The Commercial Real Estate Investor Podcast

Key Takeaways:Thoroughly evaluate the landlord and property management to avoid issues down the line, such as delayed repairs or non-payment of broker commissions. Conduct thorough due diligence on the property, including permitting, construction, and utility access, to ensure the space meets your needs. Negotiate lease terms strategically, focusing on more than just the rental rate and considering factors like renewal options and additional fees. Avoid a "take it or leave it" mentality during negotiations and instead seek common ground to reach a mutually beneficial agreement.

Key Takeaways:Transitioning from residential to commercial real estate investing takes time, patience, and the right mindset. It's not an overnight process.Raising other people's capital can be a great way to get started in commercial real estate, but you need to be very diligent in your underwriting and risk mitigation.Getting into boutique hotels can be challenging, with issues like labor shortages and operational complexities. Focusing on larger hospitality assets with more economies of scale can be beneficial.Building brand loyalty and creating unique experiences for guests are important in the hospitality business.

Key Takeaways:Office space has evolved significantly, shifting from traditional to open floor plans to remote work, similar to the changes seen in retailCauble is hiring for an office manager and integrator roles at his companyCauble is organizing an in-person commercial real estate conference in Nashville this fallCauble and Logan Freeman are launching a commercial real estate brokerage mastermind on October 1, 2024Cauble provided advice on calculating GP percentage for capital raises, the importance of having an active role when raising capital, and the challenges of wholesaling commercial real estate compared to residentialCauble emphasized the value of gaining experience working at another brokerage before starting your own, and the need to prioritize your skills and goals when considering running a brokerageCauble provided tips on tenant selection, including being cautious of auto mechanics and thoroughly vetting potential tenants

Key Takeaways:Opportunity zones are still active and viable, despite some thinking the program has expiredThe biggest benefit is the ability to defer capital gains taxes until 2026 and then potentially avoid them entirely if the investment is held for 10 yearsInvestors can set up a qualified opportunity fund (QOF) to hold their investments and get the tax benefits, rather than having to invest directly in a propertyThe QOF structure provides flexibility, as investors can buy and sell properties within the fund without affecting the 10-year holding periodOpportunity zones can also be used for estate planning purposes to avoid or minimize estate taxes

Key Takeaways:Tenants want certainty and predictability in their lease costs, but landlords cannot fully provide this due to unpredictable expenses.Triple net leases are the most common structure, especially in retail, as they hold landlords accountable and provide transparency for tenants.Lease negotiations require careful attention to key terms like rent escalations, security deposits, operating expenses, and environmental liability.Involving both a commercial real estate broker and an attorney is crucial to navigate the complexities of commercial leases and protect the tenant's interests.

Key Takeaways:Tyler is working on a boutique hotel project called Salt Ranch and is providing video updates on the project's progress.Cauble is also running an apprenticeship program at Peerless Mill and is in the process of reviewing applications and scheduling follow-up calls.Cauble emphasizes the importance of networking, cold calling, and personal effort in commercial real estate rather than relying heavily on software and technology.He advises aspiring commercial real estate investors to "just do it" and make the leap, finding a mentor and getting hands-on experience.Cauble discusses strategies for evaluating sites, maximizing cash flow, and educating tenants on triple net leases.He also shares his perspective on why banks are hesitant to finance properties with ground leases.

Key Takeaways:Commercial leases are much more complex than residential leases, and everything is typically negotiableNew business owners should assemble a team of professionals (broker, attorney, lender, etc.) to help them navigate the leasing processDetermining the right amount of space for your business can be challenging, so it's important to physically tour spaces and get a sense of the space needsLandlords typically prefer longer-term leases (5+ years) but may be willing to do shorter terms for new businesses if they have a solid business planHaving a detailed business plan can help differentiate your business and give the landlord confidence in your ability to succeed

Key Takeaways:Commercial real estate brokers are on the front lines of the industry and know market conditions well since they are directly dealing with transactions.While transaction volumes have significantly declined, there are still good investment opportunities available for those willing to get creative and work hard.Sale leasebacks can provide liquidity to cash-strapped businesses and are a way for investors to secure properties with negotiated lease terms already in place. This reduces risk compared to other deal types.When markets are downturns, it's a good time to focus on growing your business and positioning yourself for future success once conditions improve.

Key Takeaways:Commercial brokers can provide value by knowing their local market extremely well, including tenants, rental rates, and vacancy times. This allows them to be a trusted resource for investors.Affordable housing development faces challenges from lack of understanding and resistance from some politicians and governments.Micro apartments and efficiency units can help address affordable housing needs, though securing approvals can be difficult.Commercial real estate investing strategies like value-add deals may be better for wealth building than passive triple net lease properties.Alternative sources of financing like other SBA lenders or hard money loans should be explored if initial financing options have high rates.Opportunity zones can provide tax benefits but have been criticized for uneven distribution of benefits across qualified areas.

Key Takeaways:Commercial real estate development has played a major role in transforming Nashville over the past few decades, especially increasing residential units downtown. Economic downturns are challenging but can make developers more resilient if they navigate difficulties successfully. Smaller, neighborhood-focused projects face hurdles in securing financing from conservative lenders but may be viable with the right partners and equity.Studying how other cities developed, like comparing Nashville to Atlanta, can provide insights into a city's long-term growth potential. Developers have a responsibility to consider how projects will impact the surrounding community and environment over generations.Starting in commercial real estate requires finding ways to cover living expenses while gaining experience and determining the right niche or specialization.

Key Takeaways:Tyler provides a process for determining if a value-add commercial real estate deal is good using price per square foot and cap rate calculations.Creative financing strategies like vendor financing may be possible but require careful consideration of costs and risks. When replacing roofs for triple net tenants, it's best to have reserves rather than expecting rent increases to directly offset costs.Choosing the first tenants for a new retail property requires understanding the existing and desired tenant mix for the location and demographic.Community engagement is important for successful rezoning approvals through understanding neighborhood needs and crafting an aligned project.AI can help with small contract changes if its implications are understood, but an attorney is still typically needed for major legal documents.

Key Takeaways:The importance of building a track record through completing multiple successful real estate development deals from start to finish.Partnering with other developers on deals as a way to gain experience without having all the capital.Cold calling institutional investors and differentiating product offerings to scale up from friends and family money.Finding niche asset classes that are undersupplied to take advantage of demand and pricing opportunities.Returning calls and following up on potential opportunities even if they don't seem like a fit initially.Gaining exposure to deals through a career in real estate brokerage before pursuing development.

Key Takeaways:Inflation is significantly impacting QSR tenants, so it's important to consider risks for single-tenant net lease investments in that sector. Relationships with local authorities, neighbors, contractors, and banks are critical for successfully developing commercial properties.Off-market deals can offer better terms than on-market listings, but creative thinking allows finding value in on-market properties as well. Handling difficult situations professionally, such as by negotiating solutions during COVID-19, can turn problematic relationships into valuable partnerships over time.Commercial real estate investing offers various opportunities, from rehabilitating mills to partnering on sale-leaseback deals to developing education programs.

Key Takeaways:It is important to align goals and ensure congruence in objectives and strategies with any potential partners before investing in a project together. Not being on the same page can lead to problems down the road.Properly assessing and managing risk is critical, including understanding different types of risks, likelihood of occurrence, potential impact, and having a clear risk management plan.Partnership agreements should thoroughly address potential issues like buyout provisions, processes for resolving disputes, and responsibilities in worst case scenarios to protect all parties.When evaluating deals, it is important to consider both the existing risk-adjusted cap rate as well as the potential for value add and equity creation through the execution of a business plan.

Key Takeaways:Flex space and light assembly spaces are versatile options for beginner industrial real estate investors due to their ability to accommodate various business needs.Cold storage demand is increasing and it offers stable tenant retention, making it a valuable investment despite potential challenges finding new tenants. Industrial outdoor storage provides cash flow, versatility, low maintenance costs, and potential for future growth, making it a good entry point for beginners.

Key Takeaways:Commercial real estate investment opportunities like industrial/outdoor storage, flex space, and sale-leaseback deals can provide good returnsIt's important to build relationships with tenants and be a good landlord to secure longer lease renewalsGaining hands-on experience through apprenticeships or working for developers is very valuable for learning the businessHaving a solid operating agreement is critical when partnering or joint venturing on deals to protect all partiesEducating oneself on commercial real estate fundamentals and advanced strategies through resources like CRE Central can help aspiring investors get startedFocusing on the benefits of projects rather than just features helps gain support from municipalities and communities

Key Takeaways:Tenant improvement allowances can vary significantly based on property type, market conditions, tenant needs and landlord requirements.Restaurant and medical space TI deals tend to be more complex with higher costs than other property types.It's important for all parties, especially landlords, to have realistic expectations about TI budgets and costs.Treating certain capital improvements as capital expenditures rather than TI can make deals more attractive to sophisticated institutional landlords.Using market data and net effective rent calculations helps determine if a tenant's TI request is reasonable or aligned with market rates.Understanding motivations is key for brokers to negotiate effectively and find creative solutions in TI negotiations.Communication, setting clear expectations, and bringing value beyond just order-taking are important skills for brokers handling complex TI deals.

Key Takeaways:Using both online and offline strategies is important for finding the best industrial real estate investment opportunities. This includes utilizing platforms, networking, and direct exploration.Building relationships with local brokers, attending industry events, and networking can provide valuable insights and access to hidden deals.Consulting local economic development agencies and understanding their programs/incentives can help align investments with regional growth areas.For auctions, it's important to understand the dynamics, research property history, and set clear budget limits beforehand.Direct outreach to property owners through personalized messages can open doors to potential off-market deals.

Key Takeaways:Determining maximum offers on commercial properties involves calculating cash-on-cash returns and internal rates of return to set pricing.Personal guarantees and clear communication about lease clauses are important for protecting landlords.Partnering by providing sweat equity in exchange for a small equity stake can be a good way for new investors to gain experience without financial risk.Focusing investments on cash flow in addition to wealth building helps mitigate risk from having low cash reserves.

Key Takeaways:Neighbor.com presents an opportunity for commercial real estate investors to monetize unused or underutilized space in their properties through vehicle and equipment storage. This can provide significant recurring income.Storage occupancy rates remain high nationally, but some markets like the Sunbelt are leveling off while others like New York and California continue strong growth. Converting office space directly to residential is challenging and unprofitable in most cases, but converting to self-storage has low capex requirements and high potential returns.Multifamily and other commercial properties often have 20-30% of interior storage units and parking spaces sitting unused, representing an opportunity to work with Neighbor and increase net operating income.Neighbor's platform allows operators flexibility through customization and month-to-month rentals while still providing predictable recurring income streams.

Key Takeaways:Tyler is focusing more on YouTube and investments as his full-time work, building out a YouTube studio and launching new educational programs.Networking and building relationships are important for opportunities like joint ventures, mentorship, and career growth.Due diligence is important when purchasing properties to understand environmental risks and market saturation.Starting focused on one commercial real estate niche helps build a strong foundation before diversifying.Hiring the right people like an investor relations person can help scale a real estate business more effectively.

Key Takeaways:Hard money lending offers consistent returns of 10-12% due to steady demand from real estate investors needing quick financing.Demand for hard money loans is expected to remain high in 2024 due to interest rates at banks being not too far below hard money rates now.Hard money lending provides flexibility and speed that traditional bank loans lack, while still offering decent returns.Investors are shifting capital from equity investing to hard money lending funds that guarantee returns like 10%.Hard money lending can be started with as little as $50,000-$100,000 and successfully scaled up over time.

Key Takeaways:Partnerships can help scale up operations but also introduce complexity and riskIt's important to clearly define roles and responsibilities in a partnership and put them in writingEquity splits depend on each situation and should be based on a fair assessment of each partner's valueReplacing partnerships with debt when possible can help keep more upside for yourself while mitigating riskDoing due diligence on potential partners is critical to avoid issues down the line

Key Takeaways:Tyler and Logan are launching a Brokers Mastermind program to provide coaching and training to commercial real estate brokers.Both Tyler and Logan's brokerage businesses had a challenging Q1 and did not meet their sales goals.Prospecting more through activities like flyer distribution and cold calls is important to generate more leads and deals.It's important to track metrics like time to close, average value by deal type, and allocate time and focus to the most lucrative deal types.Generating leads through content marketing and branding on platforms like LinkedIn and YouTube in addition to prospecting is important to keep pipelines full.

Key Takeaways:Tyler is optimistic about the office sector and believes it will bounce back in 5-10 years as existing office buildings are converted or torn down. He thinks this will lead to a lack of supply.Tyler is developing a boutique hotel project and will be documenting the process to share monthly updates. This could provide useful insights for others interested in similar projects.Tyler fired his original contractor on the Salt Ranch project and had to get his attorney involved to get permits transferred to a new contractor. This highlighted potential issues with permits being in the contractor's name.Tyler sees potential in industrial, flex, and neighborhood commercial real estate in Nashville, particularly in undervalued areas like East Nashville and Madison.Tyler gave advice on wholesaling commercial real estate versus residential and partnering for first development projects.

Key Takeaways:Hiring a third-party asset manager allows real estate investors to take a step back from active ownership responsibilities while still maintaining control and earning income from their investments.Asset managers serve as the CEO of the property portfolio, handling execution, optimization, and strategic direction to meet the owner's goals.Asset managers assess properties, identify issues, and establish action plans to improve performance, maximize returns, and ensure smooth operations.Regular reporting from the asset manager keeps owners informed without overwhelming them with non-essential details.Hiring an asset manager typically makes sense once a portfolio grows beyond 20-100 units in size or complexity.Asset managers can optimize operations, enhance returns, and add value beyond just maintaining the status quo.Interviewing potential asset managers to understand their experience, systems, transparency, and track record is important for finding the best fit.

Key Takeaways:Tyler discussed new investment opportunities through his syndication platform and encouraged listeners interested in investing to contact him.He shared stories from deals he has filmed for his YouTube series to provide a full picture of deals beyond just the outcomes.Adaptive reuse of vacant office space into flex/industrial space was highlighted as a good opportunity currently.Networking and using YouTube has become a major part of Tyler's business and how he sources deals and clients.Markets like Chattanooga, Greenville, Asheville, and Huntsville were mentioned as up-and-coming smaller markets to watch.Deals can take a long time, with one of Tyler's taking 3 years already, so having multiple deals and projects helps stay motivated during long timelines.

Key Takeaways:- It's important to price listings realistically based on market data to avoid getting a reputation for overpricing properties. Sellers may need to hear from multiple agents before accepting a fair market price.- Ask sellers questions upfront about their goals and how they want the property marketed to develop the best strategy. Different sellers have different preferences like privacy.- Cultivate relationships with potential buyers over many years to have a ready list to market listings to. Taking listings to many buyers helps strengthen negotiations.- Rely on market data and logic in negotiations rather than high pressure sales tactics. Commercial real estate is about problem solving creatively for all parties.

Key Takeaways:Multifamily real estate, especially existing Class B and C properties, can be recession resistant due to people always needing a place to liveHealthcare real estate like medical offices is also recession resistant as people will continue needing medical careGrocery-anchored shopping centers can perform well in recessions as people still need to buy groceries and other daily goodsIt's important to underwrite conservatively, scrutinize tenants, and focus on acquiring assets that can withstand economic downturns through flexible leasing terms and creditworthy tenantsStrategies like locking in long-term fixed-rate debt ahead of potential downturns can help make portfolios more recession-proof

Key Takeaways:- Seller financing, joint ventures, crowdfunding, and lease-to-own arrangements are alternative financing strategies that can be used to purchase commercial real estate without relying solely on traditional bank loans.- These strategies can help circumvent strict bank qualification requirements like credit scores, cash reserves, and experience.- Factors like current finances, experience level, the seller's situation/motivation, and flexibility needs should be considered when choosing a financing strategy.- Being creative and persistent can open doors to capital beyond just banks to start building a commercial property portfolio.

Key Takeaways:Tyler gave a talk on building a personal brand at a conference and is preparing for another talk at Brandon Turner's REI Summit about how to get started in commercial real estate.He recently got approvals to start construction on his boutique hotel project called Salt Lick Ranch in East Nashville after two years of working on it.He is considering hiring another assistant to help with community engagement and daily tasks.He answered various questions about financial modeling, shopping centers vs apartments, deal flow generation, and other commercial real estate topics based on his experience.

Key Takeaways:- Charging for brokers opinions of value (BOV) can help ensure brokers put more time and effort into the analysis, and get clients more invested in working with them.- A BOV should include an in-depth analysis of the property through site visits, comparable property research beyond just Costar data, and a comprehensive written report.- Presenting BOV work as having value for the client's needs, rather than just doing it for free, helps establish the broker's professional expertise and value proposition.

Key Takeaways:Flex spaces are one of the easiest commercial real estate assets to own, with low vacancy rates and high demandDeveloping flex spaces can be profitable if land costs are below $5/sqft and building costs are around $136/sqftUnderwriting deals with an 8-9% cap rate upon completion and an exit at a 7% cap rate can provide good returnsSelling deals allows investors to complete more deals over time for higher returns than refinancingFlex warehousing provides easier ownership than multifamily due to triple net leases

Key Takeaways:Tyler discussed the recent NAR ruling on real estate commissions and how it may impact home buyers and sellers. He had mixed views on the ruling.Tyler shared updates on his recent trip to Buffalo and some of his upcoming speaking engagements and projects he's working on.In the Q&A portion, Tyler provided advice to various commercial real estate questions from listeners regarding development projects, land ownership structures, and strategies for new investors.

Key Takeaways:- There will likely be distressed commercial real estate opportunities coming up, but it may not be as widespread or at "pennies on the dollar" prices as some headlines suggest due to the large amount of capital on the sidelines looking to invest.- Distressed opportunities will be very market-specific, with some markets like San Francisco facing more issues than growth markets like Dallas, Nashville, etc.- Finding distressed deals may involve working directly with banks on problematic assets they want to offload, or approaching distressed owners directly for off-market deals.- When evaluating distressed deals, it's important to underwrite the fundamentals of the specific property and market to identify upside potential.

Key Takeaways:Commercial real estate transactions seem to be picking up based on the data Logan and Tyler presented from their brokerages. Pipeline values and number of deals are increasing.It's important for brokerages to track key performance indicators and visualize data to understand where opportunities exist to improve. This helps brokerages be more strategic.Developing an ideal customer profile helps brokerages understand who to target and how to craft their messaging. It also acts as a screening tool for opportunities.Communication and sharing data visually with the team is important for motivation, accountability and understanding the brokerage's progress and goals.Utilizing tools like CRMs, dashboards and email marketing can help brokerages improve processes and track leads better.

Key Takeaways:- Tyler provided updates on projects being worked on at Peerless Mill, including a second version of the Wash project and plans for industrial outdoor storage.- He discussed upcoming events like CCC in Nashville on April 25th and his guest appearance on Brandon Turner's coaching call on April 28th where he will discuss getting started in commercial real estate.- Tyler answered questions about mastermind groups he finds valuable, partnering with sellers, and cap rates for self storage properties. He emphasized looking at the experience and track record of investment sponsors over projected returns.

Key Takeaways:- Retail occupancy in Nashville is above 97%, showing retail's resiliency despite challenges like the pandemic- Rents have been increasing, currently averaging around $27 per square foot but higher in areas like East Nashville - Investment sales of retail properties have been occurring, though development of new retail space remains low at around 1.1% of total inventory- Mixed-use and smaller footprint retail spaces around 5,000-10,000 square feet have been more attractive to tenants and landlords

Key Takeaways:Be wary of overly optimistic financial projections that are not supported by strong fundamentals in the current business modelBalance visionary leadership with experienced operations Rigorously stress test tenant demand and credit risks when assessing viabilityDiversify your tenant base across different industries and company sizesTrust your calculated underwriting thresholds and don't get caught up in hype when negotiating deals

Key Takeaways:- Tyler is focusing more on YouTube content and livestreaming to educate people about commercial real estate. He's seeing good growth and engagement on certain videos.- His salt ranch development project is nearing completion of permitting but has faced delays from the city.- He's working on an exciting lease deal at the Peerless Mill property in Chattanooga.- CCC Nashville, a major commercial real estate networking event, is being launched in April that Tyler thinks will be very beneficial for people in the industry.

Key Takeaways:- Crexi is a leading commercial real estate marketplace that aims to make the commercial real estate process more efficient and accessible through their open platform and tools- They are leveraging technologies like AI to enhance listings, target users, and generate reports to help brokers and investors- Their auction platform is facilitating large commercial real estate transactions and generating interest through live bidding- Brokers should focus on transparency, communication, and collaboration when building their sales teams to best serve their clients and partners

Key Takeaways:Commercial properties can be bought with no money down through creative deal structures like seller financing, partnering with existing owners, or raising private capital from investors. Getting a real estate license allows you to represent buyers and roll commissions into equity in deals, effectively buying in with no money out of pocket.Building skills in areas like leasing, property management, or renovation can allow you to partner with existing owners and earn equity without cash by adding value.Finding "killer deals" is a valuable skill partners will value in exchange for cash in a deal.

Key Takeaways:- Commercial real estate may have hit a cyclical bottom based on signals from large firms like Blackstone that prices have dropped 15-25% from peaks- It's a good time to buy real estate if you can get a good basis and hold for the long term of 7-10 years- Investors need to focus on deals with strong historical cash flows and low-risk assumptions- Leverage will be lower around 55-60% so investors need patient capital willing to hold for the long term- Debt strategies are becoming more popular for large funds as an alternative to equity

Key Takeaways:The importance of taking action and gaining hands-on experience through initial real estate property purchases.Starting small and affordable with one's first investments to minimize risk while learning.Aiming for at least an 8% cash-on-cash return from investments.Improving real estate investing skills over time through additional purchases and focusing on areas like deal analysis, financing, and property management.Treating real estate investments like a business by implementing systems, building a team, and focusing on cash flow, appreciation, and cost basis.Specializing in a niche market by conducting research on opportunities and becoming an expert in a targeted area.

Key Takeaways:Tyler discussed looking at commercial properties under $250k, such as a 2500 sqft warehouse near Houston for under $250k that could provide a 10% cap rate. This shows opportunities exist for lower budget investors.He emphasized the importance of networking to find deals and partners, such as through events like CCC.When asked about first-time commercial investments, Tyler recommended flex space, self storage, or other trending property types that may be easier to find investors for.He provided advice on funding options even with poor personal credit, such as partnering with heavier investors or syndicating deals.Tyler discussed opportunities in converting non-traditional properties like car washes into alternative uses like restaurants or micro-units.

Key Takeaways:Cultivating relationships with banks, lenders, special servicers is important for finding distressed property opportunitiesNetworking groups like ULI, SIOR, and CREDO are good ways for brokers to meet developers and other professionalsSpecializing in a specific asset class or market allows brokers to become experts and better compete against generalistsThere are pros and cons to both small independent teams and larger brokerage teams, and brokers need to choose what aligns with their goals and personalityProspecting for off-market sellers requires manually calling owners and being discreet to maintain privacy for existing businesses

Key Takeaways:The top 10 real estate markets for 2024 based on the Urban Land Institute's emerging trends report, with a focus on investment opportunities in each market.Seattle, Raleigh-Durham, San Antonio, Boston, Austin, Atlanta, Dallas-Fort Worth, Phoenix, and Nashville are highlighted as top markets.The best investment opportunities highlighted include industrial facilities, multifamily housing, creative office spaces, life sciences lab spaces, and mixed-use developments.

Key Takeaways:Provided updates on several real estate projects including a hotel development and challenges with permitting.Discussed plans to launch a commercial real estate mastermind program and is seeking input on how to make it successful.Also mentioned writing a second and third book and is building a book launch team.In answering questions, provided advice on strategies for finding off-market deals, making offers, and networking through organizations.

Key Takeaways:Tyler and Logan started a new podcast segment to discuss their brokerage businesses each month for accountability and to provide insight into running commercial real estate businesses.Tyler's brokerage did $1.35 million in sales in January, lower than their quarterly goal but they have $56.6 million in active pipeline deals. They track metrics like leads, active deals, pipeline value and sales in Hubspot to monitor performance.Logan's brokerage aims to do $55 million in sales this year and has $23 million in active pipeline deals to work towards hitting their goals.

Key Takeaways:Real estate investing in 2024 will require more work but also offer more potential rewards compared to recent yearsTop markets for investment opportunities include Nashville, Raleigh, Durham, Austin, Phoenix, Dallas, Fort Worth, Atlanta due to job and population growthIndustrial, multifamily, and retail sectors maintain positive outlooks while office faces challenges from remote workTarget economically vibrant cities and future-proof buildings that can accommodate different tenantsMaintain rigorous underwriting and stress tests for dealsLook for off-market and distressed opportunities for lower pricesBe patient and selective with deals as the market goes through a repricing period