If you go on record a lot quoting other people, but you don't go on record a lot quoting yourself. So that maybe that's maybe that's wisdom, that's wisdom. That's the very definition of wisdom. What is up? Welcome back to how to invest in commercial real estate and we have, we have and with us today. Welcome. Happy to be here. Well, like normal, we're gonna get into some property, um, updates, not necessarily updates on the, the stuff we have, the stuff we have is doing great. Um I think this year we'll, we'll start to sell a lot of assets. I know we just, um, signed the Loy on our salad and Go o was so, so we should upload that soon. We're reviewing and I get, I did, we get sent three new offering memorandums this week, two on the Princeton deal and then the strip center in Owasso. So three different assets about to hit the market. One. We just kind of took off the market. So that's awesome. And he told me before the show, actually, he promised me before the show that we don't use the word promise that that's liability that we would sell 11 properties this year. Oh, wow.

I think with the timing and cap and interest rates coming down and probably more liquidity in the market. Q three and Q four could see a lot of exits. That's good because it's a time where we get to prove what we told the investors we were going to do so be great. All right. What about uh updates on stuff we have coming down the pipeline? Yeah. So, um man, this week, we got a deal pulled out from under. It kind of sucked. And it really just goes to show that there's a lot of pieces of shit out there. You know what I mean? That say things and and don't actually follow through with them and waste your time and money and bunny. Yeah, flew to flew, I mean, our flight got canceled. Luckily Andy, Andy flew up there and to this shit in the snow, you know what I mean? We spent a week, we literally read every single lease, extrapolated it onto one page. We put it in a 36 month budget. We were ready to go. It's a lesson for uh the people listening. If you're buying real estate, we had an agreed upon lo I they were working on a purchase and sale contract and they told us to go ahead, we negotiated the purchase and sale contract.

It's not executed and they told us go ahead with your DD. Uh And so we start spending some money, but that lo I is not binding on either party. And so they got a better offer comes flying in and they're like, ok, we know these guys have spent money but we're, we're choosing this other buyer, by the way. I love that deal and somebody came behind us and offered half a million dollars more than we did. So it's a good sign again for me because we almost got a deal. Half a million cheaper than market is, is what that tells me. It tells me we're looking at good real estate. I mean, we don't know if it's all gonna pan out, right. But at least some of them we weren't there alone. So it's, it sucks. But at the same time, we've got a lot of stuff in contract right now. I know we're pushing on, on the massive, uh sale lease back deal. More information on that coming soon. We have another shopping center deal. Um, in Chicago that principal actually came down today. Um David and the broker on the deal, Dan, and, and it was so awesome to meet these guys because so many times you do deals and, and I know we've said this to people that email us.

Like if we get serious enough about a deal, I don't care where you are in the U si mean, we'll, we'll fly to you, you fly to us. I think a lot of there's a lot of weight behind that. You know what I mean? And it prevents crap like this last deal being pulled out from under us. You wouldn't want to mention that deal because a lot of people said they wanted more information, wanted to invest in that deal or do we want to save that information? I mean, we can tell him it was, it was the Milwaukee shopping center deal which again just pissed me off. a dozen people say, hey, let me know. And so if you were interested in that, that deal got, got swept out from under us by a half a million dollar higher bid. So there's that damn. But anyway, in an effort to prevent that shit from happening again, we're meeting people now, you know, we're trying to work out a relationship going. Exactly. Um So anyway, that deal looks super promising. Um Target Shadow Anchor Little Outlet, um TJ Maxx Home Goods. Anyway, um great deal there. We're looking at another one in Michigan that Andy brings up to our attention every single day. He's like, hey guys, you look at the Michigan deal and then the next day he's like, yo, Michigan deal.

What up? Well, we also have uh uh a nice shopping center in uh ST Louis in ST Louis. So heard back on that one, number one pain in the state not hurt you. Number one, it's got a tenant. It's the number one pain to express in that area. You know, so I'm excited about it anyway. What else? Um Yeah, so the next development deal, let's talk about that one. So we've got similar to some of the kitty academies and learning experiences. We have another one that's coming up in Burleson, Texas right behind an HEB which is the predominant grocer. Uh Burleson, you got a high growth rate. Our banker saying that all of his kids and his coworkers kids are on wait list to get into daycare. So huge demand in it. Um I it should be a great, great project. We have our civil permit in hand. We think we can start construction probably about a month, month and a half after we close. Um we got the GC picked out who's doing the same one for our Grand Prairie deal. So, you know, I think it should be a great fast moving deal.

Um Great market, great growth, so excited for that one. When we launch them, we'll launch it probably next week. Ok. Yeah, if you're watching, it's probably on our website. So go there and check it out. Um The next one after that is another development deal at 96 and Garnett in Owosso. Um This is our third deal out there. Um The first one is completed and we're starting to sell off parts of the asset. The second one is, is partially completed and the tenants are starting to improve it. It should be open soon and then the third one. We bought the lane a few months ago and we're about to break ground on construction. So super excited about both of those deals. Uh Both of those deals should really come out in the next few weeks. We finished the, uh we already raised the money for the Garnett one deal. I know we're just about to mobilize construction. But um, other than that, we've got a Black Bear diner and Grand Prairie. So right in front of the major highway, that'll be a single tenant net lease deal, which should be good credit, uh expanding brand. And then we got a Costa Vita reverse build the suit which is kind of a healthier Chipotle out of Utah. That'll be up in Lubbock as well in Lubbock, Texas kind of by Texas Tech, which will be coming out probably in the next 60 to 90 days as well.

Anyway, to going on new pitch checks going, we're gonna sell 11 this year, maybe more. He promised more than 11 if you go on record a lot quoting other people, but you don't go on record a lot quoting yourself. So that maybe that's uh maybe that's wisdom, it's wisdom, very definition of wisdom. I think once uh we see rates come down in a lot of the larger apartment complexes, um shopping centers, things like that start selling, you've got 1031 money out there that needs to place 20 $25 million. You're gonna see a lot of the smaller deals because they're gonna pick up three or four deals. They don't have to manage, you know, starting to sell and inventory starting to come down. So I think, you know, as soon as we start seeing the first bit of interest rates come down, we'll see a lot of the larger deals move, freeing up capital to, to buy a lot of our product, which hopefully is Q three, Q four, which kind of lines up when stuff is gonna be finished with construction, is there anything else in the, the crystal ball that I should look out for this year? Nothing I can think of selling properties. Ok. Well, a lot going on.

We're gonna sell a lot of stuff this year. It sounds like we're gonna build a decent amount more in Q one. We're gonna buy some shopping centers. So be on the lookout for that. If you're not on the investor list, make sure to go to our website and sign up. There's a join our invest with this button, it's super easy and you'll get all of this information. But now we will get into the show and it's a really popular question, not from investors but from other people in real estate. And I think other people in real estate maybe just don't play nice together, but it's how maybe not how to structure a joint venture, but what to look for and how to find partners that you could do a deal with. Right. And why, why would you want to do a partnership? Right. Yeah. And I think that scares the crap out of a lot of people and a lot of people have a, have just a hard fast rule that I don't do joint ventures, you know? I don't, I don't play nice with others. It's mine. We don't see it a whole lot. So, let's talk about what are the reasons? It's a little unique. Tell me what we do, I think. Tell me the reasons. Yeah. So one of the biggest things is someone or a group that has a different value or skill set than you on the project, right?

And this is important. So it's, it's kind of like, uh well, I don't want to relate it to a marriage but um like us in our development um developments we did last year, right? A lot of these developers have amazing deals, but they don't necessarily have the equity or the ability to um get the debt for a lot of these deals. So they end up kind of fumbling them and excellently turn into a leasing broker and then just pass them off to another developer, right? So we're coming in and, and looking this, it's like, OK, they, they have the skill set and the ability to tap into that market. Maybe, maybe it's a completely different market, maybe they're um a ad FW broker for kiddie academies or the learning experience or whatever it is in Fort Worth, they're all over there working for kiddie academy or learning experience through whoever they're representing. They're looking for all of the best real estate. So they're probably gonna know that better than you are. So they have, in other words, they have relationships that we don't have. Right. Exactly in that, in that market, in that market. Right. And then they, they have the ability to capture a lease.

We didn't have the ability to capture the lease in the moment. So for us, we can immediately look at that and say, ok, you know, they've got value here and on the other side, um we've got value to them. It's like we, we can put a deal together, we can understand what they're offering, we can help interview contractors, we can get debt, we can, you know, write all of the legal, we can manage the investors, we can bring the equity for somebody who has the ability to capture a lease or kind of begin the preve process. That's an, that's a massive value add on, on both sides and it becomes a win, win for them to be able to, to capture that lease. And then just hand everything else over to us is, is, is a great thing for them, right? And for us. Yeah. So I think that's the first part in a joint venture is that both both sides are winning both sides need something from the other party that they don't currently have in order to do that deal or expand and it frees up time. I mean, for a developer they don't want to have to find, you know, call all their friends and family to raise the money. They don't want to have to go talk to 2030 different banks work through the, the process to get a loan.

They'd rather come to someone that can help do the project, they can manage the tenant, the construction and it frees up time for more people to do more deals. So instead of one person spending, you know, the entire year on three projects, they now can do, you know, five or 10 projects because they're just doing what they're good at. They're not focusing on a skill that they don't necessarily have or, or that they don't want to have because it's not what they like to do. Yeah. And that, that's literally the next point, right? It's somebody who's an expert in their field and if anything, your joint venture, your partnership with him is allowing them to go be an expert in their field and what they do and it allows you to be an expert in your field and what you do, right? So I think so many people and, and Joel talks about this in, in single family housing a lot, maybe not on the show, but we talked about it a lot a lot of people when they get into real estate, they're the plumber, they're the electrician, they're the real estate broker. They're, they're, they're the painter, they're literally everything. And that's the only way the deal works. Right? Like that's, that's not a good, that's not a good relationship. You get burned out and you can't scale that. Right. So that's it, it allows both of you to be experts in your space and only focus on that and we see that with tenants, right?

That's why these tenants don't own the real estate that they're in. They're acknowledging, hey, real estate companies can, can do this better than I can. I can make way more money. If I just sell chicken, I'll just lease my real estate. Let them deal with that and I'll just sell chicken. They, they literally focus on how do we open more locations and how do we do it the fastest we can do it with the least amount of capital. So they want to partner and structure deals. Uh that allows them to do that because their business is opening coffee or opening chicken place or whatever, whatever the business is correct? Ok. So let's say, well, I don't know, are you, are you done on why you would do it? Because once you maybe come across someone, what kind of values, you know, what, what kind of people are you looking for? Right? Like today we mett with some people, we'd never met them before we wanted JV with them. We wanted to meet him, face to face, right? And they wanted to meet us to see what, what kind of people we were, what kind of company we had. So, what are you looking for in uh AJ V partner? Yeah. So it's a compound question, I think first and foremost, you're dealing with people. So they need to be good people, right? You need to, first and foremost, they gotta be good.

Yeah, they, they need to be people of integrity that you believe will do what they say they will do. You know, hopefully you've, you've done some bad actor risk on them. You know, they have an office, they have infrastructure, they have a previous track record. They've, they've got good references, you know, you kind of personally check come out and, and they share some similar values and ideals. You know, I, I know Andy says a person that he wants to have a beer with afterwards is a, is a good rule of thumb. I mean, there's like you're gonna have to do business with this person. If you freaking hate them, you're gonna hate doing that business and you're gonna avoid that piece of real estate because you're like, oh shit, I gotta call so and so, you know, I gotta call Jack and something always will go wrong at some point in the relationship or, or, or something in a deal, a tenant leaves cost overruns. You know, how do you, how do you handle that? And if it's someone that you don't wanna call or someone you don't trust is going to call and tell you that something happened isn't someone we wanna do business with. It's all about transparency and how do we work together and if a problem comes up, are we going to try to work on a solution together rather than, you know, hide the information and just hope it gets better?

I mean, I think we've made a good point on kind of our newsletters and everything we do to our, to you guys, our partners is that we try to provide you all the honest information of what's happening and everything because I think it's, you know, the most important thing is whoever we work with is, is transparency because it's how you trust someone. It's interesting though. But how do you know for sure you don't? And so all you gotta do your due diligence but, you know, sometimes people can fool you, but a lot of times we do get a sense uh uh talking with them, interacting with them that you know what kind of person they are, but you don't know for sure. Uh So you always have to have your guard up a little bit on that. What I want out of a partner is I, you know, I, I tell people all the time that are investing with us, I'm gonna treat your dollars like my dollars and I'm gonna, I'm gonna treat you just like I would treat myself in that investment and, and I want a partner that's gonna do the same because when things go go bad, right. You, you wanna know that they can handle the fire and that they're gonna do the right thing or the reasonable thing in that situation, they don't necessarily have to be looking out for my best interest over their own, but they have to be reasonable.

Uh And, and when the shit hits the fan, so to speak, but also I wouldn't neglect uh making sure that you cover everything you can in the contract, right? You might meet them and think they're great people, but something's gonna go wrong. Maybe you don't know them as well as you think you need to always cover yourself in the contract, right? For sure. Yeah. And I think once you, you know, realize that you share some personal values and you say, OK, this is a person I could do business with, then it's about do we share those same values in business? Because a lot of the times those are, those are kind of a different, different set. So we'll dive into the deal and, and what I, what I mean is the business plan, right? How long do we want to hold this asset? What, what is our equity requirements? What sort of yield are we looking for? Like what sort of lens are we looking through this investment as and if we can, because everyone is underwriting real estate different, everyone's using a different model. Everyone's got different assumptions, everyone's got different game plans. Everyone wants a different rate of return on their money. Everyone uses a different leverage point like recourse, non recourse.

So there's a million different things. So when you start talking through some points and you're like, man, you know, we're, we're kind of looking at this the same way. I, I get, I get that, ok? You understand this and then you start speaking the same language, so to speak and you're like, OK, this is easy. And then some people you just don't like, what are you saying? How could we do that? Why would you do that? What do you mean you're gonna do this? And then you're just like, no, you know, and, and also when you're talking to someone and you see they've got a different skill set. I mean, we may look at the same property the same way, but they've got a construction department or a management department where they can do things that we would want to do, but have the scale and the internal capabilities to it makes it more interesting for us like we, we're not necessarily gonna go find a shopping center that's got 60,000 square foot of a box vacancy. But if we've got a partner that says I have the tenants that can do this. I've got the construction team that can split it up and it makes it more interesting for us to wanna work on a deal that would typically be outside our wheelhouse by partnering with someone that's got the internal capabilities to maximize our dollars.

Yeah. The only reason we're in development today is because we, we were willing to partner with somebody and we learned the, the development game. So I think it'd be important. Uh If you're, why, why would you use a partnership is to get into an area of business and gain expertise that you don't currently have and maybe you have to take, you know, the rough end of that uh partnership, maybe uh sacrifice a little bit more of the ownership. Uh because you're the one that's trying to learn, but it could get you in a whole new industry that you haven't been in before. So we did it with development, maybe self storage, we do it at some point, maybe in a hotel. We, we do it where we bring the equity and, and let them take the lion's share of the GP, but we learn that the hotel games. I don't know. Yeah. Um The, you know, that's a massive, if you can get past these things, you, you've got something right? You've got somebody you can work with, you've got somebody where you're looking at the investment vehicle, the same way you're looking at the debt mechanism the same way. Now, you just need to find a deal or think. Right. You've got, you've got the relationships you've, you've kind of got it. So, ok, let's, let's look for something and I can't tell you how many points where we've gotten this far in a relationship where we found that person that's gonna bring us into the new asset class.

We're jiving with them. We're talking things out. I'd get a beer with them. We're looking through the, the prospectus the same way, but we can't just, we can't find a deal. So I don't want to understate the next point. Like finding a piece of real estate to actually buy together is an important point because the relationship fades and you, you know, those once a month check ins go to every other month check ins and then it's been a year since you talked to them and you, and now you're not getting into self storage. You know what I mean? Because you're just not pushing it. It seems like it works better when we approach or someone approaches us and there's already a deal to be done. Um Somebody uh has something, they realize that there's a portion of the, of the deal that they can't execute very well and they're looking for someone like us to, to fulfill that portion. Yeah. So this next point is they've got a great deal and they, uh my, my note says is they can back it up. And what I mean by that is, is derisk it in my head, you know, take me from this piece of dirt or, or the shopping center, you know, why, why is this a good deal?

Explain to me why this is a good deal quantitatively on paper. You know, how, how are we actually de risking that thing? And in developments, it's entitlements, it's signed, um, guaranteed maximum price contracts with contractors that fit in budget or under budget, right? Like it's, it's everything closing on time. It's a, it's a lender that's teed up and ready to go. It's, it's a lease that's perfectly signed. It's this perfect package, right? Like some people will close on everything that day and constructions mobilized within a few weeks and the building's done in six months and the assets immediately for sale and you're just like, holy shit. This is amazing. That's an amazing operator. You need to hold on to that person with your life. That's important, right? Because a lot of, a lot of stuff doesn't go perfectly according to plan, you know, so you're all just trying to derisk all of this bad stuff that could happen in the beginning and somebody who again, you jive with the business plan jives with and then you're desking things kind of the same way and it's important to them like, ok, we got estoppel from all of our tenants.

That's important to me. Here's, here's sales reports from all of our tenants, here's uh, brokers opinions of value on this piece that we thought we could split off. That backs my assumption on this. You know, it's really good into the weeds and, and saying I can defend all of these points plausibly, you know, because at, at the end of the day, you explained it so well, today in our meeting, right, like if we don't perform on a deal, we're hearing about it at Thanksgiving and Christmas. You know what I mean? It's, it's bad, it's very interwoven into our personal lives, which is good, but we're not in the business of buying bad performing assets and just like turning back in the keys from the non recourse learner and walking away from it like we, we don't do that, we can't do that. It's our money, it's our, it's our family's money. So we're making sure that deal is going right? And some people will just always talk out of their ass and like, oh yeah, the lease lease is signed but it's coming, just wire me the money. It's like, why, why would you even ask me to wire you the money? Like we're, we're not on the same page with that or, or whatever it is. No comments on that. Yeah, that's good. That's good. Ok, you talked for so long.

I think you covered it. Yeah. Um OK. The last point and, and this is the hardest part once you have found the person. You've found the business plan, you've found the deal, you have to get attorneys involved and you have to negotiate an operating agreement. And this is, this is fun. Right. This is, it gets weird. Every, every single time it doesn't have to get weird. Well, it doesn't have to be a lot of times you can kind of tell what the other party is like just when they, uh, start to negotiate, you know. Yeah, why? Well, some people may say, oh, that's no big deal. That's never gonna happen. Let's not worry about that. Yeah, let's just take that out. No, I, I think you need to protect yourself. Both sides need to protect themselves in the contract or someone who's worried about that. I like that. Right? Because that means they're looking at the details. Yeah. And you uh also if they start to try to slant the deal in, in their favor, you're gonna find that out during the operating agreement negotiations and you, you see how they are handling these neutral positions and if they're trying to get an edge and for us, we always wanna have a win, win and, and make sure that everybody's fair and everybody likes the deal and, and I want somebody that reciprocates that.

So, yeah, and typically it's buy, sell decisions. So like, hey, it, it takes both universal, you know, parties to come together if we're gonna buy or sell or reen commer or distribute capital or anything like that. But you're just putting in all of these risk factors, like, hey, if you're a piece of piece of crap, you know, let's just say, and, uh, steal all the money from the NC or, or go do a bunch of stupid stuff. We have the right to come in and take control of this and sue you and you're gonna be liable for that. If somebody's trying to take that out of your operating agreement, you just run away. Right. They're worried about that. They shouldn't be worried about that. Um So anyway, stuff like that, um, be willing to meet them toward their office toward the site. I mean, you really want to spend a long time with this person because a piece of real estate can be something as little as a year or two. But honestly, it can be like a marriage where you're tied to this person's hip for a decade or, or decades, depending on the property or depending on the loan, right? Because you're buying a piece of property, but you're all so, uh, getting, getting a loan, you know, and, and you both have responsibilities as managers of this new entity to freaking talk to each other and work out the problems for the best interests of, of the money and the deal or the lender or whatever it is.

All right. Last, last point I have on, on partnerships is that you have to put in a remedy in the event you don't agree. And so, you know, if you, let's say you, someone wants to sell and someone doesn't want to sell, well, if you don't have a remedy, then you're stuck. You kind of paralyze the partnership. Uh, we wanna distribute, you don't want to distribute. And so what is that remedy? That's the only thing I would suggest is come up with a way to solve the situation when you both have opposing views and neither is willing to compromise. What's our suggestion? Yeah. What's typical there? I'm, I'm not even sure what a typical room is. That's great. But I, I don't know the answer to that. We, I, I, I've done some where it's, if it's a property that has to sell and the one group doesn't agree on the price is you get an appraisal and if it's within X percentage of the appraisal and the property has to sell. If it's not, then you don't. We've done some agreements where the developer has the right to sell the property at X cap rate or lower. But if they want to sell it at that cap rate or higher, they have to get our written approval to do it. So you can put mechanisms in that say you can't sell this property unless it meets these thresholds. And then, you know, you as the developing manager or you as the partner on the deal can make those decisions.

But if not we have the right to say no and protect our money. And we're usually putting this at what our underwriting is. It's not like we're saying, ok, we'll take a massive discount and you can get it off your books. It's ok. This, this hits our underwriting that we, we projected and showed our investors, you know, make the best decision for the partnership that those are great points. But, uh, you're assuming that it all went well and you have an asset that can sell. OK, so what, what if you can't sell it for what you have in it? And you need to take a loss and now you're fighting over that and the markets, you know, tanking or something and you need to, you need to make a decision. So you need to, I don't know, you could, you could maybe uh nominate three industry professionals, let's say, let's say the deals in, in Dallas. And you say, ok, if we can't decide on uh on selling or not or whatever the situation is, here's three really, you know, renowned brokers and we get their opinions and, and the majority wins, you know, we present, hey, you know, or something like that where you get two or three people outside the operating agreement and, and they're professionals in the industry and then you take it to them and whatever they say you go with.

I, I don't know. Well, you could probably find an attorney who commonly uh writes these contracts that would have some suggestions for remedies that he or she has seen in the past. It's just important to have them. We're getting along on the show and it doesn't always have to be selling the property. It can also be buying out the ownership interests of your other partner where you can get your capital back and then return that to your investors. So you would get whatever distributions happen and then your initial investment. So if someone believes in the deal still, but you don't mean you could put in an agreement saying, ok, you can buy out my property at X, you could buy out my ownership at X percentage or you can buy out it at this valuation and then they can just buy you out of the entity and then you get your money back that way and, and kind of break up the partnership. Can I buy out your ownership? Braden. What would you charge me for that? A billion dollars? All right. Well, we went a little long. Uh But hope, hopefully you got you thinking about that partnerships might be a way to grow your business. It might be a way to scale your business. Uh We, we certainly think they're beneficial to what we're doing. It's funny because there's four of us, you know what I mean?

I, I can't tell you how many people I know that own their own business and it's just like them. I feel, I feel like that's normal. I feel weird sometimes having partners. Somebody asked me the other day how many partners have, if you sell your interest to us, then you won't have any still on that. All right, we'll see you next week on how to invest in commercial real estate.