Claim OwnershipThe Commercial Real Estate Investor Podcast
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© 2020 Tyler Cauble
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Welcome to The Commercial Real Estate Investor Podcast where your host, Tyler Cauble, covers the ins and outs building wealth and passive income through investing in commercial real estate. Tune in for investing strategies, leasing & management tips, market updates, and more.
333 Episodes
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Key Takeaways:Public-Private Deal RisksThe public took all the financial downside while the private owner (Jeffrey Loria) gained all the upsideNo accountability or performance clauses in the dealLack of transparency and no public voteFinancial Structural ProblemsRevenue bonds backed by volatile tourism taxesHigh-interest, long-term debt ($1.9 million bond projected to cost over $1 billion)Principal payments don't start until 2026, extending debt to 2048Real Estate Investment LessonsDemand drives everything - the Marlins had a small fan baseVerbal promises aren't enough; development commitments must be in writingAlways conduct independent financial reviewsArchitectural beauty can't compensate for poor financial fundamentalsConsequencesStadium surrounded by empty lotsNeighborhood saw minimal economic developmentLoria sold team for $1.2 billion, making hundreds of millions in profitAttendance dropped from 2 million to 800,000Political backlash, including mayor's recall
Key Takeaways:Abandoned buildings offer hidden investment opportunities that most investors overlookEvaluate potential properties using a three-part framework:Location-driven demand Structure adaptability Zoning and incentivesSteps to get started:Understand construction costs Research tenant demandLearn to creatively reimagine building spacesProfit potential comes from:Buying properties at low square footage prices Transforming them to create income-based value Potentially generating six to seven-figure profitsKey mindset: See potential where others see problemsDon't be deterred by lack of current cash flow Look for buildings others consider too risky or complicatedPractical advice:Start small Take action Build momentum Learn about your local market
Key Takeaways:Passive Income Strategy:Start with an active, high-value deal that forces appreciationUse a 1031 exchange to roll gains into a passive, cash-flowing investmentAvoid getting stuck in low-return propertiesSpecific Example (Buena Vista Deal):Bought land for $618,000Rezoned from 11 to 63 unitsSold for $1.575 millionUsed 1031 exchange to invest in a self-storage facilityInvestment Approach:Step 1: Take on an active dealStep 2: Force appreciation and exitStep 3: 1031 exchange into a passive investmentStep 4: Repeat the processKey Principles:Build wealth through strategic deal sequencingFocus on creating serious equityMove from working for money to having money work for youAim for scalable, long-term investmentsOutcome:Transformed a land deal into a self-storage facilityGenerating $15,000 monthly passive income per partnerAvoided immediate tax liability through 1031 exchange
Key Takeaways:For new development projects, investors typically want to see a 20% or higher Internal Rate of Return (IRR).An 8% return is considered too low for development projects, which are inherently risky.Equity multiple is often a preferred return metric, with investors looking for around 2x equity multiple in less than five years.When vetting contractors, it's crucial to:Talk to other developers they've worked withInspect their job sitesCheck their professionalism and documentationSeller financing depends on:Talk to other developers they've worked withInspect their job sitesCheck their professionalism and documentationSeller financing depends on:Talk to other developers they've worked withInspect their job sitesCheck their professionalism and documentationDown payment amountBorrower's track recordProperty type and potential riskMarketing and finding tenants requires active prospecting, not just putting up a sign and waiting.For commercial real estate investing, having a track record is crucial - even a small first deal can open doors for future opportunities.Returns and deal attractiveness vary by market, location, and specific project details.
Key Takeaways:Deal Flow Framework (DEAL):Discover: Uncover opportunities before they hit the marketEngage: Build relationships with brokers, owners, and key playersActivate: Create systems to track and follow up on leadsLeverage: Use your network and track record to scaleThree Main Reasons Investors Struggle to Find Deals:Being passive instead of actively seeking opportunitiesWeak broker relationshipsLack of consistent follow-up system Commercial Real Estate Insights:Best deals rarely appear on public listingsRelationships are crucial in finding opportunitiesProactive approach is key (direct outreach, networking, calling owners)Treat deal finding as an ongoing process, not a one-time effortPractical Advice:Spend 30 minutes weekly working on your deal pipelineBuild relationship equity with brokersUse a CRM or spreadsheet to track leadsConsistently follow up with contactsAttend networking events and broker meetings
Key Takeaways:Don't gamble in commercial real estate - have a clear strategyDevelop a Buy Box framework with 5 key steps:- Investor Identity - Asset Class Clarity - Market Focus - Financial Filters - Operational BoundariesKnow exactly what you want before investing:- Your investment goals - Desired property type - Target market - Minimum financial returns - Level of personal involvementBenefits of a Buy Box:- Saves time - Reduces risk - Provides clear investment criteria - Helps quickly eliminate unsuitable dealsFocus on:- Local market knowledge - Matching properties to your personal investment style - Having clear, predefined investment metrics
Key Takeaways:Creative Financing: Brandon leveraged seller financing and creative deal structures to grow his real estate portfolio, starting with house hacking in East Nashville.Freedom Number Approach: He set a clear goal of $10,000 monthly cash flow to transition from tour managing to full-time real estate investing.Partnerships and Delegation: After reading "Who Not How," Brandon learned to partner with the right people and delegate tasks instead of doing everything himself.Family-First Business Design: He intentionally structures his business to prioritize family time, including not working weekends and setting clear boundaries.Hairy Deals Strategy: Brandon sees opportunity in challenging properties by:Getting a low cost basisThoroughly investigating potential issuesGetting accurate repair estimatesMitigating risks methodicallyDiversified Portfolio: He maintains a mix of single-family homes, multifamily properties, and commercial real estate, with a strategic approach to holding or selling based on potential appreciation.Continuous Learning: Brandon views mistakes as feedback and constantly adapts his investment strategy, such as being more proactive about loan terms and interest rates.
Key Takeaways:Residential real estate is a "second job" with low returns, while commercial real estate offers scalable, passive incomeCommercial properties generate higher cash flow by leasing to multiple businesses under one roof, typically netting around $15,000 monthlyCommercial real estate allows investors to force appreciation by repositioning assets, changing tenant mix, and improving property layoutProfessional commercial tenants are more reliable, focused on business growth, and less emotionally demanding compared to residential tenantsSuccess in commercial real estate requires learning specific skills like deal underwriting, building a specialized team, and choosing the right investment strategy
Key Takeaways:Commercial Real Estate Corruption:Bribery and corruption are prevalent in the industryCommon issues include:Brokers taking backdoor paymentsSharing confidential informationBribing politicians for zoning approvals Contractors inflating project costsInvestment Advice:Always get agreements in writingTrust is crucial when selecting a brokerUnderstand market dynamics before analyzing dealsGet multiple bids for projectsBe cautious of potential conflicts of interestIndustry Insights:AI is increasingly impacting commercial real estateSpreadsheet analysis is less important than understanding market dynamicsEthical practices are critical in deal-makingRecommended Practices:Always counter offersVerify contractor work and costsBuild long-term relationships over short-term gainsBe transparent and maintain professional integrity
Key Takeaways:Passive Income Strategy: Wealthy investors use triple net leases to generate consistent monthly income from properties leased to national brands like CVS, Dollar General, and 7-Eleven.Low Maintenance Investment: These properties require minimal management, as tenants cover all expenses including taxes, insurance, and maintenance.Long-Term Benefits:Predictable income with 10-20 year leasesBuilt-in rent increasesSignificant tax advantagesWealth preservationInvestment Characteristics:Typically cost $1-3 million6-8% annual cash returnTenants are stable, large corporationsOften purchased in cash or with favorable bank termsInvestment OptionsDirect property purchaseREITs (Real Estate Investment Trusts)Fractional investing through crowdfunding1031 exchangesKey AdvantageThese investments are boring but powerful, focusing on steady, long-term wealth building rather than short-term excitement.
Key Takeaways:Early Exposure: Jake's background in real estate started with his father, who was an investor and flipper, which inspired his career path.Networking Strategy: He attended 8-10 networking events weekly and meticulously tracked contacts, believing "network is my net worth."Persistence: Jake used cold calling extensively, making up to 400 calls a day to build his pipeline.Specialization: He focused on 15-75 unit multifamily properties, primarily in the Murfreesboro market.Mindset Shift: Transitioned from a transactional approach to being an investment sales advisor, which helped differentiate himself.Continuous Learning: Invested in himself through masterminds, reading books, and attending industry events.Deal Sourcing: Demonstrated skill in finding off-market deals, including a 16-unit property he sourced and closed after 134 days of follow-up.Marketing Strategy: Uses LinkedIn, case studies, and creative follow-up to keep deals and relationships alive.Technology Adoption: Utilizes tools like Intel CRE for underwriting and Gamma for presentations.Motivation: Being laid off from his previous job drove him to take control of his career and succeed in commercial real estate brokerage.
Key Takeaways:Start Investing Early: Residential agents should begin investing in real estate to build cash flow and financial freedom, rather than spending money on luxury items.Cash Flow is King: Focus on creating passive income that can cover your expenses and provide options in life.Partnership Matters: Choose partners carefully and do thorough due diligence. A bad partnership can disrupt your peace of mind and potentially cost you money.Commercial Real Estate Advantages: Commercial properties often have less drama, more stable tenants, and require less day-to-day management compared to residential properties.Patience in Investing: Don't rush to do deals just to do them. Wait for opportunities that truly make financial sense, especially in challenging market conditions.Time Freedom is Valuable: Prioritize controlling your time over simply chasing money. Investments should provide you with more life options and flexibility.Continuous Learning: Enjoy the process of investing, keep showing up, and understand that building wealth is a journey, not an overnight success
Key Takeaways:Flex Space Advantages:More versatile than multi-family real estateAllows for diverse tenant mixEasier to lease smaller suites quicklyMore logical and less emotional tenant interactionsInvestment Strategy:Buy properties that can be easily modifiedFocus on value-add opportunitiesAim for full occupancy and market-rate rentsTarget properties with flexible layout optionsFinancial Approach:Invest in properties with potential for double-digit returnsPrefer 7% preferred return for investors70/30 profit split between investors and general partnersCarefully manage capital improvements and operating expensesMaintenance and Leasing:Prioritize clean, functional spaces over aesthetic upgradesWork collaboratively with tenants on maintenanceSeek longer-term leases to increase property valueFocus on efficient space utilizationDeal Specifics (Friars Crossing):100,000 square foot flex space in ChattanoogaPurchased for just over $10 millionCurrently 91% occupiedGoal to fully occupy within 12 months and achieve market rents
Key Takeaways:Apartments are overcrowded, overpriced, and not the guaranteed path to financial freedom many believe.Alternative investment strategies like self-storage, flex spaces, industrial outdoor storage, and triple net properties can offer:More stable cash flowLess management hassleLower tenant turnoverPotentially higher returnsReal investment success isn't about accumulating the most "doors" but finding the right assets that:Generate consistent incomeRequire minimal day-to-day managementProvide flexibility and peace of mindSuccessful investors like Ryan Stackhouse demonstrated that pivoting from multifamily to other commercial real estate can:Reduce operational stressCreate more personal freedomAllow more time for family and personal interestsThe overarching message is to be open-minded, seek alternative investment strategies, and focus on assets that truly provide financial and personal freedom.
Key Takeaways:Advice on leaving W2 job for real estate syndication:Don't leave your W2 job too quicklyStart small and gradually build your portfolioFees from initial deals likely won't cover living expensesHave a backup income source while growing your real estate businessChallenges of starting a syndication:Raising capital is difficultInitial deals may not generate significant incomeNeed to be prepared for 2-3 years of limited earningsRequires careful deal selection and strategic planningPersonal updates:Closing first solo commercial real estate dealWriting third book on commercial real estateGrowing mastermind groups to 140-160 membersUpcoming events and speaking engagementsInvestment strategy recommendations:Partner on deals when possibleStart with smaller projectsBuild relationships in the industryBe patient and strategic about growth
Key Takeaways:Alec transitioned from residential to commercial real estate, focusing on industrial and flex space development.His first commercial deal was a 54,000 sq ft industrial property in a tertiary market, purchased through creative financing with partners.Raising capital is often the most challenging part of development, more so than the construction process itself.Alec chose New Braunfels, Texas for development due to faster site plan approval times and favorable building regulations.He focuses on building flex space under 12,000 sq ft to avoid expensive sprinkler system requirements.His current project involves four buildings with a total development cost of around $10 million, targeting rental rates of $16-$20 per square foot.Key lessons learned include the importance of:NetworkingUnderstanding market nichesManaging people and relationshipsCreative financingThorough due diligence
Key Takeaways:Economic Uncertainty: There are potential signs of a recession, with five major economic forces potentially suppressing US economic growth through 2025-2026.Commercial Real Estate Outlook: The market is unpredictable, with potential both positive and negative impacts across different asset classes (retail, office, multifamily, industrial).Investment Strategy Advice:Don't make decisions based on fearLook at investments with a long-term perspective (5+ year horizon)Keep cold calling and networkingFocus on buying good assetsBusiness Approach: Treat commercial real estate as a professional business, not a hobby. Use professional services like property managers and brokers.Current Challenges:High construction costsHigh interest ratesPotential economic slowdownReduced immigrationGrowing US federal deficitPractical Tip: For flex space, consider renovating existing properties rather than building from ground up due to current economic conditions.
Key Takeaways:Creative Capital Matters More Than CashYou don't need all the money upfront to invest in commercial real estateFocus on controlling the deal and finding creative financing optionsExplore strategies like seller financing, lines of credit, and investor partnershipsFinancing StrategiesConsider 100% seller financing for commercial propertiesUse lines of credit strategically if investment returns exceed interest ratesPartner with experienced investors to leverage their track recordInvestment GoalsAim for 18-22% internal rate of returnTarget 20% annualized cash-on-cash returnLook for deals with multiple value creation opportunitiesNetworking is CriticalAttend real estate investor eventsBuild relationships with potential partnersDo thorough due diligence on potential investment partnersRisk ManagementPrefer fixed-rate loans over adjustable-rate mortgagesPay cash for land investments when possibleAlways have a clear strategy for debt service and cash flowFocus on Creating ValueLook for opportunities to provide affordable spaces for businessesConsider unique amenities that attract tenants and employeesThink creatively about property development and usage
Key Takeaways:Relationship BuildingMaintain constant communication with property owners (quarterly or at least annually)Reach out with market updates, recent deals, or just to check inProspecting StrategiesLead with specific tenant requirementsTrack potential tenants and market movementsUse AI tools like ChatGPT to analyze property data and narrow down prospectsDeal Flow TechniquesBuild relationships across different market segmentsLeverage tenant representation to create deal opportunitiesConsider co-investing to add more value and understand ownership perspectiveTechnology and AI ToolsUse platforms like Placer.ai for retail market insightsUtilize AI for email drafting, data analysis, and communicationLeverage tools like Read AI or Otter for meeting transcriptions and team managementNetworking and VisibilityPost about your deals on LinkedInEstablish yourself as an expert in a specific real estate verticalStay top of mind by sharing market updates and transaction information
Key Takeaways:Create deals, don't just find themReputation compounds faster than capitalChasing cash flow can keep you poor - focus on equity and value creationControl is more valuable than ownershipOne great relationship can change everythingThe first deal is the hardestScale faster by focusing smaller (inch wide, mile deep)Brokerage is the best entry point for beginnersIf you're the smartest person in the room, you're in the wrong roomBuild your brand now - content is credibilityDevelopment will test every part of youYou're just one property away from changing your life
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