Commercial Real Estate Investing From A-Z

Brian Spear, Principal at Sunrise Capital, discusses the benefits of parking lot investing, including high demand, prime locations, and low maintenance costs. He explores the unique appeal of parking lots as a niche investment with potential for sustained cash flow and land value growth. Challenges such as scalability and financing options are also touched upon in the podcast.

How to raise a $16M syndication in one day? What are the major things they wish they knew earlier in their careers? Mark Shuler and Josh Welch, founders of SGRE Investments and Three Pillars Capital share how they got there in their real estate syndication career.You can read this entire episode here: https://bit.ly/3Ec87SXHow were you able to raise $16 million in one day? How did you arrive at that level?I'm not sure we know how we did it, but we managed to do this crazy raise. We had done a lot of preparatory legwork, we both have a very deep database of investors, we've done enough deals now that we have a lot of frequent fliers. As you do a deal, your database continues to grow as people talk to friends and family. We just teed it up, we do a very detailed deal deck and offering memorandum. We do a lot of preparatory emails, getting people in the space to understand that the deal is coming. At this point we're over raising on every deal, everybody knows that we're over raising so they're committing fast and early on the deals, and it's a record for us. At one point, we were raising a million dollars an hour for eight straight hours. We shut it down in 24 hours, Josh was getting pummeled with emails and phone calls.It seems like you guys are good partners, how did you guys meet? How did this partnership come about?Mark and I have been working together for years now, we've done several deals together. We crossed paths, and decided to team up and go on this one, and to the next and we just kept the relationship going.What are some of the things that you both wish you knew earlier in your career to expedite things for other people that you think that is important for them to know today?Something I wish I would have known from day one is how important processes are to the operations and how important the operations are in general. There's a huge misconception in this industry, that if you can raise money you can be a sponsor, and go run a deal. The more of those you can do, the more successful you'll be. But the reality is, if you don't know how to operate these assets, day over day, year over year, they can quickly go south on you. A lot of people in this market have gotten bailed out by rising prices. There will be a day where prices will flatline and stabilize, maybe even go down a little bit. Those who pay top dollar for something that is not running well will not get bailed out. The biggest lesson is that I could have put more emphasis on in the beginning is how to get a better process in your operations.Either get a mentor, get educated, or get a master's degree. You have to build on your knowledge base, though experience is a great teacher, but some of it you just have to sit down and read. It's not what I wish I had done, it's what I did. I feel like I propelled my career forward by 10 years by doing that. The other thing that you have to learn in this industry is how to raise money properly. I joined a mastermind to help me with that and educate me, in one year I probably shave 10 years off my learning curve. To figure out how to raise money effectively is the fruit of my labor from last year. If you figure out the process of raising money properly, you can raise a lot of money. That can be with anything in this industry, or with running a private equity firm, processes everything. www.sgreinvestments.commark@sgreinvestments.comwww.threepillarscapitalgroup.comjoshuaw@threepillarscapitalgroup.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Why should you invest in the metaverse? Which metaverses should you invest in today? Is Decentraland more democratic and Meta a socialist metaverse? How should you start educating yourself? Dave Carr, head of Business Development at Parcel, who also previously worked at Decentraland, one of the most popular metaverses, shares his knowledge.What would you invest in today?I love the idea of the metaverse, that it enables creators to do all sorts of fantastic things and own their creations as well, for musicians to not have to get their works through a platform that somebody else owns and takes the vast majority of their money from. For me, it's about virtual worlds that are enabling creators to get their work out there, but are also incentivizing users to come and use the space, and deriving benefits from that. If you look at it at a very specific level, the NFT's that have come out this year, all of the different avatars, the different projects have sold for an extraordinary amount of money. A lot of these NFT projects have just disappeared or gone very quiet, some of them have failed, the ones that survive are the ones that are able to create a really strong community around them, that have shown a very clear roadmap of where they are headed, and how the benefits will be rolled out to people who own it.It's the same in terms of physical investments, you buy a piece of land in an area that is going to develop and be valuable to the people who move into that space. A golden rule is to avoid putting all of your eggs in one basket.Is it be safe to assume that places like The Sandbox and Decentraland are more democratic and Meta would be a more socialist world?In terms of control, you could say that Decentraland and The Sandbox are more democratic. That's a whole other discussion in terms of the governance structures of these open virtual worlds in the open metaverse because even the governance structure is still a test case if you like. But in terms of Meta, I'd be very surprised if they handed over control to the users, but I don't see that happening. Facebook, has been incredibly successful because you are the product and your data has been monetized. Some people are very happy with that, it's absolutely fine. It'll be a different experience to the decentralized worlds, I don't see it as a bad thing for Meta to be entering into this space because it educates people to what else is out there. The people can make the decision as to which experience they want to devote most of their time to.Anybody could come up with the next Decentraland and they can all create these worlds, tell us why we should invest in these worlds?Yes, anybody could come along and create a new Decentraland, and try to replicate this and potentially do it better. The benefit that Decentraland has is that it has the lead time it has been doing this longer. The Sandbox is not fully live yet, but it has been doing the backend development work, they will get it right when it launches, and be sure that it is working properly. Similar to Decentraland and other virtual worlds, they have the runs on the board, they have the brand partnerships in place, they have the content community familiar with it, they have the architects in their building, and they've been developing those people as well and supporting them. If things go according to plan then they will continue to be one of the more established worlds. They've made the mistakes that everybody is yet to make, there's a lot of benefit to be had in being first to market.Dave Carrtwitter.com/parcelnftwww.meetparcel.comdave@meetparcel.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What is the metaverse in very basic terms? Why should someone invest in land in the metaverse? Can you be a developer in the metaverse? How to monetize it? Dave Carr, head of Business Development at Parcel, who also previously worked at Decentraland, one of the most popular metaverses, shares his knowledge.What is the metaverse, from someone that would not even know it is to begin with?The Metaverse is a more immersive version of the internet. In the very early days of the internet, you would go to very specific websites, now it’s very much a seamless part of our lives. But you would visit these destinations, and you would do things and then you would go to another website. I think we can look at the current virtual worlds as these new versions of these websites that you used to visit. If we take an example of Decentraland, you can access it via your regular browser. There are other virtual worlds that you can access from a desktop client, like an app that you will put onto your computer, there are some worlds that you can access through your virtual reality headset and you are effectively walking, or your avatar is, and you look around and see buildings that have been created. You're able to play games, it's what we say is an immersive version of the internet. Then brands and organizations can have an existence and a profile in these virtual worlds, whereby because of its interactive nature, you can interact with brands. So what that means for virtual real estate is that if I am walking through a virtual world, I'm walking around on land that can be purchased and can be used to create a shopfront, a game world, an art gallery, all sorts of different mechanisms and experiences for the people who are logging in and walking around these worlds to interact with an experience.I get the part that we don't have to deal with tenants, we don't have to deal with leaky roofs or cleaning up after anything, you can lease the property out. Is there anything else that an investor would be able to monetize within the metaverse that we haven't covered yet?I think anybody looking to buy land in a virtual world really needs to think about the long game. Let's think about it like a video game, you can be a console owner, like you can own PlayStation, an Xbox, or a Nintendo, but if you don't have the games and the experiences on that console, it's just a box. I think you can probably think about this the same way with virtual worlds, you can build these worlds, you can sell the land. But if there is no value being added to these properties, in the form of festivals or games that people enjoy playing, or content that makes people want to visit and also come back and revisit then the land will not have the value. You can rent that land so there can be a rental income, there are also things like fractionalization that could potentially divide up the land and sell off those individual parcels.Does that mean that I could build a multifamily apartment complex in the metaverse, or condos and sell each unit?I imagine that's entirely possible and that comes down to fractionalization. If you look at some of the things that are coming up with just digital art NFT's, whereby a group of people individually can't afford to buy this one piece of art so they pull their resources, they then identify those pieces that they each want to have shared ownership. And just as a developer puts up a building, then each of those different apartments are bought by different people, and they form that corporation that ends up managing the building, then I think there's no reason why this couldn't happen in a virtual world.Dave Carrtwitter.com/parcelnftwww.meetparcel.comdave@meetparcel.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Imagine building a $100M real estate company, losing it all, and then going to jail on top of it? That's what happened with Mike Morawski, he was sentenced to 10 years in federal prison, charged on wire and mail fraud after transferring funds from one syndication to another without notifying his investors. He discusses his top 5 lessons learned.You can read this entire interview here: https://bit.ly/3KQJYU1Let’s start with the growing too fast mistake. How slow is ideal for you and why?I catch myself sometimes wanting to go do something else, I have to put a pause and not look at deals because we're underwriting a whole bunch of deals right now. We're not willing to pull the trigger yet because we're waiting to get a little bit more down the road with stabilization, we bought our first deal, what we're doing is pausing a little bit. We're doing capital improvements, turning some units, we will get 25-30% of the complex turned, then we’ll go do the next one once stabilization processes are underway. Whenever you walk into something, just walk cautiously. I think too often we walk into things with so much excitement, so much vigor and energy that we don't pay attention to the little things, take the blinders off and use your peripheral vision.Moving on to the lawyer issue, if I were to ask a lawyer for some advice, I would follow their advice and think that I'm doing the right thing. Have you implemented something around that?Yes, I became the question guy, people say that I ask way too many questions, and I say it's because I'm curious and I also wanted to make sure that I'm safe. I don't think we should ever be afraid to ask questions, no matter how big or small, and we need to fact check. Just like when a doctor said you had cancer, and you didn't think you had it, you go get a second opinion. I think it's the same thing in the legal profession.When you're held at that higher standard, because you raise capital, or you have somebody else's best interest at hand, you're the fiduciary, and you need to tell them everything. Transparency and communication is more important today. You should have more investor calls, newsletters, written documentation, pictures, and things that the investor can't ever push back and say, I didn’t know this. When occupancy drops, call your investors and let them know what you're trying to do to solve the problem.In terms of vacancy, what was it before and what ended up being during the crisis?We would buy properties that were typically low 80s and high 70s in occupancy, people didn't want value add back then. Everybody loves it today. So we would buy these value add deals, and we would turn them around. We actually had occupancy rates in the high 80s, low 90s, 92% is where we averaged. When 2008 rolled around, occupancies dropped back into the high 70s. And it was overnight, and some properties went even further than that. I owned a deal in Anderson, Indiana, when we bought that property it was rated on a list out of of 275 by Money Magazine, the number three city in the country to raise a family, we bought that property, and within nine months it was fourth from the bottom, it was 281. Anderson was in the automobile industry, and those were one of the industries that got hit the hardest in 2008, automotive and transportation. We were heavily invested in markets like that. As a result, businesses went out of business, and people lost their jobs and had to move. I had a property manager call me on a Monday morning from this property in Anderson in tears, saying, I have 30 moving trucks in the parking lot this morning. How do you weather that storm? This goes back to being under capitalized, we didn't have enough money.Mike Morawskiwww.mycoreintentions.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How to deal with the worst possible outcome when it comes to real estate investing? Mike Morawski has dealt with the ultimate challenge, he was sentenced to 10 years in federal prison, charged on wire and mail fraud after transferring funds from one syndication to another without notifying his investors. He explains how he has overcome this life changing moment.You can read this entire interview here: https://bit.ly/366pNSJWhat happened along the way that was a mistake? What were the CAP rates at that time?I built a $100 million company with 100 employees working for me. We were in five markets around the country with 4,000 apartments. I thought that I had a team behind me that was getting the work done in restabilizing properties, but that wasn't happening. We should have taken a property, got it stabilized, and then gone to buy the next one, but I didn't do that. As an example, in 2007 I closed 17 transactions for 2,700 units, which was a lot of real estate in a quick period of time. I was undercapitalized and didn't raise enough money, I was over leveraged in that I bought all that $60 million worth of real estate at an 85% loan to value.Cap rates were 12-14%, they were a lot higher than they are now. As a matter of fact, I wrote a book called “Exit Plan”, and somebody was reading the book six months ago, and he called me to ask if I really bought that deal at a 13% CAP. I said yes. The funny thing is that I know the investor who just bought that deal with 4% CAP. It just goes to show you where the market is.You had a huge buffer with that high CAP rate, people today don’t have that much buffering in case of an additional 10% vacancy rate. Even though you were at an 85% loan to value that CAP rate is pretty high, so what happened after that?I just want to revisit that 85% loan to value, I don't think anybody should be in a real estate deal that they're not at 65-75% LTV. I've been looking at loans today, and some lenders sent me an email saying that they have loans at 80 and 85% LTV and I thought that's suicide.I had all this real estate, and 2008 comes around, it was the worst economic crisis that the country has ever seen. What happened was people started to move out of apartments, the market shifted and we had all this bad paper and foreclosures go to the market. My thought was, people are going to lose their house and they're going to need a place to live. Well, that wasn't what happened. People went home and doubled up, so our occupancies dropped. It was like hitting a brick wall, we started to come off of the rails and unwind as a company.By 2010, my occupancies had dropped and my NOI had dropped as a result of it. We went to some lenders and they helped us re-stabilize deals, but we still couldn't mitigate the storm. I had 38 companies at the time, and I had a number of deals that were very profitable and others that were not as profitable. So I started to take money from my profitable companies and move it into my non profitable companies. And my thought around the whole situation was, this is a recession and it tends to last 18 months. There’s a 12% correction in the marketplace, and then it bounces back. Well, this lasted for seven or eight years, it had a 40% correction in the market and people are still affected by it today. I thought if I move money between companies, and when the market comes back, I can put the money back.Did your lawyer tell you that you had to disclose that? Did he get charged for guiding you in the wrong direction?No, that was not ever part of the conversation, and I never thought I was breaking the law. They held me to a different standard because I was a licensed professional / syndicator.Mike Morawskiwww.mycoreintentions.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Where can you find commercial real estate deals in today's market? I will give you several ideas of how to find deals both online and offline. It's not magic, it's just work!You can read this entire episode here: https://bit.ly/3LUm0bHWebsitesLoopnet.com is a good place to start looking for commercial properties, but the most popular and more modern website is called crexi.com. Some brokers post their listings on both websites, but you can find different properties on both. On Loopnet, you may be able to find listings from brokers that have been in commercial real estate for a long time. On Crexi, you may find more properties for sale from more technologically savvy brokers.People You KnowDepending on how experienced you are, you will be able to get deals from people that you know. As your network grows their deal sizes, they will be selling their smaller properties so they can get into bigger properties. Sometimes they will offer these properties to you and you can negotiate. I know many people that have bought properties from people that they knew because the seller knew that their friends would close the deal, they did not involve any brokers and the buyer got a discount.Brokers Mailing ListsPut yourself on mailing lists for your targeted asset class, from brokers that specialize in your asset class. How do you get access to these mailing lists? For example, you can search for Car Wash brokers, and you will see a few of them that only specialize in car washes, sign up for their mailing list. Type whatever asset class you want, and start putting yourself on their mailing lists on their websites. I get so many emails every single day from brokers that I signed up with a while ago who sell properties in the asset classes that I’m interested in.Cold CallingI have interviewed people before that have purchased deals by cold calling property owners, they build a relationship with these people over time. Sometimes it takes one to two years of cold calling the same people every six months or so, you do have to take good notes on what each owner tells you, for example, if they have a family, or if they tell you to call back in six months, follow up in six months. By the time you reach out to them,Work as a Commercial BrokerYou will get first-hand access to deals, you can even put your commission in the deal and the seller will not have to pay the other half of the commission for the entire five or 6%. They will just pay your side of it, and you can even negotiate it and say that you won’t charge them any commission if they will give you a deal.Follow Up on Deals That Did Not CloseI have a document that is titled “Revisit in Q3”, it has a list of properties that I think are potentially decent deals if they stay in the market for a long time. They’re good properties but, in my opinion, overpriced, so I don’t think they will sell, and I want to see if they will still be available in three quarters, or two, so I can make an offer then.Build AI ModelsArtificial intelligence models can analyze properties that are a good fit for you. I met somebody that built a model for one of these companies that flip homes. What the flipping company did is, they gave all of their data on all of the best deals that they ever had so that the AI model now knows what property is available for sale today that will be a very good fit with the previous properties that sold successfully. And now, the software is feeding them these properties that are a good deal and will flip for whatever percentage they’re looking for.--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What are the top 3 ideas on how to make the transition from residential to commercial real estate investing? Amy Johnson, commercial real estate investor and principal at Y Street Capital shares her knowledge after being in residential for six years and moving to a successful career in the commercial space.You can read this entire interview here: https://bit.ly/3rFwFPsHow did you make the move from residential real estate investing and what made you think of moving to commercial real estate?We started in residential and went through that journey of house hacking our way through. What made that transition was really a lack of time. We got comfortable in the real estate world and we realized that doing these single units was too difficult to really scale and make it bigger. We felt like we needed to open our world up into commercial opportunities and that's when we made that switch from residential to commercial.What would be your top three lessons learned that you wish you knew before making the transition?1. Shadowing a professional. Go in, don't expect to be the professional on your first deal. Partner, or work with, or shadow somebody that has already done it. They've already gone through that, they already found the life lesson of XYZ and I'm never going to do that again. Go off of their learning curve for that. The easiest way to do that is you can usually be part of a syndication or something like that, or I've had people come and say, Hey, can I shadow you, and we can I work with you there. I'm careful with my time, but if you bring the right amount of value, maybe you bring the deal to them. We've done that with other people, they've brought us a deal, they said, I have this piece of dirt or I have this opportunity, I don't know what to do with it, but can I be part of your deal and learn from you, if I bring this to you, that's always been a win win. That will probably be my top one, shadow a professional to start.2. Selecting individuals that have other strengths than you. We all have different strengths and different superpowers. You need to surround yourself with other people that have different skills than you. For example, I'm terrible at Excel, it sucks the life out of me, but I love having conversations, I love networking, I can do that part. So I try to align myself with other people that are really good at the other parts. And we make a really powerful team.3. Try not to be a generalist, it's okay to have more than one type of asset that you're in. But if you're just chasing deals because you feel like it's a deal, and you're not mastering any of them. Maybe you're in flex industrial, then you go to storage, and then you go to retail and supermarkets or Dollar Generals, or you go to assisted living, or development. Those are all different things. They all have a very large learning curve in each of them. If somebody comes to me for retail, I'm sorry, I'm not a retail person. I don't do that. We try to stick to a bread and butter and keep to those specific things so that I'm not a generalist. We know those problems, so we know what to expect. It allows us to turn things over faster, and with less errors.What are some horror stories that you went through and how did you overcame them?The biggest one was not having the right amount of reserves. The second one was, everything takes longer than you expect it to happen. And that goes back to longer reserves. The third one is to not always rely on people's opinions of things, do your own research. The other one is that I'm never going to rely on $12-$14 an hour employees. That's probably the biggest horror story.Amy Johnsonwww.ystreetcapital.comwww.infiniterealestategroup.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What steps should you take to be able to quit your job and become a full time real estate investor? Bronson Hill, a syndicator and investor at Bronson Equity, who not only raised $15 million for his deals, but also just quit his job shares his path with us.You can read this entire interview here: https://bit.ly/3olStO6I had zero properties when I quit, but you did the right thing and you had real estate income before quitting. Can you share how your journey went?I admire you as well because like a lot of people say, I’m doing it, this is my new direction, burn the boats and just quit the job and I’m just going to go 100% into it. They do mentorship or other things, and then other people are a few months short of retirement and they’ve everything set up and all of a sudden they leave but I think I was somewhere in between. But there is a range of what people feel comfortable with.I had this relationship with my cousin and it has become a very transformational relationship. What he said to me was, everybody that he talked to wishes they had started in multifamily sooner. That principle really is the ability to scale or the ability to use other people's money, no matter how much money you have, no matter how much money you make. I had a couple of physicians that I worked with who made over $3 million a year, but they worked 80 hours a week. They weren't really financially free, they were kind of chained to have to go do that job. If something happened to them, they were disabled, they wanted to leave, they would just lose all of that income.Ask yourself, if adding another house, a duplex, a small multifamily, or whatever it is, is just completely overwhelming. If it feels like just way more work, then it's not really passive. That's a good passive or active test. There's really no such thing as a passive investment, but the idea of some things that are more passive.Were you able to cover your expenses by the time you left? You don't have to share exact numbers.I live pretty modestly, especially for LA, I just rent a place here, we have $150 million in real estate assets in Florida, Alabama, Arkansas, Texas, and Georgia. For me, I was able to at 40 to 50k, now it's more than that, but I was able to say, I can cover my living expenses based on this. And then each time I do a deal, I get an acquisition fee. Now in reality, I've reinvested most of the acquisition fees back in the deals that I'm doing. But then over time, when you do deals, you'll have things start to cash out. So there's some money coming from this deal. Or everybody is rolling from this deal to another. We had a deal recently that we bought in Jacksonville in March for $27 million it was a 288 unit multifamily complex. And we just sold it in December for $37.5 million. It was a huge profit, that was a 75%-100% return. But for me, we're 1030 wanting that in the next deal. And then there are some fees when we go to the next deal. There's some opportunity there.When deals sell, there are opportunities there. In some ways it's kind of feast or famine, but I feel like I'm investing in the business. I'm growing, I'm learning, and I'm covering my expenses. And I'm continuing to see my net worth grow. In multifamily in particular, you're doing these long term deals, you know that the money's there, you know it's coming, but you don't always see it right away. You're taking less up front, but still with these acquisition fees, they add up enough to at least cover the business expense and cover my living expenses, and they continue to grow my net worth.Bronson Hillwww.bronsonequity.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

I'm going to be covering a topic request from one of our listeners "What happened when I landed in this country at 18 and how did I get to where I am today, 21 years later?" As you may know, I am originally from Brazil, and was very blessed to come here at 18. I landed in Silicon Valley and I still remember the first outing with my mom, she was explaining to me what the sign "Now Hiring" meant in Portuguese. I remember being so excited, because I saw "Now Hiring" everywhere that I went. In Brazil, we don't get these many opportunities. I got my first job at Mervyn's, and also worked at Blockbuster and Wells Fargo while going to college. After buying a music player with my first paycheck, I was pretty frugal and decided to start saving up. At Blockbuster, they absolutely loved me, I got promoted within one month of being there going from $7.25 an hour to $7.50 an hour. I got promoted to assistant store manager. And the reason that they loved me was that I was just working.Sign up for our newsletter at www.montecarlorei.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support