How to Invest in Commercial Real Estate

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Episode #069- How to Become A TOP ASSET MANAGER in Commercial Real Estate!

by Criterion, Braden Cheek, Brian Duck
July 18th 2022
00:00:00
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Today our hosts Braden Cheek, Brian Duck, and Joel Thompson from The Criterion Fund discuss the life and journey of one of Oklahoma's top Asset Managers- special guest Bob Parker from Owasso Land T... More

one of the takeaways that I had as a business owner through Covid for small businesses, was that no small business should ever allow a customer to come into their store without capturing their cell phone and email address because once Covid hit and customers aren't coming in but they still may want your product, but they're banned from coming in from whatever regulation or they're afraid for their safety is you, you can call them text them, hey, you know, 15% off of your home delivery will bring it to your door, you know, but if you don't have your customers information, you are literally stuck at the mercy of whoever walks in that door. And so for the takeaway for all business people listening is that you should have a gimmick or a giveaway or something. Every person that walks in the door that they exchange their information for some gift or some 10% off or something. Now you're ready to go like you say, switching your business model to 80% delivery overnight they could have been texting those people and, and hey, let us bring you a pizza by at half price tonight, what do you think of that? You know? And so it's really important, welcome back to how to invest in commercial real estate.

Today is an exciting day because we have bob parker from Boasso land trust on and today is gonna be a cool episode because I think as far as asset management and property management leasing those, those, I mean there's a lot of jobs out there if you want to get into commercial real estate, if you wanna learn about commercial real estate, There is endless amounts of opportunity in asset management, property management and leasing. Right? And and for a lot of people that's kind of their entry or their exposure to wow this, this could be awesome, right? So before we get into a ton of that, let's just get into who bob is a little bit about the background. What are you doing now? I know you're with the land trust now, but you've been in this industry a minute and you've been in several different shops. So give us a little bit of rundown about some of your experience. So I started in 1994, always came out of the steel business in Atlanta and came back and went to work for Whiteside and grant regular Broker Joker walking the streets, knocking on doors, trying to do some deals, like, will you list your property, will you sell?

Yeah, I'm bob parker, you shouldn't do this with me, right. I know nothing. Uh stepped out of cell still, so did that for a few years. And then in 2000 I got to know a guy that worked in real estate at Walmart, which I didn't really know walmart had and I knew they bought real estate and did story, but I didn't really understand the idea of corporate real estate. I got to know this guy over years and I just got my C. C. I. M. Designation and he goes man, we really want one of those CCM guys. Here, wait, how did you meet this walmart real estate for a friend of a friend, man like fraternity guys, Arkansas fraternity guys. And so just this guy works at walmart, you should get to know him. So my name's scott stoking berry turned out to be the smartest redneck I've ever met from paul husker. You think he think he doesn't even know how to plant corn but he's freaking brilliant. Um So in 2000 I and I had said this to my wife before, I said God, I really, really like I did like the idea of being in charge of a shopping center or office buildings where you get to kind of look at it from a strategic standpoint a long term, not just to hit it and quit them deal.

I just, I like the idea of of that stability and that long term relationship stuff. And so and coincidentally I said something like like maybe the sand dunes. Well I did, I did walmart for three years, got rid of dark stores. So you were working for walmart Missouri Kentucky? Tennessee Zuri Texas. So Walmart would leave 100,000 square foot regular store to go to a Supercenter, They own the building, they would either own the building or being a long term lease. They did a lot of sale lease backs to fund their growth in the 80s and 90s. Did you work with stan johnson at all? During that time It seemed like he did some stuff with walmart kind of starting out. Yes, may have, may have been, that was earlier than 2000. He was doing yeah not on the disposition end but they did on the front end because he was doing a lot of the sale lease back. Exactly. That's It was so complicated. They would, they would package 20, stores, put it in one thing, basically a financing tool And it would be a 20 or 25 year lease which worked great if you stayed in the store.

But if you moved, if you left that store it got a little funky, particularly on the full disposition end because you have to untie these things. That's one of the one out in broken arrow that sat there at 71st and 193rd for all those years. It was in one of those, which is what complicated its disposition. It seems like a tough thing to do, go on 100,000 square foot building and have to, I got to say, I mean it sounds like a real piece of ship walmart, it's harder than it sounds. I went over there and I went over there thinking I was going to show them, you know how to how to do things and then I got really good at flea markets, uh Hispanic markets down in south texas hobby lobby's um uh, Atwood's, you know, you have your list of potential tenants that can take 100,000 square feet, About 10 of them. And it was, you're done, you're like sitting on it, figuring out what to do and uh, so, but after a few years at Walmart, you kind of, you're either a wall martian or you're not right. And so I had gotten what I needed out of it and came back to Tulsa and coincidently the sand dunes were looking for someone to run the real estate scott.

Sanderson had passed away and uh Jolene, his, his widow needed somebody to it. So I got to, I just bizarre to get to slide in that deal. And so they had 10 or 12 shopping centers and parts of this, parts of that, a lot of old oh Tasco properties because they were the old Oklahoma tyrant supply. So a lot of leftover stuff there and then a lot of stuff that scott had bought in partnerships and that's the first time I learned about syndication and LLcs and how to do that because that was his gig. And so did that for a few years. Then got introduced to Ben Latham and Rusty Richardson and they were doing advanced auto parts, they had their shopping centers and then they were doing the advance auto parts. So are they developing those? Okay, so from kind of 03, things fell apart. They 30 or 40 that was great. I didn't have to do anything on the front end. We had a guy that was going out finding the dirt they were building the building I got to sell and it was, you know, so 77, 7.5 caps.

But it was basically commodity worked a little bit with stan johnson to help get some of them done. Those were fun years because, but what I had learned to do over those years was how to run center, how to run a multi tenant property year over year doing the budgets, taking care of utilities, taking care of maintenance, talking to these tenants because most of them frankly are just mom and Pops are just people that wake up and run their insurance company, run their nail salon, run the restaurant. So that's that's my skill set is engaging with them, partnering with them. I represent the landlord, I am the landlord. Ultimately, I've got to increase the value of that asset. You've got to make sure I'm returning the investment to the investors. But I've got to make sure that my tenants are, are able frankly able to pay their their their rent ultimately, but also that they're coming in and they're they're they're able to fulfill their dreams and ambitions in our center and that's that's that's the fulfillment I get out of it is getting to engage that I have 220 tenants that I responsible ultimately for their dreams, you know their life their jobs.

So um did G. B. R. For nine years. Um And then got an opportunity to run the N. A. I. Uh franchise. Uh And that worked out a couple of that did that for a couple of years. It turns out I'm more of a deal guy, not a great people manager guy. So because I kind of do my own thing, I like it's it's it's you know we do things our way and if you don't do it then I don't even need to mess with you anymore. And I'm just not the great people but it just wasn't wasn't right for me did that for a year, which was a great place to land. A great place to kind of take my breath and catch my breath. Um And really it made me a better property manager. I'm I've always said I'm a I'm a real estate broker that pretends to be a property manager and that's that's really it because I a good property manager uh is the one that that can say no and in the tenant says thanks at the end of the conversation, they still like and respect you. Uh It's the property manager that's always you know tenants don't want to see or they don't feel like their partners and their success.

You gotta, you know so that's a good point. I just want to comment on that um You know we have a really good product managers, but I always tell them that you have to be the tenants friend. I can be the bad guy uh in the office that doesn't quite give them their rent reduction or doesn't, you know, pay for the H. V. A. C. But you, the one dealing with them need to, they need to feel like you're on their side and you're going to bat for them to the management, to the ownership. Absolutely. And so that that's a really good point for people that are that are in the management game is you've got to be able to play that card. And if you want to be the tough guy and the bad guy and deliver that bad news, you're never gonna have the relationship, you need to get honesty and trust out of those tenants. Absolutely. It's ah, ultimately you're wanting them to pay the rent. And I say that jokingly, when I'm showing space, I'm like, I'm gonna make sure you're successful because I want to make sure you pay my rent. You know, so, but and but when we create that right, right? And they get it. And and if you I always try to explain them why the least says what it says, why as the greedy landlord, this is why we have to have things and if you do that, if you give them that respect and they they're not unreasonable.

I mean, yeah, I mean sometimes I joke and say tenants are basically like Children, you know, they'll they'll do exactly what you get, let them get away with and so forth, and bad behavior and so forth. But ultimately you sit down face to face, explain to them. Here's why this is, here's here's why here's why cam went up. You know, I mean three, We have three snow events last year, and we budgeted for one. Did you want the parking lot to be icy and slippery? No? Okay, so that's just how it works. You know, another interesting point. You say that all the tenants will uh you know, get away with whatever you let them get away with. And it's interesting that we're having our our weekly calls and and I've had to talk to my staff about, okay, we have you have 10 tenants that are late and it's, you know, it's the 10th, it's the 11th, 12. And I'm like, guys, have you assess elated? No, I mean, we were trying to work with them And I'm like, guys, this is why they're not paid on the 10th because there's no penalty. Uh And so then we have to sit around every week and as a group and talk about it and then we're gonna spend an hour or two hours we're gonna call them, we're gonna email them leave messages, all that's costing us money all because you didn't do what the lease says, which is assessed the late fee on the sixth.

You do that one month. Uh they're going to pay the rent on time next month. And if they don't great, you get an extra, you know, late fee along with the rent. Because if they ultimately they don't pay it, then they're gonna have to go away most of most of the time. They don't want to do that. They want have their business open. So it's it's like that with everything though. I mean trash is a really bad one. We've got a habitat for humanity restore, which is kind of in the like goodwill ish department mixed with an ace hardware. I would call it if you haven't been one. But anyway, they've they've got ship behind their store every time you go back there and look. And and we were tired of asking. So what we did is we just removed the crap from behind the store and we started sending them a bill. And they were like, why are you guys sending us these trash bills? And it's like, well because you don't want to take it up now every week, they have somebody come up and pick up their own stuff because I'm sure they found it cheaper than what I didn't care how expensive it was. I just wanted it gone. Yeah, restaurants can do the same thing. Grease traps are freaking disgusting. And um it's your right.

But you you just, you've got to what explained to the tenants on the late fee is, believe it or not. We have bills too. I know you don't believe that. I know you think every landlord has this bottomless pit of money and we just do this for fun. But we have mortgages, we were paying for the lights out in the parking lot, we're paying for your landscaping and if you don't pay on time then we can't pay our bills. In 2017 I got introduced to uh David, charney, p Curtis and Greg Simmons. So so land trust, the Oso mafia. It's true and I sort of knew charney through Jolene san martin and different Tulsa things. Didn't know Greg didn't know Pete at all, turns out we at Tulsa small psa our lives were super connected, we just kind of didn't know it. We all fell in love with each other uh brian beam was wanting to move on and do more development stuff and kind of get out of that day to day asset management. So at the time I think I think we have like 470,000 square feet that we sort of managed and now we're at a million to that that includes stuff we've built some third party stuff, the George Kaiser family foundation stuff we took on um and other 3rd party stuff we've been there are our system is um honed pretty good, we have good software system of fantastic staff and so we found ourselves able to seek out other choice third party assignments and and it's it's paying off really well.

Um So for five years that's uh that's what I've done, what I was able to bring to them, they didn't do budgets, it really as sophisticated as they and you're coming from the Ben and Rusi, you know both C. P. A. Budget, getting nazis financial genius, rusty greatest dealmaker I've ever met. Those two guys man was an amazing partnership and so I've taken from both of them. But Ben taught me the importance of Penny taught me importance of details and I wasn't great at it before and I'm still not great at it. Like I said I'm a I'm a real estate broker, pretending to be a property manager but I know enough of it and I geek out on the on the budgeting process because I like planning, I like looking into the next year and going okay what are we doing? How's the roof? How's the parking lot, what are we gonna do to enhance the center? And then I totally geek out on hitting that budget or beating that budget, whether that be you know, getting more rent than we anticipated or paying less ah pecs than we anticipated.

And at the end of it going okay, I told you we were gonna return 12.5% but now it's 15, you know, aren't you happy and that's that's where I I I really take a lot of joy in doing that. And so that's that's what we do. So, so we we initiated budgeting, we better reporting. Now, that's kind of, I mean, I I can't get over the budgeting thing. So massive. I mean, massive company and and not really just what do we get this? Week or month? Okay, great. Can we, can we write checks? Yeah. You know, and it wasn't that bad, but it wasn't, it wasn't in that professional. Now, you may tell the people listening, I mean, the lots of land trust wasn't originally a commercial uh, you know, portfolio owner, right. They kind of grew into that space and maybe that's why they didn't have some of the expertise that you were used to having coming from that. That's exactly right. David is an attorney by trade that became a home builder and Greg and peter developer. Residential, Yeah, I mean, now they developed commercial, but originally they were coming as one of the premier home building companies in the state in this area, but definitely in Tulsa and Owasso.

So yeah, so they built, You know, kind of starting in the early 90s Bailey Ranch Golf course. All that development did that Greg came on and built homes. And so in the early 2000s they kind of looked at the landscape inside, We got all these people living here now they need, you know, let's build a shopping center here, in a shopping center here and then they bought a Church and converted it to an office in a, in a retail center. And yeah, so through the 2000s and up to the current day, they kind of accidentally got into the commercial real estate business and, and, and, and did a great job. Just just kind of made it up as they went along. Right? And then got into apartments. They've done a great job on, Yeah, they built a great apartment. It's gorgeous. I mean, it's gorgeous and they seem to have made it make money, which is the flip of that coin. Right? Right. And it was really good if you built it five or 10 years ago and sold it it, you know, last year's cap rates, you look like a genius that's for sure came out pretty good. That's when you buy jets and cool things like that.

Um, So anyway, that's what I've been doing for five years and um, we've been able to grow the portfolio substantially and kind of create my own little world. Uh, that is, that is not tied to the residential, which as we know, is suffering. You know, the results of policy changes and so forth right now. So it's nice. They really look like geniuses because I have this portfolio that's, you know, it might slow down. It's not gonna be oh eight again, just stops and people can't pay, We all survived Covid, uh, and all those requests rent reduction requests and I don't anticipate a Big problem, uh, in this, in whatever we're gonna hit in the next 6 to 12 months, you mentioned Covid rent request and that's something we've talked about before. And, and you know, we've shared our thoughts and how we handle it. How did you and Ol t specifically handle Covid and, and hey, we're going out of business or hey, we don't want to pay rent for the next three months. How did, how did you handle that? I'm curious to know. Well, case by case, what I tell people is honestly, if you went to Owasso, you fairly new Covid.

We never, we never did mask mandates. Yeah. So we didn't go through something political also in broken arrow did. However, for example, my CC's pizza, It's a pizza buffet with a game room. If people don't come in, he doesn't sell pizza. He wasn't set up for delivery. He wasn't set up for curb side. It was a buffet. So we had to work with him. Had to work with our CCS guy, but he's fine. He's a great guy. He owns a million of them. We have one, we knew his solid Greg's great guy probably is one perimeter that he has, the one red, but that we have and the one that he hasn't Alonso is the same. Yeah, He Great operating 27 of them or something. He even has some in texas. So I knew he was solid. I knew he would figure out a way to get through it. The Angelina's guys Geniuses, they literally flipped in two days. Found pizza boxes. Did the curbside thing? They changed their entire business model from 10% take out to 90% take out for that. Whatever that period time was never missed a beat.

One of the takeaways that I had as a business owner through Covid for small businesses was that no small business should ever allow a customer to come into their store without capturing their cell phone and email address because once Covid hit and customers aren't coming in, but they still may want your product, but they're banned from coming in from whatever regulation or they're afraid for their safety is you, you can call them text them, hey, you know, 15% off of your home delivery will bring it to your door, you know. But if you don't have your customers information, you are literally stuck at the mercy of whoever walks in that door. And so for the takeaway for all business people listening is that you should have a gimmick or a giveaway or something. Every person that walks in the door that they exchange their information for some gift or some 10% off or something. Now you're ready to go like you say, switching your business model to 80% delivery overnight. They could have been texting those people and and hey, let us bring you a pizza by at half price tonight. What do you think of that? You know? And so it's really important. You are so, right.

I'll tell you one company that's really good at it is a society smoothie bowl. Jason's really smart businessman. And so he opened in Owasso because the old dry cleaner spot next to the shop right here. Yeah. So he does, he gets your cell phone And man, uh, at least weekly they text me, Hey, we've seen you while come in $2 off just what you're saying. And it's, you know, there's, there's a, there's an overload of that at some point. But if you're on the front end and you're creating that. I, I love it because it does remind me it works like I'll be sitting there 11 30 or, or the worst is, you know, when you sit there at your desk and you work through lunch and now it's one o'clock and you're starving. But I don't want to go drive through and get burgers and fries. But I'm like, I don't feel good about It. Get $2 off me. Um, so that the covid deal was a case by case. Uh, I know some owners who just said everybody gets a free month, We didn't blanket like that.

We, I mean our insurance guys, they didn't miss anything. I mean, you know, there were a lot of people that never missed a beat. My big response to 10ant. There were a few that we had to work with a few. But most of the time they're like, Hey, we can't pay our bills, we're gonna have to shut down. And I would just say prove it. Well, that's, that's the model show us. And then, and then once the P. P. P. Money started coming in, we, we just started directing them to that. And and some of them came out. I mean, honestly, that's LCCS guy. Yeah. And again, he taught me a lot because he was able to pay his employees. He never, you never missed a, but it's it's it is that, and I learned that in a way, You know, you guys lived through 808 was same thing. All the same Nationals. It was the Nationals. It's the nationals. I have the attorneys and stuff and they uh, let's see what we can get away with. Well and Covid we lost a few tenants. And so when people said, hey, shouldn't the landlord share in some of the burden here of the pain that we're going through. Uh, and I'm like, yeah. And the pain I'm gonna share is the tenants that, that actually close their doors and don't pay me rent.

That's what I'm, I'm eating that. But if you want to stay open, I'm not eating your rent. I'm only eating the ones that close you, if you want to have an open business, you gotta pay your rent and you really get to know, okay, who can make it and who can, but you're never gonna know a lot of landlords just agreed to free rent because you don't know if they compare, not until you until you forced them to prove it. Right. So absolutely the right way to go. So, coming into ol t you said you said budgeting was huge. What were some of the other, you know, key things that you were able to put in place and and I mean, put really hang your hat on. I mean, asset management, but you you came into this massive portfolio. I mean, what were some of the other things or what are currently some of the things that you do that you think are are just key to driving value maybe. Right, Right. So, again, it's, it's to me my strength is the tenant relationship stuff and just kind of creating a dialogue that be strong through the good times and the bad and then really taking my my property manager had come from the apartment world.

So she was talented, but just kind of was learning the commercial world and it's different, It's different when you deal with the 10ants is different the Five days versus the 10 days. I mean, everything about it, it's a different fair housing book almost. Yeah, yeah, yeah. And so I was able to kind of bring her into my philosophy the way I look at tenants and and and then do do more, do more on site, be there. Right. And so, so I've got her, I've got a great maintenance guy because a good maintenance guy is half ambassador because because he's the guy that's really on the property more than me, you know, I'll sign the lease and then I'll try to swing by every once in a while. But really I probably won't see him see him in great depth until its renewal time. I mean, I'll try. But really the property manager in the maintenance guy are the ones that have to be, have those relationships. So good maintenance guy is worth it, you know? Uh and then good accounting.

Um So we, you know, the metrics by which we uh measure ourselves, you know, kind of the the the growth, the growth of income, the return on investment, just know it, They didn't really talk about those things before and it's easier to do when you bought a property paid $1 million dollars for it, but now it's worth a million five. But when you've built it 15 years ago, you gotta kinda they're just enjoying the cash flow, right? It's amazing at that point. So they've been able to, they've been able to pay off almost every mortgage and then those that they didn't opportunities to get some threes and 3, 3.5 resets and um yeah, So like Pine Street Industrial Park is one, it's a 30 building, one street, It's right there. Pine and 169 It's been a 15 year build out and we are just finishing the last two bills at least one of them available 9800 square feet at you know 89 bucks foot net.

But this thing they reset it, they they refinanced it last year. This thing is gotta gotta 20 year am and we're gonna be able to distribute, Distribute. Thank you. Can you edit that please? Over $1 million dollars a year wow. Which is, it's the perfect. It should be a case because it's it's you've got taking advantage of positive leverage and you're returning because a lot of times if you want to pay something down they have distributions. The thing is it's really we should we should box it up and make a make a book out of it because it's and it was a very patient deal. But you know and it's it's it's relationships with your vendors, your landscape guy, your Trish in your room for with great rougher harness, roofing is sponsored by harness roofing. It could be, it could be, it's expensive though. Those are, those are great guys. Uh people that can respond quickly to whatever the situation right now.

Great H. V. A. C. Guys. Ekland thank you. Uh Oh my Lord. And you talk about busy, I mean last 30 days the next 30 days. I mean these guys are gonna be flying jets and having you know houses in Aspen, you know by the time it's done. My lord, you're on the global warming train. Yeah let's do it. But yeah, I mean like five replacement five ton unit. I'm old man on the porch here. You know it was always it was always 1000 ton. Right? Five grand, five grand now it's double. Yeah, I think we paid 90 200 Approved one yesterday for 97. It was in ST louis. But so you guys, let me ask you that. So I'm focused very much on uh Oso Tulsa area. We did we we have built some uh some industrial uh some small industrial, down in Oklahoma city, kind of the west side in the northwest side. But like some of the market you were in going back to Covid. Did you see a like like the bigger metro areas? Did you see a different response to Covid that affected you differently than your Tulsa properties?

I didn't but we've gone into those markets after Covid. So I mean Joel Joel had some Vegas stuff and some stuff in Kentucky and Arkansas Vegas. The only challenge we had was they shut down restaurants and bars which was kind of silly because you have you know hundreds of thousands of people going to huge casinos. But but my the bar and my strip center in Henderson shouldn't open makes zero Sense. But overall no we had challenges throughout the portfolio that we worked through. We had, even in the center that we office here in Tulsa. We had some challenges. Same as we did in Vegas. We lost a few tenants but we're able to release them. So I think on the multi family side your multi family portfolio did amazing through Covid right. Multi family in general did pretty well because that's the first bill people pay is their their home uh their mortgage or their rent. And we got some uh federal assistance to help those tenants during that moratorium, eviction moratorium and we thankfully had very few tenants that tried to take advantage of that situation.

We had a few but most people overall paid paid their way through. That was fascinating man. Multi family Ever since I've met you. It's just been on this. Yeah I wish I wish we would have purchased more of it. All of it all. Everything, all of everything we walked. If we would have bought when we did we would have killed it. Yeah a few $100 million. But you can't spend too much time thinking in the past. I had a question I want to ask you before we wrap it up. You had gotten your C. C. I. M. Designation? Uh And I I've done all the classes but the final um and I probably won't end up getting it now being being an owner and not really needing as much but I was going to get your thoughts on that. Uh did it help you, how did it help you in your career? Did it maybe open your eyes to all the different ways of commercial real estate interactions? Tell us about it real quick. Absolutely. So being the guy that sort of slept through finance class in college and cheated off the theta in front of him, I didn't Exactly. Uh no. All the investment principles, the time value of money and stuff.

I mean conceptually I got it, but I not not practically. So what C. I. 101 everybody should take, ci 101 is drinking from a firehose, but it is just, it is simply that's time value of money if I buy it now and I spend this money for five or 10 years and I create this value. You understand that one principle, you can talk with investors with sophisticated investors. The rest of the classes are, have other reports to it. Uh So C. C. I. M let's break down what that stands for certified Commercial investment member. Gotcha. And what it's focused on is investment sales. My correct gotcha, investment. It's it's in investment sales. Professional leasing. Uh There's some of that as well. It's not just sales. Um It's more, I would say professional education for someone that wants to be in commercial real estate right? Instead of going and getting a degree in real estate on a university which most people aren't going to do. This is something you can do post college, that gives you a well rounded overview of commercial real estate, professional type stuff.

Yes, yes, and, and, and so there's a, there's a whole one on market studies, demographics, there's the sale versus lease analysis, that's a real good one that I still use a lot of. Um, so it did, it did a couple of things. This was the 90s, I was new, uh, what's, what was really cool about it was we did the classes kind of either in Tulsa Stillwater, whatever, and I did one a year. Uh, and it was, it was marco, it was Looney was Monte Berry, it was Perry Dunham. Uh, it was matt Clem ish, I mean, all these guys and now we're the old guys, but we were all the young guys then and it formed, just got all got to know each other. That's what that's been vital to my career, is my relationship with the other brokers in town. I've always said, I'm a brokers broker. I don't, obviously, it's a competition in some ways, but to me, we have to work together, we have to be kind of above, we have to represent our clients, but we have to kind of be above the deal and get the deal done because without us deals don't get done.

And I've said this a million times my, I hate this when it happens, but when we really earn our money is when the buyer and the seller are not exactly happy. They didn't get exactly what they wanted. But the deal got done because somebody's in the middle going be reasonable quit being a jackass. You're not getting this isn't worth this and you can't, you need to pay this and that's when we really earn our money when everybody's happy and they didn't need us. So I kind of look at it that so so it taught me the education and then and then the relationships and the networking that I did has carried forward 20 plus years. I mean I I was I was at a dinner last night, there was marco and and there was rick dialed and all these guys that I've you know, I just love that, I love that. It's weird being the age I am and and not being the young Guy in 39, 39 and holding business I was gonna, I was gonna tell you, you'd ask me about enhancing value. I was gonna give one last tip on what I did. Yeah. So these guys were sort of primitive in their thinking uh kind of country boy type and I don't mean that in a bad way but they didn't like spending money on deals and would rather keep the rent low And so I showed them that within within reason if you will spend a little bit of T.

I money or give a little bit of free rent and then get your rent that you want, the highest that the market will bear It substantially enhances the value of your property, I mean substantial. The difference between, you know, I'll give you a deal, you won't spend the money I give you for $12 a foot When the markets 15, 17, 18. But they're doing deals like that. Like you're you're gonna keep your value down here if we will spend a little bit of money and and and yeah, so let's let's do an example on that, right? Like you've got 5000 ft and you're getting an extra $3 a foot, right? That's 15,000 year. And those are probably seven cap assets or there's seven cap, 7.5 7.5, that's 200,000 in value. And so so you spend 20 grand in T. I. And so so that's what I was showing them, you'll spend five bucks. Well yeah, it's even better than that, okay for people that are listening because, Yeah, let's say you're gonna spend 20 grand, but you get 15,000 more in rent the first year.

So you almost, so you're basically, if you're gonna keep the center, you're getting, what's that 80% return on that money, Right? You gave them 25 and you're getting or you gave him 20 and you're getting 75% return on your money yearly. And so if you think in those terms and when you, when you sell You get 10 times the money you've enhanced the value. And so uh you know that's a huge point when you're talking about leasing is rent increases, we've done a whole show on it are so important and it's almost worth any amount of t I. All things being equal to get the rent increases. So we had we had one office building, two story office building behind El Tequila there and one space had never been built out, it's concrete, no lights, no ceiling. and last year I spent $275,000 in that building. Which Chunky Chunk Right? 20,000 square foot building. Uh So they were all kind of, what are you doing, bob what you doing bob? I took the value of it from 1.7 to 3.2. So for 200. So that's the way I had to present it to him.

If I told you that if you gave me $225,000 I will give you a million and a half next year. Would you consider that a good investment? Of course that's what I did and that that's that's the case study that I showed them the value. So do you think you can get that sort that thought process from C. C. I. M. Absolutely those those are those principles in play. They go over some of those types of examples, you learn that and you can learn it in a finance class. If you pay attention and don't, you can apply it to something outside, actually go to class. But the CCM helps it and it puts it in a real estate perspective. Uh, you know, here you're buying this building, you're buying this center, you're buying whatever apartments. Um, and so it's good to have those examples and then you can play with it. You know, some people can take it too far and just, you know, zone people out. But if you just know it back your hand, you can talk it. That's, that's what somebody wants to hear. That's what if you've got, you know, your investors, you, you know, you got your guys, your performers or see, see I am in action man, You guys, you guys should give a class on, you know, on how to, but um, but CCM helped a lot.

And at the end, I mean, it's, it's to me it's totally worth getting across the finish line. Just just from a, just from, hey, I did it. I finally did. There's so many people that take all the classes and then They're at the 99 yard line. I know man, this guy over here, I started, so I'm good, I'm good, haven't started a thing, The issue for me and we got to wrap this up, but I took those classes back 15 years ago before my real estate companies had really taken off. I went moved out of the country to India, you know management office there came back, still worked in oil and gas. Uh and so then by the time I got back into real estate, my company's kind of just was it wasn't as pressing but I still I guess could could could do it, I just maybe have to study some of those to pass that course concepts review. It's a two day course before you, I'll help you man. So uh bob, thanks for joining us today. Uh you know, it's a good example and we always try to educate people on this. There's just so many different avenues into commercial real estate, there's so many different ways to add value to be a part of the industry and once we've talked about it, once you get in the game then the opportunity to start coming your way, whether on the management side the leasing the brokerage, the owning.

Um So we want to encourage people just find a way to get in this industry, uh can make you a lot of money and can be a lot of fun as well. I love it. Alrighty guys, well make sure to go to our website and sign up for our investor list so you get all of our investment opportunities and then bob if you want to follow up with him, I'm sure you can find him somewhere at the U. S. A. Land trust website or something like that. Alright, well we will catch you next week on how to invest in commercial real estate bob. Thanks for coming on man. Really appreciate it.

Episode #069- How to Become A TOP ASSET MANAGER in Commercial Real Estate!
Episode #069- How to Become A TOP ASSET MANAGER in Commercial Real Estate!
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