The Commercial Real Estate Investor Podcast

Key Takeaways:Tariffs will significantly impact commercial real estate, especially industrial and retail sectors, by increasing construction and material costs.Manufacturing relocation back to the US will take 4-5 years minimum, with full impact potentially taking 10+ years.Businesses are likely to face immediate price increases due to tariffs, potentially causing economic uncertainty and reduced transactions.Coastal cities and port-heavy markets may be hit hardest by import/export disruptions.Opportunities still exist in commercial real estate, particularly in value-add projects involving renovating existing buildings.Landlords should:Communicate openly with tenantsBe flexible with lease termsPrepare for potential vacanciesFocus on long-term strategiesThe current economic environment suggests caution, with an emphasis on making steady, conservative investments rather than seeking big wins.Interest rates may rise to combat inflation caused by tariffs, making current rates attractive for investment.

Key Takeaways:Occupancy dropped from the seller's claimed 93% to as low as 58%, but has now climbed to the high 70s.Partnering with a moving company (Six Demand Movers) provides unique advantages in filling units and getting above-market rates.Major operational challenges included:Transferring property management softwareOnboarding a call centerFixing maintenance issues (gate, HVAC, doors)Tenant retention strategy focuses on:Responsive maintenanceFlexible fee policiesBuilding relationshipsServing long-term, multi-unit clientsFuture plans include:Reaching near 100% occupancyAdding 40-52 new units using shipping containers and movable unitsPotentially expanding to 130-140 total unitsImproving property curb appealKey financial insights:Each unit is worth approximately $17,300Adding units can significantly increase property valueAvoiding marketing expenses creates substantial valueSeasonal considerations: Peak moving/storage season is March to October, with slowest months in January and February.

Key Takeaways:Location Matters: Choose a location that fits your specific investment strategy and asset class.Cash Flow is Critical: Aim for properties that can cover debt service, especially in the current interest rate environment.Environmental Due Diligence: Always conduct a phase one environmental report to identify potential contamination risks.Property Age Considerations: Older properties can have expensive maintenance issues, particularly with plumbing, HVAC, and infrastructure.Zoning Verification: Always double-check zoning with the city, as local tax maps can be inaccurate.Parking and Accessibility: Evaluate parking needs based on the specific market and neighborhood.Surrounding Neighborhood: Assess the condition of nearby properties and potential for future development.Tenant Compatibility: Consider how surrounding businesses and potential tenants align with the property's intended use.Feasibility Study: Do quick initial calculations to determine if a deal is worth pursuing further (e.g., price per square foot, potential rental rates).Investment Strategy: Look for opportunities to potentially double your money in 3-5 years through a combination of cash flow and appreciation.

Key Takeaways:Tyler hosted a successful CRE Accelerator Mastermind event in Birmingham, Alabama, where they covered topics like developing flex space, underwriting, and case studies from members.Tyler is planning the next in-person mastermind event in Nashville, which will focus heavily on underwriting practice and property tours.Tyler is under contract to purchase a 4,000 sq ft building in East Nashville to convert into an event space and YouTube studio for his business.Owner-occupying commercial real estate was highlighted as a good way for business owners to build their real estate portfolio.

Key Takeaways:Unconventional ways to monetize commercial real estate include renting out parking spaces, using excess land for storage containers, implementing digital billboards/signage, and leveraging technology and experiential elements.In the industrial sector, there is a "tale of two cities" scenario, with oversupply in big box warehousing but high demand for smaller manufacturing spaces.Retail faces challenges due to supply constraints and high construction costs, making it difficult for tenants to afford the rents.The office market is poised for a potential bull market, but will require creative destruction and adaptation to changing space needs post-pandemic.Integrating technology, such as VR, digital signage, and IoT, can enhance the value and attractiveness of commercial properties.

Key Takeaways:Being a generalist in commercial real estate is better than being a specialist, as it broadens your investment skills and opportunities.The numbers alone don't make a deal - you need to consider operational capacity, management ability, and local market conditions as well.Real estate doesn't always go up in value, and can experience significant drops in the short-term.Just because you find a good deal doesn't mean the money will automatically come - raising capital is an ongoing process that requires preparation.The 1031 exchange is not always the best option, and it's important to consult your CPA.Single-family rentals are no longer a good investment due to the high risk and low reward.

Key Takeaways:Industrial real estate remains resilient, with low vacancy rates, but older buildings may need upgrades to meet modern standards.The multifamily market is bifurcating, with Class A urban properties seeing more challenges, while Class B and workforce housing have stronger fundamentals in certain areas.The office market has structurally changed, with high vacancy rates, but there are pockets of resilience in medical office, Class A trophy spaces, and suburban mixed-use developments.In retail, grocery-anchored centers and experiential retail are performing well, while malls and big box retail continue to struggle, especially in weaker markets.Potential opportunities exist in distressed office, hospitality with expiring CMBS loans, retail repositioning, and affordable office/multifamily in good secondary markets, but caution is advised to avoid overpaying.

Key Takeaways:Leverage LinkedIn and social media to become a thought leader by creating valuable, client-focused content rather than self-promotional posts.Ensure your social media presence and brand aligns with the type of high-value clients you want to attract.Publish regular, data-driven market reports to differentiate yourself and stay top-of-mind with potential clients.Seek out speaking engagements and other opportunities to position yourself as an industry expert.Develop a system to proactively identify and build relationships with the key players and decision-makers at large industrial, retail, and corporate clients.When given an opportunity to work with a high-profile client, make it your top priority to over-deliver and exceed their expectations.

Key Takeaways:Be very cautious of deals with extremely high cap rates (over 10%), as there are likely underlying issues with the property or tenant.Thoroughly vet the seller and ensure they are the actual owner of the property before proceeding. Verify ownership through title work.Conduct thorough due diligence, including a Phase 1 environmental study, to uncover any potential problems or liabilities.Have a commercial real estate attorney review all lease and purchase documents carefully before moving forward.Work with reputable title and escrow companies, not directly with the seller, to protect yourself from potential scams.Ensure the tenant's financials and business model make sense for the high rent being paid, as it may not be sustainable.

Key Takeaways:Explore alternative financing options like bridge loans, floating rate loans with rate caps, assumable debt, and seller financing to make deals work in the high interest rate environment.Underwrite deals conservatively, stress-testing for debt sensitivity and ensuring NOI durability. Focus on realistic rent growth and expense assumptions.Plan for longer hold periods of 7-10 years, as the 3-5 year flip mentality may not work in the current market.Look for distressed opportunities, especially properties facing debt maturities that are forcing owners to sell or refinance on unfavorable terms.Consider value-add opportunities, especially in newer vintage properties from the 2000s, as they require less capital expenditure compared to older 1960s-1970s properties.Tighten expense management and focus on value-add improvements to boost NOI, as rent growth alone may not be enough.Be conservative in underwriting, build in buffers, and focus on the long-term rather than short-term market fluctuations.