if you don’t realize that until the last minute, or even until after you purchased the property, that can be a huge problem. So in this example, the real estate agent put the existing property taxes, and for a 3 million dollar property, these taxes were $20,000 per year.<br> <br> I asked the real estate agent, what do you estimate the property taxes will be at the $3 million purchase price? And the real estate agent answered $61,000. That is three times what they had in their financial analysis. This is something that you really need to be watching out for, for these type of deals, and also for other asset classes. As we have talked about before in the retail world, even though your tenants will pay for that tax, you really want to be considering if they can afford to pay for these additional taxes. And in the retail example, a lot of times they may have in their lease that the only increase in tax that they’re willing to pay is an additional 10 percent per year, for example. And 10 percent per year isn’t going to cut it if your property taxes are being tripled.<br> <br> Contact me here: <a href="https://montecarlorei.com/contact-us/">https://montecarlorei.com/contact-us/</a><br> Subscribe to our newsletter on top of our website.</p> --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>What Are Entitlements?Devin Lewis is a California Licensed Architect that has spent the last 10 years working with real estate developers determining the highest and best use for properties across the country, and around the world.
  
  You can read this interview here: https://tinyurl.com/uj4bqos
  
  What are entitlements?
  Entitlements, in a simplified explanation is what you, as an owner, are promising the city that you or someone that purchases your entitled design will build and it ultimately determines the value of the property. An entitled design is thought out enough to where the city can understand what will be built, what’s propose, what taxes it will receive from any of its operations. And the entitlements are based off of what architects consider a schematic design. So the design of the building will, after entitlements, develop significantly. And development for an architect means something different than development for a real estate developer. But the project will architecturally develop after the project becomes entitled with engineering systems. In order to entitle a project, you need a good idea of the square footage, the functions and what you have planned for that piece of property.
  
  What are some of the best pieces of advice that you can share with us in trying to get a smooth entitlement process as fast as possible in a very difficult city?
  As a property owner developing a piece of property, I think the most important thing is to strive to have an understanding of the process. As an owner, you could experience a great deal of frustration if you’re not aware that an architect is your agent and the architect really is there to help you facilitate the process and that process In most cities it looks like this. You’ll get a schematic design, go to the planning department, set up a meeting and you’ll work with different departments like the police department, the fire department, traffic, public works, sometimes the trash management services for the city to really make sure that at a high level, your project will fit in to the city’s fabric, the city’s functions, and the way the city will tie in to what you’re proposing. You’ll work with a staff member and you’ll present to the planning department. The planning department will actually grant you entitlements. If it’s a large project, it’ll be presented to the city council. When the staff member feels that it’s ready, they will recommend the project for approval. During this process, the architect is folding in the requirements and desires of many different parties. The city is going to bring its requirements and you’re going to meet with community members in community meetings, folding in their desires.
  
  Can they give an estimate of more or less how long it would take to get all the approvals from a particular city?
  We put together a timeline schedule for each project. Entitlement is a difficult thing to quantify in terms of time, especially in San Francisco, because the neighbors have such huge influence over what becomes approved. And it's a great thing that the neighbors have say in the character of their city. One of the main drivers for the amount of time that a project will take is CEQA, The California Environmental Quality Act which requires an environmental impact report for large projects. It's tough to say how long a project will take to get planning commission approval because the neighbors can form large, powerful groups and create lawsuits that actually will stall projects for a number of reasons such as traffic in their neighborhood, the density, and type of use that is being proposed.
  
  Devin Lewis
  dlewis@lpas.com
  https://www.linkedin.com/in/devinjameslewis/
  --- Support this...]]>Devin Lewis is a California Licensed Architect that has spent the last 10 years working with real estate developers determining the highest and best use for properties across the country, and around the world.
  
  You can read this interview here: https://tinyurl.com/uj4bqos
  
  What are entitlements?
  Entitlements, in a simplified explanation is what you, as an owner, are promising the city that you or someone that purchases your entitled design will build and it ultimately determines the value of the property. An entitled design is thought out enough to where the city can understand what will be built, what’s propose, what taxes it will receive from any of its operations. And the entitlements are based off of what architects consider a schematic design. So the design of the building will, after entitlements, develop significantly. And development for an architect means something different than development for a real estate developer. But the project will architecturally develop after the project becomes entitled with engineering systems. In order to entitle a project, you need a good idea of the square footage, the functions and what you have planned for that piece of property.
  
  What are some of the best pieces of advice that you can share with us in trying to get a smooth entitlement process as fast as possible in a very difficult city?
  As a property owner developing a piece of property, I think the most important thing is to strive to have an understanding of the process. As an owner, you could experience a great deal of frustration if you’re not aware that an architect is your agent and the architect really is there to help you facilitate the process and that process In most cities it looks like this. You’ll get a schematic design, go to the planning department, set up a meeting and you’ll work with different departments like the police department, the fire department, traffic, public works, sometimes the trash management services for the city to really make sure that at a high level, your project will fit in to the city’s fabric, the city’s functions, and the way the city will tie in to what you’re proposing. You’ll work with a staff member and you’ll present to the planning department. The planning department will actually grant you entitlements. If it’s a large project, it’ll be presented to the city council. When the staff member feels that it’s ready, they will recommend the project for approval. During this process, the architect is folding in the requirements and desires of many different parties. The city is going to bring its requirements and you’re going to meet with community members in community meetings, folding in their desires.
  
  Can they give an estimate of more or less how long it would take to get all the approvals from a particular city?
  We put together a timeline schedule for each project. Entitlement is a difficult thing to quantify in terms of time, especially in San Francisco, because the neighbors have such huge influence over what becomes approved. And it's a great thing that the neighbors have say in the character of their city. One of the main drivers for the amount of time that a project will take is CEQA, The California Environmental Quality Act which requires an environmental impact report for large projects. It's tough to say how long a project will take to get planning commission approval because the neighbors can form large, powerful groups and create lawsuits that actually will stall projects for a number of reasons such as traffic in their neighborhood, the density, and type of use that is being proposed.
  
  Devin Lewis
  dlewis@lpas.com
  https://www.linkedin.com/in/devinjameslewis/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>b15d28c5-2938-4060-b415-6cc6c93d49e7Thu, 09 Jan 2020 08:00:00 -080021:36falsefull142421Can You Avoid Paying Taxes - Legally - With Real Estate? Dave Zook, an experienced real estate investor and syndicator will talk about the tax benefits of investing in real estate, as well as self storage, and a different kind of investment: ATMs. He has acquired more than $100 million worth of real estate since 2010. Dave has been actively investing in multi-family apartments, self storage, and ATMs.
  
  You can read the entire interview here: https://montecarlorei.com/can-you-avoid-paying-taxes-legally-with-real-estate/
  
  When you understood that you could have a lot of tax benefits to real estate, what happened?
  What pushed me over the edge was that around the year 2011, I made my quarterly tax payments. I was getting the feeling that we might have a tax issue, but it wasn't totally prepared for what was coming. I got the call on April the 13th from my CPA saying that we took all the deductibles, you paid your quarterly payments, and you still owe $373,422. So I paid around half a million dollars in taxes that year. Prior to that time, I was having a lot of fun. I was busy. I was putting a lot of time and energy into the business, but it didn't feel like work. It was so much fun. But when I had to pay almost half my earnings back to the government, it wasn't so much fun anymore. After that, I realized during my research that multi-family apartments can be a really good tax shelter. I bought several hundred units of multi-family apartments and I've been tax free ever since. I haven't paid federal tax in a lot of years now.
  
  You are not alone in the real estate world, which is great. So let's talk about taxes. What are some of the great real estate tax benefits that people may not know about?
  The Trump tax law change that came through in late 2017, early 2018. There are some things there that really sweetened the real estate game for investors, and it now enables investors to take bonus depreciation on new or used equipment. Combine that with some leverage. Combine that with some cost segregation studies. It's a ridiculous amount of relief that you can get from investing in multi-family apartments.
  
  Can you avoid taxes forever? Or are the people who will potentially inherit some of these properties end up having to pay these taxes?
  That's a good question. I get that question a lot. There's a lot of people out there that think like I used to, that when you make a lot of money, you've to pay a lot of taxes.  The next question is, well, you've to pay the tax sometime, so might as well pony up and pay it now rather than later. And those two questions are almost the same. Yes, if you don't know what you're doing, then you have to pay a lot of taxes when you make a lot of money. If you don't know what you're doing, you also have to pay the tax sometimes. So you're only just playing the deferral game. If you don't know what you're doing, you're going to have to pay at some time. But if you're strategic, and you have a plan and you've good team members around you, you can make a lot of money and you can pay no tax, ever.
  
  As a syndicator, you actually are fundraising for a very interesting class which is ATM machines. Can you share with us how you came across that as an opportunity, and why did you decide to fundraise outside of real estate?
  ATMs is a form of real estate. It doesn't sound like it.  You're investing in an ATM location, and instead of having a building sitting on that real estate or instead of having thousands of square feet, you're getting a location agreement that 3 foot by 3 foot. So it is a real estate play, but you're extracting value from that 3 foot by 3 foot space
  
  Dave Zook
  info@therealassetinvestor.com
  www.therealassetinvestor.com
  --- Support this podcast: Dave Zook, an experienced real estate investor and syndicator will talk about the tax benefits of investing in real estate, as well as self storage, and a different kind of investment: ATMs. He has acquired more than $100 million worth of real estate since 2010. Dave has been actively investing in multi-family apartments, self storage, and ATMs.
  
  You can read the entire interview here: https://montecarlorei.com/can-you-avoid-paying-taxes-legally-with-real-estate/
  
  When you understood that you could have a lot of tax benefits to real estate, what happened?
  What pushed me over the edge was that around the year 2011, I made my quarterly tax payments. I was getting the feeling that we might have a tax issue, but it wasn't totally prepared for what was coming. I got the call on April the 13th from my CPA saying that we took all the deductibles, you paid your quarterly payments, and you still owe $373,422. So I paid around half a million dollars in taxes that year. Prior to that time, I was having a lot of fun. I was busy. I was putting a lot of time and energy into the business, but it didn't feel like work. It was so much fun. But when I had to pay almost half my earnings back to the government, it wasn't so much fun anymore. After that, I realized during my research that multi-family apartments can be a really good tax shelter. I bought several hundred units of multi-family apartments and I've been tax free ever since. I haven't paid federal tax in a lot of years now.
  
  You are not alone in the real estate world, which is great. So let's talk about taxes. What are some of the great real estate tax benefits that people may not know about?
  The Trump tax law change that came through in late 2017, early 2018. There are some things there that really sweetened the real estate game for investors, and it now enables investors to take bonus depreciation on new or used equipment. Combine that with some leverage. Combine that with some cost segregation studies. It's a ridiculous amount of relief that you can get from investing in multi-family apartments.
  
  Can you avoid taxes forever? Or are the people who will potentially inherit some of these properties end up having to pay these taxes?
  That's a good question. I get that question a lot. There's a lot of people out there that think like I used to, that when you make a lot of money, you've to pay a lot of taxes.  The next question is, well, you've to pay the tax sometime, so might as well pony up and pay it now rather than later. And those two questions are almost the same. Yes, if you don't know what you're doing, then you have to pay a lot of taxes when you make a lot of money. If you don't know what you're doing, you also have to pay the tax sometimes. So you're only just playing the deferral game. If you don't know what you're doing, you're going to have to pay at some time. But if you're strategic, and you have a plan and you've good team members around you, you can make a lot of money and you can pay no tax, ever.
  
  As a syndicator, you actually are fundraising for a very interesting class which is ATM machines. Can you share with us how you came across that as an opportunity, and why did you decide to fundraise outside of real estate?
  ATMs is a form of real estate. It doesn't sound like it.  You're investing in an ATM location, and instead of having a building sitting on that real estate or instead of having thousands of square feet, you're getting a location agreement that 3 foot by 3 foot. So it is a real estate play, but you're extracting value from that 3 foot by 3 foot space
  
  Dave Zook
  info@therealassetinvestor.com
  www.therealassetinvestor.com
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>e3188e43-c27f-43ee-887e-8717ac8aae0fMon, 30 Dec 2019 17:22:36 -080016:02falsefull141411New Year, New Life: How to Make Your Real Estate Dreams Come TrueIn the light of setting goals for the New Year, improving our personal lives, as well as our professional lives, we're going to talk about a course called the Landmark Forum that has had a huge impact in my life, as well as my friend Bronson Hill's life. Bronson has been investing in real estate since 2006 and is an active general partner in over 700 multi-family units.
  
  Link to available courses throughout the world: https://www.landmarkworldwide.com/searchResults?prgid=7&pgid=117&crid=840&ctid=-1&sdt=-1&ofr=true
  
  You can read this entire interview here: https://bit.ly/35DoNkb
  
  Why did you decide to take Landmark after we were having a conversation at an event earlier this year?
  I'd heard about Landmark from several people and they all were very successful people. Then I heard your endorsement when you said, hey, you have to take it, it's just going to change your life. I was like, OK, I guess I have to take it now. I guess it's going to change my life. That's what got me to sign up. I really didn't have much by way of expectations. I just kind of just went in with an open mind and the results of it were pretty profound. It really lived up to that endorsement that you gave that it really has substantially changed my life in the areas of communication, becoming more authentic, particularly in areas where I've been inauthentic with people, correcting some of those things, and really opening up all different types of new possibilities for business, and for relationships. Just pretty much in every way in so many aspects of my life. I have not found a personal development event that is better than this event.
  
  One of the distinctions that is near and dear to my heart was when they told us to, "Give up being right, even though we think we might be right." I was thinking what do you mean? If I'm right, I'm right. What do you mean give up being right? And I vividly remember when someone close to me said something, and I was doing my homework of giving up being right. So I was going to react to what that person said. And I chose to zip it. And it turned out that that person was saying something completely different than what I thought he was saying. So that has been super helpful as well. What other distinctions are now part of your life?
  Being right is an issue for a lot of people and of me, I've always right, but everybody else isn't. It's something that we all think that we're right. It can be hard to let go. And I felt like this gives a real, authentic way. And I keep using that word authentic. I think there's a lot of ways we can move forward, but we really lose connection with people or we don't really live out of a place of integrity with ourselves. And this program really gives the opportunity to walk in a way that feels more authentic, where you can actually be closer to people. And I've experienced that. I think when we can let go of having to be right, and this will give you tools on how to do that.
  
  Landmark Forum classes available can be found here: https://www.landmarkworldwide.com/searchResults?prgid=7&pgid=117&crid=840&ctid=-1&sdt=-1&ofr=true
  
  Let us know if you end up taking it: https://www.linkedin.com/in/steffbold/
  
  Bronson Hill
  www,growingcashflow.com/
  --- Support this podcast: In the light of setting goals for the New Year, improving our personal lives, as well as our professional lives, we're going to talk about a course called the Landmark Forum that has had a huge impact in my life, as well as my friend Bronson Hill's life. Bronson has been investing in real estate since 2006 and is an active general partner in over 700 multi-family units.
  
  Link to available courses throughout the world: https://www.landmarkworldwide.com/searchResults?prgid=7&pgid=117&crid=840&ctid=-1&sdt=-1&ofr=true
  
  You can read this entire interview here: https://bit.ly/35DoNkb
  
  Why did you decide to take Landmark after we were having a conversation at an event earlier this year?
  I'd heard about Landmark from several people and they all were very successful people. Then I heard your endorsement when you said, hey, you have to take it, it's just going to change your life. I was like, OK, I guess I have to take it now. I guess it's going to change my life. That's what got me to sign up. I really didn't have much by way of expectations. I just kind of just went in with an open mind and the results of it were pretty profound. It really lived up to that endorsement that you gave that it really has substantially changed my life in the areas of communication, becoming more authentic, particularly in areas where I've been inauthentic with people, correcting some of those things, and really opening up all different types of new possibilities for business, and for relationships. Just pretty much in every way in so many aspects of my life. I have not found a personal development event that is better than this event.
  
  One of the distinctions that is near and dear to my heart was when they told us to, "Give up being right, even though we think we might be right." I was thinking what do you mean? If I'm right, I'm right. What do you mean give up being right? And I vividly remember when someone close to me said something, and I was doing my homework of giving up being right. So I was going to react to what that person said. And I chose to zip it. And it turned out that that person was saying something completely different than what I thought he was saying. So that has been super helpful as well. What other distinctions are now part of your life?
  Being right is an issue for a lot of people and of me, I've always right, but everybody else isn't. It's something that we all think that we're right. It can be hard to let go. And I felt like this gives a real, authentic way. And I keep using that word authentic. I think there's a lot of ways we can move forward, but we really lose connection with people or we don't really live out of a place of integrity with ourselves. And this program really gives the opportunity to walk in a way that feels more authentic, where you can actually be closer to people. And I've experienced that. I think when we can let go of having to be right, and this will give you tools on how to do that.
  
  Landmark Forum classes available can be found here: https://www.landmarkworldwide.com/searchResults?prgid=7&pgid=117&crid=840&ctid=-1&sdt=-1&ofr=true
  
  Let us know if you end up taking it: https://www.linkedin.com/in/steffbold/
  
  Bronson Hill
  www,growingcashflow.com/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>357b4f38-1248-4f5c-a7bc-8561deb9aac2Thu, 19 Dec 2019 08:22:42 -080024:45falsefull140401How to Deal With Politics & Problems in Real Estate InvestingIn this episode we will learn how to find out about the political environment of a city that you’re looking at purchasing,  How to deal with bank problems? How to prepare and ride the next downturn? We are interviewing Michael Flight, an expert retail real estate entrepreneur who has been active in commercial real estate over the past 34 years. Michael has handled more than $500 million worth of real estate transactions.

  You can read this entire interview here: https://montecarlorei.com/how-to-deal-with-politics-problems-in-real-estate-investing/
  
  How would someone go about understanding the political environment of a particular city?
  The best thing to do is, when you have it under contract, to call up either the building department or the Economic Development Department and say “We’re interested in buying this. And here are some of the things that we’re looking to do. So what’s it going to take?” Your local retail brokers or commercial property managers will also know how difficult the city is to deal with. Then the other really good way to get a handle on how cities are is to speak with individual tenants, or you’ll hear about it. Because we deal with properties nationwide, there are nationwide brokers. For example, the guy that represented Pet Supplies Plus does Pet Supplies Plus and a number of other national tenants across the country. So I can just call him and say, we’re looking at this area and I see you guys did a store down here, how was it for you? And he’ll say, oh, it’s fantastic. Or “I’m just going to tell you, won’t be able to get any signage out there and everything. You’ll be pulling teeth. And then they’ll come out just randomly and inspect you and then create all kinds of other problems which we’ve had in the past.”
  
  How do you sleep at night during hard times?
  I had some real issues with the downturn of 2008. On one of them was that we had a very conservative loan and I had started to renew the loan with the bank a year in advance, And all of a sudden, everybody that I was working with was gone from the bank. The last guy who was let go, calls me up and says that they’re not going to renew my loan. So then this new woman comes in and she says, you need to pay this right away and we’re going to come after you and blah, blah, blah. And they sent the default notice to my house and my wife opens it up and asks if we are going to lose our house. I said, no, we’re not going to lose our house.
  
  I called her up because I had done workouts before and I knew how to go about this. I said, look, I’ll move my loan in an orderly fashion over to this other bank. In the meantime, you’re going to extend my loan. And she said no, we’re not going to do that. And I answered, no, you need to listen. You’re going to extend my loan because if you don’t extend my loan, I gave her the name of my foreclosure attorney who was helping me out with some other things. And this guy actually argued about foreclosures all the way up to the Illinois Supreme Court. I said, “We will tie you up for four years, you won’t get any money, so we could do it the easy way, or we could do it the difficult way. I’m going to be out of here in six months. You can rest assured that if you touch any of my deposit accounts in the meantime and freeze anything, I will sue you, and I will throw all these other properties into foreclosure, too.
  
  Michael Flight
  www.concordiarealty.com/contact
  
  Want to become Steff's mentee? Tell me more about you here: https://montecarlorei.com/contact-us/

  --- Support this podcast: In this episode we will learn how to find out about the political environment of a city that you’re looking at purchasing,  How to deal with bank problems? How to prepare and ride the next downturn? We are interviewing Michael Flight, an expert retail real estate entrepreneur who has been active in commercial real estate over the past 34 years. Michael has handled more than $500 million worth of real estate transactions.

  You can read this entire interview here: https://montecarlorei.com/how-to-deal-with-politics-problems-in-real-estate-investing/
  
  How would someone go about understanding the political environment of a particular city?
  The best thing to do is, when you have it under contract, to call up either the building department or the Economic Development Department and say “We’re interested in buying this. And here are some of the things that we’re looking to do. So what’s it going to take?” Your local retail brokers or commercial property managers will also know how difficult the city is to deal with. Then the other really good way to get a handle on how cities are is to speak with individual tenants, or you’ll hear about it. Because we deal with properties nationwide, there are nationwide brokers. For example, the guy that represented Pet Supplies Plus does Pet Supplies Plus and a number of other national tenants across the country. So I can just call him and say, we’re looking at this area and I see you guys did a store down here, how was it for you? And he’ll say, oh, it’s fantastic. Or “I’m just going to tell you, won’t be able to get any signage out there and everything. You’ll be pulling teeth. And then they’ll come out just randomly and inspect you and then create all kinds of other problems which we’ve had in the past.”
  
  How do you sleep at night during hard times?
  I had some real issues with the downturn of 2008. On one of them was that we had a very conservative loan and I had started to renew the loan with the bank a year in advance, And all of a sudden, everybody that I was working with was gone from the bank. The last guy who was let go, calls me up and says that they’re not going to renew my loan. So then this new woman comes in and she says, you need to pay this right away and we’re going to come after you and blah, blah, blah. And they sent the default notice to my house and my wife opens it up and asks if we are going to lose our house. I said, no, we’re not going to lose our house.
  
  I called her up because I had done workouts before and I knew how to go about this. I said, look, I’ll move my loan in an orderly fashion over to this other bank. In the meantime, you’re going to extend my loan. And she said no, we’re not going to do that. And I answered, no, you need to listen. You’re going to extend my loan because if you don’t extend my loan, I gave her the name of my foreclosure attorney who was helping me out with some other things. And this guy actually argued about foreclosures all the way up to the Illinois Supreme Court. I said, “We will tie you up for four years, you won’t get any money, so we could do it the easy way, or we could do it the difficult way. I’m going to be out of here in six months. You can rest assured that if you touch any of my deposit accounts in the meantime and freeze anything, I will sue you, and I will throw all these other properties into foreclosure, too.
  
  Michael Flight
  www.concordiarealty.com/contact
  
  Want to become Steff's mentee? Tell me more about you here: https://montecarlorei.com/contact-us/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>df92c65f-9071-31b1-4d32-3a04b0116806Thu, 12 Dec 2019 08:03:53 -080017:46falsefull139391How to Go From 0 to $500M in Retail Real Estate InvestmentsIn this episode we will learn the story of how a successful retail real estate investor got into real estate, what was his first deal like, what has been the best deal of his career, and we’ll also touch a little bit about a not so talked about topic: how to deal with political risks in the city that you invest in. We are interviewing Michael Flight, an expert retail real estate entrepreneur who has been active in commercial real estate over the past 34 years. Michael has handled more than $500 million worth of real estate transactions.
  
  You can read this entire interview here: https://montecarlorei.com/how-to-go-from-0-to-500m-in-retail-real-estate-investments/
  
  Tell us bout your best deal.
  There are a few best deals. There's one that we're still working on. We started managing it in nineteen ninety and we've redeveloped it three times now. We've expanded or renewed most of the tenants in the shopping center. It's a 300,000 square foot shopping center in suburban Chicago. We've actually torn down and rebuilt forty five percent of the shopping center. We took a Walgreens that was doing phenomenal volume and moved them to an aisle parcel that was just vacant, a parking lot. Over the years, the managing partner that became partners with us on a few different projects that we've done, that's just been a great project for us to expose us to a lot of things, not only with that, but geotechnical problems with soil stability. I'm fairly certain that most of the environmental problems are corrected, but every time we stuck a shovel in the dirt over there a new underground storage tank would come up. The other exciting thing was that it was in two major motion pictures. Wayne's World, and Wanted with Morgan Freeman and Angelina Jolie. They blew up one of the stores that we were replacing anyway since they were going out of business.
  
  You briefly mentioned that the city wanted you to have a different tenant, can you elaborate there?
  We have run into that in a number of different municipalities all over the country. It really depends on how strict their zoning laws are. It really depends on the individual city. That's why if you're buying a shopping center, you're going to have to live with whatever is the political system in there. Even if it's in a good state like Texas, it could be a difficult city. You need to know about that in advance. Now, we've had situations where we were doing a facade renovation on our property in Connecticut, next to New Haven. Most of the guys that were on the zoning board, probably three of them, also taught in the Architectural Department of Yale University. They all thought that they knew way better than the property owner what was needed for the shopping center. We went in with plans and they actually redesigned a large majority of the plans.
  
  And that's how much control they have over most of the time with the facade renovation. It doesn't require a zoning permit and you would just go in for a building permit. But some of these municipalities have very strict zoning code, signage code, design code. They're into the minute details. Another thing that triggers some things is if the municipality has traffic planners. So if you decide to change any part of the parking lot, they will tell you that you need to do this and that in the parking lot. You just need to be aware of some of the things that go into it. Slightly different than owning apartment buildings. They're more visible and so cities take a more active interest in it, and a lot of times they generate sales taxes, so cities take a larger interest in it as well. They're kind of your partner, but without putting any money into it.
  
  Michael Flight
  www.concordiarealty.com/contact
  --- Support this...]]>In this episode we will learn the story of how a successful retail real estate investor got into real estate, what was his first deal like, what has been the best deal of his career, and we’ll also touch a little bit about a not so talked about topic: how to deal with political risks in the city that you invest in. We are interviewing Michael Flight, an expert retail real estate entrepreneur who has been active in commercial real estate over the past 34 years. Michael has handled more than $500 million worth of real estate transactions.
  
  You can read this entire interview here: https://montecarlorei.com/how-to-go-from-0-to-500m-in-retail-real-estate-investments/
  
  Tell us bout your best deal.
  There are a few best deals. There's one that we're still working on. We started managing it in nineteen ninety and we've redeveloped it three times now. We've expanded or renewed most of the tenants in the shopping center. It's a 300,000 square foot shopping center in suburban Chicago. We've actually torn down and rebuilt forty five percent of the shopping center. We took a Walgreens that was doing phenomenal volume and moved them to an aisle parcel that was just vacant, a parking lot. Over the years, the managing partner that became partners with us on a few different projects that we've done, that's just been a great project for us to expose us to a lot of things, not only with that, but geotechnical problems with soil stability. I'm fairly certain that most of the environmental problems are corrected, but every time we stuck a shovel in the dirt over there a new underground storage tank would come up. The other exciting thing was that it was in two major motion pictures. Wayne's World, and Wanted with Morgan Freeman and Angelina Jolie. They blew up one of the stores that we were replacing anyway since they were going out of business.
  
  You briefly mentioned that the city wanted you to have a different tenant, can you elaborate there?
  We have run into that in a number of different municipalities all over the country. It really depends on how strict their zoning laws are. It really depends on the individual city. That's why if you're buying a shopping center, you're going to have to live with whatever is the political system in there. Even if it's in a good state like Texas, it could be a difficult city. You need to know about that in advance. Now, we've had situations where we were doing a facade renovation on our property in Connecticut, next to New Haven. Most of the guys that were on the zoning board, probably three of them, also taught in the Architectural Department of Yale University. They all thought that they knew way better than the property owner what was needed for the shopping center. We went in with plans and they actually redesigned a large majority of the plans.
  
  And that's how much control they have over most of the time with the facade renovation. It doesn't require a zoning permit and you would just go in for a building permit. But some of these municipalities have very strict zoning code, signage code, design code. They're into the minute details. Another thing that triggers some things is if the municipality has traffic planners. So if you decide to change any part of the parking lot, they will tell you that you need to do this and that in the parking lot. You just need to be aware of some of the things that go into it. Slightly different than owning apartment buildings. They're more visible and so cities take a more active interest in it, and a lot of times they generate sales taxes, so cities take a larger interest in it as well. They're kind of your partner, but without putting any money into it.
  
  Michael Flight
  www.concordiarealty.com/contact
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>192fbc4d-3f5f-84c5-0c18-de82ed377051Thu, 05 Dec 2019 09:00:00 -080024:34falsefull138381Top 3 Things to Know Before Investing in HotelsToday we’re learning what are the top things to watch out for when investing in hotels. We’re interviewing Jerome Yuan, CIO of ASAP Holdings. He has assisted with acquisitions and dispositions of over 33 hotels in the past 9 years.

  You can read this entire interview here: https://montecarlorei.com/top-3-things-to-know-about-investing-in-hotels/
  
  Why should investors invest in hotels, especially nowadays? I heard that where the economy might end up going, it might be a bit risky. But let's let's see what you have to say on that.
  They say the hotels are probably the most sensitive to economic cycles. They're probably the first to get any type of effect, but they're also the first to rebound out of any type of recession as well. For us, investing in hotels is both a real estate play and also an operational play. We believe that hotels are like 50% real estate and 50% operations. Location matters a lot too, just like any other commercial real estate deal. But then you also have, depending on the hotel, 50 to 100 employees there that you have to take care of. You have guests checking in and out on a daily basis. The operational side is really where you can make a difference and improve the cash flow of the property. And we believe that improving hotels are are the fastest and easiest way to improve cash flows in commercial real estate just because of the daily transactions that you have with customers and hotel guests.
  
  What is a typical management fee?
  The property manager usually takes a 2.5-3% percent fee off of the of the gross income. It's pretty reasonable.
  
  What are some of the top things that investors should keep in mind and watch out for when investing in hotels?
  1. Investors should really look at the brand of the hotel, or if there is a brand, and if you're buying a boutique hotel or independent, those hotels rely on the location. If it's a beachfront property, you won't have any problems. But if you have an unbranded hotel in a suburban area where it's mainly business travelers, you're going to need to be careful and make sure that the brand is the right brand for the hotel.
  2. The other thing is really the renovation costs after purchasing the hotel. Every brand requires the new owner to renovate it. They call it a property improvement plan that's issued by the brand. You've to make sure that you cost out every item and avoid any cost overruns because that just eats into your return on your investment. I think those two main things are the bread and butter of what to invest in for hotels.
  3. Location. As long as you're in a good location, you might not need a brand. But some brands are stronger than others, so a Marriott would be stronger than a Four Points or something like that. So that's very important.
  
  Do you look at Airbnb laws in that particular city?
  We don't focus on that too much. The way we invest in hotels, they're mainly business travel hotels. We'll have hotels in the suburbs, or near office parks, and things like that. We don't really compete with Airbnb, at least we don't think we do as much. They definitely do affect hotels stay, I do believe that, but the business traveler is there for one night, two nights, and then they're out of the hotel most of the day at business meetings. If we were to start transitioning our investment to resort, luxury, or tourist type of hotels, then we would definitely be looking more at how the local Airbnb laws are changing.
  
  Jerome Yuan
  www.asapholdings.com
  
  Subscribe to our newsletter here: https://montecarlorei.com/

  ...]]>Today we’re learning what are the top things to watch out for when investing in hotels. We’re interviewing Jerome Yuan, CIO of ASAP Holdings. He has assisted with acquisitions and dispositions of over 33 hotels in the past 9 years.

  You can read this entire interview here: https://montecarlorei.com/top-3-things-to-know-about-investing-in-hotels/
  
  Why should investors invest in hotels, especially nowadays? I heard that where the economy might end up going, it might be a bit risky. But let's let's see what you have to say on that.
  They say the hotels are probably the most sensitive to economic cycles. They're probably the first to get any type of effect, but they're also the first to rebound out of any type of recession as well. For us, investing in hotels is both a real estate play and also an operational play. We believe that hotels are like 50% real estate and 50% operations. Location matters a lot too, just like any other commercial real estate deal. But then you also have, depending on the hotel, 50 to 100 employees there that you have to take care of. You have guests checking in and out on a daily basis. The operational side is really where you can make a difference and improve the cash flow of the property. And we believe that improving hotels are are the fastest and easiest way to improve cash flows in commercial real estate just because of the daily transactions that you have with customers and hotel guests.
  
  What is a typical management fee?
  The property manager usually takes a 2.5-3% percent fee off of the of the gross income. It's pretty reasonable.
  
  What are some of the top things that investors should keep in mind and watch out for when investing in hotels?
  1. Investors should really look at the brand of the hotel, or if there is a brand, and if you're buying a boutique hotel or independent, those hotels rely on the location. If it's a beachfront property, you won't have any problems. But if you have an unbranded hotel in a suburban area where it's mainly business travelers, you're going to need to be careful and make sure that the brand is the right brand for the hotel.
  2. The other thing is really the renovation costs after purchasing the hotel. Every brand requires the new owner to renovate it. They call it a property improvement plan that's issued by the brand. You've to make sure that you cost out every item and avoid any cost overruns because that just eats into your return on your investment. I think those two main things are the bread and butter of what to invest in for hotels.
  3. Location. As long as you're in a good location, you might not need a brand. But some brands are stronger than others, so a Marriott would be stronger than a Four Points or something like that. So that's very important.
  
  Do you look at Airbnb laws in that particular city?
  We don't focus on that too much. The way we invest in hotels, they're mainly business travel hotels. We'll have hotels in the suburbs, or near office parks, and things like that. We don't really compete with Airbnb, at least we don't think we do as much. They definitely do affect hotels stay, I do believe that, but the business traveler is there for one night, two nights, and then they're out of the hotel most of the day at business meetings. If we were to start transitioning our investment to resort, luxury, or tourist type of hotels, then we would definitely be looking more at how the local Airbnb laws are changing.
  
  Jerome Yuan
  www.asapholdings.com
  
  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>b22741c3-ff49-2903-a73f-be8c8672229aThu, 21 Nov 2019 09:00:00 -080014:10falsefull137371Pros and Cons of: Retail / Office / Self Storage / Mobile Home ParksIn this episode we will learn the pros and cons of investing in a few asset classes: retail, office, self storage, and mobile home parks. We are interviewing Jeremy Roll, a passive real estate investor since 2002.

  Read this entire interview here: https://montecarlorei.com/passive-investing-retail-vs-office-vs-self-storage-vs-mobile-home-parks/
  
  What are some pros and cons of the following asset classes: retail, mobile home parks, self-storage and office?
  
  Retail
  What I don’t like about retail going forward is what’s going on in the next 10 years, as far as predictability. Some of the challenges that I see, some of them are continuing and some will be in the future include: are people going to continue to go stores or are they actually going to migrate online even more and more? And if the answer is online more or more, what does that mean for the retailers?
  
  Mobile Home Parks
  I love mobile home parks. And the reason why I say that is because if you do your research, you’ll find that it probably has the lowest turnover ratio in terms of tenancy of any asset class I can think of. I believe the national average turnover ratio is about 9%, which is very low. There are certain apartment classes that have 40 to 60% turnover, depending on the type of building and location. I love mobile home parks because of that. And I love the fact that they’re serving lower income people, and that I see a need for lower income housing and affordable housing for a very long time going forward. So there is that predictability that I was talking about. There is predictability of demand. Predictability in lack of turnover in terms of cash flow. And, if you buy the right profile, which is very important, where most of the tenants are owner occupied and not renter occupied. You’re probably going to have more predictability in terms of having less problems.
  
  Self Storage
  That’s another asset class that I really like. When you think about how the US is changing from a demographic profile, we’re aging over the next 10 years. We have a lot of people moving, and projected to move to Florida and to Texas to retire. What I love about self-storage is that when people retire, they typically downsize. And I see that there will be a need for self storage as a result when these people move, or even if they’re living there and they downsize. In certain locations, I think they can be great. One of the challenges with self-storage is that it’s very low cost to build and it can be built relatively quickly. The barriers to entry are low. If you’re going to invest in self-storage, the supply and demand factors in the market you’re looking at at the time are critical, because you may have a competitor pop up in a year or two that you weren’t expecting.  
  
  Office
  I have multiple office investments right now as well. But I have the same challenge with office that I have with retail, for a couple reasons. And we didn’t get into one aspect of retail that’s a little bit of a predictability challenge, which is the same in office, which is tenant improvements. When you have a tenant that leaves, typically there’s some money to be spent to turn the unit around and make it ready for the next tenant. In retail, it can be quite substantial if they’re changing the entire use. Let’s say you have a record store that’s being turned into a restaurant. There’s a lot of money that has to go into that. And often you’re sharing that cost with the tenant upfront. The same thing goes with office. Between the tenant improvement requirements that may come up if you have tenants leave unexpectedly, that may come out of cash flow or reserves.
  
  Jeremy Roll
  jroll@rollinvestments.com

  --- Support this podcast: In this episode we will learn the pros and cons of investing in a few asset classes: retail, office, self storage, and mobile home parks. We are interviewing Jeremy Roll, a passive real estate investor since 2002.

  Read this entire interview here: https://montecarlorei.com/passive-investing-retail-vs-office-vs-self-storage-vs-mobile-home-parks/
  
  What are some pros and cons of the following asset classes: retail, mobile home parks, self-storage and office?
  
  Retail
  What I don’t like about retail going forward is what’s going on in the next 10 years, as far as predictability. Some of the challenges that I see, some of them are continuing and some will be in the future include: are people going to continue to go stores or are they actually going to migrate online even more and more? And if the answer is online more or more, what does that mean for the retailers?
  
  Mobile Home Parks
  I love mobile home parks. And the reason why I say that is because if you do your research, you’ll find that it probably has the lowest turnover ratio in terms of tenancy of any asset class I can think of. I believe the national average turnover ratio is about 9%, which is very low. There are certain apartment classes that have 40 to 60% turnover, depending on the type of building and location. I love mobile home parks because of that. And I love the fact that they’re serving lower income people, and that I see a need for lower income housing and affordable housing for a very long time going forward. So there is that predictability that I was talking about. There is predictability of demand. Predictability in lack of turnover in terms of cash flow. And, if you buy the right profile, which is very important, where most of the tenants are owner occupied and not renter occupied. You’re probably going to have more predictability in terms of having less problems.
  
  Self Storage
  That’s another asset class that I really like. When you think about how the US is changing from a demographic profile, we’re aging over the next 10 years. We have a lot of people moving, and projected to move to Florida and to Texas to retire. What I love about self-storage is that when people retire, they typically downsize. And I see that there will be a need for self storage as a result when these people move, or even if they’re living there and they downsize. In certain locations, I think they can be great. One of the challenges with self-storage is that it’s very low cost to build and it can be built relatively quickly. The barriers to entry are low. If you’re going to invest in self-storage, the supply and demand factors in the market you’re looking at at the time are critical, because you may have a competitor pop up in a year or two that you weren’t expecting.  
  
  Office
  I have multiple office investments right now as well. But I have the same challenge with office that I have with retail, for a couple reasons. And we didn’t get into one aspect of retail that’s a little bit of a predictability challenge, which is the same in office, which is tenant improvements. When you have a tenant that leaves, typically there’s some money to be spent to turn the unit around and make it ready for the next tenant. In retail, it can be quite substantial if they’re changing the entire use. Let’s say you have a record store that’s being turned into a restaurant. There’s a lot of money that has to go into that. And often you’re sharing that cost with the tenant upfront. The same thing goes with office. Between the tenant improvement requirements that may come up if you have tenants leave unexpectedly, that may come out of cash flow or reserves.
  
  Jeremy Roll
  jroll@rollinvestments.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>05d23b72-a0ab-1913-8f4a-2e78beea40a8Thu, 14 Nov 2019 09:00:00 -080016:49falsefull1363615 Things Passive Investors Look For in a Syndication Deal and the OperatorWe will learn what do passive investors look for in an operator as well as in a deal. We are interviewing Jeremy Roll, a passive real estate investor since 2002.
  
  Read this entire interview here: https://montecarlorei.com/5-things-passive-investors-look-for-in-a-syndication-operator-and-the-deal-itself/
  
  You are a full time passive investor. That means that you are investing in other people’s deals. How do you evaluate an operator before investing with them?
  Great question. I want to stress the fact that the operator to me is even more important than the opportunity. I would say that’s number one. Number two is the actual opportunity itself. And I want to be clear, too, that the actual opportunity you’re investing in is very critical, clearly. But who you’re making a bet on when you invest passively is absolutely critical. And the reason is because typically when you’re investing passively in the way that I do it, I invest in what’s called syndications, and what that means is that they’re pulling a number of investors together, it could be several investors into an LLC and we’re typically buying a property. When you do that as an investor, you’re considered a limited partner, or in the LLC or the actual entity you’re investing in.
  
  1. The first thing that I look for is an operator who is conservative, who is looking to under-promise and over-deliver and have longer term relationships with investors. I try to avoid operators who are aggressive with their assumptions and their projections to make the numbers look really good so that they can attract investors based on the projected returns, but that may or may not perform to projections.
  
  2. From there, I ask a lot of questions. It’s very common for me to ask 150 to 200 questions about an opportunity. Some of those questions are going to be purposefully designed and asked. I don’t necessarily care about what the answer is, but more how they answer it and reading between the lines. If someone’s answering me in certain ways and saying “Well, we believe this property is going to do X and Y, but we we use this assumption which is much more conservative because we want to make sure we were conservative for investors. We think it’s going to over perform, but we want to set the right expectations.” That type of an answer to me is very valuable, it tells me their mindset.
  
  3. I do background checks every time on all of the key managers and the opportunity.

  4. I don’t usually invest with someone unless I met them in person at least once. And that’s because I am a very firm believer in doing a gut check after doing all your due diligence. Are you 100 percent sure you want invest with someone or there’s this 5 percent question mark, you don’t even know why, but your gut is telling you that it’s not a perfect scenario and maybe you should pass. That’s a very important thing. And I feel like meeting in person is an important part of that process. I know it’s very hard for some passive investors to do, but it’s part of my formula.
  
  5. If you look at the legal documents, which are very important, sometimes they may tell you a little bit if this operator is looking to make this a win win structure for investors, whether it’s preferred return, profit splits. I could tell you some examples of some rules where it’s very obvious that they’re not trying to make anything in favor of investors. They’re working at it to maximize the situation for themselves. When I see an operator not trying to get a balance between the investors and themselves as far as profits, I’m just not aligned with the operator properly from a philosophical perspective.
  
  Jeremy Roll
  jroll@rollinvestments.com

  --- Support]]>We will learn what do passive investors look for in an operator as well as in a deal. We are interviewing Jeremy Roll, a passive real estate investor since 2002.
  
  Read this entire interview here: https://montecarlorei.com/5-things-passive-investors-look-for-in-a-syndication-operator-and-the-deal-itself/
  
  You are a full time passive investor. That means that you are investing in other people’s deals. How do you evaluate an operator before investing with them?
  Great question. I want to stress the fact that the operator to me is even more important than the opportunity. I would say that’s number one. Number two is the actual opportunity itself. And I want to be clear, too, that the actual opportunity you’re investing in is very critical, clearly. But who you’re making a bet on when you invest passively is absolutely critical. And the reason is because typically when you’re investing passively in the way that I do it, I invest in what’s called syndications, and what that means is that they’re pulling a number of investors together, it could be several investors into an LLC and we’re typically buying a property. When you do that as an investor, you’re considered a limited partner, or in the LLC or the actual entity you’re investing in.
  
  1. The first thing that I look for is an operator who is conservative, who is looking to under-promise and over-deliver and have longer term relationships with investors. I try to avoid operators who are aggressive with their assumptions and their projections to make the numbers look really good so that they can attract investors based on the projected returns, but that may or may not perform to projections.
  
  2. From there, I ask a lot of questions. It’s very common for me to ask 150 to 200 questions about an opportunity. Some of those questions are going to be purposefully designed and asked. I don’t necessarily care about what the answer is, but more how they answer it and reading between the lines. If someone’s answering me in certain ways and saying “Well, we believe this property is going to do X and Y, but we we use this assumption which is much more conservative because we want to make sure we were conservative for investors. We think it’s going to over perform, but we want to set the right expectations.” That type of an answer to me is very valuable, it tells me their mindset.
  
  3. I do background checks every time on all of the key managers and the opportunity.

  4. I don’t usually invest with someone unless I met them in person at least once. And that’s because I am a very firm believer in doing a gut check after doing all your due diligence. Are you 100 percent sure you want invest with someone or there’s this 5 percent question mark, you don’t even know why, but your gut is telling you that it’s not a perfect scenario and maybe you should pass. That’s a very important thing. And I feel like meeting in person is an important part of that process. I know it’s very hard for some passive investors to do, but it’s part of my formula.
  
  5. If you look at the legal documents, which are very important, sometimes they may tell you a little bit if this operator is looking to make this a win win structure for investors, whether it’s preferred return, profit splits. I could tell you some examples of some rules where it’s very obvious that they’re not trying to make anything in favor of investors. They’re working at it to maximize the situation for themselves. When I see an operator not trying to get a balance between the investors and themselves as far as profits, I’m just not aligned with the operator properly from a philosophical perspective.
  
  Jeremy Roll
  jroll@rollinvestments.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>91704f86-12db-8c1d-ad06-ca5e1c18ab26Thu, 07 Nov 2019 09:31:24 -080019:04falsefull135351From Food Stamps to Millionaire Real Estate Investor: How a Single Mother Did ItToday we are interviewing an incredible woman, Heather Self, a multi-millionaire real estate investor that literally came from nothing. I am incredibly humbled to interview her, she was a single mother of FOUR when she started her journey into real estate investing.
  
  You can read this entire interview here: https://montecarlorei.com/how-a-single-mother-of-four-went-from-food-stamps-to-millionaire-real-estate-investor/
  
  I am so excited that you are here to share with our audience how you started from zero, or maybe negative, why don't we get started with how you got into real estate? 
  To make a long story short, otherwise we'll be here for three weeks, I'll start by saying that I got married directly out of high school. My first husband and I had our daughter and, shortly after that, I found out that my husband was using drugs. I then decided that my kids are not going to be raised like this, that this is not the lifestyle and things that I want them to know and be privy to. At the same time I also got an eviction notice on my apartment door. Keep in mind that I'm 18 years old at the time. My car was repossessed, and found out that my husband had robbed my boss at the time. I ended up losing that job too. Within a 48 hour period I had lost my job, my car, my apartment, and found out that my husband was on drugs and I was pregnant with my second child. Now I look at my calendar, and if it looks crazy for 48 hours, I don't worry about it. If I can handle all of that in 48 hours, I can do anything. Luckily, I had a wonderful, supportive family. And they told me to move back in. 

  I was able to take that time and rebuild myself and figure out what I wanted out of life. And since I was pregnant, it was really difficult finding a job, and I was in the middle of all this turmoil, so what do you do? I got to the point where I didn't see any other way out but to receive welfare benefits, I had to get on food stamps, and they started offering some classes with the Welfare Reform Act. These were called Fresh Start classes in order to receive the benefit of $185 per month. The positive with that, though, is that they were offering these classes. I couldn't work at the time, so what better way to take time off and go get a different perspective. Maybe get a paradigm shift. I needed to get out of that because I knew that's not how I wanted to raise my family.
  
  Did you need a downpayment for that?
  You do need a down payment. You have to have very reasonable credit, which is also something that I was working to fix. I had already made up my mindset that I don't want to be that person that depends on somebody else for my independence, or for my children's future, or what I'm going be able to offer. That was the first time that I said "This is my responsibility and my responsibility alone to get out here and make this happen". You have to have a job for a good amount of time. You have to have decent credit. You have to have a down payment and you make mortgage payments. It's not a free house. That's a big common misconception. It is something that you have to qualify for, and very few people qualify for that. In the summer of 2001, we started building and we moved in shortly after. Going through that process you start to see that all these choices that I felt were kind of stripped away, I now had control over. And that's what that program is able to do. And that's why I'm a contributor and a donor to it now. It's very important to my life's work and what I want to do.
  
  Heather Self
  www.heatherself.com
  hlsefl76@gmail.com

  --- Support this podcast: Today we are interviewing an incredible woman, Heather Self, a multi-millionaire real estate investor that literally came from nothing. I am incredibly humbled to interview her, she was a single mother of FOUR when she started her journey into real estate investing.
  
  You can read this entire interview here: https://montecarlorei.com/how-a-single-mother-of-four-went-from-food-stamps-to-millionaire-real-estate-investor/
  
  I am so excited that you are here to share with our audience how you started from zero, or maybe negative, why don't we get started with how you got into real estate? 
  To make a long story short, otherwise we'll be here for three weeks, I'll start by saying that I got married directly out of high school. My first husband and I had our daughter and, shortly after that, I found out that my husband was using drugs. I then decided that my kids are not going to be raised like this, that this is not the lifestyle and things that I want them to know and be privy to. At the same time I also got an eviction notice on my apartment door. Keep in mind that I'm 18 years old at the time. My car was repossessed, and found out that my husband had robbed my boss at the time. I ended up losing that job too. Within a 48 hour period I had lost my job, my car, my apartment, and found out that my husband was on drugs and I was pregnant with my second child. Now I look at my calendar, and if it looks crazy for 48 hours, I don't worry about it. If I can handle all of that in 48 hours, I can do anything. Luckily, I had a wonderful, supportive family. And they told me to move back in. 

  I was able to take that time and rebuild myself and figure out what I wanted out of life. And since I was pregnant, it was really difficult finding a job, and I was in the middle of all this turmoil, so what do you do? I got to the point where I didn't see any other way out but to receive welfare benefits, I had to get on food stamps, and they started offering some classes with the Welfare Reform Act. These were called Fresh Start classes in order to receive the benefit of $185 per month. The positive with that, though, is that they were offering these classes. I couldn't work at the time, so what better way to take time off and go get a different perspective. Maybe get a paradigm shift. I needed to get out of that because I knew that's not how I wanted to raise my family.
  
  Did you need a downpayment for that?
  You do need a down payment. You have to have very reasonable credit, which is also something that I was working to fix. I had already made up my mindset that I don't want to be that person that depends on somebody else for my independence, or for my children's future, or what I'm going be able to offer. That was the first time that I said "This is my responsibility and my responsibility alone to get out here and make this happen". You have to have a job for a good amount of time. You have to have decent credit. You have to have a down payment and you make mortgage payments. It's not a free house. That's a big common misconception. It is something that you have to qualify for, and very few people qualify for that. In the summer of 2001, we started building and we moved in shortly after. Going through that process you start to see that all these choices that I felt were kind of stripped away, I now had control over. And that's what that program is able to do. And that's why I'm a contributor and a donor to it now. It's very important to my life's work and what I want to do.
  
  Heather Self
  www.heatherself.com
  hlsefl76@gmail.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>9fc3609e-f9e9-4332-96a7-0ed25be4ee70Thu, 31 Oct 2019 06:59:07 -080023:14falsefull134341How You Can Lose 50% of Your Property Value in One Downturn: The Quadruple WhammyIn today's episode I go over how you can potentially lose 50% of the value of your property in one economic downturn. You could potentially lose less, you could potentially lose more, the point of this episode is to share with you the key points that make property values go down in a downturn.
  
  You can read this entire episode here: https://montecarlorei.com/how-you-can-lose-50-of-your-property-value-in-one-downturn-the-quadruple-whammy/
  
  Let’s take an example of a commercial retail property that you purchased for 10 million dollars at a 5% cap rate. This means that that property is currently making $500,000 in NOI. Let’s say, for example, that this property has 25,000 square feet. You have now have a 10 million dollar property making $500,000 NOI.
  1. In this great economy, the rents are higher. Let’s say you were getting $20 per square foot per year across the board on all of your 25,000 sf of property.
  2. Your property is 100% leased.
  3. The interest rates are low. When property prices are rising, that means that interest rates are decreasing and more people can buy more property. When interest rates are higher, you do not qualify for as big of a loan as when interest rates are low because you have a specific dollar amount to pay every month.
  4. And that brings us full circle. When interest rates are low, you can buy more property. More people are buying properties and naturally cap rates compress, they get smaller and smaller. So that’s what brings us to the 5% cap rate that you bought this property for.
  
  Quadruple Whammy Gone Wrong – Economic Downturn
  Let’s say something pops in the economy. Here is what is going to happen to all these four bullet points that I just described.

  1. Your rents are going to go down. Instead of leasing for $20 per square foot per year, let’s say that about 25% of the property is now renting at $16 per square foot per year because some leases are going to be long term. Therefore, 75% of your tenants are still going to be on the $20 per square foot per year lease. Now, we dropped to $16 per square foot per year just because people cannot afford the $20, and your neighbors are also charging $16/sf so you cannot charge more. The total net operating income on that property is now $475,000. Again, this is if you are 100% leased.

  2. Vacancies are higher. You are going to get some vacancies in that property, and is going to take longer to get them filled. Let’s be conservative and have a 15% vacancy rate at that $475,000 that you are now making because you’re charging a little bit less rent. You’re now making $403,000 in NOI. Now that your property just lost almost $100,000 in that operating income, unfortunately everyone is selling, because nobody can afford their mortgage, because they bought at a super high price, and they don’t have enough rent income to pay for the mortgage.

  3. Interest rates are up, and buyers can afford less “property”.

  4. Cap rates are higher because it’s a buyer’s market. Let’s say that from a 5% cap rate, the market is now selling properties at an 8% cap rate. So that $403,000 net operating income divided by an 8% cap brings the value of your property to $5,037,500. You just lost five million dollars of property value. Let’s just let that sink in for a bit.
  
  Another important side of this coin is the potential lost income of not making an investment. Let’s say that you found a great deal back in 2016 that was bringing you 20% cash on cash return. At a $1,000,000 cash investment, you’d have lost $600,000 so far in three years (we’re currently in 2019)  if you had not made the investment at that time.
  
  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: In today's episode I go over how you can potentially lose 50% of the value of your property in one economic downturn. You could potentially lose less, you could potentially lose more, the point of this episode is to share with you the key points that make property values go down in a downturn.
  
  You can read this entire episode here: https://montecarlorei.com/how-you-can-lose-50-of-your-property-value-in-one-downturn-the-quadruple-whammy/
  
  Let’s take an example of a commercial retail property that you purchased for 10 million dollars at a 5% cap rate. This means that that property is currently making $500,000 in NOI. Let’s say, for example, that this property has 25,000 square feet. You have now have a 10 million dollar property making $500,000 NOI.
  1. In this great economy, the rents are higher. Let’s say you were getting $20 per square foot per year across the board on all of your 25,000 sf of property.
  2. Your property is 100% leased.
  3. The interest rates are low. When property prices are rising, that means that interest rates are decreasing and more people can buy more property. When interest rates are higher, you do not qualify for as big of a loan as when interest rates are low because you have a specific dollar amount to pay every month.
  4. And that brings us full circle. When interest rates are low, you can buy more property. More people are buying properties and naturally cap rates compress, they get smaller and smaller. So that’s what brings us to the 5% cap rate that you bought this property for.
  
  Quadruple Whammy Gone Wrong – Economic Downturn
  Let’s say something pops in the economy. Here is what is going to happen to all these four bullet points that I just described.

  1. Your rents are going to go down. Instead of leasing for $20 per square foot per year, let’s say that about 25% of the property is now renting at $16 per square foot per year because some leases are going to be long term. Therefore, 75% of your tenants are still going to be on the $20 per square foot per year lease. Now, we dropped to $16 per square foot per year just because people cannot afford the $20, and your neighbors are also charging $16/sf so you cannot charge more. The total net operating income on that property is now $475,000. Again, this is if you are 100% leased.

  2. Vacancies are higher. You are going to get some vacancies in that property, and is going to take longer to get them filled. Let’s be conservative and have a 15% vacancy rate at that $475,000 that you are now making because you’re charging a little bit less rent. You’re now making $403,000 in NOI. Now that your property just lost almost $100,000 in that operating income, unfortunately everyone is selling, because nobody can afford their mortgage, because they bought at a super high price, and they don’t have enough rent income to pay for the mortgage.

  3. Interest rates are up, and buyers can afford less “property”.

  4. Cap rates are higher because it’s a buyer’s market. Let’s say that from a 5% cap rate, the market is now selling properties at an 8% cap rate. So that $403,000 net operating income divided by an 8% cap brings the value of your property to $5,037,500. You just lost five million dollars of property value. Let’s just let that sink in for a bit.
  
  Another important side of this coin is the potential lost income of not making an investment. Let’s say that you found a great deal back in 2016 that was bringing you 20% cash on cash return. At a $1,000,000 cash investment, you’d have lost $600,000 so far in three years (we’re currently in 2019)  if you had not made the investment at that time.
  
  Subscribe to our newsletter here: https://montecarlorei.com/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>adcf2623-7c27-3d0c-6cfd-ff9614e47b66Thu, 24 Oct 2019 07:00:00 -080019:00falsefull133331How to Invest in Mobile Home ParksIn this episode we learn about mobile home parks: why are they a good asset class to invest in, how do you go about analyzing a mobile home park, how do you get rent comps when there are no parks near you, and how to find these deals? We are interviewing Todd Sulzinger, founder of Blue Elm Investments.
  
  You can read this interview here: https://montecarlorei.com/how-to-invest-in-mobile-home-parks/
  
  Why mobile home parks?
  I had always been intrigued by mobile homes, for one the returns are better than most other real estate assets. They’re very recession resistant. There’s definitely concerns now with what’s going to be happening in the economy in the future. And the mobile home park business is very resistant through any kind of recession movements in the economy. If you own your own mobile home, then you can often rent the pads themselves. In the markets that I look in, you get between one hundred and fifty and three hundred fifty dollars a month. If you don’t own your own home, but you’re renting a mobile home from a park owner like myself, you might be able to rent it for between $450 to $750-800 dollars. If somebody is looking for a place to live, that’s potentially less than an apartment or a single family home, then mobile home parks are one of the best choices they have.
  
  How do you go about finding deals in a market that is shrinking like the mobile home park market?
  My primary source has been through brokers. There are a few brokers out there that specialize in the mobile home park space, as well as other commercial brokers who periodically get listings for parks. I recently closed on a park in Georgia, and I found that one through a broker who specializes in mobile home parks. The mobile home park consultants that I work with have quite a bit of deal flow that crosses their desk. So I see a fair amount through them as well that have the potential to purchase. And recently I’ve also started to see more activity on the partnering front where I’ve seen quite a few other people putting deals together who are looking for people to partner with. They may have a park under contract and they’re looking for people to partner with to put deals together, and sometimes things come across my desk from that angle as well.
  
  How do you analyze a mobile home park?
  It’s a multi-step process. When I’m looking at potential acquisitions and bringing them through my funnel, I’ve a simple spreadsheet that I have created where when something looks like it might work. I plug it into the spreadsheet and take a look at the numbers to get a quick sense of whether it’s even worth pursuing further.  If it looks like it is, I have a more detailed model that I put numbers into. You look at the amount of income that it’s generating. You then look at the last 12 months of income statement. What is the history of vacancies? What have the operating expenses been? Go through the due diligence process of visiting the park and seeing if there are any other infrastructure issues that might need to be taken care of. From there you take a look at the net operating income and the purchase price to see if this is something that will make sense for your investors. Can there be enough safety, in return and potential upside, that it’ll be attractive for me to bring to my investor group?
  
  Todd Sulzinger
  todd@blueelminvestments.com
  www.blueelminvestments.com
  
  Subscribe to our newsletter: http://montecarlorei.com
  --- Support this podcast: In this episode we learn about mobile home parks: why are they a good asset class to invest in, how do you go about analyzing a mobile home park, how do you get rent comps when there are no parks near you, and how to find these deals? We are interviewing Todd Sulzinger, founder of Blue Elm Investments.
  
  You can read this interview here: https://montecarlorei.com/how-to-invest-in-mobile-home-parks/
  
  Why mobile home parks?
  I had always been intrigued by mobile homes, for one the returns are better than most other real estate assets. They’re very recession resistant. There’s definitely concerns now with what’s going to be happening in the economy in the future. And the mobile home park business is very resistant through any kind of recession movements in the economy. If you own your own mobile home, then you can often rent the pads themselves. In the markets that I look in, you get between one hundred and fifty and three hundred fifty dollars a month. If you don’t own your own home, but you’re renting a mobile home from a park owner like myself, you might be able to rent it for between $450 to $750-800 dollars. If somebody is looking for a place to live, that’s potentially less than an apartment or a single family home, then mobile home parks are one of the best choices they have.
  
  How do you go about finding deals in a market that is shrinking like the mobile home park market?
  My primary source has been through brokers. There are a few brokers out there that specialize in the mobile home park space, as well as other commercial brokers who periodically get listings for parks. I recently closed on a park in Georgia, and I found that one through a broker who specializes in mobile home parks. The mobile home park consultants that I work with have quite a bit of deal flow that crosses their desk. So I see a fair amount through them as well that have the potential to purchase. And recently I’ve also started to see more activity on the partnering front where I’ve seen quite a few other people putting deals together who are looking for people to partner with. They may have a park under contract and they’re looking for people to partner with to put deals together, and sometimes things come across my desk from that angle as well.
  
  How do you analyze a mobile home park?
  It’s a multi-step process. When I’m looking at potential acquisitions and bringing them through my funnel, I’ve a simple spreadsheet that I have created where when something looks like it might work. I plug it into the spreadsheet and take a look at the numbers to get a quick sense of whether it’s even worth pursuing further.  If it looks like it is, I have a more detailed model that I put numbers into. You look at the amount of income that it’s generating. You then look at the last 12 months of income statement. What is the history of vacancies? What have the operating expenses been? Go through the due diligence process of visiting the park and seeing if there are any other infrastructure issues that might need to be taken care of. From there you take a look at the net operating income and the purchase price to see if this is something that will make sense for your investors. Can there be enough safety, in return and potential upside, that it’ll be attractive for me to bring to my investor group?
  
  Todd Sulzinger
  todd@blueelminvestments.com
  www.blueelminvestments.com
  
  Subscribe to our newsletter: http://montecarlorei.com
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>aa60379d-2f70-bd8a-0749-8fe446f6e558Thu, 17 Oct 2019 08:00:00 -080019:47falsefull132321Loans: The Good, the Bad and the Ugly - Self Storage, Who is The Best Commercial Lender (Part 2)Today we cover self storage lending, how long should you stabilize a property before refinancing, and the best kept secret is out: who is the best commercial lender in the world? We are interviewing Billy Brown, the Vice President of Business Development for Alternative Capital Solutions.
  
  You can read this full interview here: https://montecarlorei.com/loans-the-good-the-bad-and-the-ugly-self-storage-and-what-is-the-absolute-best-commercial-lender-part-2/
  
  Self Storage Loans
  Did you know that SBA will lend on self storage? SBA has a lot of options for self storage if it's the right size. Even for ground up investments.

  What would be a typical loan size?
  Probably over a million. If you're going to do anything ground up on the self-storage, it's going to be over a million because the price of steel right now and the price of land. But you can get up to four years interest only. This is one where you come in and do some fun stuff where you go build it, lease it up, let it season a few years. Then once you have a couple of years tax returns, the property becomes more valuable because the NOI goes up and then you can do a cash out refinance.
  
  For how long should we stabilize the property until we do the refinance?
  I would start on the front end because sometimes I can even help you give me some tips on negotiating the financing because I love seller financing. The triplex we bought, as well as the office complex that we're buying is under land contract, also called seller financing. You can do some fun stuff with the seller financing. There are many strategies when you have seller financing, for the triplex that we bought, I negotiated a low interest rate of 4% and I negotiated 90 days before my first payment. And you'll justify by saying "I want to give you your price, but my term, and my terms are this: lower interest rate, 90 days before my first payment because I have to stabilize the property. I've to get tenants in there, I've to put a lot of money into this I don't have more money into it for somebody to back out. And I want a longer loan with a couple extensions built in. And they did it for me. You can also negotiate a limited recourse or non recourse.
  
  How long was the loan for?
  It really just depends on the terms that you’re negotiating. If you get decent terms, why would you want refinance? Most sellers want an in and out in six to twelve months. As a lender, we want to see 12 months of financials from the owner. The story also helps, and we can help with that as well.

  Many sellers, especially the mom and pop deals on self-storage, or multifamily, or smaller multifamily don’t have very good financials. They mix their personal expenses in with the deal, therefore, they can’t get the prices they want. So you can come in and say “I’ll give you your price, but under my terms”. But because you don’t have proper bookkeeping, I need at least a year, 18 months, two years, to go run the property professionally so I can go get a proper loan. I usually start at two years and negotiate down to one if needed. Typically you can get a decent lending after one year.
  
  Who is the absolute best commercial lender in the market?
  The seller. Why would a commercial lender like myself, and an investor, want to tell you “Go get seller financing”? Here’s a little secret: commercial lenders are much better at refinances than they are at purchases.
  
  Billy Brown
  www.billybrown.me
  www.altcapsolutions.com
  
  Subscribe to our newsletter here: http://montecarlorei.com

  ---...]]>Today we cover self storage lending, how long should you stabilize a property before refinancing, and the best kept secret is out: who is the best commercial lender in the world? We are interviewing Billy Brown, the Vice President of Business Development for Alternative Capital Solutions.
  
  You can read this full interview here: https://montecarlorei.com/loans-the-good-the-bad-and-the-ugly-self-storage-and-what-is-the-absolute-best-commercial-lender-part-2/
  
  Self Storage Loans
  Did you know that SBA will lend on self storage? SBA has a lot of options for self storage if it's the right size. Even for ground up investments.

  What would be a typical loan size?
  Probably over a million. If you're going to do anything ground up on the self-storage, it's going to be over a million because the price of steel right now and the price of land. But you can get up to four years interest only. This is one where you come in and do some fun stuff where you go build it, lease it up, let it season a few years. Then once you have a couple of years tax returns, the property becomes more valuable because the NOI goes up and then you can do a cash out refinance.
  
  For how long should we stabilize the property until we do the refinance?
  I would start on the front end because sometimes I can even help you give me some tips on negotiating the financing because I love seller financing. The triplex we bought, as well as the office complex that we're buying is under land contract, also called seller financing. You can do some fun stuff with the seller financing. There are many strategies when you have seller financing, for the triplex that we bought, I negotiated a low interest rate of 4% and I negotiated 90 days before my first payment. And you'll justify by saying "I want to give you your price, but my term, and my terms are this: lower interest rate, 90 days before my first payment because I have to stabilize the property. I've to get tenants in there, I've to put a lot of money into this I don't have more money into it for somebody to back out. And I want a longer loan with a couple extensions built in. And they did it for me. You can also negotiate a limited recourse or non recourse.
  
  How long was the loan for?
  It really just depends on the terms that you’re negotiating. If you get decent terms, why would you want refinance? Most sellers want an in and out in six to twelve months. As a lender, we want to see 12 months of financials from the owner. The story also helps, and we can help with that as well.

  Many sellers, especially the mom and pop deals on self-storage, or multifamily, or smaller multifamily don’t have very good financials. They mix their personal expenses in with the deal, therefore, they can’t get the prices they want. So you can come in and say “I’ll give you your price, but under my terms”. But because you don’t have proper bookkeeping, I need at least a year, 18 months, two years, to go run the property professionally so I can go get a proper loan. I usually start at two years and negotiate down to one if needed. Typically you can get a decent lending after one year.
  
  Who is the absolute best commercial lender in the market?
  The seller. Why would a commercial lender like myself, and an investor, want to tell you “Go get seller financing”? Here’s a little secret: commercial lenders are much better at refinances than they are at purchases.
  
  Billy Brown
  www.billybrown.me
  www.altcapsolutions.com
  
  Subscribe to our newsletter here: http://montecarlorei.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>29aa2a2e-56c0-c4ad-7485-ea8e4f0ff76dThu, 10 Oct 2019 08:00:00 -080013:17falsefull131311Loans: The Good, the Bad and the Ugly - Office, Retail, Warehouse (Part 1)Today we are learning what are the pros and cons of each asset class and their loans. In this post we are covering office, retail, and warehouses. You will also learn some strategies for selling your property, as well as how long you should account for getting a commercial loan. We are interviewing Billy Brown, the Vice President of Business Development for Alternative Capital Solutions.
  
  You can read this interview here: https://montecarlorei.com/commercial-lending-the-good-the-bad-and-the-ugly-office-retail-warehouse-part-1/
  
  Let's go over three or four different types of loan options and the pros and cons of each one of them, it's important to know what the cons are so that all the investors can decide what is best for them and their business plan when they're purchasing a property.
  The first one is if you have a bunch of rentals, four, five, six of them, they've Fannie Mae, Freddie Mac lending on them and they're getting a little frustrated with how more difficult is becoming to go get that sixth or seventh one. And they're about to be what we call "Fannie and Freddie out". They may see that the cash flows are good. There's some equity in there that's lazy, and they want to access that. And there's a way to go do that. It's called cross-collateralization. What we then do is we take that into one loan and we can go up to 75% of the appraised value. And if it's big enough, then we can do what's called "non recourse lending". If it's not big enough, then we can go recourse lending.
  
  How many years are there for prepayment penalties, are they for the entirety of the loan?
  No, it's not like multifamily, the prepayments are usually limited to the first three or five years. Usually the first two are pretty heavy in the 5% range, and then it drops down significantly after that. So by year three or four, you're down to 1 or 2%.
  
  Office and Retail Loans
  This one is one of those asset classes that's under the radar and most people shy away from it, because the lending isn't as great as the multi-family world. And that's because the tenant determines what type of lending you can do, as well as the size of the loan. And the size of the loan matters, a $500,000 loan is actually harder to go get than a $5M loan. That's a little flip on the the idea of starting small and moving up. It's actually easier to get the bigger stuff. On the office, your tenants and the length of the lease will determine what type of loan you can get.
  
  Warehousing Loans
  Warehouses are the next best tenant because they typically stick around once they put in their $100,000-$200,000 equipment and they bolt it to the floor. Most of time they don't leave. They'll sign leases and they just keep on staying there because these guys like to work their hands, they're typically not business people so much and they just don't want to move. It's a pain in the rear to go get these things off the ground, bolted, and go find another place, especially warehouses. You can bundle the office, warehouse and retail, in general, in the same bucket as far as your lending options. Because it's all determined by the strength of the tenant. For newer investors, they're going to be a lot more conservative, and have a lower loan to value, versus the NNN larger corporate tenants. If you get a good deal, it's all on the buy. The lending becomes much easier.
  
  Billy Brown
  www.billybrown.me
  www.altcapsolutions.com
  
  Subscribe to our newsletter here: http://montecarlorei.com
  --- Support this podcast: Today we are learning what are the pros and cons of each asset class and their loans. In this post we are covering office, retail, and warehouses. You will also learn some strategies for selling your property, as well as how long you should account for getting a commercial loan. We are interviewing Billy Brown, the Vice President of Business Development for Alternative Capital Solutions.
  
  You can read this interview here: https://montecarlorei.com/commercial-lending-the-good-the-bad-and-the-ugly-office-retail-warehouse-part-1/
  
  Let's go over three or four different types of loan options and the pros and cons of each one of them, it's important to know what the cons are so that all the investors can decide what is best for them and their business plan when they're purchasing a property.
  The first one is if you have a bunch of rentals, four, five, six of them, they've Fannie Mae, Freddie Mac lending on them and they're getting a little frustrated with how more difficult is becoming to go get that sixth or seventh one. And they're about to be what we call "Fannie and Freddie out". They may see that the cash flows are good. There's some equity in there that's lazy, and they want to access that. And there's a way to go do that. It's called cross-collateralization. What we then do is we take that into one loan and we can go up to 75% of the appraised value. And if it's big enough, then we can do what's called "non recourse lending". If it's not big enough, then we can go recourse lending.
  
  How many years are there for prepayment penalties, are they for the entirety of the loan?
  No, it's not like multifamily, the prepayments are usually limited to the first three or five years. Usually the first two are pretty heavy in the 5% range, and then it drops down significantly after that. So by year three or four, you're down to 1 or 2%.
  
  Office and Retail Loans
  This one is one of those asset classes that's under the radar and most people shy away from it, because the lending isn't as great as the multi-family world. And that's because the tenant determines what type of lending you can do, as well as the size of the loan. And the size of the loan matters, a $500,000 loan is actually harder to go get than a $5M loan. That's a little flip on the the idea of starting small and moving up. It's actually easier to get the bigger stuff. On the office, your tenants and the length of the lease will determine what type of loan you can get.
  
  Warehousing Loans
  Warehouses are the next best tenant because they typically stick around once they put in their $100,000-$200,000 equipment and they bolt it to the floor. Most of time they don't leave. They'll sign leases and they just keep on staying there because these guys like to work their hands, they're typically not business people so much and they just don't want to move. It's a pain in the rear to go get these things off the ground, bolted, and go find another place, especially warehouses. You can bundle the office, warehouse and retail, in general, in the same bucket as far as your lending options. Because it's all determined by the strength of the tenant. For newer investors, they're going to be a lot more conservative, and have a lower loan to value, versus the NNN larger corporate tenants. If you get a good deal, it's all on the buy. The lending becomes much easier.
  
  Billy Brown
  www.billybrown.me
  www.altcapsolutions.com
  
  Subscribe to our newsletter here: http://montecarlorei.com
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>b7356efb-e22d-03d6-c60d-b59304e04b42Thu, 03 Oct 2019 08:00:00 -080018:23falsefull130301Commercial Loans: What is Debt Service Coverage Ratio, What Counts as Assets, What Are Deal KillersAs we continue our conversation around commercial financing, will learn: how you can get a commercial loan as a first time buyer and operator, what is debt service coverage ratio, what counts as assets when you are getting a loan, what are deal killers when getting a commercial loan, and what are some things that you should keep in mind about your loans in case our economy takes a turn. We are interviewing Blake Janover, the founder and CEO of Janover Ventures, a commercial real estate and multifamily capital markets advisor focused on providing senior debt for commercial real estate.

  You can read this interview here: https://montecarlorei.com/commercial-loans-debt-service-ratio/
  
  Can first time buyers and operators get a loan? Do they need to have a job, does the credit score matter as much as residential, what's the minimum down payment?
  The answer is yes. It's considered a credit factor, a risk factor, when an underwriter that analyzes credit looks at a deal and says "This is your first piece of commercial real estate" this is higher risk, but there are ways to mitigate it. One way to mitigate the risk is to add a partner that's highly experienced, I think it's great advice. It's not just great advice because it's what the lender wants, but generally speaking there's a reason the lender wants it, and it's imprudent to enter into a new industry without experience and not think that there are a lot of things that could go wrong that you don't know about and that's what having an experienced partner is about.

  In some cases you can offset experience with having an experienced third party property manager that has a demonstrated track record of managing similar properties in a similar sub market, and lenders will look at other things in order to offset certain risks such as a larger down payment, for example.
  
  What is debt service coverage ratio?
  From a net worth and liquidity perspective, lenders generally want to see that you have a net worth greater than the loan amount. That's all your assets minus all your liabilities. So if you're borrowing a million dollars, they want to see that you have a better than a million dollar cumulative net worth among all the guarantors or carve guarantors. And this isn't a hard and fast number. Liquidity is generally 10% but I'll talk about a deal a little later where we went way below that. So these are not hard metrics. Debt service coverage ratio is a hard metric. A good example is if your monthly debt payments to your lender are $10,000 a month, your lender will want to see that you have net operating income no less than $12,000 a month. That 12,000 representing 1.2 multiple of the 10,000 debt payments.
  
  What are some typical deal killers for loan applications?
  One of our biggest deal killers prior to an application is unrealistic expectations. We get inquiries that are not based in reality: "I'm buying a property for $5 million, I want to borrow $6 million". Okay, me too, let me know when you find that loan. Sometimes folks are looking for equity and we're really focused on senior debt. A big pre-application and post application deal killer is nondisclosure, principals that are not telling us all of their dirty little secrets and then it comes out later and it hurts everybody. I'm a big believer in just tell us everything upfront and we will either figure out a way to make it work or put a bullet in it early, but everything comes out in the wash. Other deal killers are net worth, liquidity, experience.
  
  Blake Janover
  capital@janover.ventures
  (800) 567-9631
  
  Join our newsletter here: http://montecarlorei.com

  --- Support this podcast: As we continue our conversation around commercial financing, will learn: how you can get a commercial loan as a first time buyer and operator, what is debt service coverage ratio, what counts as assets when you are getting a loan, what are deal killers when getting a commercial loan, and what are some things that you should keep in mind about your loans in case our economy takes a turn. We are interviewing Blake Janover, the founder and CEO of Janover Ventures, a commercial real estate and multifamily capital markets advisor focused on providing senior debt for commercial real estate.

  You can read this interview here: https://montecarlorei.com/commercial-loans-debt-service-ratio/
  
  Can first time buyers and operators get a loan? Do they need to have a job, does the credit score matter as much as residential, what's the minimum down payment?
  The answer is yes. It's considered a credit factor, a risk factor, when an underwriter that analyzes credit looks at a deal and says "This is your first piece of commercial real estate" this is higher risk, but there are ways to mitigate it. One way to mitigate the risk is to add a partner that's highly experienced, I think it's great advice. It's not just great advice because it's what the lender wants, but generally speaking there's a reason the lender wants it, and it's imprudent to enter into a new industry without experience and not think that there are a lot of things that could go wrong that you don't know about and that's what having an experienced partner is about.

  In some cases you can offset experience with having an experienced third party property manager that has a demonstrated track record of managing similar properties in a similar sub market, and lenders will look at other things in order to offset certain risks such as a larger down payment, for example.
  
  What is debt service coverage ratio?
  From a net worth and liquidity perspective, lenders generally want to see that you have a net worth greater than the loan amount. That's all your assets minus all your liabilities. So if you're borrowing a million dollars, they want to see that you have a better than a million dollar cumulative net worth among all the guarantors or carve guarantors. And this isn't a hard and fast number. Liquidity is generally 10% but I'll talk about a deal a little later where we went way below that. So these are not hard metrics. Debt service coverage ratio is a hard metric. A good example is if your monthly debt payments to your lender are $10,000 a month, your lender will want to see that you have net operating income no less than $12,000 a month. That 12,000 representing 1.2 multiple of the 10,000 debt payments.
  
  What are some typical deal killers for loan applications?
  One of our biggest deal killers prior to an application is unrealistic expectations. We get inquiries that are not based in reality: "I'm buying a property for $5 million, I want to borrow $6 million". Okay, me too, let me know when you find that loan. Sometimes folks are looking for equity and we're really focused on senior debt. A big pre-application and post application deal killer is nondisclosure, principals that are not telling us all of their dirty little secrets and then it comes out later and it hurts everybody. I'm a big believer in just tell us everything upfront and we will either figure out a way to make it work or put a bullet in it early, but everything comes out in the wash. Other deal killers are net worth, liquidity, experience.
  
  Blake Janover
  capital@janover.ventures
  (800) 567-9631
  
  Join our newsletter here: http://montecarlorei.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>f519c53e-26e9-59b4-e08f-ad0bcf83bdd0Thu, 26 Sep 2019 08:00:00 -080021:43falsefull1292918 Things You Should Know About Real Estate FinancingToday we are continuing our conversation around commercial financing, we will learn how you can get a commercial real estate loan, ways to partner up with seasoned operators, how to find lenders that can make creative financing available to you, and a few other valuable things. We are interviewing John Pascal, Managing Director of Paramount Capital Advisors (PCA).
  
  You can read this interview here: https://montecarlorei.com/8-things-you-should-know-about-real-estate-financing/
  
  Let's start with the basics: is a job needed for first time investors, does the credit score matter, what is the minimum down payment for that type of investor?
  From a lender standpoint it’s very important that the borrower has experience executing the business plan that they’re proposing. It’s a little bit difficult to get financing for first time investors or developers. Generally, who I deal with are more experienced real estate groups because it’s just very difficult to finance the deal otherwise. But I would encourage anybody who is looking at getting into the business to maybe partner with, or work with a group that has done it once what they’re proposing to do. And it’s also important that the borrower has a good balance sheet. Typically a lender would like to see net worth equal to or above the loan amount, and liquidity, meaning cash or marketable securities equal to at least 10% of the loan amount. 

  What are typical deal killers when trying to get a loan?
  The lack of financial capability, i.e. net worth and liquidity. The parameters for that are more stringent with a traditional bank than they are with a private equity lender. The other hurdle is the experience of the borrower. The more experience, the easier it’ll be to find financing because the lender will have comfort that the borrower can execute on their business plan. The strategy itself is also important. If a borrower says “I can sell this property in a 4% cap rate and that’s my way of paying the loan back”. It has to be realistic, and proven in the market. Are 4% cap rates prevalent in the market, and can that be proven out to the lender? Those three things are really critical for getting the loan approved.
  
  I heard that you are very creative on getting financing, I would love to hear some examples of your creativity.
  It all boils down to having a good understanding of the capital markets, and which capital sources are doing what. I spend a lot of my time understanding what different lenders with different equity sources are interested in doing. One example was that there was a developer of a hotel in the Atlanta area whose lenders were looking to foreclose on the asset, and the property was in a good location. It just was at the time completed and about a year or so prior to me getting involved, and it was just ramping up, basically it was under water. The vultures were circling, and the borrower came to me to try to figure out a solution. It was a situation where a traditional lender probably wouldn’t have looked at this deal because the deal was underwater, but I brought in a private equity firm to recognize that there was going to be some value in the deal. There were probably 15 or 16 lenders on the deal, and we negotiated with each of the lenders to take them out. It was like herding cats. The bottom line was that I found a private equity firm who would do the deal. They certainly charged a lot of money to do it, but today the property is doing great.

  John Pascal
  www.paramountcapitaladvisors.com
  john@paramountcapitaladvisors.com
  (312) 767-3320

  
  

  --- Support this...]]>Today we are continuing our conversation around commercial financing, we will learn how you can get a commercial real estate loan, ways to partner up with seasoned operators, how to find lenders that can make creative financing available to you, and a few other valuable things. We are interviewing John Pascal, Managing Director of Paramount Capital Advisors (PCA).
  
  You can read this interview here: https://montecarlorei.com/8-things-you-should-know-about-real-estate-financing/
  
  Let's start with the basics: is a job needed for first time investors, does the credit score matter, what is the minimum down payment for that type of investor?
  From a lender standpoint it’s very important that the borrower has experience executing the business plan that they’re proposing. It’s a little bit difficult to get financing for first time investors or developers. Generally, who I deal with are more experienced real estate groups because it’s just very difficult to finance the deal otherwise. But I would encourage anybody who is looking at getting into the business to maybe partner with, or work with a group that has done it once what they’re proposing to do. And it’s also important that the borrower has a good balance sheet. Typically a lender would like to see net worth equal to or above the loan amount, and liquidity, meaning cash or marketable securities equal to at least 10% of the loan amount. 

  What are typical deal killers when trying to get a loan?
  The lack of financial capability, i.e. net worth and liquidity. The parameters for that are more stringent with a traditional bank than they are with a private equity lender. The other hurdle is the experience of the borrower. The more experience, the easier it’ll be to find financing because the lender will have comfort that the borrower can execute on their business plan. The strategy itself is also important. If a borrower says “I can sell this property in a 4% cap rate and that’s my way of paying the loan back”. It has to be realistic, and proven in the market. Are 4% cap rates prevalent in the market, and can that be proven out to the lender? Those three things are really critical for getting the loan approved.
  
  I heard that you are very creative on getting financing, I would love to hear some examples of your creativity.
  It all boils down to having a good understanding of the capital markets, and which capital sources are doing what. I spend a lot of my time understanding what different lenders with different equity sources are interested in doing. One example was that there was a developer of a hotel in the Atlanta area whose lenders were looking to foreclose on the asset, and the property was in a good location. It just was at the time completed and about a year or so prior to me getting involved, and it was just ramping up, basically it was under water. The vultures were circling, and the borrower came to me to try to figure out a solution. It was a situation where a traditional lender probably wouldn’t have looked at this deal because the deal was underwater, but I brought in a private equity firm to recognize that there was going to be some value in the deal. There were probably 15 or 16 lenders on the deal, and we negotiated with each of the lenders to take them out. It was like herding cats. The bottom line was that I found a private equity firm who would do the deal. They certainly charged a lot of money to do it, but today the property is doing great.

  John Pascal
  www.paramountcapitaladvisors.com
  john@paramountcapitaladvisors.com
  (312) 767-3320

  
  

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>09e3598c-0e25-d6b9-581b-45963d2b910fThu, 19 Sep 2019 08:00:00 -080019:49falsefull128281How to Apply for a Commercial Loan & How to Find the Best LendersToday we're discussing commercial loans: how are they different from residential loans, how to find the best lenders, how to apply to these loans and present them to the lender, and what are some of the terms that we get to choose on these loans.
  
  Read the full interview here: https://montecarlorei.com/how-to-apply-for-a-commercial-loan-how-to-find-the-best-lenders/

  How should a new investor present a deal to a lender in order to get approved?
  Run your credit report up front, accumulate the last three years of your tax returns, put together a personal financial statement, and basically be candid with the lender. If you have anything that you think is going to look badly, like a past bankruptcy or past foreclosure, just explain it upfront.
  
  What are some different loan terms that we as investors would be able to choose from and decide on for commercial properties?
  Basically you can choose how much leverage you want. It depends on what the lender's going to offer, but you can get leverage anywhere from 60 to 75 or 80%, we even do 85% of some stuff. Where you have the most flexibility, as a borrower, it's the prepayment. The longer you do your prepayment out, typically the lower your rate is going to be. So whether you do a three year, five year, or ten year prepay, that's really where you have the most flexibility when you're speaking to the lender.
  
  Can these loans be transferred to a new buyer if we decide to sell the property before that three, five or 10 year prepay?
  With most lenders, yes. with some lenders no. In today's market, most lenders would transfer, and there's usually a small transfer fee.
  
  How do you recommend people going about finding really good lenders? I see a lot of people posting hard money loans and they really sound like a scam because their rates are so low. How can people make sure that they are really dealing with a legit lender and also a very good one?
  There's a lot of scammers in this business, so I'm just being very careful. I would say to talk to other investors, see are they used for lenders and or bonkers and I would really do it that way. I wouldn't just, you, you know, if you're a new investor, just going in on your own, talk to other investors and network, you know, go to the networking groups. It pays to network with other investors. You know, I mean this is an information business or whatever one's one.
  
  A lot of people say that you need to find a local lender where the property is based out of. Is that true? 
  No, that’s false, I don’t buy that for a minute. For example, the deal that I shared with you previously that I did in Ohio, it was a retail deal in Cleveland and we got great deal for them, 4.35%, 10 year term. 75% loan to value, with a California lender 2000 miles away. I think there might be a few times where a local lender makes sense, but off of the top of my head, I can’t think of a circumstance.
  
  Were you there back in 2008 doing loans? Do you want to share a little bit about what was going on and how we should be prepared for a potential recession coming up?
  Yes, I was. What was going on? Not a great deal. Nothing really. I was actually working at Marcus and Millichap back then and not much was trading. How do you prepare for that? That’s a good point. A lot of people believe, particularly in some of the biggest cities, particularly in multifamily, they think it’s a little frothy right now. The cap rates are sub five. I think looking at tertiary markets, secondary markets, and value add is kind of a protection for that.
  
  Paul Castagna
  (561) 306-6852
  bedfordlending.com

  --- Support...]]>Today we're discussing commercial loans: how are they different from residential loans, how to find the best lenders, how to apply to these loans and present them to the lender, and what are some of the terms that we get to choose on these loans.
  
  Read the full interview here: https://montecarlorei.com/how-to-apply-for-a-commercial-loan-how-to-find-the-best-lenders/

  How should a new investor present a deal to a lender in order to get approved?
  Run your credit report up front, accumulate the last three years of your tax returns, put together a personal financial statement, and basically be candid with the lender. If you have anything that you think is going to look badly, like a past bankruptcy or past foreclosure, just explain it upfront.
  
  What are some different loan terms that we as investors would be able to choose from and decide on for commercial properties?
  Basically you can choose how much leverage you want. It depends on what the lender's going to offer, but you can get leverage anywhere from 60 to 75 or 80%, we even do 85% of some stuff. Where you have the most flexibility, as a borrower, it's the prepayment. The longer you do your prepayment out, typically the lower your rate is going to be. So whether you do a three year, five year, or ten year prepay, that's really where you have the most flexibility when you're speaking to the lender.
  
  Can these loans be transferred to a new buyer if we decide to sell the property before that three, five or 10 year prepay?
  With most lenders, yes. with some lenders no. In today's market, most lenders would transfer, and there's usually a small transfer fee.
  
  How do you recommend people going about finding really good lenders? I see a lot of people posting hard money loans and they really sound like a scam because their rates are so low. How can people make sure that they are really dealing with a legit lender and also a very good one?
  There's a lot of scammers in this business, so I'm just being very careful. I would say to talk to other investors, see are they used for lenders and or bonkers and I would really do it that way. I wouldn't just, you, you know, if you're a new investor, just going in on your own, talk to other investors and network, you know, go to the networking groups. It pays to network with other investors. You know, I mean this is an information business or whatever one's one.
  
  A lot of people say that you need to find a local lender where the property is based out of. Is that true? 
  No, that’s false, I don’t buy that for a minute. For example, the deal that I shared with you previously that I did in Ohio, it was a retail deal in Cleveland and we got great deal for them, 4.35%, 10 year term. 75% loan to value, with a California lender 2000 miles away. I think there might be a few times where a local lender makes sense, but off of the top of my head, I can’t think of a circumstance.
  
  Were you there back in 2008 doing loans? Do you want to share a little bit about what was going on and how we should be prepared for a potential recession coming up?
  Yes, I was. What was going on? Not a great deal. Nothing really. I was actually working at Marcus and Millichap back then and not much was trading. How do you prepare for that? That’s a good point. A lot of people believe, particularly in some of the biggest cities, particularly in multifamily, they think it’s a little frothy right now. The cap rates are sub five. I think looking at tertiary markets, secondary markets, and value add is kind of a protection for that.
  
  Paul Castagna
  (561) 306-6852
  bedfordlending.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>f2c9e2de-742e-8ecb-be98-d4b2c304fc01Thu, 12 Sep 2019 09:00:00 -080012:10falsefull1272717 Tips to Improve Your Personal Finances (Before We Talk About Commercial Real Estate Lending)One of the most asked for podcasts has been on the financing side of real estate investing: do we need to be employed in order to get a commercial real estate loan? Does our credit score matter? How long are these loans for? Are the interest rates the same as residential loan rates? What does the downpayment look like? What are the risks, loan options, etc? We will have a series of interviews coming up with commercial lenders to discuss the financing side of things in order to clarify some of these questions for you. Before that, I thought it would be appropriate to discuss personal finances first, in order to make sure we are all starting this journey together on the right foot.

  You can read this podcast and get all the links we discussed here: https://montecarlorei.com/8-tips-to-improve-your-personal-finances/
  
  Top 8 Tips for Improving Your Personal Finances

  1. If you have credit card debt, and you have an interest rate that is anything higher than 0%, fear not, you are not alone as we just found out! Call your credit card company and ask for a 0% interest rate. They will likely say no, and then you just open a credit card with Citi Double Cash, and transfer this debt to that new card, you will get 0% interest for 1.5 yrs, that will give you enough time to pay off your existing debt without it growing every month.
  2. On that same note, if you have, let’s say $5,000 in credit card debt, and you are paying 20% interest in that debt, and you have $10,000 in your savings account, you should pay off that debt with your savings, so your credit card balance stops increasing by $1,000 per year. After you pay off your credit card debt, another benefit of this “Citi Double Cash” card is that you get 2% cash back on all of your purchases.
  3. If you have a student loan, make sure you are getting the lowest interest rate as possible. If you have multiple loans, make sure to consolidate all of them into one very low interest rate loan: https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/
  4. If you have a checking account that is paying you 1 penny per month, you can open an account with Wealthfront, they are a company that is paying the highest rat that I could find, 2.32% today and they offer up to $1M in FDIC insurance (unlike the other banks that offer a maximum of 250k FDIC insurance).  I know someone that works there and they told me that they’re able to give $1M FDIC insurance because they break the balance down with different institutions, for example, they’ll put $250k with Bank of America, $250k with Wells Fargo, etc.
  5. Watch out your expenses! If you buy Starbucks everyday, you might want to buy a coffee machine and do it at home, I never understood why people pay $3-5 for coffee every day when they can make coffee at home. It was only after I had a really good job after my 30’s, that I started buying myself lattes, and on the weekends only!
  
  

  You can get in touch with me here: https://montecarlorei.com/contact-us/

  --- Support this...]]>One of the most asked for podcasts has been on the financing side of real estate investing: do we need to be employed in order to get a commercial real estate loan? Does our credit score matter? How long are these loans for? Are the interest rates the same as residential loan rates? What does the downpayment look like? What are the risks, loan options, etc? We will have a series of interviews coming up with commercial lenders to discuss the financing side of things in order to clarify some of these questions for you. Before that, I thought it would be appropriate to discuss personal finances first, in order to make sure we are all starting this journey together on the right foot.

  You can read this podcast and get all the links we discussed here: https://montecarlorei.com/8-tips-to-improve-your-personal-finances/
  
  Top 8 Tips for Improving Your Personal Finances

  1. If you have credit card debt, and you have an interest rate that is anything higher than 0%, fear not, you are not alone as we just found out! Call your credit card company and ask for a 0% interest rate. They will likely say no, and then you just open a credit card with Citi Double Cash, and transfer this debt to that new card, you will get 0% interest for 1.5 yrs, that will give you enough time to pay off your existing debt without it growing every month.
  2. On that same note, if you have, let’s say $5,000 in credit card debt, and you are paying 20% interest in that debt, and you have $10,000 in your savings account, you should pay off that debt with your savings, so your credit card balance stops increasing by $1,000 per year. After you pay off your credit card debt, another benefit of this “Citi Double Cash” card is that you get 2% cash back on all of your purchases.
  3. If you have a student loan, make sure you are getting the lowest interest rate as possible. If you have multiple loans, make sure to consolidate all of them into one very low interest rate loan: https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/
  4. If you have a checking account that is paying you 1 penny per month, you can open an account with Wealthfront, they are a company that is paying the highest rat that I could find, 2.32% today and they offer up to $1M in FDIC insurance (unlike the other banks that offer a maximum of 250k FDIC insurance).  I know someone that works there and they told me that they’re able to give $1M FDIC insurance because they break the balance down with different institutions, for example, they’ll put $250k with Bank of America, $250k with Wells Fargo, etc.
  5. Watch out your expenses! If you buy Starbucks everyday, you might want to buy a coffee machine and do it at home, I never understood why people pay $3-5 for coffee every day when they can make coffee at home. It was only after I had a really good job after my 30’s, that I started buying myself lattes, and on the weekends only!
  
  

  You can get in touch with me here: https://montecarlorei.com/contact-us/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>5a1a8266-d852-df90-8a0c-4c12903a53aaThu, 05 Sep 2019 10:00:00 -080015:56falsefull126261What's The Future of Retail, How Should a Retail Investor Approach Their Investments in Today's World?Today we are reviewing where is retail going, how should a retail investor think and approach their investments in today's world, what are tenants looking for in a retail center, and what are major items that national tenants and landlords want to see in their lease.
  
  Read the full interview here: https://montecarlorei.com/where-is-retail-going-lease-negotiation-national-tenants/
  
  Where do you think retail is going based on your experience?
  I'm sure a lot of folks that have come on your podcast talked about the retail evolution, the apocalypse, and that retail is dying. And when you look at the history of retail, it has always evolved based on consumer demands and convenience. From a macro view, we are seeing a slowing in the development pipeline, slightly higher cap rates compared to other sectors, and I'd argue we're a little overbuilt in the United States when it comes to retail. However, there is a tremendous amount of product that is obsolete, a lot of C lass C malls and Class C shopping centers across the US need to be repurposed and rezoned. We're starting to see this happening now, I go back to this idea that Sears completely disrupted retail back when they came out with their catalog, and then, the next flavor of the month was "It's more convenient to go to the mall." And then in the 90's power centers just ballooned, you had these huge giant anchors, and they were fulfillment stores. Now you have online shopping, and we're seeing all of these things shift out.
  
  How should a retail investor think and approach their investments in today's world?
  I think that regardless of the asset, you have to take a longterm vision on real estate based on strong fundamentals. We can't control what the Fed is going to do tomorrow, we can't control what cap rates are, and where they're going to trend, so I don't want to spend a lot of time worrying about those things. Commercial real estate is so cyclical, and it's always in either one of four phases. At the end of the day you want to find well located assets with really strong demographics, one, three and five mile radius, understand how many households, what's the average household income, what's the population, how's it growing, how's the job market? Just going back to the basics. And then we want to look for attractive opportunities. When you're in a rising cap rate market, you have to find ways to grow your NOI. The only way to do that is to really dig into the market dynamics and understand where the value is. There’s an art to underwriting shopping centers, it’s not the broker's job because they will say that you can just lease up this vacancy in three to six months, and this is the market rate they’re going to pay. There are so many more nuances to getting leases done, you have to find ways to lease and attract the right tenants.
  
  As you work with a lot of tenants, what are they looking for in a retail center nowadays?
  It has always been about market share, finding sales, and finding the desirable tenant mix. Retailers are getting so sophisticated when it comes to understanding what the market analytics, trends, and where they need to be in the marketplace. Demographics play a huge role in this: understanding traffic counts, traffic patterns, visibility, the amount of parking that they will need, and they want to partner with well-respected landlords that are going to take care of the asset.
  
  Jason Ricks
  www.concordiarealty.com
  jason@concordiarealty.com
  Blog post: http://www.concordiarealty.com/resources/crc020-online-sales-vs-brick-and-mortar-retail/
  ]]>Today we are reviewing where is retail going, how should a retail investor think and approach their investments in today's world, what are tenants looking for in a retail center, and what are major items that national tenants and landlords want to see in their lease.
  
  Read the full interview here: https://montecarlorei.com/where-is-retail-going-lease-negotiation-national-tenants/
  
  Where do you think retail is going based on your experience?
  I'm sure a lot of folks that have come on your podcast talked about the retail evolution, the apocalypse, and that retail is dying. And when you look at the history of retail, it has always evolved based on consumer demands and convenience. From a macro view, we are seeing a slowing in the development pipeline, slightly higher cap rates compared to other sectors, and I'd argue we're a little overbuilt in the United States when it comes to retail. However, there is a tremendous amount of product that is obsolete, a lot of C lass C malls and Class C shopping centers across the US need to be repurposed and rezoned. We're starting to see this happening now, I go back to this idea that Sears completely disrupted retail back when they came out with their catalog, and then, the next flavor of the month was "It's more convenient to go to the mall." And then in the 90's power centers just ballooned, you had these huge giant anchors, and they were fulfillment stores. Now you have online shopping, and we're seeing all of these things shift out.
  
  How should a retail investor think and approach their investments in today's world?
  I think that regardless of the asset, you have to take a longterm vision on real estate based on strong fundamentals. We can't control what the Fed is going to do tomorrow, we can't control what cap rates are, and where they're going to trend, so I don't want to spend a lot of time worrying about those things. Commercial real estate is so cyclical, and it's always in either one of four phases. At the end of the day you want to find well located assets with really strong demographics, one, three and five mile radius, understand how many households, what's the average household income, what's the population, how's it growing, how's the job market? Just going back to the basics. And then we want to look for attractive opportunities. When you're in a rising cap rate market, you have to find ways to grow your NOI. The only way to do that is to really dig into the market dynamics and understand where the value is. There’s an art to underwriting shopping centers, it’s not the broker's job because they will say that you can just lease up this vacancy in three to six months, and this is the market rate they’re going to pay. There are so many more nuances to getting leases done, you have to find ways to lease and attract the right tenants.
  
  As you work with a lot of tenants, what are they looking for in a retail center nowadays?
  It has always been about market share, finding sales, and finding the desirable tenant mix. Retailers are getting so sophisticated when it comes to understanding what the market analytics, trends, and where they need to be in the marketplace. Demographics play a huge role in this: understanding traffic counts, traffic patterns, visibility, the amount of parking that they will need, and they want to partner with well-respected landlords that are going to take care of the asset.
  
  Jason Ricks
  www.concordiarealty.com
  jason@concordiarealty.com
  Blog post: http://www.concordiarealty.com/resources/crc020-online-sales-vs-brick-and-mortar-retail/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>01d1f43a-7622-8634-5596-1898a3d65f1fThu, 29 Aug 2019 10:00:00 -080016:24falsefull125251What is Cash on Cash, IRR, and REIT's?Today we are covering what is the difference between Cash on Cash and IRR, what are REIT's, and what are the pros and cons from an investor's perspective.

  Read this interview here: http://montecarlorei.com/episode-23-what-is-cash-on-cash-irr-and-reits/
  
  We're interviewing Jason Ricks, a professional real estate investor focusing on acquisitions, leasing, construction, and development. He has a background in retail leasing and asset management working on premier properties worth hundreds of millions across the country. He also oversaw a 2.2 million square foot value add retail portfolio throughout Texas and Oklahoma, and most recently he was featured in the number one Amazon best selling book Desire, Discipline and Determination.
  
  What is the difference between cash on cash and IRR?
  These are both really common metrics that a lot of investors use when evaluating real estate. One of the beauties of commercial real estate, or income producing real estate, is the cashflow. Cash on cash is a snapshot of the percentage return of your cash invested. Imagine that you invested $100,000 into a shopping center. In year one you got a cash flow check of $10,000, so what type of return is that on your investment? That's going to be a 10% cash on cash return and this is usually quoted on a before tax basis. What that does is that it gives you a nice snapshot of the initial return that you're going to get on your investment, which a lot of investors are curious about, especially when you evaluate this against, for example, a stock dividend or a coupon. That's one of the exciting things about commercial real estate - that cash on cash income producing, and cash on cash gives you a nice snapshot of the IRR.
  
  Internal rate of return gives you the full picture, the comprehensive picture. And the way that's done is if you own, let's say a shopping center over a period of five years, you're going to have very different cash flows. And whenever you decide to sell the building, you're going to have a big chunk of sales proceeds. How do you evaluate a return on your investment over a five year period, taking into account the time value of money? That's what the IRR does. It gives you a nice picture of your yield. A lot of times investors will look at IRR before making an investment, and it's primarily a proforma. So it will say, here's my crystal ball and here's where I think cash flows are going to be, here's where I think we're going to end up going on an exit cap, and this is going to be the sales proceeds. And what's nice about it is that it gives you an opportunity to evaluate it against other investment vehicles.
  
  What are REIT's and what are the pros and cons of investing in a REIT from an investor's perspective?
  REIT's came about in the 60's and at that point only accredited investors were really engaged in commercial real estate, REIT's then allowed non-accredited investors to invest in commercial real estate. This can be done in either debt or equity REIT's, and these can either be private or public. To qualify for a REIT there are a lot of requirements, and a ton of reporting. 90% of its taxable income has to be in the form of shareholder dividends, and you have to invest 75% of your assets in real estate cash or US Treasuries. As an individual investor that's unaccredited, what's fantastic about REIT's is that gives you broad based diversification and exposure to commercial real estate, plus just like any other publicly traded stock, it's liquid, meaning that you can get in and get out very quickly.
  
  Unfortunately, REIT’s don’t offer much in the form of capital appreciation. They’re very dividend heavy focused. And those dividend checks that you do get from REIT’s are going to be taxed as regular income.
  
  Jason Ricks
  jason@concordiarealty.com

  ...]]>Today we are covering what is the difference between Cash on Cash and IRR, what are REIT's, and what are the pros and cons from an investor's perspective.

  Read this interview here: http://montecarlorei.com/episode-23-what-is-cash-on-cash-irr-and-reits/
  
  We're interviewing Jason Ricks, a professional real estate investor focusing on acquisitions, leasing, construction, and development. He has a background in retail leasing and asset management working on premier properties worth hundreds of millions across the country. He also oversaw a 2.2 million square foot value add retail portfolio throughout Texas and Oklahoma, and most recently he was featured in the number one Amazon best selling book Desire, Discipline and Determination.
  
  What is the difference between cash on cash and IRR?
  These are both really common metrics that a lot of investors use when evaluating real estate. One of the beauties of commercial real estate, or income producing real estate, is the cashflow. Cash on cash is a snapshot of the percentage return of your cash invested. Imagine that you invested $100,000 into a shopping center. In year one you got a cash flow check of $10,000, so what type of return is that on your investment? That's going to be a 10% cash on cash return and this is usually quoted on a before tax basis. What that does is that it gives you a nice snapshot of the initial return that you're going to get on your investment, which a lot of investors are curious about, especially when you evaluate this against, for example, a stock dividend or a coupon. That's one of the exciting things about commercial real estate - that cash on cash income producing, and cash on cash gives you a nice snapshot of the IRR.
  
  Internal rate of return gives you the full picture, the comprehensive picture. And the way that's done is if you own, let's say a shopping center over a period of five years, you're going to have very different cash flows. And whenever you decide to sell the building, you're going to have a big chunk of sales proceeds. How do you evaluate a return on your investment over a five year period, taking into account the time value of money? That's what the IRR does. It gives you a nice picture of your yield. A lot of times investors will look at IRR before making an investment, and it's primarily a proforma. So it will say, here's my crystal ball and here's where I think cash flows are going to be, here's where I think we're going to end up going on an exit cap, and this is going to be the sales proceeds. And what's nice about it is that it gives you an opportunity to evaluate it against other investment vehicles.
  
  What are REIT's and what are the pros and cons of investing in a REIT from an investor's perspective?
  REIT's came about in the 60's and at that point only accredited investors were really engaged in commercial real estate, REIT's then allowed non-accredited investors to invest in commercial real estate. This can be done in either debt or equity REIT's, and these can either be private or public. To qualify for a REIT there are a lot of requirements, and a ton of reporting. 90% of its taxable income has to be in the form of shareholder dividends, and you have to invest 75% of your assets in real estate cash or US Treasuries. As an individual investor that's unaccredited, what's fantastic about REIT's is that gives you broad based diversification and exposure to commercial real estate, plus just like any other publicly traded stock, it's liquid, meaning that you can get in and get out very quickly.
  
  Unfortunately, REIT’s don’t offer much in the form of capital appreciation. They’re very dividend heavy focused. And those dividend checks that you do get from REIT’s are going to be taxed as regular income.
  
  Jason Ricks
  jason@concordiarealty.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>d1073d87-e3f1-ccd3-4b02-4e9896a24ee7Thu, 22 Aug 2019 17:43:51 -080017:00falsefull124241Top 5 Mistakes to Avoid When Investing in Commercial Real EstateIn this episode we will learn what are some of the top 5 mistakes to avoid when investing in CRE.
  
  You can read this episode here: http://montecarlorei.com/episode-22-top-5-mistakes-to-avoid-when-investing-in-commercial-real-estate/
  
  1. Looking at Pro Forma Numbers
  One of the things that you will start to see as you're searching for properties is that there are two sources of income in the financial statement. Number one is the actual revenue / actual net operating income of the property. Number two is the pro forma income / pro forma net operating income. And these numbers are different because one is the current number and existing financials and the other one is an imaginary number. It's an imaginary number based on what the real estate agent thinks the property could make after you buy it. Commercial real estate brokers don't have the same obligations around disclosures or telling the truth as residential real estate agents do, you have to be careful and take everything that they give you with a grain of salt on the pro forma numbers. 
  
  2. Always take a look at who your tenants are
  Is this the right mix of tenants? If it's a retail building - when are their leases expiring? If the majority of the tenants have lease expiration dates coming up all around the same time in the next three years, that's not a good sign. Why? Because what if something happens to the economy or what if something happens to the local market and these tenants all decided to leave at the same time? Not only are you looking at the tenant mix and when their leases expire, you are also looking at how much these leases are currently at, are the leases above market price? Are the leases currently below market price?Is this the right mix of tenants? If it's a retail building - when are their leases expiring? If the majority of the tenants have lease expiration dates coming up all around the same time in the next three years, that's not a good sign. Why? Because what if something happens to the economy and these tenants all decided to leave at the same time?
  
  3. Survey the property for environmental issues as well as the laws within that city
  There are a lot of very difficult cities to do business with, San Francisco is a prime example. For example, if you want to convert an office to a Starbucks, you're going to have to go through a lot of approvals with the city. If you want to convert something to a residential building, it might take literally years to get that approved. A lot of people in the neighborhood will make a big deal out of it and they will make it very difficult for you to get approvals in a short period of time, so you really want to check what you can do with that property without having a lot of issues.
  
  4. Get all reports and surveys done
  Get a structural engineer to make sure that the building is solid and has no problems. Get a roof inspector to make sure that your property has a solid roof, and depending on the type of property, you might want to have a few other surveys done such as taking a look at the foundation, the windows, and HVAC units, if applicable.
  
  5. Take a look at hidden costs and contracts that will have to be honored by you after the sale
  Some properties may have contracts that are two, three years long for online advertising and those were part of the costs that you were planning on cutting after you took over the property. However, the contract doesn't end for at least another couple of years. You also may have to pay local taxes that the seller was responsible for paying, and there may also be some insurances that you may not need that the seller purchased and now you're responsible for paying.
  --- Support this podcast: In this episode we will learn what are some of the top 5 mistakes to avoid when investing in CRE.
  
  You can read this episode here: http://montecarlorei.com/episode-22-top-5-mistakes-to-avoid-when-investing-in-commercial-real-estate/
  
  1. Looking at Pro Forma Numbers
  One of the things that you will start to see as you're searching for properties is that there are two sources of income in the financial statement. Number one is the actual revenue / actual net operating income of the property. Number two is the pro forma income / pro forma net operating income. And these numbers are different because one is the current number and existing financials and the other one is an imaginary number. It's an imaginary number based on what the real estate agent thinks the property could make after you buy it. Commercial real estate brokers don't have the same obligations around disclosures or telling the truth as residential real estate agents do, you have to be careful and take everything that they give you with a grain of salt on the pro forma numbers. 
  
  2. Always take a look at who your tenants are
  Is this the right mix of tenants? If it's a retail building - when are their leases expiring? If the majority of the tenants have lease expiration dates coming up all around the same time in the next three years, that's not a good sign. Why? Because what if something happens to the economy or what if something happens to the local market and these tenants all decided to leave at the same time? Not only are you looking at the tenant mix and when their leases expire, you are also looking at how much these leases are currently at, are the leases above market price? Are the leases currently below market price?Is this the right mix of tenants? If it's a retail building - when are their leases expiring? If the majority of the tenants have lease expiration dates coming up all around the same time in the next three years, that's not a good sign. Why? Because what if something happens to the economy and these tenants all decided to leave at the same time?
  
  3. Survey the property for environmental issues as well as the laws within that city
  There are a lot of very difficult cities to do business with, San Francisco is a prime example. For example, if you want to convert an office to a Starbucks, you're going to have to go through a lot of approvals with the city. If you want to convert something to a residential building, it might take literally years to get that approved. A lot of people in the neighborhood will make a big deal out of it and they will make it very difficult for you to get approvals in a short period of time, so you really want to check what you can do with that property without having a lot of issues.
  
  4. Get all reports and surveys done
  Get a structural engineer to make sure that the building is solid and has no problems. Get a roof inspector to make sure that your property has a solid roof, and depending on the type of property, you might want to have a few other surveys done such as taking a look at the foundation, the windows, and HVAC units, if applicable.
  
  5. Take a look at hidden costs and contracts that will have to be honored by you after the sale
  Some properties may have contracts that are two, three years long for online advertising and those were part of the costs that you were planning on cutting after you took over the property. However, the contract doesn't end for at least another couple of years. You also may have to pay local taxes that the seller was responsible for paying, and there may also be some insurances that you may not need that the seller purchased and now you're responsible for paying.
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>37a7723a-ea9d-989a-575e-8c8d20c99086Thu, 15 Aug 2019 20:06:06 -080013:06falsefull123231How to Prepare for a Possible Recession and How to Underwrite Deals With That in Mind Today we are reviewing how to make investments with a possible recession coming up, and how do you underwrite deals with that in mind. We are interviewing Hunter Thompson, the founder and managing principal of Asym Capital.
  
  You can read this full interview here: http://montecarlorei.com/how-do-you-prepare-for-a-possible-recession-how-to-underwrite-real-estate-deals-resistant/
  
  I am personally very excited about this topic, from my observation living in Silicon Valley, I think that the signs on an upcoming recession are everywhere:
  1. One of the companies that I used to work for is currently losing $130 million per year, and they’re valued at almost $10 billion in the stock market.
  2. I dabbed into angel investing, and so much money being thrown at startups that don’t have any customers
  3. There’s a lot of money being thrown in real estate. Cap rates are very low, interest rates are at an all time low, and the government is not raising rates for some strange reason.

  These signs all happened right before 2000 and right before 2008, and now is a great opportunity for us to jump into why we should be looking at session resistant properties and how to underwrite these deals.
  
  How do you prepare for a potential downturn and how do you underwrite real estate deals with this in mind?
  My thesis is that all types of real estate are going to perform if the capital markets are booming and the economy is really heating up. If you can raise rents aggressively, you can fill occupancy, you can complete capital expenditure and expect to be able to raise rents, etc. But only some types of real estate do well when the economy is contracting, so even if you have a portion of your portfolio that’s focused on the types of real estate that do well when the economies are contracting, it really significantly increases the overall risk profile of your portfolio and increases the favorability of the risk profile.
  
  A significant portion of our business is focused exclusively on things that cater to people that are making $35,000 – $55,000 a year, somewhere in that range. The mobile home park business, for example, is probably the most clear example of a recession resistant asset because the worst the economy does, the more demand there is for the product. Think about it like this: if everyone that’s making $100,000 moves down to making $60,000, and everyone that’s making $60,000 moves down to $40,000 and everyone that’s making $40,000 moves down to $30,000, there’s always demand for that bottom product. Now that doesn’t paint the whole picture, which is something we can get into from a big picture perspective, though the mobile home park business is very compelling because the demand is stable.

  A similar case can be made for something like self storage where people use the product when they’re going through some kind of life change. Let’s think about things like downsizing, which is very common during recessions, people change jobs, people have to move in order to stay employed, things like that are all very common during recessions, and also you have people moving home from college unexpectedly, but all of them spur demand for the product of self storage. From a downside protection standpoint, it’s very compelling. And also looking at the historical data, this isn’t something that just sounds reasonable. It’s very compelling and not just something that makes sense from a big picture.
  
  Hunter Thompson
  Email: info@asymcapital.com
  Website: https://asymcapital.com

  --- Support this podcast: Today we are reviewing how to make investments with a possible recession coming up, and how do you underwrite deals with that in mind. We are interviewing Hunter Thompson, the founder and managing principal of Asym Capital.
  
  You can read this full interview here: http://montecarlorei.com/how-do-you-prepare-for-a-possible-recession-how-to-underwrite-real-estate-deals-resistant/
  
  I am personally very excited about this topic, from my observation living in Silicon Valley, I think that the signs on an upcoming recession are everywhere:
  1. One of the companies that I used to work for is currently losing $130 million per year, and they’re valued at almost $10 billion in the stock market.
  2. I dabbed into angel investing, and so much money being thrown at startups that don’t have any customers
  3. There’s a lot of money being thrown in real estate. Cap rates are very low, interest rates are at an all time low, and the government is not raising rates for some strange reason.

  These signs all happened right before 2000 and right before 2008, and now is a great opportunity for us to jump into why we should be looking at session resistant properties and how to underwrite these deals.
  
  How do you prepare for a potential downturn and how do you underwrite real estate deals with this in mind?
  My thesis is that all types of real estate are going to perform if the capital markets are booming and the economy is really heating up. If you can raise rents aggressively, you can fill occupancy, you can complete capital expenditure and expect to be able to raise rents, etc. But only some types of real estate do well when the economy is contracting, so even if you have a portion of your portfolio that’s focused on the types of real estate that do well when the economies are contracting, it really significantly increases the overall risk profile of your portfolio and increases the favorability of the risk profile.
  
  A significant portion of our business is focused exclusively on things that cater to people that are making $35,000 – $55,000 a year, somewhere in that range. The mobile home park business, for example, is probably the most clear example of a recession resistant asset because the worst the economy does, the more demand there is for the product. Think about it like this: if everyone that’s making $100,000 moves down to making $60,000, and everyone that’s making $60,000 moves down to $40,000 and everyone that’s making $40,000 moves down to $30,000, there’s always demand for that bottom product. Now that doesn’t paint the whole picture, which is something we can get into from a big picture perspective, though the mobile home park business is very compelling because the demand is stable.

  A similar case can be made for something like self storage where people use the product when they’re going through some kind of life change. Let’s think about things like downsizing, which is very common during recessions, people change jobs, people have to move in order to stay employed, things like that are all very common during recessions, and also you have people moving home from college unexpectedly, but all of them spur demand for the product of self storage. From a downside protection standpoint, it’s very compelling. And also looking at the historical data, this isn’t something that just sounds reasonable. It’s very compelling and not just something that makes sense from a big picture.
  
  Hunter Thompson
  Email: info@asymcapital.com
  Website: https://asymcapital.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>9c39f0a5-5263-e6d5-38e5-ed230ff3e7d4Thu, 08 Aug 2019 10:00:00 -080020:23falsefull122221What is Due Diligence? What are Some Items You Should Cover When Purchasing a Property?In this episode, we will review what is due diligence, what types of questions you should be asking during the due diligence period, and what documents you should be getting from the seller. I won't go over the entire due diligence checklist because that is a very long checklist. This is just a very brief overview of some of the items that you will need as you're going through the due diligence report.  
  
  You can read this podcast here: https://montecarlorei.com/what-is-due-diligence-what-are-some-items-you-should-cover-when-purchasing-a-property/
  
  What is Due Diligence?
  It’s a term that you will learn when you are buying your first commercial property, it happens after your offer was accepted and that means that you have a specific number of days to review all the documents that the seller has on the property, schedule all types of inspections and reports, compare rental rates that are ongoing in the market, as well as sales comps to make sure that you are paying the right price for the property. If you Google what is due diligence, Google says that due diligence is the “reasonable steps taken by a person in order to satisfy a legal document, especially in buying or selling something”. It’s a comprehensive appraisal of a business undertaken by you (the prospective buyer) to make sure that the assets and the liabilities are correct, and make sure that this is an actual good deal for you to purchase or not. You typically have, depending on the market, 15 days at the very, very minimum to do all of your due diligence, all the way to 30 days, 60 days, sometimes 90 days. If the deal is really, really complex, it can take six months, nine months, or even one year. If you get in contract to purchase a property and you get 30 days to do your due diligence, and then you realize that you need more time because you were not given all of the paperwork on time, you can always ask for an extension, which is what we did on my first offer.
  
  What are some example items that you need to cover during the due diligence process?
  - Who is going to escort everyone to the property? You will have contractors coming over to do inspections and some reports, so you need to know who will be helping these people get in the property.
  - The seller’s agent should provide you with a contact sheet for who is the escrow agent, who is the escrow officer, their phone numbers in case you need to get in contact with any one them.
  - You are going to be asking for referrals for structural engineers, architects, roof inspectors and this could be from your own real estate agent because they are familiar with that city and they can refer you to the right people that they have used in the past.
  - Sales comps for the area from your real estate agent, and this is for you to understand if you are paying a fair price for the property. How you determined that is by looking at the price per square feet. Prices can vary greatly based on location, so you need to take that into consideration as well. For instance, one of the sales comps can be three blocks away from your property.
  - You'll need a copy of all of the leases that have been signed for this property. If you're buying an office building or a retail building, you really want to make sure that your read every single lease and all of the red lines. If you have two national tenants there for example, let's say you have a Starbucks and you have a Chick-Filet, they will likely require the owner of the property to use their own leases, so Chick-Filet and Starbucks will give their own lease to the owner of the property and they will negotiate from that.
  - A breakdown of every single expense that the property has, and for most of these expenses you will want a two year history of all of the bills.
  
  ...]]>In this episode, we will review what is due diligence, what types of questions you should be asking during the due diligence period, and what documents you should be getting from the seller. I won't go over the entire due diligence checklist because that is a very long checklist. This is just a very brief overview of some of the items that you will need as you're going through the due diligence report.  
  
  You can read this podcast here: https://montecarlorei.com/what-is-due-diligence-what-are-some-items-you-should-cover-when-purchasing-a-property/
  
  What is Due Diligence?
  It’s a term that you will learn when you are buying your first commercial property, it happens after your offer was accepted and that means that you have a specific number of days to review all the documents that the seller has on the property, schedule all types of inspections and reports, compare rental rates that are ongoing in the market, as well as sales comps to make sure that you are paying the right price for the property. If you Google what is due diligence, Google says that due diligence is the “reasonable steps taken by a person in order to satisfy a legal document, especially in buying or selling something”. It’s a comprehensive appraisal of a business undertaken by you (the prospective buyer) to make sure that the assets and the liabilities are correct, and make sure that this is an actual good deal for you to purchase or not. You typically have, depending on the market, 15 days at the very, very minimum to do all of your due diligence, all the way to 30 days, 60 days, sometimes 90 days. If the deal is really, really complex, it can take six months, nine months, or even one year. If you get in contract to purchase a property and you get 30 days to do your due diligence, and then you realize that you need more time because you were not given all of the paperwork on time, you can always ask for an extension, which is what we did on my first offer.
  
  What are some example items that you need to cover during the due diligence process?
  - Who is going to escort everyone to the property? You will have contractors coming over to do inspections and some reports, so you need to know who will be helping these people get in the property.
  - The seller’s agent should provide you with a contact sheet for who is the escrow agent, who is the escrow officer, their phone numbers in case you need to get in contact with any one them.
  - You are going to be asking for referrals for structural engineers, architects, roof inspectors and this could be from your own real estate agent because they are familiar with that city and they can refer you to the right people that they have used in the past.
  - Sales comps for the area from your real estate agent, and this is for you to understand if you are paying a fair price for the property. How you determined that is by looking at the price per square feet. Prices can vary greatly based on location, so you need to take that into consideration as well. For instance, one of the sales comps can be three blocks away from your property.
  - You'll need a copy of all of the leases that have been signed for this property. If you're buying an office building or a retail building, you really want to make sure that your read every single lease and all of the red lines. If you have two national tenants there for example, let's say you have a Starbucks and you have a Chick-Filet, they will likely require the owner of the property to use their own leases, so Chick-Filet and Starbucks will give their own lease to the owner of the property and they will negotiate from that.
  - A breakdown of every single expense that the property has, and for most of these expenses you will want a two year history of all of the bills.
  
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>a3701da8-b887-c571-9355-9b47b646fb67Thu, 01 Aug 2019 20:40:58 -080015:44falsefull121211Should You Buy a Home or Invest in Commercial Real Estate? Project Updates and Lessons LearnedToday we’re going to do a very basic analysis around the question: should you buy your own place, or should you invest in a commercial property? I’ll also going to update you on what I have been up to for the last couple of months, and how are my projects going.
  
  Read this entire episode here: https://montecarlorei.com/should-you-buy-a-home-or-invest-in-commercial-real-estate-my-project-updates-and-lessons-learned/
  
  Should you buy your own home, or rent and put the down payment in an investment property?
  I am not providing any financial advice, this is my personal opinion based on the things that I have learned, you should always do your own homework and ask a professional for advice. Here’s my personal opinion on the question around buying a home to live in, or not buying it and putting that money towards an investment property.
  
  If I were to buy a one bedroom apartment in San Francisco, I would be paying around $1.2M and I would have to put 20% down, so I would be putting $240,000 as a down payment and my mortgage would be $960,000, the interest rate could be around 4% in today’s market, that’s $960,000 at 4%. My monthly payment would be $4,500 per month plus property taxes of $1,000 per month (1% of the property value in California), and we have another $1,000/month in HOA fees (Home Owners Association). My total payment would be $6,500 per month if I were to own my one bedroom condo. On the other hand, I can be a tenant and rent that one bedroom apartment in today’s market for $4,500 per month. That’s a $2,000 difference – $4,500 if I am renting from someone vs $6,500 if I am the owner of that apartment. On top of that, if I am the owner, I just put $240,000 as a down payment, so I’m not making any money on that $240,000.
  
  Now, let’s say you’d take that $240,000 to invest in a commercial property, and we are going to round this up to make things very simple: let’s say that you are making a 10% return every single year on that $240,000, which is very acceptable for real estate investing. At $240,000 that you were putting as a down payment, you’re instead getting a basic return of 10% every single year. That’s $24,000 that you’re making every year, plus, as a renter, I am saving $2,000 from the $6,500 that I would be paying if I was a homeowner or a condo owner in this case. That’s another $24,000 that I am saving by being a renter every single year, and another 10% on my $240,000 which is another $24,000 that I’m making every year in my commercial real estate investment. That’s a total of $48,000 every single year, that’s almost half a million dollars over ten years.
  
  How much should you save to buy a home, and to buy a commercial property?
  If you are going to own your own house, you typically should put a 20% down payment, there are all kinds of loans that you can get to nowadays, you could probably only have a 10% down payment, and sometimes even less depending on the type of loan that you find. For commercial properties you should have around 30% down payment. This number can also change depending on the property income and the type of loan that you get. This is a very standard number: 20% down for your own home, 30% down for a commercial investment, or you can join a syndication where you are investing with quite a few people and you buy a small part of that property. Typically the minimum amount to invest in a syndication is around $25,000 (it could also be much higher than that), and in a syndication you would own a percentage of that property.
  
  Linkedin:  https://www.linkedin.com/in/steffbold/
  --- Support this podcast: Today we’re going to do a very basic analysis around the question: should you buy your own place, or should you invest in a commercial property? I’ll also going to update you on what I have been up to for the last couple of months, and how are my projects going.
  
  Read this entire episode here: https://montecarlorei.com/should-you-buy-a-home-or-invest-in-commercial-real-estate-my-project-updates-and-lessons-learned/
  
  Should you buy your own home, or rent and put the down payment in an investment property?
  I am not providing any financial advice, this is my personal opinion based on the things that I have learned, you should always do your own homework and ask a professional for advice. Here’s my personal opinion on the question around buying a home to live in, or not buying it and putting that money towards an investment property.
  
  If I were to buy a one bedroom apartment in San Francisco, I would be paying around $1.2M and I would have to put 20% down, so I would be putting $240,000 as a down payment and my mortgage would be $960,000, the interest rate could be around 4% in today’s market, that’s $960,000 at 4%. My monthly payment would be $4,500 per month plus property taxes of $1,000 per month (1% of the property value in California), and we have another $1,000/month in HOA fees (Home Owners Association). My total payment would be $6,500 per month if I were to own my one bedroom condo. On the other hand, I can be a tenant and rent that one bedroom apartment in today’s market for $4,500 per month. That’s a $2,000 difference – $4,500 if I am renting from someone vs $6,500 if I am the owner of that apartment. On top of that, if I am the owner, I just put $240,000 as a down payment, so I’m not making any money on that $240,000.
  
  Now, let’s say you’d take that $240,000 to invest in a commercial property, and we are going to round this up to make things very simple: let’s say that you are making a 10% return every single year on that $240,000, which is very acceptable for real estate investing. At $240,000 that you were putting as a down payment, you’re instead getting a basic return of 10% every single year. That’s $24,000 that you’re making every year, plus, as a renter, I am saving $2,000 from the $6,500 that I would be paying if I was a homeowner or a condo owner in this case. That’s another $24,000 that I am saving by being a renter every single year, and another 10% on my $240,000 which is another $24,000 that I’m making every year in my commercial real estate investment. That’s a total of $48,000 every single year, that’s almost half a million dollars over ten years.
  
  How much should you save to buy a home, and to buy a commercial property?
  If you are going to own your own house, you typically should put a 20% down payment, there are all kinds of loans that you can get to nowadays, you could probably only have a 10% down payment, and sometimes even less depending on the type of loan that you find. For commercial properties you should have around 30% down payment. This number can also change depending on the property income and the type of loan that you get. This is a very standard number: 20% down for your own home, 30% down for a commercial investment, or you can join a syndication where you are investing with quite a few people and you buy a small part of that property. Typically the minimum amount to invest in a syndication is around $25,000 (it could also be much higher than that), and in a syndication you would own a percentage of that property.
  
  Linkedin:  https://www.linkedin.com/in/steffbold/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>0edfc728-5f6c-d5c5-eb13-74dca27e5415Thu, 25 Jul 2019 10:00:00 -080020:56falsefull120201What is Cost Segregation, How Can it Help You Save Taxes, What’s Bonus Depreciation, and How Much Would a Cost Segregation Study Cost?In this episode you will learn a tip for tax deduction when you buy a property, it’s useful even if you have already bought some properties: cost segregation. What types of properties can benefit from cost segregation, we’ll go over an example of how much you’ll be able to deduct on your taxes, why it’s important to have cash on hand today versus in five years, what is bonus depreciation and how much a cost segregation study would typically cost. We're interviewing Yonah Weiss, a Business Director at Madison SPECS, a national Cost Segregation leader.
  
  You can read the interview here: https://montecarlorei.com/what-is-cost-segregation-what-types-of-properties-can-benefit-from-it-whats-bonus-depreciation-and-how-much-would-a-cost-segregation-study-cost/
  
  What is cost segregation?
  It’s a tax benefit for real estate investors and it has to do with depreciation. When you own a property, you get a tax deduction called depreciation. Where cost segregation comes into play is the fact that the IRS determined that things in the property have different useful lives, anything that is not part of the structure of the building depreciates over five years. Then you have another category of things called land improvements and this can be anything like pavement, asphalt, parking lot, landscaping, fencing, anything outside the building actually depreciates over 15 years instead of 39 years. You break out the components of the property into their cost, and depreciate them at a faster rate.
  
  What type of properties qualify for this?
  Any type of property, as long as it’s not your personal residence, it can be commercial, residential and multifamily, office, assisted living, hotels, hospitality, self storage, industrial, shopping malls, golf courses, mobile home parks, etc.
  
  What is the main benefit of doing cost segregation?
  The cashflow. When you have more deductions than you have income, you don’t write a check. We’re not talking about getting free money, what we’re talking about is keeping the money that you made and paying less taxes, or no taxes. In many cases, the main benefit is the cashflow, you’re able to use that money to invest. The second thing is the time value of money because you can take huge deductions early on and make sure that you’re using that money to invest. The time value of money means money today is worth more than it is five years from now. If I were to offer you $50,000 today or $10,000 a year or five years, what would you take?
  
  What is bonus depreciation?
  It used to be a rule that when you developed a new property, you could take 50% of the depreciation of that property in the first year of that new construction. The law changed in that it’s now for any property that you buy, not just new developments. All the depreciation that is less than 20 years (in the example that we gave, the five-year personal property and 15 year land improvements) all of that cost segregation is eligible for bonus depreciation, you can actually take 100% of that depreciation in the first year of ownership, instead of spreading it over five years. You have a choice of 100% or 50%, which really gives you a much added benefit to take, to knock off your entire income tax liability in the first year.
  
  How much would it cost to do a cost segregation study in our example property, 30,000 square feet office that was purchased for $3 million?
  At our firm and for that property, it could cost around $5,000-$6,000.
  
  Yonah Weiss
  https://www.linkedin.com/in/cost-segregation-yonah-weiss/
  yweiss@madisonspecs.com
  (732)...]]>In this episode you will learn a tip for tax deduction when you buy a property, it’s useful even if you have already bought some properties: cost segregation. What types of properties can benefit from cost segregation, we’ll go over an example of how much you’ll be able to deduct on your taxes, why it’s important to have cash on hand today versus in five years, what is bonus depreciation and how much a cost segregation study would typically cost. We're interviewing Yonah Weiss, a Business Director at Madison SPECS, a national Cost Segregation leader.
  
  You can read the interview here: https://montecarlorei.com/what-is-cost-segregation-what-types-of-properties-can-benefit-from-it-whats-bonus-depreciation-and-how-much-would-a-cost-segregation-study-cost/
  
  What is cost segregation?
  It’s a tax benefit for real estate investors and it has to do with depreciation. When you own a property, you get a tax deduction called depreciation. Where cost segregation comes into play is the fact that the IRS determined that things in the property have different useful lives, anything that is not part of the structure of the building depreciates over five years. Then you have another category of things called land improvements and this can be anything like pavement, asphalt, parking lot, landscaping, fencing, anything outside the building actually depreciates over 15 years instead of 39 years. You break out the components of the property into their cost, and depreciate them at a faster rate.
  
  What type of properties qualify for this?
  Any type of property, as long as it’s not your personal residence, it can be commercial, residential and multifamily, office, assisted living, hotels, hospitality, self storage, industrial, shopping malls, golf courses, mobile home parks, etc.
  
  What is the main benefit of doing cost segregation?
  The cashflow. When you have more deductions than you have income, you don’t write a check. We’re not talking about getting free money, what we’re talking about is keeping the money that you made and paying less taxes, or no taxes. In many cases, the main benefit is the cashflow, you’re able to use that money to invest. The second thing is the time value of money because you can take huge deductions early on and make sure that you’re using that money to invest. The time value of money means money today is worth more than it is five years from now. If I were to offer you $50,000 today or $10,000 a year or five years, what would you take?
  
  What is bonus depreciation?
  It used to be a rule that when you developed a new property, you could take 50% of the depreciation of that property in the first year of that new construction. The law changed in that it’s now for any property that you buy, not just new developments. All the depreciation that is less than 20 years (in the example that we gave, the five-year personal property and 15 year land improvements) all of that cost segregation is eligible for bonus depreciation, you can actually take 100% of that depreciation in the first year of ownership, instead of spreading it over five years. You have a choice of 100% or 50%, which really gives you a much added benefit to take, to knock off your entire income tax liability in the first year.
  
  How much would it cost to do a cost segregation study in our example property, 30,000 square feet office that was purchased for $3 million?
  At our firm and for that property, it could cost around $5,000-$6,000.
  
  Yonah Weiss
  https://www.linkedin.com/in/cost-segregation-yonah-weiss/
  yweiss@madisonspecs.com
  (732) 298-9002
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>1db1a730-8ca9-28af-d2ea-cdfbd18d61f9Thu, 18 Jul 2019 10:00:00 -080021:15falsefull119191Making a Case for Self Storage InvestingIn this episode we're learning  why you should invest in self storage, how to select the location to invest, what are the biggest challenges with self storage and how to select and hire the best property manager for your locations. We're interviewing Ryan Gibson, a co-founder of Spartan Investment Group.
  
  You can read the full interview here: https://montecarlorei.com/making-a-case-for-self-storage-investing/
  
  Why should real estate investors invest in self storage?
  Self storage is something that we looked at back in 2016, we made a pivot from investing in residential real estate, we were building condos, new houses, flipping houses, and we landed in self storage for a couple of reasons: 1. We liked how straight forward it was, how operationally easier it was to manage than a multifamily property. We looked at vacancy trends, rent growth, saturation and all the things that people like about self storage. It is also one of the least foreclosed upon asset classes during the last recession.
  
  How do you guys go about deciding where to invest in self storage?
  We focus on 150 MSA’s across the United States. And those MSA’s have a key component of population growth. Population growth is the number one driver of self storage utilization, overall market saturation, job growth, demographics of our ideal consumer, income levels, job placement, migration trends, and we look for cities and areas, or an MSA that are trending positive and have a good outlook for population. We look at rental rates as well. We have a hard time justifying building in certain markets, brand new storage, if the rental rates are, say less than $6 a square foot, it would be difficult to do that.
  
  What are some of the biggest challenges with self storage?
  I would say the number one challenge is finding the right projects. We looked at 880 projects last year, we put out six offers, and we bought three. It's a very institutionalized asset class. A lot of projects that are over $5 million are getting all cash offers, so it’s very difficult to compete with a lot of the institutional capital, and larger players in the market because they have a lower cost of capital than we do. Because we're offering our investors a market rate return on equity and they have a good team of folks that can find the same data that we're finding.
  
  Moving on to property manager, how do you select and hire the best property manager and what do they do all day long?  Some folks will hire third party property management companies like Cubesmart, Extra Space, West Coast Self Storage, Public Storage. They might hire a company like that to come in and do the property management for them, but they're still going to have to hire somebody that works at the desk, that the owner is responsible for covering that expense. The property management companies will take a fee, usually 6% of gross revenue, to manage that facility. We do the property management asset management in house.
  
  What is your second favorite asset class after self storage and why?
  We own an RV park in west Texas and that has been my favorite deal ever. Very similar in characteristics to a mobile home park in that the tenants are there full time and they live there right now, rent is about $800 a month (and utilities are included in that). Not to have a whole lot of amenities and have the lowest entries for housing, we just collect a lot rent and the folks bring in their own RVs and mobile homes, they purchase their own homes, it does well in good times, and in bad times.
  
  Ryan Gibson
  www.spartan-investors.com
  ryan@spartan-investors.com
  --- Support this podcast: In this episode we're learning  why you should invest in self storage, how to select the location to invest, what are the biggest challenges with self storage and how to select and hire the best property manager for your locations. We're interviewing Ryan Gibson, a co-founder of Spartan Investment Group.
  
  You can read the full interview here: https://montecarlorei.com/making-a-case-for-self-storage-investing/
  
  Why should real estate investors invest in self storage?
  Self storage is something that we looked at back in 2016, we made a pivot from investing in residential real estate, we were building condos, new houses, flipping houses, and we landed in self storage for a couple of reasons: 1. We liked how straight forward it was, how operationally easier it was to manage than a multifamily property. We looked at vacancy trends, rent growth, saturation and all the things that people like about self storage. It is also one of the least foreclosed upon asset classes during the last recession.
  
  How do you guys go about deciding where to invest in self storage?
  We focus on 150 MSA’s across the United States. And those MSA’s have a key component of population growth. Population growth is the number one driver of self storage utilization, overall market saturation, job growth, demographics of our ideal consumer, income levels, job placement, migration trends, and we look for cities and areas, or an MSA that are trending positive and have a good outlook for population. We look at rental rates as well. We have a hard time justifying building in certain markets, brand new storage, if the rental rates are, say less than $6 a square foot, it would be difficult to do that.
  
  What are some of the biggest challenges with self storage?
  I would say the number one challenge is finding the right projects. We looked at 880 projects last year, we put out six offers, and we bought three. It's a very institutionalized asset class. A lot of projects that are over $5 million are getting all cash offers, so it’s very difficult to compete with a lot of the institutional capital, and larger players in the market because they have a lower cost of capital than we do. Because we're offering our investors a market rate return on equity and they have a good team of folks that can find the same data that we're finding.
  
  Moving on to property manager, how do you select and hire the best property manager and what do they do all day long?  Some folks will hire third party property management companies like Cubesmart, Extra Space, West Coast Self Storage, Public Storage. They might hire a company like that to come in and do the property management for them, but they're still going to have to hire somebody that works at the desk, that the owner is responsible for covering that expense. The property management companies will take a fee, usually 6% of gross revenue, to manage that facility. We do the property management asset management in house.
  
  What is your second favorite asset class after self storage and why?
  We own an RV park in west Texas and that has been my favorite deal ever. Very similar in characteristics to a mobile home park in that the tenants are there full time and they live there right now, rent is about $800 a month (and utilities are included in that). Not to have a whole lot of amenities and have the lowest entries for housing, we just collect a lot rent and the folks bring in their own RVs and mobile homes, they purchase their own homes, it does well in good times, and in bad times.
  
  Ryan Gibson
  www.spartan-investors.com
  ryan@spartan-investors.com
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>92bd7dcb-08f8-eb39-99fe-506bc919209cThu, 11 Jul 2019 10:00:00 -080017:07falsefull118181Should You Invest in Silicon Valley? What Does the Future of Office Space Look Like? What Happened to Office Spaces During the Last Downturn? In this episode we'll learn if investing Silicon Valley could be a good idea, what happened to office spaces during the last downturn, things an investor should cover when looking at purchasing an office, what types of leases are standard for office space, and what does the future of office space could look like. We're interviewing Eduardo Zepeda, an asset manager and leasing director of a family's holdings, he manages north of $100M in combined assets comprised of multi-tenant office and retail property.
  
  You can read the full interview here: https://montecarlorei.com/should-you-invest-in-silicon-valley-what-does-the-future-of-office-space-look-like-what-happened-to-office-spaces-during-the-last-downturn/
  
  Making a case for investing in Silicon Valley: Why do you like this area? 
  It’s the perfect storm of supply and demand economics where you have a finite fixed amount of land and a very strong demand not only for housing but also for space to occupy, whether it’s office, industrial or just land to develop and improve. The macroeconomic factors for the Bay Area are very compelling, whether you’re looking for a short term value add project with an exit, or a long term hold, there’s a compelling argument in both cases for investing in this area even during this economic times. The challenge is that prices are very lofty.
  
  What was the vacancy rate like during the 2008 recession and what were some of the major issues that the properties that you were managing were facing?
  We were doing deals somewhere in the $20’s/yr/sf, sometimes even in the high teens and there was a lot of inventory space back then. The demand was pretty low, especially compared to now where the vacancy rate in San Francisco is around 5% for office. The demand didn't stay very strong throughout, on a rental rate basis it was quite different than what it is now, from $20/sf back then.
  
  What are offices charging per square foot nowadays?
  It depends on the building type, within our portfolio we have multi-tenant, and class B and C properties. Depending on the part of town and the part of the Financial District, or South of Market, anywhere from the high $40’s/sf/year all the way up to the high $60’s- low $70’s for a class B. For a high rise, you can go anywhere from the mid $70’s-low $80’s all the way up to $100’s or higher, depending on the building and the area. 
  
  What should investors look for when buying an office building? 
  1. Get a working knowledge of the building systems: the HVAC , boilers, chillers, electrical, and those types of systems that depending on the way that the leases are structured could be an expense of the landlord, or they could be expensive to the tenant. 2. Having some working knowledge as to the way that they are operating at that property.
  3. Have a working knowledge as to the different types of leases that are active in the market, or typical for this kind of building. 
  4. Know the difference between a full service gross lease, an industrial gross lease, a net lease, or any variation thereof. That's pretty important because it will dictate how much is going to be an expense to you as a landlord.
  5. If it's a building that has some vacancy, or that has some holes in the leases in the next one to three years - know what the market is doing in order for you to able to accurately predict what you're going to be able to lease those spaces for on a per sf basis.
  
  Eduardo Zepeda
  ez@cma-re.com
  https://www.meetup.com/SFREConnection/
  --- Support this podcast: In this episode we'll learn if investing Silicon Valley could be a good idea, what happened to office spaces during the last downturn, things an investor should cover when looking at purchasing an office, what types of leases are standard for office space, and what does the future of office space could look like. We're interviewing Eduardo Zepeda, an asset manager and leasing director of a family's holdings, he manages north of $100M in combined assets comprised of multi-tenant office and retail property.
  
  You can read the full interview here: https://montecarlorei.com/should-you-invest-in-silicon-valley-what-does-the-future-of-office-space-look-like-what-happened-to-office-spaces-during-the-last-downturn/
  
  Making a case for investing in Silicon Valley: Why do you like this area? 
  It’s the perfect storm of supply and demand economics where you have a finite fixed amount of land and a very strong demand not only for housing but also for space to occupy, whether it’s office, industrial or just land to develop and improve. The macroeconomic factors for the Bay Area are very compelling, whether you’re looking for a short term value add project with an exit, or a long term hold, there’s a compelling argument in both cases for investing in this area even during this economic times. The challenge is that prices are very lofty.
  
  What was the vacancy rate like during the 2008 recession and what were some of the major issues that the properties that you were managing were facing?
  We were doing deals somewhere in the $20’s/yr/sf, sometimes even in the high teens and there was a lot of inventory space back then. The demand was pretty low, especially compared to now where the vacancy rate in San Francisco is around 5% for office. The demand didn't stay very strong throughout, on a rental rate basis it was quite different than what it is now, from $20/sf back then.
  
  What are offices charging per square foot nowadays?
  It depends on the building type, within our portfolio we have multi-tenant, and class B and C properties. Depending on the part of town and the part of the Financial District, or South of Market, anywhere from the high $40’s/sf/year all the way up to the high $60’s- low $70’s for a class B. For a high rise, you can go anywhere from the mid $70’s-low $80’s all the way up to $100’s or higher, depending on the building and the area. 
  
  What should investors look for when buying an office building? 
  1. Get a working knowledge of the building systems: the HVAC , boilers, chillers, electrical, and those types of systems that depending on the way that the leases are structured could be an expense of the landlord, or they could be expensive to the tenant. 2. Having some working knowledge as to the way that they are operating at that property.
  3. Have a working knowledge as to the different types of leases that are active in the market, or typical for this kind of building. 
  4. Know the difference between a full service gross lease, an industrial gross lease, a net lease, or any variation thereof. That's pretty important because it will dictate how much is going to be an expense to you as a landlord.
  5. If it's a building that has some vacancy, or that has some holes in the leases in the next one to three years - know what the market is doing in order for you to able to accurately predict what you're going to be able to lease those spaces for on a per sf basis.
  
  Eduardo Zepeda
  ez@cma-re.com
  https://www.meetup.com/SFREConnection/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>b97d23d3-5aa8-dc19-8556-112f7b4602e4Thu, 27 Jun 2019 19:15:54 -080020:47falsefull117171What are Opportunities Zones, How to Hire the Best Team, What Types of Asset Classes to Invest in Today’s MarketIn this episode we’ll learn how to manage multiple companies at the same time, how to hire and inspire the best people, what types of asset classes and what markets are interesting to invest in today’s market, and we will also learn what are opportunities zones and how you can leverage OZ's in your investments. We’re interviewing Greg Dickerson, a serial entrepreneur, real estate developer, coach and mentor. Over the last 20 years he has bought, developed and sold over $200 million in real estate.

  You can read this full episode here: https://montecarlorei.com/what-are-opportunities-zones-how-to-hire-the-best-team-what-types-of-asset-classes-to-invest-in-todays-market/
  
  How do you make sure that you're successful when you're doing everything from fundraising to investing in all kinds of asset classes? You have done multifamily, retail, medical center, offices, how do you make everything move forward? 
  Education. I didn't go to college but I am very highly self-educated, I've always developed myself personally and professionally. I've never owned one song, only audio books and courses. Business and personal professional development are important in order to accomplish things. You need to be a visionary, a leader. What is it that you're trying to accomplish? Create the vision, communicate that vision in a way that people understand it and can see it even though it's not there. Put together the right team, inspire the results out of that team, delegate, motivate, and lead.
  
  Is now a good time to invest in commercial real estate? What are your favorite markets?
  It’s always a good time to invest in commercial real estate, but it's not always a great time to invest in every asset class. And every market is specific. Everybody says that real estate is local, I call it hyperlocal, real estate is local down to the block of the neighborhood within the city and the subdivision you're investing in. You could say that multifamily is a great, safe place all across the country, which it is, it's the safest bet from a real estate investment standpoint, especially at the low A, high B level. That's an asset class that's probably never going to go away, people need housing, so when you start going down in the B, C, D classes it can get a little risky in certain areas, but they can be slam dunks in other areas.
  
  What are Opportunity Zones, and how can people leverage them within their own investments?
  The Tax and Jobs Act from 2017 gave governors of all the states in the US the ability to designate certain areas as opportunities zones. The idea behind it was to incentivize investment into lower areas, primarily in business and in real estate assets. Each governor was able to go through their state and pick zones within cities of the state as opportunities. It was created to spur investment in businesses and in real estate in lower income, distressed areas.  With opportunity zones, you get to defer capital gains, let's say that you sell stock, art, or property - anything that generates capital gains. You then can invest into an opportunity zone fund, and for the first five years 10% of that gain is a written off. After seven years you get an additional 5%, and an after ten years anything that you make on that gain is tax-free. You can also refinance, sell assets and reinvest in another opportunity zone within a year and roll it over. You could invest $1 million, make $10 million within a year, reinvest that gain and keep on going.
  
  Greg Dickerson
  gregdickerson.com
  Cel: (434) 326-3903

  --- Support this podcast: In this episode we’ll learn how to manage multiple companies at the same time, how to hire and inspire the best people, what types of asset classes and what markets are interesting to invest in today’s market, and we will also learn what are opportunities zones and how you can leverage OZ's in your investments. We’re interviewing Greg Dickerson, a serial entrepreneur, real estate developer, coach and mentor. Over the last 20 years he has bought, developed and sold over $200 million in real estate.

  You can read this full episode here: https://montecarlorei.com/what-are-opportunities-zones-how-to-hire-the-best-team-what-types-of-asset-classes-to-invest-in-todays-market/
  
  How do you make sure that you're successful when you're doing everything from fundraising to investing in all kinds of asset classes? You have done multifamily, retail, medical center, offices, how do you make everything move forward? 
  Education. I didn't go to college but I am very highly self-educated, I've always developed myself personally and professionally. I've never owned one song, only audio books and courses. Business and personal professional development are important in order to accomplish things. You need to be a visionary, a leader. What is it that you're trying to accomplish? Create the vision, communicate that vision in a way that people understand it and can see it even though it's not there. Put together the right team, inspire the results out of that team, delegate, motivate, and lead.
  
  Is now a good time to invest in commercial real estate? What are your favorite markets?
  It’s always a good time to invest in commercial real estate, but it's not always a great time to invest in every asset class. And every market is specific. Everybody says that real estate is local, I call it hyperlocal, real estate is local down to the block of the neighborhood within the city and the subdivision you're investing in. You could say that multifamily is a great, safe place all across the country, which it is, it's the safest bet from a real estate investment standpoint, especially at the low A, high B level. That's an asset class that's probably never going to go away, people need housing, so when you start going down in the B, C, D classes it can get a little risky in certain areas, but they can be slam dunks in other areas.
  
  What are Opportunity Zones, and how can people leverage them within their own investments?
  The Tax and Jobs Act from 2017 gave governors of all the states in the US the ability to designate certain areas as opportunities zones. The idea behind it was to incentivize investment into lower areas, primarily in business and in real estate assets. Each governor was able to go through their state and pick zones within cities of the state as opportunities. It was created to spur investment in businesses and in real estate in lower income, distressed areas.  With opportunity zones, you get to defer capital gains, let's say that you sell stock, art, or property - anything that generates capital gains. You then can invest into an opportunity zone fund, and for the first five years 10% of that gain is a written off. After seven years you get an additional 5%, and an after ten years anything that you make on that gain is tax-free. You can also refinance, sell assets and reinvest in another opportunity zone within a year and roll it over. You could invest $1 million, make $10 million within a year, reinvest that gain and keep on going.
  
  Greg Dickerson
  gregdickerson.com
  Cel: (434) 326-3903

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>ec1c7ed9-37a9-d120-372d-02bc0c69c449Thu, 20 Jun 2019 07:55:53 -080019:31falsefull116161How to Start Real Estate Investing With Zero MoneyIn this episode you’re going to learn how to get started in real estate investing with zero money down. If you’re feeling a little overwhelmed by the fact that you need a lot of money to get started in real estate investing, fear not! There are opportunities out there where you can partner up with people. We interviewed Ellis Hammond to find out how he got started in real estate investing with no money down.

  Read this podcast here: https://montecarlorei.com/how-to-get-started-in-real-estate-investing-with-no-money/
  
  What are some things that you did to get to where you are, and what are some things that you wish you did when you were starting?
  Build your network before you need your network is the best advice I can give to someone who wants to get started into real estate. That’s really how I went from owning no real estate to doing a $2 million deal last year, and we have two deals right now that will be over $15 million in real estate. I found a mentor, and that mentor opened me up to his network and other networks. I showed up at conferences that have people that you want to connect with.
  
  What are some ways that people can get into real estate investing without any money? 
  It’s finding the deals or finding the money. That’s essentially what it comes down to. Which one of those can you begin to play a part in? I think the nice thing about commercial real estate is that it’s a team sport and there are multiple roles within commercial real estate. That’s why I like it. That’s why I really got out of the single family space because commercial real estate allows you to specialize in what your superpower is. What is your superpower? What are you really good at doing? I’m really good at networking. I’m really good at building relationships. 
  
  If our listeners were to raise all of the funds, or raise 50% of the funds for a particular deal, how much would they own of that deal?
  For big commercial deals, the person who raising the capital can normally get paid 2-3% on the money that they raise. If you raised $1 million, you could make 2-3% or right off the get go on that million dollars you bring into the deal. So that’s nice to get some money right away. But you want to be a partner in the deal and with the people that you’re investing with. For syndications there are two sides of the deal: the general partner who’s the sponsor, or the operator, the ones who are putting together the deal. And then there are the investors, which is it called the limited partnership. So you then negotiate for a percentage of the general partnership and the equity so that you have consistent cash flow throughout the life of the project. If you’re raising all of the money, you would look to have about 10% of the deal or 25-40% of the general partnership equity. 
  
  There is another side to this that you could also start with: finding deals. Can you elaborate on that?
  If you don’t like asking people for money, the best thing you can start doing is looking for deals. In this market, if you get really good at finding deals, you’re gold. People will pay to find good deals because good deals are hard to find, especially in this market. This is a super power, it takes a ton of follow up, it takes a ton of detailed work. I tried to do both sides and I just realized that a lot goes into this one. So to get started learning how to find deals, go to a website called listsource.com – it’s a database website where you can filter real estate by asset class. 
  
  Ellis Hammond
  invest@ellishammond.com
  https://www.linkedin.com/in/ellis-hammond-435b40156/

  --- Support this podcast: In this episode you’re going to learn how to get started in real estate investing with zero money down. If you’re feeling a little overwhelmed by the fact that you need a lot of money to get started in real estate investing, fear not! There are opportunities out there where you can partner up with people. We interviewed Ellis Hammond to find out how he got started in real estate investing with no money down.

  Read this podcast here: https://montecarlorei.com/how-to-get-started-in-real-estate-investing-with-no-money/
  
  What are some things that you did to get to where you are, and what are some things that you wish you did when you were starting?
  Build your network before you need your network is the best advice I can give to someone who wants to get started into real estate. That’s really how I went from owning no real estate to doing a $2 million deal last year, and we have two deals right now that will be over $15 million in real estate. I found a mentor, and that mentor opened me up to his network and other networks. I showed up at conferences that have people that you want to connect with.
  
  What are some ways that people can get into real estate investing without any money? 
  It’s finding the deals or finding the money. That’s essentially what it comes down to. Which one of those can you begin to play a part in? I think the nice thing about commercial real estate is that it’s a team sport and there are multiple roles within commercial real estate. That’s why I like it. That’s why I really got out of the single family space because commercial real estate allows you to specialize in what your superpower is. What is your superpower? What are you really good at doing? I’m really good at networking. I’m really good at building relationships. 
  
  If our listeners were to raise all of the funds, or raise 50% of the funds for a particular deal, how much would they own of that deal?
  For big commercial deals, the person who raising the capital can normally get paid 2-3% on the money that they raise. If you raised $1 million, you could make 2-3% or right off the get go on that million dollars you bring into the deal. So that’s nice to get some money right away. But you want to be a partner in the deal and with the people that you’re investing with. For syndications there are two sides of the deal: the general partner who’s the sponsor, or the operator, the ones who are putting together the deal. And then there are the investors, which is it called the limited partnership. So you then negotiate for a percentage of the general partnership and the equity so that you have consistent cash flow throughout the life of the project. If you’re raising all of the money, you would look to have about 10% of the deal or 25-40% of the general partnership equity. 
  
  There is another side to this that you could also start with: finding deals. Can you elaborate on that?
  If you don’t like asking people for money, the best thing you can start doing is looking for deals. In this market, if you get really good at finding deals, you’re gold. People will pay to find good deals because good deals are hard to find, especially in this market. This is a super power, it takes a ton of follow up, it takes a ton of detailed work. I tried to do both sides and I just realized that a lot goes into this one. So to get started learning how to find deals, go to a website called listsource.com – it’s a database website where you can filter real estate by asset class. 
  
  Ellis Hammond
  invest@ellishammond.com
  https://www.linkedin.com/in/ellis-hammond-435b40156/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>a9646cf4-c4fa-c2d7-d799-8d6d569c44d9Thu, 13 Jun 2019 10:00:00 -080018:51falsefull115151What is a Syndication, How to Underwrite Deals for a Recession, What is Replacement CostToday we'll learn what is a real estate syndication, what types of asset classes are safer so we can be prepared when we go into a recession, how do to underwrite and pick deals, as well as what does replacement cost mean. We're interviewing Matt Shamus, the founder of Driven Capital Partners, a real estate private equity firm based in California.  
  
  Read this episode here: https://montecarlorei.com/what-is-a-syndication-how-to-underwrite-deals-what-is-replacement-cost/
  
  What is a syndication?
  A syndication is pooling assets together to achieve something that neither of us could achieve on our own. That term is used very commonly, especially today in real estate investing for a structure where you have the sponsor who is outsourcing the deal, underwriting the deal, packaging it together, and then raising money from individual passive investors, that structure is called syndication. I actually don’t love the term syndication or syndicator, and I don’t really apply that to what we do because it has a bit of a connotation. In fact, one of our investors recently told me that he considers our group a little bit more like an investing club than a syndication, and I think that’s the approach that we’re taking.
  
  Is there a particular asset class that you prefer today?
  “Today” is a very important modifier to the question because we are in May, 2019 and in the middle of a trade war between the United States and China, there’s a lot of uncertainty in the stock market. There’s a lot of uncertainty with regard to when are we going into a recession, and our belief is that we will be entering a recession at some point. What that means as a real estate investor is that you have a choice: Do I stay on the sidelines and see what happens and forgo potential gains for the sake of being “conservative” and waiting it out? Or do I take the approach that everything that I’m investing in, I’m looking at a little bit more closely, specifically through the lens of “we’re going to enter a recession at some point”. Our investors want the benefits of investing in real estate, but they don't have the time or expertise.
  
  Can you elaborate on what does it mean when a property is below replacement cost?
  I’m writing an offer today on an industrial warehouse, it’s 86,000 square feet, it’s mostly warehouse in a great location appealing to someone that needs a distribution center, high height space, which is essentially space that a large truck can back up into and you can stack the merchandise very high so you can maximize the square footage, and also has office space. That combination is very appealing in this particular market. We are looking at buying this property for less than $60 a square foot.

  If I were to build this exact same property on a similar parcel, I couldn’t build it for $60 a foot. I’d have to pay more just to build the property and then I would have a vacant property sitting there waiting to be leased. So the risk associated with the development is meaningful. What we look for is where can we buy something that is below the cost to replace it. That’s one way of determining if it’s undervalued, and it’s one way that a lot of brokers will use if you look at an offering memo. One thing to watch out for is that brokers are salespeople. It’s easy to say that this asset is below replacement cost, but what they will never they tell you is “this actually would be replacement cost, and here are the real numbers that we used”. Below replacement cost is a term that is used very loosely with a lot of brokers.
  
  Matt Shamus
  matt@drivencap.com
  www.drivencap.com

  --- Support this podcast: Today we'll learn what is a real estate syndication, what types of asset classes are safer so we can be prepared when we go into a recession, how do to underwrite and pick deals, as well as what does replacement cost mean. We're interviewing Matt Shamus, the founder of Driven Capital Partners, a real estate private equity firm based in California.  
  
  Read this episode here: https://montecarlorei.com/what-is-a-syndication-how-to-underwrite-deals-what-is-replacement-cost/
  
  What is a syndication?
  A syndication is pooling assets together to achieve something that neither of us could achieve on our own. That term is used very commonly, especially today in real estate investing for a structure where you have the sponsor who is outsourcing the deal, underwriting the deal, packaging it together, and then raising money from individual passive investors, that structure is called syndication. I actually don’t love the term syndication or syndicator, and I don’t really apply that to what we do because it has a bit of a connotation. In fact, one of our investors recently told me that he considers our group a little bit more like an investing club than a syndication, and I think that’s the approach that we’re taking.
  
  Is there a particular asset class that you prefer today?
  “Today” is a very important modifier to the question because we are in May, 2019 and in the middle of a trade war between the United States and China, there’s a lot of uncertainty in the stock market. There’s a lot of uncertainty with regard to when are we going into a recession, and our belief is that we will be entering a recession at some point. What that means as a real estate investor is that you have a choice: Do I stay on the sidelines and see what happens and forgo potential gains for the sake of being “conservative” and waiting it out? Or do I take the approach that everything that I’m investing in, I’m looking at a little bit more closely, specifically through the lens of “we’re going to enter a recession at some point”. Our investors want the benefits of investing in real estate, but they don't have the time or expertise.
  
  Can you elaborate on what does it mean when a property is below replacement cost?
  I’m writing an offer today on an industrial warehouse, it’s 86,000 square feet, it’s mostly warehouse in a great location appealing to someone that needs a distribution center, high height space, which is essentially space that a large truck can back up into and you can stack the merchandise very high so you can maximize the square footage, and also has office space. That combination is very appealing in this particular market. We are looking at buying this property for less than $60 a square foot.

  If I were to build this exact same property on a similar parcel, I couldn’t build it for $60 a foot. I’d have to pay more just to build the property and then I would have a vacant property sitting there waiting to be leased. So the risk associated with the development is meaningful. What we look for is where can we buy something that is below the cost to replace it. That’s one way of determining if it’s undervalued, and it’s one way that a lot of brokers will use if you look at an offering memo. One thing to watch out for is that brokers are salespeople. It’s easy to say that this asset is below replacement cost, but what they will never they tell you is “this actually would be replacement cost, and here are the real numbers that we used”. Below replacement cost is a term that is used very loosely with a lot of brokers.
  
  Matt Shamus
  matt@drivencap.com
  www.drivencap.com

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>c8e56df8-45cf-cb94-f86f-94d1f97d5599Thu, 06 Jun 2019 10:00:00 -080021:48falsefull114141Office Leases: Lease Negotiation Points, What Makes for a Good Landlord, What Does "Base Year" Mean on a LeaseIn this episode we cover what does the base year mean in office leasing, what are specific things that startups want to negotiate on a lease, what happens when a startup goes out of business, LOI’s, lease negotiation & TI’s (also called lease concessions), and lastly, what makes for a good office landlord.
  
  You can read this episode here: https://montecarlorei.com/office-leases-lease-negotiation-points-what-makes-for-a-good-landlord-what-does-base-year-mean-on-a-lease/
  
  For offices, are the leases typically NNN?
  No. It's typically what's called a "full service lease" where you pay your rent, and it's pretty much in all in rent. The landlord covers the utilities, the janitorial,  the operating expenses, and real estate taxes. The way that it works is you get what's called a base year. So let's say we completed our lease in 2019 and we do a three year term. You get a "base year" and 2019 is your first year, you don't need to pay any real estate taxes and operating expenses. But in the following year you are responsible for paying your proportionate share of the increase in operating expenses and real estate taxes. So let's use round numbers, for example let's say that you occupied 10% of a building. The operating expense in real estate taxes were $100 in 2019 and they went up to $200 in 2020, a $100 increase. All you need to pay is your proportionate share of $100, in this case $10. But as you do a long term lease, 7-10 years, it's growing every year, and that number can become significant. So a lot of companies will renegotiate their lease, they will do what's called an extension, or they'll expand and renegotiate the lease to get a brand new base year so that they don't have to incur those costs.
  Has it ever happened that a startup went out of business, and what happened to that contract? What are the recourses for the landlord? 
  They go into what’s called a default and the landlord eventually ends up needing to collect their money. This situation has come up numerous times and what we do is find a new tenant to sublease the space. We market it for sublease, and once you come to an agreement on terms, the landlord will say “Okay, instead of subleasing from this company who has gone bankrupt, we’ll wrap up that lease and do a new direct deal with this new tenant”. So we’re able to bring a new tenant into the space and, by doing that, cut our client out of any rent responsibility moving forward.
  
  What are some specific things that startups want to negotiate in a lease that we haven't covered yet?
  The few things that we've covered so far are the big items such as rent, term, free rent, tenant improvement allowance, and the security deposit. Things we haven't talked about yet are: let's say a landlord is forcing us into a five year deal, but we know we're not going to be able to make it for the full five years. We try to negotiate a termination option where after three years we can terminate with no penalty, or a very small penalty such as two months rent. Another item is sublease rights, a landlord will generally give you the right to sublease, but any profit that you get for that sublease is split 50-50 between the tenant and the landlord since they want to discourage tenants to take space and sublease for a profit. When you're in rapid expansion mode we try to negotiate what's called a right of first refusal, where if a space becomes available in the building, the landlord is required to present it to the startup first at a fair market value.
  
  Reuben Torenberg
  reuben.torenberg@cbre.com
  
  Steffany's Linkedin: https://www.linkedin.com/in/steffbold/
  --- Support this podcast: In this episode we cover what does the base year mean in office leasing, what are specific things that startups want to negotiate on a lease, what happens when a startup goes out of business, LOI’s, lease negotiation & TI’s (also called lease concessions), and lastly, what makes for a good office landlord.
  
  You can read this episode here: https://montecarlorei.com/office-leases-lease-negotiation-points-what-makes-for-a-good-landlord-what-does-base-year-mean-on-a-lease/
  
  For offices, are the leases typically NNN?
  No. It's typically what's called a "full service lease" where you pay your rent, and it's pretty much in all in rent. The landlord covers the utilities, the janitorial,  the operating expenses, and real estate taxes. The way that it works is you get what's called a base year. So let's say we completed our lease in 2019 and we do a three year term. You get a "base year" and 2019 is your first year, you don't need to pay any real estate taxes and operating expenses. But in the following year you are responsible for paying your proportionate share of the increase in operating expenses and real estate taxes. So let's use round numbers, for example let's say that you occupied 10% of a building. The operating expense in real estate taxes were $100 in 2019 and they went up to $200 in 2020, a $100 increase. All you need to pay is your proportionate share of $100, in this case $10. But as you do a long term lease, 7-10 years, it's growing every year, and that number can become significant. So a lot of companies will renegotiate their lease, they will do what's called an extension, or they'll expand and renegotiate the lease to get a brand new base year so that they don't have to incur those costs.
  Has it ever happened that a startup went out of business, and what happened to that contract? What are the recourses for the landlord? 
  They go into what’s called a default and the landlord eventually ends up needing to collect their money. This situation has come up numerous times and what we do is find a new tenant to sublease the space. We market it for sublease, and once you come to an agreement on terms, the landlord will say “Okay, instead of subleasing from this company who has gone bankrupt, we’ll wrap up that lease and do a new direct deal with this new tenant”. So we’re able to bring a new tenant into the space and, by doing that, cut our client out of any rent responsibility moving forward.
  
  What are some specific things that startups want to negotiate in a lease that we haven't covered yet?
  The few things that we've covered so far are the big items such as rent, term, free rent, tenant improvement allowance, and the security deposit. Things we haven't talked about yet are: let's say a landlord is forcing us into a five year deal, but we know we're not going to be able to make it for the full five years. We try to negotiate a termination option where after three years we can terminate with no penalty, or a very small penalty such as two months rent. Another item is sublease rights, a landlord will generally give you the right to sublease, but any profit that you get for that sublease is split 50-50 between the tenant and the landlord since they want to discourage tenants to take space and sublease for a profit. When you're in rapid expansion mode we try to negotiate what's called a right of first refusal, where if a space becomes available in the building, the landlord is required to present it to the startup first at a fair market value.
  
  Reuben Torenberg
  reuben.torenberg@cbre.com
  
  Steffany's Linkedin: https://www.linkedin.com/in/steffbold/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>d1332fbb-2109-b085-0865-82c91b306265Thu, 30 May 2019 15:52:40 -080019:09falsefull113131What Do Startups Need When Leasing an Office SpaceIn this episode, we interview Reuben Torenberg, a commercial real estate broker who specializes in helping startups, technology companies, and venture capital firms find office space in the San Francisco Bay Area and beyond. 
  
  You can read this episode here: https://montecarlorei.com/what-do-startups-look-for-when-leasing-an-office/
  
  What do startups look for when leasing an office?
  Every startup is in rapid growth mode. At the very beginning you don't know exactly what your projections are 12 months out, even six months out. So you are looking for a space to do a few things:
  1. Attract talent.
  2. Manage growth. You don't want to get an office that's too big and be hemorrhaging money.
  3. Staying flexible. It's very hard both in San Francisco and throughout the world to find space that will let you stay flexible as you continue to grow larger, as landlords are looking for three to five year terms.
  
  You have to be creative in how you're able to position your client to stay short term. One of the things you can do is actually get into subleasing. A lot of companies that are growing too quickly or shrinking faster and they'd hope need to offload space for 12 months, 18 months, which tend to be very, very attractive situations for our clients.
  
  Who would be responsible for subleasing that space? The tenant or the landlord?
  The tenant is responsible. They become a sub landlord in that instance, and they put the space in the sublease market, usually at a premium here in San Francisco because it is so attractive to startups. And then once they managed that whole leasing process, they need to get the landlord's consent where they present the sublease to the landlord and the landlord has 30 days to say, yes we would like this new tenant, or no. Another huge thing for startups is being near public transit. Attracting talent in San Francisco has become extremely difficult. They're now looking to the East Bay. There's also a lot of talent down in the South Bay with Stanford, with Berkeley in the East Bay. Being near Caltrain and being near Bart is a huge plus, and rents are much higher near those areas. So startups try and find something in between. Subleasing is one option. 
  
  What are some other things that they look for when leasing an office?
  It all ties into the big main question: will this place help us attract talent? Once you get past that, it goes into a lot of the comfort stuff, so a big one is how many meeting rooms are in this space. A lot of times startups like to be in wide open environment to maximize the amount of people you can fit in, and to endorse collaboration, to have everyone talking, hanging out, help the culture. But everyone at some point needs to enclose themselves in a room to have a private conversation. The question is, are there enough meeting rooms for us to fit? This is frequently a pain point. We have a metric actually for it, and it will vary between companies, but we say that startups should have at least one meeting room for every 7 - 10 employees. So if you have 50 employees, you should get at least five meeting rooms. Another one is size. Can we fit all of our employees for the duration of the term? If this is a three year lease, but we're going to be blowing out of it in a year, do we need to take on more space? Are there enough restrooms?
  
  Reuben Torenberg:
  reuben.torenberg@cbre.com
  Linkedin: https://www.linkedin.com/in/reuben-torenberg-b985b646/
  Twitter: rtorenberg021
  Instagram: rtorenberg021
  --- Support this podcast: In this episode, we interview Reuben Torenberg, a commercial real estate broker who specializes in helping startups, technology companies, and venture capital firms find office space in the San Francisco Bay Area and beyond. 
  
  You can read this episode here: https://montecarlorei.com/what-do-startups-look-for-when-leasing-an-office/
  
  What do startups look for when leasing an office?
  Every startup is in rapid growth mode. At the very beginning you don't know exactly what your projections are 12 months out, even six months out. So you are looking for a space to do a few things:
  1. Attract talent.
  2. Manage growth. You don't want to get an office that's too big and be hemorrhaging money.
  3. Staying flexible. It's very hard both in San Francisco and throughout the world to find space that will let you stay flexible as you continue to grow larger, as landlords are looking for three to five year terms.
  
  You have to be creative in how you're able to position your client to stay short term. One of the things you can do is actually get into subleasing. A lot of companies that are growing too quickly or shrinking faster and they'd hope need to offload space for 12 months, 18 months, which tend to be very, very attractive situations for our clients.
  
  Who would be responsible for subleasing that space? The tenant or the landlord?
  The tenant is responsible. They become a sub landlord in that instance, and they put the space in the sublease market, usually at a premium here in San Francisco because it is so attractive to startups. And then once they managed that whole leasing process, they need to get the landlord's consent where they present the sublease to the landlord and the landlord has 30 days to say, yes we would like this new tenant, or no. Another huge thing for startups is being near public transit. Attracting talent in San Francisco has become extremely difficult. They're now looking to the East Bay. There's also a lot of talent down in the South Bay with Stanford, with Berkeley in the East Bay. Being near Caltrain and being near Bart is a huge plus, and rents are much higher near those areas. So startups try and find something in between. Subleasing is one option. 
  
  What are some other things that they look for when leasing an office?
  It all ties into the big main question: will this place help us attract talent? Once you get past that, it goes into a lot of the comfort stuff, so a big one is how many meeting rooms are in this space. A lot of times startups like to be in wide open environment to maximize the amount of people you can fit in, and to endorse collaboration, to have everyone talking, hanging out, help the culture. But everyone at some point needs to enclose themselves in a room to have a private conversation. The question is, are there enough meeting rooms for us to fit? This is frequently a pain point. We have a metric actually for it, and it will vary between companies, but we say that startups should have at least one meeting room for every 7 - 10 employees. So if you have 50 employees, you should get at least five meeting rooms. Another one is size. Can we fit all of our employees for the duration of the term? If this is a three year lease, but we're going to be blowing out of it in a year, do we need to take on more space? Are there enough restrooms?
  
  Reuben Torenberg:
  reuben.torenberg@cbre.com
  Linkedin: https://www.linkedin.com/in/reuben-torenberg-b985b646/
  Twitter: rtorenberg021
  Instagram: rtorenberg021
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>2c0d90c9-021e-8a43-7f18-ab7117ec7911Thu, 23 May 2019 10:00:00 -080012:01falsefull112121A Review of The Investor Summit at Sea & Lessons LearnedToday we are reviewing the Investors Summit at Sea. I’ll also share a few lessons learned on this cruise that are simply invaluable.
  
  You can read this full episode here: https://montecarlorei.com/review-of-the-investor-summit-at-sea-and-lessons-learned/
  
  Lessons learned specifically for real estate investing:
  – Have a team, management is key, get very good managers.
  – When things go wrong, it’s almost always because you had the wrong people in the wrong chairs.
  – Don’t try to do things that are too small because you cannot afford to get the right people in the right chairs, so go big in order to be able to afford the right people.
  – Really evaluate if you want to get into a tertiary market.
  – Cut your losses early.
  – A market has thousands of submarkets. Just like within your city, there are very good areas and within that very good area, or that upcoming area.
  – Make sure to change your investment strategy if it is reaching a peak.
  – Don’t say I can’t do it. Say, how can I do it? (you can do a joint venture deal, you can get a few partners, etc).
  – Always be building and growing your team.
  – The best time to get started is yesterday.
  – Get mentors and ask them questions that you already think you know the answer to.
  – FHA HUD loans can take a while to get approved, they have heavier fees, but when it’s done, you get a 40 year loan, fixed, non-recourse debt. This is very good for construction loans and refinance loans.
  – Don’t wish for no problems, wish that you get better at solving them (I love it!).
  – Statements, close the mind, questions open it. (Double love it!)
  
  How you can prepare for what is coming in the economy:
  – You should have five uncorrelated assets. For example: real estate, gold, stocks, and a couple of other things.
  – Lock your rates for 10 to 12 years, and get 30 year loans. You should have at least six to 12 months worth of operating expenses as a backup.
  – If you are a syndicator, you should always have cash calls in your paperwork.
  – Underwrite your deals based on historical rent and historical cap rates (rates similar to when we were in a recession back in 2008).
  
  What have I learned about the economy and government:
  Here I encourage you to do your own research to learn more about these topics:
  – The federal government hasn’t been audited. Has anyone thought about that before?
  – Pension funds are America’s greatest retirement crisis in history. State pension funds are not governed.
  – Fidelity Investments has $7 trillion under management, $2 trillion of that is in 401k’s, and their fees are $40 billion per year.
  – Inflation is a form of taxation. The Fed is committed to increase inflation by 2% every year.
  – The money we deposit in the bank is not ours anymore. The bank now owes us that money, this was passed very quietly under the Obama administration.
  – The number one asset in a government bank is student debt. It’s the only thing that you cannot remove in a bankruptcy.
  – If you want to revoke your citizenship here in the US, you owe the government three times your income. and if you owe $50,000 in taxes or more, they may revoke your passport.
  – At a $100,000 income, if you pay 40% taxes, and if you put your remaining money ($60,000) at a 12% return, it will take you 5.5 years to get that money back to $100,000!
  
  The next Summit will be from June 11th -20th, 2020.
  Sign up for the Summit at Sea here: https://realestateguysradio.com/summit/
  Make sure to mention Steffany Boldrini to get $100 credit in the ship, which can be very useful for internet usage.
  --- Support this podcast: Today we are reviewing the Investors Summit at Sea. I’ll also share a few lessons learned on this cruise that are simply invaluable.
  
  You can read this full episode here: https://montecarlorei.com/review-of-the-investor-summit-at-sea-and-lessons-learned/
  
  Lessons learned specifically for real estate investing:
  – Have a team, management is key, get very good managers.
  – When things go wrong, it’s almost always because you had the wrong people in the wrong chairs.
  – Don’t try to do things that are too small because you cannot afford to get the right people in the right chairs, so go big in order to be able to afford the right people.
  – Really evaluate if you want to get into a tertiary market.
  – Cut your losses early.
  – A market has thousands of submarkets. Just like within your city, there are very good areas and within that very good area, or that upcoming area.
  – Make sure to change your investment strategy if it is reaching a peak.
  – Don’t say I can’t do it. Say, how can I do it? (you can do a joint venture deal, you can get a few partners, etc).
  – Always be building and growing your team.
  – The best time to get started is yesterday.
  – Get mentors and ask them questions that you already think you know the answer to.
  – FHA HUD loans can take a while to get approved, they have heavier fees, but when it’s done, you get a 40 year loan, fixed, non-recourse debt. This is very good for construction loans and refinance loans.
  – Don’t wish for no problems, wish that you get better at solving them (I love it!).
  – Statements, close the mind, questions open it. (Double love it!)
  
  How you can prepare for what is coming in the economy:
  – You should have five uncorrelated assets. For example: real estate, gold, stocks, and a couple of other things.
  – Lock your rates for 10 to 12 years, and get 30 year loans. You should have at least six to 12 months worth of operating expenses as a backup.
  – If you are a syndicator, you should always have cash calls in your paperwork.
  – Underwrite your deals based on historical rent and historical cap rates (rates similar to when we were in a recession back in 2008).
  
  What have I learned about the economy and government:
  Here I encourage you to do your own research to learn more about these topics:
  – The federal government hasn’t been audited. Has anyone thought about that before?
  – Pension funds are America’s greatest retirement crisis in history. State pension funds are not governed.
  – Fidelity Investments has $7 trillion under management, $2 trillion of that is in 401k’s, and their fees are $40 billion per year.
  – Inflation is a form of taxation. The Fed is committed to increase inflation by 2% every year.
  – The money we deposit in the bank is not ours anymore. The bank now owes us that money, this was passed very quietly under the Obama administration.
  – The number one asset in a government bank is student debt. It’s the only thing that you cannot remove in a bankruptcy.
  – If you want to revoke your citizenship here in the US, you owe the government three times your income. and if you owe $50,000 in taxes or more, they may revoke your passport.
  – At a $100,000 income, if you pay 40% taxes, and if you put your remaining money ($60,000) at a 12% return, it will take you 5.5 years to get that money back to $100,000!
  
  The next Summit will be from June 11th -20th, 2020.
  Sign up for the Summit at Sea here: https://realestateguysradio.com/summit/
  Make sure to mention Steffany Boldrini to get $100 credit in the ship, which can be very useful for internet usage.
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>a35d32a0-3bfe-2eb5-7458-a25922910462Thu, 16 May 2019 10:00:00 -080020:51falsefull111111Retail Investing Strategy & Why Be Optimistic About RetailToday we interview Adam Carswell, a Director with Concordia Realty and a Business Development Manager with Asym Capital. He focuses on retail, mobile home parks and self storage. 

  You can read the full interview here:  https://montecarlorei.com/retail-investing-strategy-why-be-optimistic-about-retail/

  What is your business model? Why do you guys invest in the properties that you invest in? What is your strategy?
  My business partners at each firm go about things in different ways. Starting with Asym Capital, Hunter Thompson (the host of the Cashflow Connections Real Estate Podcast) focuses more on the syndication side of things, we look to partner with experienced operators, and as you can see with our track record, we really take our due diligence with operators and sponsors seriously. The level of due diligence that we do, not only on the asset or the deal that we're going into, but on our sponsor at underwriting is literally what I would call next level. And that's one thing that I've been fortunate to be in an environment like that, with someone who is this diligent.

  Transitioning to Concordia Realty and Michael flight, we are retail focused, shopping center focused, and we look for opportunities to add value to shopping centers anywhere across the US. We normally will stay away from primary markets, but we do like secondary and tertiary markets. We like for our shopping centers to have a grocery store as an anchor, and at least one, and sometimes two discount stores in the plaza as well. So that could be a Family Dollar, Dollar Tree, Dollar General, etc. Drugstores are always good too: CVS, Walgreens. If we see a shopping center that fits that mold and is less than a hundred dollars per square foot, we will take a closer look at it, put it through our financial model, make assumptions and see if it will be a good fit for us and our investors. 

  Can you share with us why are you optimistic about retail nowadays?
  The first reason is that Amazon invested $13.7 billion into brick and mortar. That's a lot of money! And a company like Amazon has a lot of data that they have access to, and the amount of information that they have access to is also next level. There are very few people that can make a move like that. Sears is also doing a few things in retail.

  The second reason is when you look at life in general, and you look at trends, and you look at things that people gravitate towards, retail has had its moment of super success and it's had its moments of no success. Kind of like what we're going through right now, but it's all cyclical. Retail has been around since the Roman Agora. It just evolves and takes a new shape and a new form. You had the general store in the 1900's, and then you had Sears catalog, which killed that general store. But then Sears did brick and mortar after the catalog with all their department stores. Amazon is like the new catalog that came out and kind of killed the brick and mortar movement. But again, it's, it's just very cyclical.

  Right now is the perfect time to start at least researching and learning as much as you can about retail real estate because it is going to make a comeback nationally, and it's not going anywhere. It's just going to evolve.
  
  Contact Adam Carswell here:
  carswell.io
  adam@carswell.com 
  iTunes: https://podcasts.apple.com/us/podcast/dream-chasers/id1441685534
  Spotify: https://open.spotify.com/show/0fqzz3iJS2uARrz4N6dlmN?si=1Yjisi-JSRK_1vRyU34JWA

  --- Support this podcast: Today we interview Adam Carswell, a Director with Concordia Realty and a Business Development Manager with Asym Capital. He focuses on retail, mobile home parks and self storage. 

  You can read the full interview here:  https://montecarlorei.com/retail-investing-strategy-why-be-optimistic-about-retail/

  What is your business model? Why do you guys invest in the properties that you invest in? What is your strategy?
  My business partners at each firm go about things in different ways. Starting with Asym Capital, Hunter Thompson (the host of the Cashflow Connections Real Estate Podcast) focuses more on the syndication side of things, we look to partner with experienced operators, and as you can see with our track record, we really take our due diligence with operators and sponsors seriously. The level of due diligence that we do, not only on the asset or the deal that we're going into, but on our sponsor at underwriting is literally what I would call next level. And that's one thing that I've been fortunate to be in an environment like that, with someone who is this diligent.

  Transitioning to Concordia Realty and Michael flight, we are retail focused, shopping center focused, and we look for opportunities to add value to shopping centers anywhere across the US. We normally will stay away from primary markets, but we do like secondary and tertiary markets. We like for our shopping centers to have a grocery store as an anchor, and at least one, and sometimes two discount stores in the plaza as well. So that could be a Family Dollar, Dollar Tree, Dollar General, etc. Drugstores are always good too: CVS, Walgreens. If we see a shopping center that fits that mold and is less than a hundred dollars per square foot, we will take a closer look at it, put it through our financial model, make assumptions and see if it will be a good fit for us and our investors. 

  Can you share with us why are you optimistic about retail nowadays?
  The first reason is that Amazon invested $13.7 billion into brick and mortar. That's a lot of money! And a company like Amazon has a lot of data that they have access to, and the amount of information that they have access to is also next level. There are very few people that can make a move like that. Sears is also doing a few things in retail.

  The second reason is when you look at life in general, and you look at trends, and you look at things that people gravitate towards, retail has had its moment of super success and it's had its moments of no success. Kind of like what we're going through right now, but it's all cyclical. Retail has been around since the Roman Agora. It just evolves and takes a new shape and a new form. You had the general store in the 1900's, and then you had Sears catalog, which killed that general store. But then Sears did brick and mortar after the catalog with all their department stores. Amazon is like the new catalog that came out and kind of killed the brick and mortar movement. But again, it's, it's just very cyclical.

  Right now is the perfect time to start at least researching and learning as much as you can about retail real estate because it is going to make a comeback nationally, and it's not going anywhere. It's just going to evolve.
  
  Contact Adam Carswell here:
  carswell.io
  adam@carswell.com 
  iTunes: https://podcasts.apple.com/us/podcast/dream-chasers/id1441685534
  Spotify: https://open.spotify.com/show/0fqzz3iJS2uARrz4N6dlmN?si=1Yjisi-JSRK_1vRyU34JWA

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>d80169e5-087c-47b0-f131-1a4b4ed0e484Fri, 10 May 2019 10:00:00 -080015:38falsefull110101Lease Negotiation Points for National Tenants, LOI’s, What Happens When a Tenant Goes Dark (Part 2 of 2)Today we’re interviewing James Chung, he is the Executive Managing Director and Managing Principal for the Western US for Cushman & Wakefield's Retail platform. He has been with the company for 15 years and has worked with over 30 national tenants and over 9 million sf of retail across the Bay Area in Silicon Valley. Some of his clients are: AT&T, Chase Bank, Adidas, In&Out Burger, and Sur La Table.

  Read the full interview here: https://montecarlorei.com/lease-negotiation-points-for-national-tenants-lois-what-happens-when-a-tenant-goes-dark-part-2-of-2/

  In terms of leasing retail space to a national tenant, what makes a national tenant want to lease a particular space?
  Every tenant has a different purpose, and each tenant also has a different requirement for the optimal environment for which they can thrive on, and we are often involved in developing a strategy for them in our market. For example, some tenants only want to lease in grocery anchored shopping centers, and they only want to look at a Safeway or Whole Foods anchored center (or the like caliber). Or we could be working with a 100,000 sf box tenant who needs a certain amount of land, they need access to major freeways, and they need the demographic to be above a certain threshold within a 1 – 3 – 5 mile radius ring area. Or we could be working with food tenants who just want to be on downtown, street front environments where they want to be part of a community, there is a lot of foot traffic, and they don’t want to be in a shopping center. In order to help them position themselves in the market it depends so much on the tenant and their process. We also provide analytics on anywhere from psychographic, to demographics, to data on their competitors and sales volume, so there’s a lot of information that goes into the analysis of an opportunity and while one person’s success or failure won’t dictate the success or failure of the tenant at hand, it at least gives a certain starting point of who has done what in a particular market. The appetite for growth is so unique to each tenant that it depends on their requirements, some people are positioning for public events, some are repositioning the market, some people are closing stores, and only want to combine units, so each requirement is truly unique, which makes our job unique. James likes the work he does with a lot of household names that we see, and being able to walk in the stores, shop at them, and eat at them after completing the process. The deal cycles may take a few months to a few years and it’s fascinating when he sees the body of work in the form of storefronts, or a restaurant as a living organism since it creates jobs, it is feeding people, or simply seeing people buying clothes, it’s very rewarding to him and some of the reasons that it attracted him to retail.

  Once we’re past the LOI Are they going to try to renegotiate the price when the lawyers get involved?
  Typically no, it is assumed that the business items have been agreed upon, and at that point you’re only negotiating the legal language.

  What are some deal-breakers for national tenants that we as investors should be aware of?
  It depends on how bad they want the site. For example, for a lot of landlords, termination clauses are deal breakers, that means early kick out language and things like that, but ultimately everything is negotiable, so the deal breakers will be dictated by the opportunity and the players at the table, unfortunately there is no standard there.

  Contact James Chung here: http://www.cushmanwakefield.com/en/people/james-chung

  --- Support this podcast: Today we’re interviewing James Chung, he is the Executive Managing Director and Managing Principal for the Western US for Cushman & Wakefield's Retail platform. He has been with the company for 15 years and has worked with over 30 national tenants and over 9 million sf of retail across the Bay Area in Silicon Valley. Some of his clients are: AT&T, Chase Bank, Adidas, In&Out Burger, and Sur La Table.

  Read the full interview here: https://montecarlorei.com/lease-negotiation-points-for-national-tenants-lois-what-happens-when-a-tenant-goes-dark-part-2-of-2/

  In terms of leasing retail space to a national tenant, what makes a national tenant want to lease a particular space?
  Every tenant has a different purpose, and each tenant also has a different requirement for the optimal environment for which they can thrive on, and we are often involved in developing a strategy for them in our market. For example, some tenants only want to lease in grocery anchored shopping centers, and they only want to look at a Safeway or Whole Foods anchored center (or the like caliber). Or we could be working with a 100,000 sf box tenant who needs a certain amount of land, they need access to major freeways, and they need the demographic to be above a certain threshold within a 1 – 3 – 5 mile radius ring area. Or we could be working with food tenants who just want to be on downtown, street front environments where they want to be part of a community, there is a lot of foot traffic, and they don’t want to be in a shopping center. In order to help them position themselves in the market it depends so much on the tenant and their process. We also provide analytics on anywhere from psychographic, to demographics, to data on their competitors and sales volume, so there’s a lot of information that goes into the analysis of an opportunity and while one person’s success or failure won’t dictate the success or failure of the tenant at hand, it at least gives a certain starting point of who has done what in a particular market. The appetite for growth is so unique to each tenant that it depends on their requirements, some people are positioning for public events, some are repositioning the market, some people are closing stores, and only want to combine units, so each requirement is truly unique, which makes our job unique. James likes the work he does with a lot of household names that we see, and being able to walk in the stores, shop at them, and eat at them after completing the process. The deal cycles may take a few months to a few years and it’s fascinating when he sees the body of work in the form of storefronts, or a restaurant as a living organism since it creates jobs, it is feeding people, or simply seeing people buying clothes, it’s very rewarding to him and some of the reasons that it attracted him to retail.

  Once we’re past the LOI Are they going to try to renegotiate the price when the lawyers get involved?
  Typically no, it is assumed that the business items have been agreed upon, and at that point you’re only negotiating the legal language.

  What are some deal-breakers for national tenants that we as investors should be aware of?
  It depends on how bad they want the site. For example, for a lot of landlords, termination clauses are deal breakers, that means early kick out language and things like that, but ultimately everything is negotiable, so the deal breakers will be dictated by the opportunity and the players at the table, unfortunately there is no standard there.

  Contact James Chung here: http://www.cushmanwakefield.com/en/people/james-chung

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>958f5ac1-f7c2-9585-ae1e-726d70034464Mon, 06 May 2019 01:05:45 -080017:35falsefull1991Leasing Retail Property to National Tenants and What to Look for During Due Diligence (Part 1 of 2)Today we’re interviewing James Chung, he is the Executive Managing Director and Managing Principal for the Western US for Cushman & Wakefield's Retail platform. He has been with the company for 15 years and has worked with over 30 national tenants and over 9 million sf of retail across the Bay Area in Silicon Valley. Some of his clients are: AT&T, Chase Bank, Adidas, In&Out Burger, and Sur La Table.

  Read the full interview here: https://montecarlorei.com/leasing-retail-property-to-national-tenants-and-what-to-look-for-during-due-diligence-part-1-of-2/

  Tips for Listing Retail Properties for Lease and What to Charge Tenants per Square Foot
  First you need to understand the health of the shopping center, and one way to do that is to understand the health ratio of the tenants. The health ratio is the relationship between gross sales and total occupancy cost. Then go through the health ratio tenant by tenant, and understand if the rent they're paying is equitable to their sales performance. The challenge with pricing is that geography will often dictate pricing. However, you can have an asset next door to you charging half the rent! Part of that reason is co-tenancy, part of it is how updated the center is, part of it is who anchors the center, as well as how accessible the center is. Retail is not commoditized in the way where we can say "By virtue of being on this block or that block, your rent should be X", it's like when you are getting comps for a home, the price/sf in that area gives you an indication, but it is within 10 to 20 to 30% of where things could be, depending on the home itself. Block-by-block can change dramatically. Are the tenants in place at highest and best use for the positions that they are in the shopping center? What are the lease expiration dates, who's lease is coming up and when, who is healthy or not, where we could reposition tenants, etc.

  What are Good Types of Tenants to Have in Your Center?
  It depends on the opportunity, if it's a neighborhood shopping center, the most coveted asset class would be a grocery anchored shopping center. One of the most desirable investment opportunities for people, especially in the Bay Area are grocery-anchored centers in the retail space. If you're in any neighborhood, if there is a strong national grocery tenant who is the hub of the center - that is typically the most desirable. Besides that, there are lots of asset classes like malls, lifestyle centers, outlet malls, and so many different types of shopping centers, but if he had to pick one, he would probably say grocery anchored.

  How Can We Make Money in Retail When the Cap Rates Are so Low in This Market, and What Should We Look For in a Deal?
  Low cap rates are actually not necessarily a bad thing if the income on the property is under market. Even if you're paying 3.5% cap on a deal but the rent is 50% of what it should be, that's when market intelligence comes into play, and understanding how things are being underwritten. There is currently a compression in cap rates just by virtue of geography and being in Silicon Valley, but there still are great opportunities out there, you just may not find them listed openly. It's about understanding how to unlock the value in whatever asset you're looking at because there are many ways to skin the cat, and oftentimes people are looking at it very one-dimensionally, when in fact there may be multiple ways to create value.
  
  Contact James Chung here: http://www.cushmanwakefield.com/en/people/james-chung

  --- Support this podcast: Today we’re interviewing James Chung, he is the Executive Managing Director and Managing Principal for the Western US for Cushman & Wakefield's Retail platform. He has been with the company for 15 years and has worked with over 30 national tenants and over 9 million sf of retail across the Bay Area in Silicon Valley. Some of his clients are: AT&T, Chase Bank, Adidas, In&Out Burger, and Sur La Table.

  Read the full interview here: https://montecarlorei.com/leasing-retail-property-to-national-tenants-and-what-to-look-for-during-due-diligence-part-1-of-2/

  Tips for Listing Retail Properties for Lease and What to Charge Tenants per Square Foot
  First you need to understand the health of the shopping center, and one way to do that is to understand the health ratio of the tenants. The health ratio is the relationship between gross sales and total occupancy cost. Then go through the health ratio tenant by tenant, and understand if the rent they're paying is equitable to their sales performance. The challenge with pricing is that geography will often dictate pricing. However, you can have an asset next door to you charging half the rent! Part of that reason is co-tenancy, part of it is how updated the center is, part of it is who anchors the center, as well as how accessible the center is. Retail is not commoditized in the way where we can say "By virtue of being on this block or that block, your rent should be X", it's like when you are getting comps for a home, the price/sf in that area gives you an indication, but it is within 10 to 20 to 30% of where things could be, depending on the home itself. Block-by-block can change dramatically. Are the tenants in place at highest and best use for the positions that they are in the shopping center? What are the lease expiration dates, who's lease is coming up and when, who is healthy or not, where we could reposition tenants, etc.

  What are Good Types of Tenants to Have in Your Center?
  It depends on the opportunity, if it's a neighborhood shopping center, the most coveted asset class would be a grocery anchored shopping center. One of the most desirable investment opportunities for people, especially in the Bay Area are grocery-anchored centers in the retail space. If you're in any neighborhood, if there is a strong national grocery tenant who is the hub of the center - that is typically the most desirable. Besides that, there are lots of asset classes like malls, lifestyle centers, outlet malls, and so many different types of shopping centers, but if he had to pick one, he would probably say grocery anchored.

  How Can We Make Money in Retail When the Cap Rates Are so Low in This Market, and What Should We Look For in a Deal?
  Low cap rates are actually not necessarily a bad thing if the income on the property is under market. Even if you're paying 3.5% cap on a deal but the rent is 50% of what it should be, that's when market intelligence comes into play, and understanding how things are being underwritten. There is currently a compression in cap rates just by virtue of geography and being in Silicon Valley, but there still are great opportunities out there, you just may not find them listed openly. It's about understanding how to unlock the value in whatever asset you're looking at because there are many ways to skin the cat, and oftentimes people are looking at it very one-dimensionally, when in fact there may be multiple ways to create value.
  
  Contact James Chung here: http://www.cushmanwakefield.com/en/people/james-chung

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>ac317619-e66b-0b8c-257b-1f19359bfaebThu, 25 Apr 2019 10:00:00 -080017:10falsefull1881My First Commercial Real Estate Offer: What Happened (Part 3 of 3)In this and final episode, I'll go over the financials and how I made the decision to move forward (or not!) with the purchase, and then we'll come to a conclusion at the end.
  
  You can read the entire episode here: https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-3-of-3/
  
  When we made an offer on this theater that had been abandoned for 30 years, we had three options in mind:
  1. Do a very basic remodel and sell it.
  2. Go all the way with the remodel, bring the property up to an impeccable state, and run it as a business: running events such as corporate events, weddings, parties, etc.
  3. Remodel as much as we should, rent it out to a tenant, and decide then if we would sell it or keep it.
  

  Since we were unsure how the economy was going to go by the time the construction was done, we had to be very conservative. At the time of purchase, the cap rates were at around 6% for the area, and we wanted to think ahead and in case the economy took a hit, so we also ran the numbers at an 8% cap rate. Why? When the economy tanks, cap rates to go up because people are able to buy less property (because interest rates are higher and banks are more conservative), and there are more "discounts" happening (because less people are buying), that's why we had to calculate an increase of 2% in the cap rate, just in case that there be something going on in the economy by the time that the property was fully remodeled. This is a very important calculation for all of us at this time in the economy.

  Calculation breakdown for construction costs:
  Construction costs: the best case scenario was $780,000 of renovation costs, the medium case scenario was $1,000,000 of renovation costs, and the worst case scenario was $1.5M of renovation costs, plus the purchase price of $430,000. At the worst case scenario, we could have ended up with almost $2M in total costs, in which case we’d definitely have to sell above that number.

  Options for what to do after renovations, and their associated costs:
  1. With our first option of doing the very basic remodel of $780,000 of minimum renovation and selling the property for a worst case scenario of 8% cap, we would be making around $200,000 – at this number it was not worth the headache for us.
  2. The number two option was to remodel incredibly well and run it as a business and do events. For this option, I contacted quite a few events places in the area and I found one place that was very comparable to ours. They were charging around $5,500/event which included security, tables, chairs, linen, staff, water bill, electricity bill. I estimated that out of that $5,500 we would probably end up keeping around $2,000-$3,000 per night. In the worst case scenario we would rent it for 40 nights per year, and in the best case scenario we would rent it for 60 nights per year. I was also adding a revenue for a church to hold services on Sundays for a few weekends during the year. At the end of the calculations, our net income on the worst worst case scenario would have been around $110,000/year, in the best-case scenario would have been around $160,000/year, however this was very conservative at a net revenue of $2,000/night.
  
  Out of these three options, we were calculating the least amount of construction costs that we were going to incur, as well as the highest amount of construction costs. Because we didn’t know exactly how much the construction cost would end up being until we started the construction, we had to understand the minimum cost, and the maximum costs we could end up incurring.

  --- Support this podcast: In this and final episode, I'll go over the financials and how I made the decision to move forward (or not!) with the purchase, and then we'll come to a conclusion at the end.
  
  You can read the entire episode here: https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-3-of-3/
  
  When we made an offer on this theater that had been abandoned for 30 years, we had three options in mind:
  1. Do a very basic remodel and sell it.
  2. Go all the way with the remodel, bring the property up to an impeccable state, and run it as a business: running events such as corporate events, weddings, parties, etc.
  3. Remodel as much as we should, rent it out to a tenant, and decide then if we would sell it or keep it.
  

  Since we were unsure how the economy was going to go by the time the construction was done, we had to be very conservative. At the time of purchase, the cap rates were at around 6% for the area, and we wanted to think ahead and in case the economy took a hit, so we also ran the numbers at an 8% cap rate. Why? When the economy tanks, cap rates to go up because people are able to buy less property (because interest rates are higher and banks are more conservative), and there are more "discounts" happening (because less people are buying), that's why we had to calculate an increase of 2% in the cap rate, just in case that there be something going on in the economy by the time that the property was fully remodeled. This is a very important calculation for all of us at this time in the economy.

  Calculation breakdown for construction costs:
  Construction costs: the best case scenario was $780,000 of renovation costs, the medium case scenario was $1,000,000 of renovation costs, and the worst case scenario was $1.5M of renovation costs, plus the purchase price of $430,000. At the worst case scenario, we could have ended up with almost $2M in total costs, in which case we’d definitely have to sell above that number.

  Options for what to do after renovations, and their associated costs:
  1. With our first option of doing the very basic remodel of $780,000 of minimum renovation and selling the property for a worst case scenario of 8% cap, we would be making around $200,000 – at this number it was not worth the headache for us.
  2. The number two option was to remodel incredibly well and run it as a business and do events. For this option, I contacted quite a few events places in the area and I found one place that was very comparable to ours. They were charging around $5,500/event which included security, tables, chairs, linen, staff, water bill, electricity bill. I estimated that out of that $5,500 we would probably end up keeping around $2,000-$3,000 per night. In the worst case scenario we would rent it for 40 nights per year, and in the best case scenario we would rent it for 60 nights per year. I was also adding a revenue for a church to hold services on Sundays for a few weekends during the year. At the end of the calculations, our net income on the worst worst case scenario would have been around $110,000/year, in the best-case scenario would have been around $160,000/year, however this was very conservative at a net revenue of $2,000/night.
  
  Out of these three options, we were calculating the least amount of construction costs that we were going to incur, as well as the highest amount of construction costs. Because we didn’t know exactly how much the construction cost would end up being until we started the construction, we had to understand the minimum cost, and the maximum costs we could end up incurring.

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>923ea4d4-b373-4c3a-b0b0-b792c33d3b05Thu, 18 Apr 2019 10:00:00 -080016:51falsefull1771My First Commercial Real Estate Offer: What Happened (Part 2 of 3)In this episode I'm going to share the things that we had to do on our own during the due diligence process of my first offer, as well as the things that our attorney looked at and objected to on the title report.
  
  Read the full details here: https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-2-of-3/

  What did we on our own:
  1. Checked Geotracker which is a website to see if there is contamination near the property. This helps us understand what our Phase I report will probably look like. The Phase I report is an environmental report that costs around $3,000-$4,000 and that you must do in order to see if the ground of the property is contaminated. If it is contaminated, it’s going to be very costly to decontaminate the property, and the city will make sure that you eventually decontaminate the grounds. It’s very important to know if your property is contaminated or not. When you search Geotracker, you’re able to have a preliminary idea if it is contaminated or not, based on existing data.
  2. Checked the current assessed value of the property to see how much taxes they were paying.
  3. Reached out to the City Department Services Division, and the Community Development Division and asked to see if there were any approved permits for the property. I also had to find out information on zoning in the downtown area to see if we could do what we wanted to or not.
  4. Because we were potentially going to run this as a business and do events in the property, I had to check prices for the following: audio and visual installation, new chairs, how much it would cost to level the floor, how to dispose of the existing chairs (could we sell it or not?). I also had to find out how much we could charge per event and the costs associated with that (tables, catering, security, electricity, water, etc).

  Reports that we paid for during the due diligence process, and the contractors that we had come by to give us quotes:
  1. Phase I Environmental report: the report came out clean (as we expected after checking Geotracker).
  2. Roof survey: we found out that it was going to cost us around $127,000 for a new roof since the existing roof already had three layers on it, and we could not add another layer. We had to redo the roof from scratch.
  3. Structural engineer: we had one come by to assess the structural damage and do a shear wall test – this meant that he was going to test how strong or how weak the wall was and he was going to tell us if we had to redo the wall entirely, or just reinforce it.
  4. Architect: the architect came over to assess some of the costs that we were going to incur during the renovation.
  5. I had to find a person that was working at Calwater (California Water Service) in order to find out where there was a water source for the building. Also, where was the line, and if there were fire hydrants near the property. During this process I learned that in California the businesses are the ones who have to pay for installing a public fire hydrant if the property does not have one nearby! This alone can cost at least $50,000. We had to understand how much it would cost for us to pull in water for the fire sprinklers because the property was not up to code and we would have to install fire sprinklers.
  6. Fire sprinkler contractor: he came over to give us a quote on how much it would cost to install the fire sprinklers. We ended up finding out that we would have to bring water from the back of the building to the front, and that was going to cost quite a lot of money (I believe it was around $100,000).

  --- Support this podcast: In this episode I'm going to share the things that we had to do on our own during the due diligence process of my first offer, as well as the things that our attorney looked at and objected to on the title report.
  
  Read the full details here: https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-2-of-3/

  What did we on our own:
  1. Checked Geotracker which is a website to see if there is contamination near the property. This helps us understand what our Phase I report will probably look like. The Phase I report is an environmental report that costs around $3,000-$4,000 and that you must do in order to see if the ground of the property is contaminated. If it is contaminated, it’s going to be very costly to decontaminate the property, and the city will make sure that you eventually decontaminate the grounds. It’s very important to know if your property is contaminated or not. When you search Geotracker, you’re able to have a preliminary idea if it is contaminated or not, based on existing data.
  2. Checked the current assessed value of the property to see how much taxes they were paying.
  3. Reached out to the City Department Services Division, and the Community Development Division and asked to see if there were any approved permits for the property. I also had to find out information on zoning in the downtown area to see if we could do what we wanted to or not.
  4. Because we were potentially going to run this as a business and do events in the property, I had to check prices for the following: audio and visual installation, new chairs, how much it would cost to level the floor, how to dispose of the existing chairs (could we sell it or not?). I also had to find out how much we could charge per event and the costs associated with that (tables, catering, security, electricity, water, etc).

  Reports that we paid for during the due diligence process, and the contractors that we had come by to give us quotes:
  1. Phase I Environmental report: the report came out clean (as we expected after checking Geotracker).
  2. Roof survey: we found out that it was going to cost us around $127,000 for a new roof since the existing roof already had three layers on it, and we could not add another layer. We had to redo the roof from scratch.
  3. Structural engineer: we had one come by to assess the structural damage and do a shear wall test – this meant that he was going to test how strong or how weak the wall was and he was going to tell us if we had to redo the wall entirely, or just reinforce it.
  4. Architect: the architect came over to assess some of the costs that we were going to incur during the renovation.
  5. I had to find a person that was working at Calwater (California Water Service) in order to find out where there was a water source for the building. Also, where was the line, and if there were fire hydrants near the property. During this process I learned that in California the businesses are the ones who have to pay for installing a public fire hydrant if the property does not have one nearby! This alone can cost at least $50,000. We had to understand how much it would cost for us to pull in water for the fire sprinklers because the property was not up to code and we would have to install fire sprinklers.
  6. Fire sprinkler contractor: he came over to give us a quote on how much it would cost to install the fire sprinklers. We ended up finding out that we would have to bring water from the back of the building to the front, and that was going to cost quite a lot of money (I believe it was around $100,000).

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>7148e3f6-c5b4-23c4-0bb1-06b4c5e7cecfFri, 12 Apr 2019 10:00:00 -080011:50falsefull1661My First Commercial Real Estate Offer: What Happened (Part 1 of 3)In this episode I’ll go over my very first offer (which happened about 4 months into my real estate education).  You can read the process here: https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-1-of-3/
  
  This will be broken down into a few episodes because it’s going to be a detailed explanation from beginning to end, and it will be as follows:
  1. How did we decide to make an offer on this property
  2. What did we ask the real estate agent to send us during the due diligence process
  3. Are we running this as a business or selling after remodeling, plus all the financial calculations
  4. Which items our attorney looked at and objected to from the title report
  5. What ended up happening and conclusion
     
  
  

  Things to note on the offer agreement
  We used the standard commercial offer agreement, and as noted above, we had to give the seller all of the inspections if we didn’t end up buying the property, so they could give them to the next buyer. A few other things that I highlighted on the purchase agreement were: 1. We needed to deliver the removal of contingencies or cancel the agreement within those 45 days, 2. If there was any problem with his purchase, we would have to resolve it through arbitration, 3. Both buyer and seller pay for escrow fees, the seller pays for County transfer fees, the seller pays for the city transfer fee, the buyer pays for all the reports, and the buyer also pays for the title insurance policy. These are just standard terms and we agreed to them.
  
  Things to ask the real estate agent to send during the due diligence process:
  1. Recommendations for Structural Engineers, roof inspector, and contacts in the city of Salinas since she had been a broker there for a very long time, and she knew quite a few people.
  2. The last structural report done on the property.
  3. The blueprints so we can give them to our architect, otherwise if the architect did not have the blueprints we would have to pay around $10,000 to get have them redone. I needed those blueprints not only in paper format, but also in digital format since I wanted to forward it to our architect digitally via email. Both of these cost money so since she had the original blueprint (and it was about 11 pages long) she had to scan the blueprints and send them to me.
  4. Rent comps, and sales comps in the area. Both of these are important in order for us to understand what we could rent the property for (and therefore what we could sell the property for), and what were people paying in that area once the property was fully leased and fully remodeled. All of this information was used in my financial analysis to do a best and worst case scenario so we could see what was going to be an ideal price for this property. Note that I asked for leased comps and sales comps from two different real estate agents and both of them provided me different numbers so I had to average them out to come up with the final number. You really want to make sure that you ask for comps from more than one real estate agent.
  5. The lease for the nail salon, they were on a month-to-month lease and I wanted to understand if they were below market or not. It’s also important for us to have a copy of that.
  6. Who the owner of the building next door was, because we were sharing a wall with them and we needed to understand if they did anything to the wall or not. 

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>In this episode I’ll go over my very first offer (which happened about 4 months into my real estate education).  You can read the process here: https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-1-of-3/
  
  This will be broken down into a few episodes because it’s going to be a detailed explanation from beginning to end, and it will be as follows:
  1. How did we decide to make an offer on this property
  2. What did we ask the real estate agent to send us during the due diligence process
  3. Are we running this as a business or selling after remodeling, plus all the financial calculations
  4. Which items our attorney looked at and objected to from the title report
  5. What ended up happening and conclusion
     
  
  

  Things to note on the offer agreement
  We used the standard commercial offer agreement, and as noted above, we had to give the seller all of the inspections if we didn’t end up buying the property, so they could give them to the next buyer. A few other things that I highlighted on the purchase agreement were: 1. We needed to deliver the removal of contingencies or cancel the agreement within those 45 days, 2. If there was any problem with his purchase, we would have to resolve it through arbitration, 3. Both buyer and seller pay for escrow fees, the seller pays for County transfer fees, the seller pays for the city transfer fee, the buyer pays for all the reports, and the buyer also pays for the title insurance policy. These are just standard terms and we agreed to them.
  
  Things to ask the real estate agent to send during the due diligence process:
  1. Recommendations for Structural Engineers, roof inspector, and contacts in the city of Salinas since she had been a broker there for a very long time, and she knew quite a few people.
  2. The last structural report done on the property.
  3. The blueprints so we can give them to our architect, otherwise if the architect did not have the blueprints we would have to pay around $10,000 to get have them redone. I needed those blueprints not only in paper format, but also in digital format since I wanted to forward it to our architect digitally via email. Both of these cost money so since she had the original blueprint (and it was about 11 pages long) she had to scan the blueprints and send them to me.
  4. Rent comps, and sales comps in the area. Both of these are important in order for us to understand what we could rent the property for (and therefore what we could sell the property for), and what were people paying in that area once the property was fully leased and fully remodeled. All of this information was used in my financial analysis to do a best and worst case scenario so we could see what was going to be an ideal price for this property. Note that I asked for leased comps and sales comps from two different real estate agents and both of them provided me different numbers so I had to average them out to come up with the final number. You really want to make sure that you ask for comps from more than one real estate agent.
  5. The lease for the nail salon, they were on a month-to-month lease and I wanted to understand if they were below market or not. It’s also important for us to have a copy of that.
  6. Who the owner of the building next door was, because we were sharing a wall with them and we needed to understand if they did anything to the wall or not. 

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>482d9e82-3253-f670-b2ec-04d10d6328edFri, 05 Apr 2019 11:00:00 -080018:32falsefull1551<p>In this episode I’ll go over my very first offer (which happened about 4 months into my real estate education). &nbsp;You can read the process here: <a href="https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-1-of-3/">https://montecarlorei.com/my-first-commercial-real-estate-offer-what-happened-part-1-of-3/</a><br> <br> This will be broken down into a few episodes because it’s going to be a detailed explanation from beginning to end, and it will be as follows:</p> <ol> <li>How did we decide to make an offer on this property</li> <li>What did we ask the real estate agent to send us during the due diligence process</li> <li>Are we running this as a business or selling after remodeling, plus all the financial calculations</li> <li>Which items our attorney looked at and objected to from the title report</li> <li>What ended up happening and conclusion<br> </li> </ol> <p><strong>Things to note on the offer agreement</strong><br> We used the standard commercial offer agreement, and as noted above, we had to give the seller all of the inspections if we didn’t end up buying the property, so they could give them to the next buyer. A few other things that I highlighted on the purchase agreement were: 1. We needed to deliver the removal of contingencies or cancel the agreement within those 45 days, 2. If there was any problem with his purchase, we would have to resolve it through arbitration, 3. Both buyer and seller pay for escrow fees, the seller pays for County transfer fees, the seller pays for the city transfer fee, the buyer pays for all the reports, and the buyer also pays for the title insurance policy. These are just standard terms and we agreed to them.<br> <br> <strong>Things to ask the real estate agent to send during the due diligence process:</strong><br> 1. Recommendations for Structural Engineers, roof inspector, and contacts in the city of Salinas since she had been a broker there for a very long time, and she knew quite a few people.<br> 2. The last structural report done on the property.<br> 3. The blueprints so we can give them to our architect, otherwise if the architect did not have the blueprints we would have to pay around $10,000 to get have them redone. I needed those blueprints not only in paper format, but also in digital format since I wanted to forward it to our architect digitally via email. Both of these cost money so since she had the original blueprint (and it was about 11 pages long) she had to scan the blueprints and send them to me.<br> 4. Rent comps, and sales comps in the area. Both of these are important in order for us to understand what we could rent the property for (and therefore what we could sell the property for), and what were people paying in that area once the property was fully leased and fully remodeled. All of this information was used in my financial analysis to do a best and worst case scenario so we could see what was going to be an ideal price for this property. Note that I asked for leased comps and sales comps from two different real estate agents and both of them provided me different numbers so I had to average them out to come up with the final number. You really want to make sure that you ask for comps from more than one real estate agent.<br> 5. The lease for the nail salon, they were on a month-to-month lease and I wanted to understand if they were below market or not. It’s also important for us to have a copy of that.<br> 6. Who the owner of the building next door was, because we were sharing a wall with them and we needed to understand if they did anything to the wall or not.&nbsp;</p> --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>Why Commercial Properties and Not Residential Today you will learn why I picked commercial properties for my real estate investments and not residential properties. But first, let’s learn what types of properties fall under “residential investments” and what types of properties fall under “commercial investments”.
  
  You can read this episode in detail here: https://montecarlorei.com/why-commercial-properties-and-not-residential-for-real-estate-investment/

  Residential Properties:
  Residential are properties where people live in, where people have their bed and pillow to sleep on at night, so it’s not only single family homes, it’s also duplexes, triplexes, fourplexes, mobile home parks, multi family properties like apartment buildings, high rises, lofts, student housing, and senior housing – and each of these categories have their own pros and cons! Also, each of these categories can be good or bad investments depending on the state that you invest in because of things like property prices, local economy, and state and city laws (i.e. some states have laws that benefit the tenants and you cannot kick them out, some states have laws that benefit the property owners, so if a tenant doesn’t pay the rent, they are out of the property within days).

  Commercial properties:
  1. Industrial: distribution center, warehousing, or manufacturing
  2. Office: you can have a regular office that you lease it out to several companies, lawyers, etc, or you could have a medical office building (for example) where you lease to a hospital, or to dentists, dermatologists, psychologists, etc
  3. Retail: within retail you can have a single tenant building, for example in the downtown area of where you live, you can own a building that is leased out to a coffee shop for instance, or you could have a restaurant in your building, so that’s a single tenant retail. Another type of retail is the small neighborhood service center, like the places that have 5-10 tenants where you go to the dry cleaner, and there’s also a nail salon, or a cash advance business for example. Another type of retail can be a strip mall with let’s say 20-40 tenants, like the place where you go grocery shopping and they also have a bank as a tenant, some food places like Burger King or a big box shopping center where they’ll have a Target, Macy’s, a food court, etc
  4. Storage units: this is where people pay you a monthly fee to keep things they’ll never need in your building, and within storage you could focus on storing wine for instance, because people like to collect, but don’t have a lot of space to have a temperature controlled storage at home. If you have a lot of courage, you could store gold for people
  5. Land: you could lease your land to all kinds of businesses. For example: for agricultural purposes, to wind farms, for RV’s to park for a few days, for truck drivers to park their trucks when they’re on the road
  
  Why commercial and not residential?
  1. NNN: this means that your tenants will pay for property taxes, insurance and common area maintenance (also known as CAM), this doesn’t happen in residential
  2. With commercial properties you also get better tenants, you can get big companies such as Jack in the Box, or a bank, or a supermarket, and if you can get big name tenants to lease from you, you can increase the value of your property significantly. Why? Because these big companies are unlikely to out of business and the rent is pretty much guaranteed to come in, and the next investor buying your commercial property values that
  3. Commercial tenants also sign longer leases: commercial leases can vary from 10-20 years, and sometimes more, there are yearly price increases that are negotiated on those leases, the leases typically start to get increased after year 5 for commercial...]]>Today you will learn why I picked commercial properties for my real estate investments and not residential properties. But first, let’s learn what types of properties fall under “residential investments” and what types of properties fall under “commercial investments”.
  
  You can read this episode in detail here: https://montecarlorei.com/why-commercial-properties-and-not-residential-for-real-estate-investment/

  Residential Properties:
  Residential are properties where people live in, where people have their bed and pillow to sleep on at night, so it’s not only single family homes, it’s also duplexes, triplexes, fourplexes, mobile home parks, multi family properties like apartment buildings, high rises, lofts, student housing, and senior housing – and each of these categories have their own pros and cons! Also, each of these categories can be good or bad investments depending on the state that you invest in because of things like property prices, local economy, and state and city laws (i.e. some states have laws that benefit the tenants and you cannot kick them out, some states have laws that benefit the property owners, so if a tenant doesn’t pay the rent, they are out of the property within days).

  Commercial properties:
  1. Industrial: distribution center, warehousing, or manufacturing
  2. Office: you can have a regular office that you lease it out to several companies, lawyers, etc, or you could have a medical office building (for example) where you lease to a hospital, or to dentists, dermatologists, psychologists, etc
  3. Retail: within retail you can have a single tenant building, for example in the downtown area of where you live, you can own a building that is leased out to a coffee shop for instance, or you could have a restaurant in your building, so that’s a single tenant retail. Another type of retail is the small neighborhood service center, like the places that have 5-10 tenants where you go to the dry cleaner, and there’s also a nail salon, or a cash advance business for example. Another type of retail can be a strip mall with let’s say 20-40 tenants, like the place where you go grocery shopping and they also have a bank as a tenant, some food places like Burger King or a big box shopping center where they’ll have a Target, Macy’s, a food court, etc
  4. Storage units: this is where people pay you a monthly fee to keep things they’ll never need in your building, and within storage you could focus on storing wine for instance, because people like to collect, but don’t have a lot of space to have a temperature controlled storage at home. If you have a lot of courage, you could store gold for people
  5. Land: you could lease your land to all kinds of businesses. For example: for agricultural purposes, to wind farms, for RV’s to park for a few days, for truck drivers to park their trucks when they’re on the road
  
  Why commercial and not residential?
  1. NNN: this means that your tenants will pay for property taxes, insurance and common area maintenance (also known as CAM), this doesn’t happen in residential
  2. With commercial properties you also get better tenants, you can get big companies such as Jack in the Box, or a bank, or a supermarket, and if you can get big name tenants to lease from you, you can increase the value of your property significantly. Why? Because these big companies are unlikely to out of business and the rent is pretty much guaranteed to come in, and the next investor buying your commercial property values that
  3. Commercial tenants also sign longer leases: commercial leases can vary from 10-20 years, and sometimes more, there are yearly price increases that are negotiated on those leases, the leases typically start to get increased after year 5 for commercial properties

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>889ddc18-ec0a-c462-e8ba-b8e32466594cThu, 28 Mar 2019 21:29:47 -080012:31falsefull1441Questions You Should be Asking the Seller's Real Estate Agent When Interested in a PropertyWelcome back to Best Commercial Retail Real Estate Investing Advice Ever! Today we’re going to be learning the questions that I ask a seller’s real estate agent after I take a look at a property on Loopnet and think that this could be interesting. You don’t necessarily need to ask all these questions every single time, but it’s a good idea to go over most of them when you call the seller’s real estate agent.

  Here is the step-by-step guide for your homework in today's episode: https://montecarlorei.com/questions-you-should-be-asking-the-sellers-real-estate-agent-when-interested-in-a-property/

  A brief breakdown of the questions you should be asking the seller's real estate agent is:
  1. Introduce yourself
  2. How long has the property been on the market?
  3. What is the potential you see for this property from an investor's perspective?
  4. Are you local?
  5. How did you come up with the price?
  6. Who is the seller and how long have they owned the property?
  7. Is there any known contamination in the property?
  8. Does anyone have the right of first refusal (aka ROFR)?
  9. Are there any easement agreements?
  10. Please send me the rent roll.
  11. Is the building historical?
  12. Has the building been retrofitted (if older building)? Do you have any estimates to retrofit the building if it hasn't been retrofitted yet?

  If you're finding this podcast useful, make sure to subscribe to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: https://montecarlo.home.blog/contact/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>Welcome back to Best Commercial Retail Real Estate Investing Advice Ever! Today we’re going to be learning the questions that I ask a seller’s real estate agent after I take a look at a property on Loopnet and think that this could be interesting. You don’t necessarily need to ask all these questions every single time, but it’s a good idea to go over most of them when you call the seller’s real estate agent.

  Here is the step-by-step guide for your homework in today's episode: https://montecarlorei.com/questions-you-should-be-asking-the-sellers-real-estate-agent-when-interested-in-a-property/

  A brief breakdown of the questions you should be asking the seller's real estate agent is:
  1. Introduce yourself
  2. How long has the property been on the market?
  3. What is the potential you see for this property from an investor's perspective?
  4. Are you local?
  5. How did you come up with the price?
  6. Who is the seller and how long have they owned the property?
  7. Is there any known contamination in the property?
  8. Does anyone have the right of first refusal (aka ROFR)?
  9. Are there any easement agreements?
  10. Please send me the rent roll.
  11. Is the building historical?
  12. Has the building been retrofitted (if older building)? Do you have any estimates to retrofit the building if it hasn't been retrofitted yet?

  If you're finding this podcast useful, make sure to subscribe to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: https://montecarlo.home.blog/contact/

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>2436871d-da23-a856-949d-750f7b3e70fbFri, 15 Mar 2019 13:00:00 -080017:47falsefull1331<p>Welcome back to Best Commercial Retail Real Estate Investing Advice Ever! Today we’re going to be learning the questions that I ask a seller’s real estate agent after I take a look at a property on Loopnet and think that this could be interesting. You don’t necessarily need to ask all these questions every single time, but it’s a good idea to go over most of them when you call the seller’s real estate agent.</p> <p>Here is the step-by-step guide for your homework in today's episode: <a href="https://montecarlorei.com/questions-you-should-be-asking-the-sellers-real-estate-agent-when-interested-in-a-property/">https://montecarlorei.com/questions-you-should-be-asking-the-sellers-real-estate-agent-when-interested-in-a-property/</a></p> <p>A brief breakdown of the questions you should be asking the seller's real estate agent is:<br> 1. Introduce yourself<br> 2. How long has the property been on the market?<br> 3. What is the potential you see for this property from an investor's perspective?<br> 4. Are you local?<br> 5. How did you come up with the price?<br> 6. Who is the seller and how long have they owned the property?<br> 7. Is there any known contamination in the property?<br> 8. Does anyone have the right of first refusal (aka ROFR)?<br> 9. Are there any easement agreements?<br> 10. Please send me the rent roll.<br> 11. Is the building historical?<br> 12. Has the building been retrofitted (if older building)? Do you have any estimates to retrofit the building if it hasn't been retrofitted yet?</p> <p>If you're finding this podcast useful, make sure to subscribe to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: <a href="https://montecarlo.home.blog/contact/" target="_blank"><strong>https://montecarlo.home.blog/contact/</strong></a></p> --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>What is a CAP Rate and What Should You Be Looking at on LoopnetWelcome back to Best Commercial Retail Real Estate Investing Advice Ever! Here is the step-by-step guide for your homework in today's episode: https://montecarlorei.com/what-is-a-cap-rate-and-what-should-you-be-looking-at-on-loopnet/
  
  In this episode you will learn what is a cap rate, which is a variable rate that varies per property, and is determined when you are selling the property. As a buyer, you will be looking at various cap rates, and the very basic explanation is that it is the net income on the property divided by the price of the property. For example, there is a property for sale for $400,000 and the cap rate is 8% – this means that your income on the property is $32,000 per year. There are other intricacies about cap rates when you are selling the property, but what you need to know is that cap rates can vary greatly. It can vary by location (state, city, and even where within that city!), by tenant, by current interest rates, etc. A high cap rate is not always a good thing as you will see in this episode.
  
  Cap rates also vary based on where the property is located in a particular city. If the property is in an incredible location, the cap rates are going to be lower, if the property is leased to a national tenant (for example Starbucks, Burger King), the cap rate will still be even lower because your rent is going to be guaranteed and you can easily sell this property. However, when you have a local tenant, and the property is not in such a great location, or is the location isn’t very visible, then your cap rate can be higher because the seller is incentivizing you to buy the property.
  
  Cap rates are also determined by the interest rates on loans: when interest rates are low your are able to lend more money to buy property – meaning you qualify for a higher mortgage – however, when interest rates are higher, you can afford less property because you’re getting a smaller loan. You need to look at all of these things not only when you’re buying, but also when you’re selling a commercial property because when you’re selling that’s when it’s going to determine what the cap rate for the property is.
  
  To elaborate more on cap rates varying by location: for example here where I am in California you can find cap rates as low as 2.5% in Santa Monica which means that you’re making a 2.5% income per year based on the price of the property. You can also find 7% cap rates in some areas of Berkeley for instance. However, in Alabama, you can find cap rates at 10% and that’s because it’s harder to sell the properties there than in California, so the sellers typically want to make the rate pretty attractive to the buyer.
  
  You'll also learn how to evaluate a commercial property for sale at first glance. We are reviewing a property for sale on Loopnet.com and going over all the details you should be looking at such as: how to evaluate what they are describing the property as, understand price per square foot, parking ratio per 1,000 sf, location of the property and how to "walk through" the outside of the property with Google maps, walk score, what to ask for if you think the property could be contaminated, Phase I report, and much more.
  
  Make sure to subscribe to this podcast to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: https://montecarlorei.com/contact-us/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>Welcome back to Best Commercial Retail Real Estate Investing Advice Ever! Here is the step-by-step guide for your homework in today's episode: https://montecarlorei.com/what-is-a-cap-rate-and-what-should-you-be-looking-at-on-loopnet/
  
  In this episode you will learn what is a cap rate, which is a variable rate that varies per property, and is determined when you are selling the property. As a buyer, you will be looking at various cap rates, and the very basic explanation is that it is the net income on the property divided by the price of the property. For example, there is a property for sale for $400,000 and the cap rate is 8% – this means that your income on the property is $32,000 per year. There are other intricacies about cap rates when you are selling the property, but what you need to know is that cap rates can vary greatly. It can vary by location (state, city, and even where within that city!), by tenant, by current interest rates, etc. A high cap rate is not always a good thing as you will see in this episode.
  
  Cap rates also vary based on where the property is located in a particular city. If the property is in an incredible location, the cap rates are going to be lower, if the property is leased to a national tenant (for example Starbucks, Burger King), the cap rate will still be even lower because your rent is going to be guaranteed and you can easily sell this property. However, when you have a local tenant, and the property is not in such a great location, or is the location isn’t very visible, then your cap rate can be higher because the seller is incentivizing you to buy the property.
  
  Cap rates are also determined by the interest rates on loans: when interest rates are low your are able to lend more money to buy property – meaning you qualify for a higher mortgage – however, when interest rates are higher, you can afford less property because you’re getting a smaller loan. You need to look at all of these things not only when you’re buying, but also when you’re selling a commercial property because when you’re selling that’s when it’s going to determine what the cap rate for the property is.
  
  To elaborate more on cap rates varying by location: for example here where I am in California you can find cap rates as low as 2.5% in Santa Monica which means that you’re making a 2.5% income per year based on the price of the property. You can also find 7% cap rates in some areas of Berkeley for instance. However, in Alabama, you can find cap rates at 10% and that’s because it’s harder to sell the properties there than in California, so the sellers typically want to make the rate pretty attractive to the buyer.
  
  You'll also learn how to evaluate a commercial property for sale at first glance. We are reviewing a property for sale on Loopnet.com and going over all the details you should be looking at such as: how to evaluate what they are describing the property as, understand price per square foot, parking ratio per 1,000 sf, location of the property and how to "walk through" the outside of the property with Google maps, walk score, what to ask for if you think the property could be contaminated, Phase I report, and much more.
  
  Make sure to subscribe to this podcast to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: https://montecarlorei.com/contact-us/
  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>84ccc8b4-694b-7a13-6686-8a5930d861daThu, 07 Mar 2019 23:56:04 -080013:03falsefull1221<p>Welcome back to Best Commercial Retail Real Estate Investing Advice Ever! Here is the step-by-step guide for your homework in today's episode: <a href="https://montecarlorei.com/what-is-a-cap-rate-and-what-should-you-be-looking-at-on-loopnet/">https://montecarlorei.com/what-is-a-cap-rate-and-what-should-you-be-looking-at-on-loopnet/</a><br> <br> In this episode you will learn what is a cap rate, which is a variable rate that varies per property, and is determined when you are selling the property. As a buyer, you will be looking at various cap rates, and the very basic explanation is that it is the net income on the property divided by the price of the property. For example, there is a property for sale for $400,000 and the cap rate is 8% – this means that your income on the property is $32,000 per year. There are other intricacies about cap rates when you are selling the property, but what you need to know is that cap rates can vary greatly. It can vary by location (state, city, and even where within that city!), by tenant, by current interest rates, etc. A high cap rate is not always a good thing as you will see in this episode.<br> <br> Cap rates also vary based on where the property is located in a particular city. If the property is in an incredible location, the cap rates are going to be lower, if the property is leased to a national tenant (for example Starbucks, Burger King), the cap rate will still be even lower because your rent is going to be guaranteed and you can easily sell this property. However, when you have a local tenant, and the property is not in such a great location, or is the location isn’t very visible, then your cap rate can be higher because the seller is incentivizing you to buy the property.<br> <br> Cap rates are also determined by the interest rates on loans: when interest rates are low your are able to lend more money to buy property – meaning you qualify for a higher mortgage – however, when interest rates are higher, you can afford less property because you’re getting a smaller loan. You need to look at all of these things not only when you’re buying, but also when you’re selling a commercial property because when you’re selling that’s when it’s going to determine what the cap rate for the property is.<br> <br> To elaborate more on cap rates varying by location: for example here where I am in California you can find cap rates as low as 2.5% in Santa Monica which means that you’re making a 2.5% income per year based on the price of the property. You can also find 7% cap rates in some areas of Berkeley for instance. However, in Alabama, you can find cap rates at 10% and that’s because it’s harder to sell the properties there than in California, so the sellers typically want to make the rate pretty attractive to the buyer.<br> <br> You'll also learn how to evaluate a commercial property for sale at first glance. We are reviewing a property for sale on Loopnet.com and going over all the details you should be looking at such as: how to evaluate what they are describing the property as, understand price per square foot, parking ratio per 1,000 sf, location of the property and how to "walk through" the outside of the property with Google maps, walk score, what to ask for if you think the property could be contaminated, Phase I report, and much more.<br> <br> Make sure to subscribe to this podcast to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: <a href="https://montecarlorei.com/contact-us/">https://montecarlorei.com/contact-us/</a></p> --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>Commercial Real Estate Investing from A-Z. Start Here!The very first episode of Best Commercial Retail Real Estate Investing Advice Ever! Here is the step-by-step guide for your homework in today's episode: https://montecarlorei.com/the-journey-begins-retail-real-estate-investing-from-a-z-podcast/
  
  In this episode you will learn a little bit about me: I have been living in Silicon Valley since 2000 and working in tech for the last few years. Being in the startup world, you definitely get enticed to become an angel investor in tech startups, and that is what I started doing – however –  when I spoke extensively with my friend who has been investing in commercial real estate properties for the last 20+ years, we came to the conclusion that real estate is the best form of investment, not only from a cashflow standpoint, but also from a tax perspective, and on top of it all, it’s a very secure investment: the worst thing that can happen is not making any money (versus losing tons of money as an angel investor). And if you are here, you already know all of that and need no convincing!
  
  You'll also learn how to setup your Loopnet alerts so that you can start watching your area and learn what is a good commercial property deal or not.
  
  Lastly, you'll also lean how to get started on biggerpockets.com which is a great resource to start meeting people in your community, and learning a lot about real estate investing.

  
  Make sure to subscribe to this podcast to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: https://montecarlo.home.blog/contact/
  

  See you soon!

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>The very first episode of Best Commercial Retail Real Estate Investing Advice Ever! Here is the step-by-step guide for your homework in today's episode: https://montecarlorei.com/the-journey-begins-retail-real-estate-investing-from-a-z-podcast/
  
  In this episode you will learn a little bit about me: I have been living in Silicon Valley since 2000 and working in tech for the last few years. Being in the startup world, you definitely get enticed to become an angel investor in tech startups, and that is what I started doing – however –  when I spoke extensively with my friend who has been investing in commercial real estate properties for the last 20+ years, we came to the conclusion that real estate is the best form of investment, not only from a cashflow standpoint, but also from a tax perspective, and on top of it all, it’s a very secure investment: the worst thing that can happen is not making any money (versus losing tons of money as an angel investor). And if you are here, you already know all of that and need no convincing!
  
  You'll also learn how to setup your Loopnet alerts so that you can start watching your area and learn what is a good commercial property deal or not.
  
  Lastly, you'll also lean how to get started on biggerpockets.com which is a great resource to start meeting people in your community, and learning a lot about real estate investing.

  
  Make sure to subscribe to this podcast to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: https://montecarlo.home.blog/contact/
  

  See you soon!

  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>1e4a7af9-6f38-8494-9b59-25354cc74de6Fri, 01 Mar 2019 20:00:00 -080009:57falsefull1111<p>The very first episode of Best Commercial Retail Real Estate Investing Advice Ever! Here is the step-by-step guide for your homework in today's episode: <a href="https://montecarlorei.com/the-journey-begins-retail-real-estate-investing-from-a-z-podcast/">https://montecarlorei.com/the-journey-begins-retail-real-estate-investing-from-a-z-podcast/</a><br> <br> In this episode you will learn a little bit about me: I have been living in Silicon Valley since 2000 and working in tech for the last few years. Being in the startup world, you definitely get enticed to become an angel investor in tech startups, and that is what I started doing – however –&nbsp; when I spoke extensively with my friend who has been investing in commercial real estate properties for the last 20+ years, we came to the conclusion that real estate is the best form of investment, not only from a cashflow standpoint, but also from a tax perspective, and on top of it all, it’s a very secure investment: the worst thing that can happen is not making any money (versus losing tons of money as an angel investor). And if you are here, you already know all of that and need no convincing!<br> <br> You'll also learn how to setup your <a href="loopnet.com">Loopnet</a> alerts so that you can start watching your area and learn what is a good commercial property deal or not.<br> <br> Lastly, you'll also lean how to get started on <a href="biggerpockets.com">biggerpockets.com</a> which is a great resource to start meeting people in your community, and learning a lot about real estate investing.</p> <p><br> Make sure to subscribe to this podcast to continue learning about commercial real estate investing, and if you can please do me a favor and write a review since we are just getting started, that would be wonderful. You can contact me here: <a href="https://montecarlo.home.blog/contact/">https://montecarlo.home.blog/contact/</a><br> </p> <p>See you soon!</p> --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>Commercial Real Estate Investing From A-Z (Trailer)https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support]]>8df70db7-bbb4-4cb6-9ed9-acd3ba921a31Thu, 28 Feb 2019 20:00:00 -080000:53falsetrailer --- Support this podcast: <a href="https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support" rel="payment">https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support</a>