How to Invest in Commercial Real Estate

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Episode #032 - How to find MILLIONS of dollars on Google for your Commercial Real Estate Deal!

by Criterion, Braden Cheek, Brian Duck
May 17th 2021
00:00:00
Description

Finding Debt and Equity for your commercial real estate deal is probably the biggest thing keeping more people from doing it. Today we have special guest Andrew Thelen from The Woodmont Company alo... More

what's the story behind it, is that we were the specialist, we were managing a property for a special servicer and we have been given first right to buy it before they took it out to auction. And we had lisa's working with three major tenants and so we were gonna kind of talking about should we go find equity for it? And so I was like, well I'll just call groups and see if it makes sense. We had a financial package put together at this point, I was doing none of it and Stephen was kind of one going out to find capital, I just google Oklahoma private equity was like, okay, they'll understand norman they know the college town, I end up calling Brandon picked up, send him over the deal. Um So yeah, we're interested in hear back from you on it um and then it goes to auction and then you reach out back again for the deal and you guys still like gonna go for it, like well we had another investment, but that was with us up to a certain point, but if they go goes past it, you know, we might be a player for working with you. Um nothing really came from it. And then you guys were watching the ticking time on the auction and what did it get up to? I'll never forget, I was I was in an interview and at 68 and Louis in Tulsa And you had apartments we owned oh my gosh, and we were just watching it and I think we could have bought it for like 10 million, eight, eight million and it went for like 16 million.

Yeah. Yeah. What is up guys welcome back to how to invest in commercial real estate today. We have Andrew Allen with the Woodmont company on. Super excited to have you on the show bro. Thanks for coming on. Yeah, great to be here. Thanks for having me. Um Andy Andrew. Andy is the vice president of capital markets for the Woodmont company. So he's vice president, assistant vice president capital markets for the Woodmont company. And he gets the fun job to go find all the debt and equity for all these deals, which I'm sure you know, hey, here's the deal. Go find debt and equity. Is that pretty much how's it go or uh at times it feels like that. So I'm involved with the entire process from when we choose a site to running all the numbers for it to figuring out is it a viable option? Do we meet the return thresholds for for us internally and for our external investors from there? It's putting together the financial package, How do we present it? What's the best way, how long is the whole time kind of, what splits can we do to maximize our revenue and our partners revenue and then it's going out to banks to Equity Partners trying to figure out realistically how much debt can we put on this and running the whole life cycle.

And then what's interesting for me since I do get a little closer since I do this internally Instead of like a 3rd party where once the transaction is done, I'm out of it. This one I actually get to work with the investor all the way through the life cycle of the project. From sending out updates to kinda if we've got offers, where do we go from there? If we have to change the strategy, working with the investors to make sure they're on board for it. So I don't have the traditional equity or debt broker role where as soon as the transaction is done, I'm gone, I get to work with it for the entire life cycle. You do because we've worked with you on a few deals now and we hear from you from day one and then we're getting updates from you until the projects basically completed. So from my perspective is a good way to do it. Yeah, I'd rather have 11 guy to go to one. How many deals did you find equity for this last year? This year so far I've done 44 that have closed. I've got 1/5 I've got 55 and six committed and then I should be hearing and I've got to lenders also committed and then I've got probably about another three or four deals, which I should hopefully find out it will be committed this month.

That's not bad coming out of Covid. And and is that, is that a normal rate for years that more, is that less because of Covid or what? This is more. I kind of got into the role three years ago and I kind of got into it by mistake. I was never hired to actually do this job. It just kind of just kind of fell into my position and I've loved it. So I just got taken off with it. Did you get an initial list of high net worth or, or maybe Woodman investors that you go to? What was the beginning when you, they said, hey, we need you to raise some equity? Well, I was never even told, I need to raise equity. It was way, you're never even told you need to raise equity. This was just somebody else's job. And you're like, hey, I got some money basically. We, we had, we were working on a bunch of franchise concepts and it was hard to get traditional equity to want to invest in franchise concepts because they were first time operators where there's just, it's not something they're comfortable with where the check sizes were too small. So we had hired a couple of outside groups to go and raise capital and we had done some fundraising online for real crowd and I essentially told steven, the chairman of the company, Hey, I think I can do a better job than who you're paying to raise money.

You mind if I give it a shot and he's like, sure go for it. Like it doesn't really affect me that much. So after that I called, I just googled JV equity partners or real estate private equity and I got closed two deals with a private, with, um, with a private equity company out of Chicago. How much money, How much private equity did you google and get my first year? I did probably five million and that was $5 million in your pocket. Yeah, basically in his pocket. But the deal, so it was just, it was just cold calling and real estate is great because a lot of people are very susceptible to getting a cold call. They think that people aren't above them to, to listen to what you have to pitch and if the numbers make sense and the company's track record makes sense. It's a lot easier. You didn't have Woodmont, that was probably a plus and, and getting uh, but, but man, I love the cold calling because it's something that I am not any good at. Uh, it's just, it's a certain unique type of person that can be really good at cold calling, especially when they're asking for money.

And so I gotta applaud you on that. That's really cool. Is that how you found how they find precision? Did you google us? Yeah, we uh, we had a shopping center that was in foreclosure that we were managing for that. We should have bought, we definitely should have bought for those that are you said no on that, by the way, those that are listening that we shouldn't have bought that deal. Well, yeah, and he tried to bring us a deal that we didn't know for sure, but We know we know for sure now, we know for sure now that it would have made us about $7 or $8 million we don't want we don't want to hear excuses. So anyway, that's what he tried to bring me and I didn't take advantage of the story behind it is that we were the specialist, we were managing a property for special service or and we have been given first right to buy it before they took it out to auction and we had lisa's working with three major tenants and so we were gonna kind of talking about should we go find equity for it. And so I was like, well I'll just call groups and see if it makes sense.

We had a financial package put together at this point, I was doing none of it and Stephen was kind of one going out to find capital. I just google Oklahoma Private equity was like, okay, they'll understand norman they know the college town, I end up calling Brandon picked up, send him over the deal. Um, so yeah, we're interested in hear back from you on it. Um, and then it goes to auction and then you reach out back again for the deal and you guys still like gonna go for it. Like, well we had another investment, but that was with us up to a certain point, but if they go goes past it, you know, we might be a player for working with you. Um, nothing really came from it. And then you guys were watching the ticking time on the auction and what did it get up to? I'll never forget. I was, I was in an interview and at 68 and Louis in Tulsa And you had apartments we owned, Oh my gosh. And we were just watching it and I think we could have bought it for like 10 million, eight, eight million and it went for like 16 million. It was it hurt. It was at the end of it. I mean, I was, I was pissed. Yeah, I was, I was pretty upset too because what do we talked about earlier? The deal, the decade comes along once a week. Yeah, but that was, and we just didn't, we didn't grasp it when it, when it came and that was one we could have made happen.

It was, it was impeccably bad timing. You know, you just closed a deal a few months prior off a big 10, 31 but we couldn't, we couldn't, we could have made it, we could have made it happen and we didn't. So, but it's a cool story that you're fine and equity by googling and calling and pitching. I need to take lessons actually get better at raising equity and then we called you for a con steal to, yeah, I was ready to invest in that and I forget what happened with that one, but that one of being a pass. So when we were getting ready to roll out the kiddie academy, I was like, okay, I talked to Brayden, they were interesting at con steal to triple that type of deal. Let me go ahead and call brad and see if they'll be interesting. And I remember you picked up like, Andy, I don't care what you're pitching me whatever it is. I'm going to say yes, that's what I missed out on. Yeah, I remember that. I was like, I'm listening now you've got my attention. We're gonna, we're gonna do that con steal. But I think we were late to the game where you guys were late to the image that they decided to go another direction. You know, we actually, we don't even keep it under contract. They went with another group because I don't think we could figure find the right equity for the issue is conscious just its be minus credit. And they were on the bankruptcy watch list.

Your story is interesting because I think a lot of people who are just breaking into this business think, well, okay, how am I gonna raise for their project? I don't care how big or how small it is. How am I gonna raise my equity? And what you've shown is you can just, you can pick up the phone, you can get on the internet and, and it, and it can be done. You're raising so much so people who are watching this, uh, should just do the same thing right? Just get on, google some things. Find out if your back numbers and emails isn't enough, right? You don't have the history, then you're like, we've talked about before, you partner with a company that does have some history and then do the googling and the raising. I guarantee you, if you want to get into a deal with me and you say, hey, I've got a deal. I need to use your experience. But don't worry, I'll help you bring the equity or worry. Yes. And then, yeah, maybe I'm going to take some of that deal. But after you do one or two of them, you're not gonna need me anymore because you're going to start developing your own tracker. Yeah. And if you have a good deal, I mean sponsors or investors can can see if the numbers make sense or if you're just bullshitting and know if your costs are online, if your returns make sense.

And at that point, if you're pitching a real deal people will sometimes take a chance on you even if you don't have the notorious background because you at least show that it's a real deal and you're not over selling. Yeah. Yeah. Yeah if they're experts are their private equity group they're gonna know what makes sense. Uh Probably more than me or you do. So that's a good point. Yeah. What one other one real quick, we're doing this deal in in Vegas right now and it's it's interesting because a lot of people you know I think you've got to be local but I mean we've all proven that you can buy something out of the state you live in. But it's it's just interesting you're in Fort Worth. We're buying a deal in Vegas and Henderson specifically and you've got to go get some debt on it. And thats initially a little bit more complicated because banks like to lend on a borrower that is kind of in their backyard with an asset that's kinda in their backyard or at least in their market. So we we've got out of state borrowers we've got an out of state asset where I guess the the asset is in state for them but the fact that you can just like google it. Yeah banks in uh Henderson las Vegas and I mean they cut it on that.

Yeah I mean it's it's easy enough. I mean the biggest issue with people having with an out of state sponsors, they can get comfortable, they know the real estate. So if I've got a deal in Chicago or a deal in Henderson or a deal in Denver it's What are all the banks in a 10 mile radius that know that intersection that know the story behind the market And it's just calling them all just you know you call 2010, call you back maybe five show interest and so from those five there's a good chance you'll get one of them to go gotcha. It's a numbers game. You make it sound simple and I love that because it really is simple. Even things that I am not doing effectively in my day to day talking to Andy or other people, they'll they'll explain to me how simple it is and I love it. The worst is they say no it's like okay onto the next one. Yeah and so I mean the deal in Henderson we're doing I mean I got we had a sign term sheet within three days of sending them a package with with not a piece of property in a contract without signed and have another contract with family signed. We didn't have hold on again this is such a critical moment because people they think they've got to go get in contract so I got to get an attorney, I gotta go get in contract.

So I gotta I gotta have that least signed or oh it's got to be all buttoned up. But I mean you had a sign term sheet on the deal and you don't even know if it's yours and you don't even know once you get it if you can get The 10 minute. But by, by God we got the debt. Yeah, I mean that one was that one was great because it was an existing building. So there was already collateral that the bank could take if something went wrong, it's gonna be, it's a more challenging for a ground up development because for a ground up development, they want to know that you at least have the lease, even if the land is in other contracts, they want to make sure that the assumptions that are underwriting for the tenant are true. How do you find that deal real quick? So that was, it's a vacant restaurant on a really good corner in Henderson. So this was one of grants user president brokerages relationship with a broker out in Vegas. They had done some deals with back in the past and he brought it to them saying like, hey, here's a great spot. He knows the operator and the operators, one of grant's friends who is a restaurant tour in Vegas. They said, okay, we want to buy it, here's the concept that's going to go into. And he's like, love the concept, gonna pitch it to the owner, we're going to go with you over other groups. It was, it was, it was relationship basis.

It was that deal was getting five offers a week on the market because it's such a hot, wow. Really. If you're an ambassador guards and you're listening, just remember that we were getting five offers a week and we got it. And your boys got it. Yeah, You boys got it. Yeah. And if you're an investor and you're not in on that deal, it's already oversold. So sorry. Fast sold out. Quick, sold out quick. All right, Annie. Well, I appreciate you making the trek up here. I really appreciate you. Coming on, love having you up here, man. Um, Anything else? No, let's do more deals. Absolutely, absolutely. I may call you to help me raise equity. Yeah. Alright. Isn't that your job? I need help. Thanks man. We'll catch you next time on how to increase real estate. Mm. Yeah, Yeah.

Episode #032 - How to find MILLIONS of dollars on Google for your Commercial Real Estate Deal!
Episode #032 - How to find MILLIONS of dollars on Google for your Commercial Real Estate Deal!
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