The Commercial Real Estate Investor Podcast

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

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

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

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

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

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

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

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

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

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