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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Commercial Real Estate Investing From A-Z

What to Look for in Industrial Properties + Negotiation Strategies + Best and Worst Industrial Investments

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. I have a girl in my hometown, I coach her, we work together, she comes to my house. She’s that real personal touch of somebody who knows the area, she can say, I know that town, I went to lunch there two weeks ago, and making sure that you’re at the highest level where you can have those conversations to build that rapport. For our mailers, it’s the same thing. I like to target properties from 5,000 square feet up to 200,000. When you’re marketing to those, you run across a lot of different types of owners, from institutional type owners that own lots of property to, in smaller properties, it might be the only building that they own, they might have had their business in it. The letter that they get from me, it’s thick cardstock, you can feel the difference, it has a real stamp, they have machines now that actually write with a real pen for the address and the return address and the letter that’s inside. It costs more. I put my business card with my picture in it in every envelope before we seal it up. When they’re talking to me, they can see the person that they’re talking to. And I don’t know how much of a difference that makes, but I definitely have had people comment on it, they can look at the person that mailed them the letter and make that connection. That’s how I target and get people to respond to my letters when I’m mailing, or get people to actually pick up the phone and allow my assistant to set that appointment. 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. Darren Smith darren@solidgrowthproperties.com --- Support this podcast: https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

How to Buy Industrial Properties? What is Happening in the Industrial Space?

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Tax Benefits of Investing in Real Estate

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Short Term Rentals: Should You Invest in This Asset Class?

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

How to Manage Properties Remotely: All of My Secrets!

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

What are the Benefits of NNN Leases and How to Find National Tenants

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

How a 21-Year-Old Purchased 30 Units with Zero Money Down

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

5 Syndication Questions From a Podcast Listener

What 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. Renat Yusufov Bullpen renat@bullpenre.com --- Support this podcast: https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Pro-Forma & Most Profitable Asset Classes & Best Markets to Be In

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 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. So 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 really 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, which I call the dashboard or 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 reasonably land in terms of your total construction costs. Renat Yusufov: www.linkedin.com/in/renatyusufov www.bullpenre.com --- Support this podcast: https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Everything You Should Put in Your Pro Forma Calculations

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

10 New Tips For Real Estate Investing & a Lot More Info

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Where is Retail Going (According to Gen Z)

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

36-48% Cash on Cash? What Asset Class is That?!

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

What Are Some Best Practices for Raising Funds?

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://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

Is Senior Assisted Living an Interesting Asset Class? What Makes for a Good Operator?

Getting started with Commercial Real Estate Investing, or an experienced investor? This is a weekly podcast on the steps that I take to make my Commercial Real Estate investments (Retail, Office, Self Storage, etc) including successes and lessons learned. We cover advanced techniques for purchasing, operating, and exiting your properties, from the best people in the industry. You will learn everything you need to know about real estate investing. We are based in San Francisco / Silicon Valley and also cover how technology affects Commercial Real Estate, and how you can stay ahead of the game. Support this podcast: https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

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Commercial Real Estate Investing From A-Z

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