How to Invest in Commercial Real Estate

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Episode #051- Why the Time to Invest in Commercial Real Estate is NOW!

by Criterion, Braden Cheek, Brian Duck
February 28th 2022

Today our hosts Brian Duck, Braden Cheek & Joel Thompson from The Criterion Fund talk about why it is such a pivotal time to invest in Commercial Real Estate, as well as the importance of diver... More

you know, a lot of people have have self directed iras and four oh one K. S. And the market is teetering on these all time highs and we've been on this 12-year bull run correction is going to happen, we're gonna, we're gonna raise interest rates and there will be a correction in commercial real estate on some level. But I sure wouldn't want to have all my money in the market at a peak. I would be wanting to diversify that across a few different asset classes. Uh that's what really got me interested when you first came to me a dozen years ago, I thought, man, I'm just all in stocks and mutual funds, I need to diversify. And so that was what was really appealing to me. Welcome back to how to invest in commercial real estate. Today is an exciting day. We're almost through january and today we are just doing a goal check in. I mean it is the time to be alive, it is the time to be investing. And and we are excited, we're doing deals and and you know, we think this is a great time to be investing in commercial real estate Man. We've been investing now for.

I've been in the market almost 20 years. And what's awesome is that I'm more excited about the stuff we're doing today than I have ever been precision equities rocking criterion is rocking the market is good. Interest rates are low, investors have a lot of money and it's just a good time to be in real estate. And the question we wanna ask you guys today is why are you not in real estate yet? And we were using this podcast in the middle of January because this is a time that people self reflect. They take time every year about this time to join a gym and waste that $50. But more importantly, what are your investing goals and what are you doing to achieve them this year? Uh, and so that's what we want you to think about while we're talking because we want you in real estate. We just got done sending out all of our distributions, uh, criterion hit a record. You guys sent out how much money last quarter, $1.6 million dollars last quarter. And not even to that many investors, they had a deal close, which was awesome.

Uh, made a ton of money. And then, uh, precision equity we sent, we sent over 600,000 out. Uh, no deals closing. That's just cash flow, Just profit. Um, that's getting pretty consistent. You guys, almost 2.5 million for the year. Didn't show over 2.5 million for the year. And you know, it's, it's just a handful of investors. I think the average check size is probably five grand a quarter. Do you guys want to check from me for five grand a quarter? We'll find a way to get in a deal. Um, I know people are just procrastinating and we want to ask you, why are you procrastinating? and how do we get you motivated to get in? Yeah, I think it's gonna be interesting to look at, you know, our typical investor behavior. I mean we were talking about investors that probably have successful businesses or successful jobs that produce excess cash and they're looking for a place to put it a good place to put it. They don't want to put it in the stock market. You know, they want to put it in something, they understand, they want to put it in something real, they want to pay it or put it in something that's hopefully going to produce cash flow. Hopefully it's gonna appreciate after that.

But it's it's really a behavior of a habit of investing, right? It's, it's not like we have a million dollar relationship with this investor and they wrote us a check For $1 million. It was a relationship we had over years and we launched deals over years. It may have been 789 a dozen deals and they were just in 50 75 100,000 every deal because they just had a habit of investing had a habit of, I want to be in real estate. This is a great asset class for me, I need to be investing in these deals. It's not all or nothing, right? And I think that's what people, they get all caught up and I don't have enough information. I don't have knowledge. It's scary and I don't want to put everything in real estate. But brian like you, you came in with an initial investment, got you going and now you're full time. Yeah. Yeah. That's really how I started. And I'd like to encourage people to do that in 2020 to 1 of their goals if they're interested in commercial real estate is too to get involved somehow. Um, a lot of our uh, investors, I say a lot we've had a handful across north America who've heard our podcast and they decided that the way they wanted to get started was investing with us.

So, and that's how I started a dozen years ago, I knew nothing about commercial real estate and Joel had been in it and came to me and uh had a deal and asked me if I wanted to invest and I did and I invested a large sum of money because at that time it was just three investors. It was just the three of us. And so it was a large amount and it, it really, it really changed my life. And so just by just, well just by going in and investing, what it allowed me to do was to look uh, to see what you guys liked about the deal. And then it let me see the financials every month. It let me see how commercial real estate works. And so that gave me the confidence over the years of just passive investing that wants the opportunity for us to start criterion to, to jump in and make it my full time job. Yeah. And, and that's a really important point because people think that everyone just has this figured out when we're getting investors or when people are deciding to get involved in commercial real estate there asking questions, they're coming to the table there saying, hey, you guys are the professionals here, this is your business, how do I get involved?

And then we, we tell you here, here, here's good questions asked. Some of the dumbest questions are the best questions to ask because they're so obvious, How does this work? How long do the tenants stay? How do you know they stay? How do you underwrite this? How do we add value? How do, how do you, how do we fill out the paperwork? How do other people filled out their paperwork? Well, you know, it's a, it's a mixed bag and we can kind of get, get them involved, get them advice and then it gets easier and easier and easier as you go to our investors, we have most of our investors are asking us questions every time we send out a deal, they call us, they say, what do you like about it? What about this? What about this tenant? Uh, and they do that three or four times on some deals? And they're starting to understand they really, they really do start to understand the questions get better. The questions are different and the questions are different for every person on every single deal based on that person's, you know, previous experience, what we find is once people make the decision to get involved in real estate, they get more involved in real estate, they invest more money in real estate. And we've had several people that are that are moved on your your your own criterion.

Uh you know, Brandon's an owner of criterion, but but but I have other friends where now they're doing their own deals and and that's what we want to encourage you guys is commercial real estate is not just a passive income scheme for your investing. It can literally be the ticket to whatever you want to do financially. It can be freedom, it can be retirement. Uh It can be wealth generational wealth to pass on to your kids. I mean, it can be all of those things and it starts with making a commitment to get some money on the line and just get in, get in the game and get some investments going. Yeah, and I'd really like to encourage people that um are younger and they're they're just now they've got their job and they're just now starting to have a little income that they can an extra extra income that they can invest And they're not sure what to do with it right now, they're probably thinking stocks or maybe even more so crypto right now. But you know, I wish uh 40 years ago when I started that I wish I would have gotten into commercial real estate. I'd I'd have I'd have, I don't know how many times more money I'd have than investing in stocks.

I want to. This is another point I want to tell people I did not envision myself here when I started um and I'm making more money today in real estate than I ever thought possible in the future. I'm going to make even more. But when I started I had no knowledge of any of this, I was literally gonna buy rent houses and make $200 a month per house. And that's the only vision I had. But I was always challenging myself with new questions I think bigger all that. So I was always progressing. But you don't have to see yourself retiring in the Bahamas on commercial real estate today. Yeah. But if all you have is is your 401k. And all you are committed to is your day job, You're getting nailed on taxes, you're going to have more of the same next year that you had the year before, that you're going to work to your 65 if you're lucky and you're gonna retire and and be average and there's nothing wrong with that. Okay, there's nothing wrong with that. What we want to encourage you is that there is a is another path. And commercial real estate can be that path for you and it can also be other things.

It can be other investments. Uh but if you're listening to the podcast, you have some uh you know some pool and interest into real estate and we're saying don't hold back because we're really confident that it's a great investment and and I'm more excited like I said today than I haven't been in a long time. And for us, looking back, I think some of my biggest regrets if I were to have any real estate was never buying a deal, you know, we've bought some really good deals. So thankfully we haven't had deals go bad but my my regrets are from not buying deals. It's like, man, I had that one locked up. I really should have pulled the trigger on it. So this is your reminder to go get that deal, keep pushing, get it in contract, get it over the finish line, get it closed and and and let it do its job. You know, don't kill it before it has the chance to do something good. You know, a lot of people have have self directed Iras and 41 Ks and the market is teetering on these all time highs and we've been on this 12 year bull run correction is going to happen. We're gonna, we're gonna raise interest rates and there will be a correction in commercial real estate on some level, but I sure wouldn't want to have all my money in the market at a peak.

I would be wanting to diversify that across a few different asset classes. That's what really got me interested when you first came to me a dozen years ago I thought man I'm just all in stocks and mutual funds. I need to diversify and so that was what was really appealing to me. One thing I think about with me, procrastinating real estate is not something I procrastinate. As soon as I found out about it, luckily I jumped in I just didn't, I jumped in on the slow train on the poor man's train buying. You're really tough rentals and tough areas that weren't ever gonna make me rich but that's okay. Got in the game and here I am 20 years later. But crypto is an example where years ago I thought about getting in ah this could be huge. People were saying it could be huge and I didn't pull the trigger you know and I could have just put in some money but I didn't, I just took no action and here I am, you know years later and I could have bought it at $10 at $1 at 50 cents an ounce. You know 40,000, it's been almost 70,000 coin on Bitcoin.

And so that's what I think the I want to encourage people today is your future self will thank you if you'll just put something on the line in commercial real estate today, and then 10 years from now when you've got deals going, maybe you even done your own deal 20 years from now when you've got, you've partnered up with some guys because you you talk to commercial real estate and you got in and then you found some other guys doing it pretty soon. You're starting your own LLC and you're buying your own deals, your future self is gonna thank you that you went ahead and took action and I know we're we're kind of pounding that, but I really do want people listening to to take action on commercial real estate, not just our deals there, maybe you're you're listening to this, uh, we've had people over the country, but in new york or in California, there's there's there's probably better syndicators than us out there to get involved in their stuff. Yeah, they're like, like you said, there's so much opportunity out there and if you are interested in listening, if you are listening, you're probably interested in some facet in commercial real estate, you're probably interested in some facet and investing. And I mean, there's there's money everywhere.

I mean, the government passes out money, I don't know how much money they just gave to everyone last year. 5 $6000. I don't know, you know, tax season is coming up, how much, how much tax return money to people get back. I mean, if you're working a w two job, you're probably paying in 356 tens of thousands of dollars potentially. And you know, if you have kids, you're getting, you're getting taxes back, I've gotten a tax refund for so long and it's so easy to just get money that you kind of already stashed away. You kind of already saved that the government made you do that, You get a $5,000 chunk back. What do you do? You go by a flat screen, you take a vacation, you and your wife go out to a nice dinner pretty soon. You don't have $5,000 or anything to show for it whatsoever. And instead you could have, I mean we don't typically allow people in for $5,000 right there. Like if you message me and you had to commit, Hey man, I love this deal man, I live right behind it. It's my only 5000 I've got to get in. I have to, you know, I might let you in. I don't know, you know, we'd probably let you in.

But it's just the idea of of trying to get involved with something, trying to do something with your money instead of just immediately writing it off like oh free $5000. Let's throw a party. Oh I if I could give people advice, which I give probably too much on this podcast, but it's listed as a, as an employee, your number one goal in life should be taking earned income and converting it to passive income. Yeah. Uh and one of the things I learned from my mentors is uh you do not go buy liabilities or things with your money. You invest your money in assets that pay passive income and with the passive income that your investment to make you you go buy whatever you want with it that right there will change your life. And so then you're a worker and you you save and you've got 20,000 at the end of the year and you say let's buy that vacation. Let's get a new car. That's what most people do. They upgrade a car like the car's fine. It drives fine. Okay? But you're robbing from your future self by buying that new car that's going down in value, invest the money, it'll grow, it's gonna throw off cash, right?

If you're really smart, invest the cash that your assets throw off and you start multiplying and snowballing And and in a few years, right? And then you can buy all the new cars you want, right? Cause you got a snowball of money that's just churning out cash flow. Okay? But but people, how what percent of the population gets 0% of their income? Passively a Lot a lot maybe 90 95%. I'm telling you what if you start getting checks in the mail every month for work that you didn't do. Uh it is the best feeling and it's lower tax than you get at your day job and then that just grows and grows and grows until you will throw away that day job eventually. So You know, I think going back to what I said earlier, developing the habit of investing and we just talked about all this money we just distributed to all of our investors, you know, over $2 million dollars and we just finished almost a $2 million equity raise. So the investors, what are they doing when we're giving them their return and their profit?

Hey, we just finished the steals an amazing deal. We got you this I. R. R. We got you this money back amazing profit. We're so excited And then they're just giving it back to us. There's like sweet, let's do it again. Maybe they keep some of it, but then they're they're reinvesting the rest of it. Yeah. Yeah. And it pays off huge. Especially, I mean every year it's just the compounding nature of money is working against you. Not only do people not have passive income most of the time. You know, they're working for all of the money they have, but they're buying things that are typically going down in value. Oh and it's worse than that. People are buying things that are going down in value, but they're not buying it with cash, they're borrowing money to buy things that go down in value guys, that that is the number one killer. So not only do we want to tell you right now to make the goal to get into real estate, but make it a goal to stop buying liabilities and anything that goes down in value with debt, never do that. Now, if you want to buy a house with debt, get a great interest rate and it's going to go up in value, maybe I'm gonna let you do that.

But you should not, if you can't pay cash for a car, uh, it's really tough for me to tell you, you should, you should be buying it. Uh, now if you had the money in an account and you could get a really low interest on the car and you could invest that money at five times the interest rate. You're paying on the car. I mean we're getting complicated, but I might let you do that. It's just the idea that people are living a lifestyle that they ultimately can't afford. And what we're trying to say is that when you, when, you know, let's just say you're bringing $100,000 live off of 50 or 60 or 75 or fucking 80 You don't have to think you're never going to get that car, you're just, or the that bigger house, you're just delaying it a little while. So while you get that money to work for you. And most people, I mean we say you're living a life that you can't afford in our opinion. That's really true. But it's not actually true. They can't afford it but they shouldn't afford it. Your future self, you're robbing from your future self, you really can't afford that. You really need to be investing in things that are going up in value while you're young to pay off big down the road.

And they're stretching to get you know the new cadillac or the new, you know, Mercedes or whatever because it looks good driving around and then it's gonna be worth half and like three years what you paid for it, what real estate deal can you do? That'll be worth half in three or four years. Actually be hard to find. And that that would that's the hole. That would be crazy to find a deal that go, just gets cut in half in three years. Uh And so think about that when you're looking at where do I put my money? Cars, real estate. So I don't know guys, it's a new year uh don't procrastinate get into real estate. It's a great time to do it once you get your money and you're gonna you're gonna you'll force an education, you'll get more excited about it 10 years from now. You'll be doing deals and you're you're gonna be thinking yourself Alrighty well thanks for listening and watching everyone. We will be back next week with a new episode. Thanks guys, thanks. Yeah

Episode #051- Why the Time to Invest in Commercial Real Estate is NOW!
Episode #051- Why the Time to Invest in Commercial Real Estate is NOW!
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