All right, welcome back to how to invest in commercial real estate. What's the topic today? Brian topic today is, you know, uh, a lot of people ask us, we were asked today, you were asked yesterday, how do you find deals out of your market? So we're here in Tulsa, Oklahoma. We've bought a lot of stuff in Tulsa Waso, but we've bought all across the country. And so how do we go about finding those deals? Getting comfortable with those deals and closing those deals? This is gonna be a short episode because it really is pretty simple. Uh, but not just how to, but really the, the, the thing I wanted to talk about is people always expressed to me like, oh man, you guys, you're big risk takers, you guys buy out of your market. I, I could never do that, you know, and we've heard people say, uh I won't buy. If I can't, you know, drive over to it. If I can't see it, then I'm not buying it. And, and they've got a block in their mind. They have are assigning risk, a higher level of risk to a mundane activity that everybody already does for, for some reason they see it as a perceived risk.

And so that's what the episode is really about is just helping you guys think through why it's not that risky. Uh Go ahead. Here's another inherent problem, let's say, you know, I think last year we had a goal to buy 50 or $60 million worth of real estate. If we were just buying real estate in Tulsa, Oklahoma wouldn't happen, couldn't do it. We literally couldn't do it. There's not enough of our product type that we're looking for to invest in, in Tulsa, Oklahoma that comes up for scale or that comes up for sale. So just out of a sheer necessity to scale, you have to look outside of your market if you want to buy more than a deal a year. And so I, I wanna take the listeners back to the first deal I did out of the market way back, way back and, and here's how it was, it was just this easy. We had been purchasing apartments here in Tulsa and we sold them and we uh 10 31 traded that into a retail deal. I actually didn't even intend to do that. I identified several properties and all of those became unavailable and the only one that was left was a retail deal. So we purchased it and it was amazing. Uh the tenants just paid the management company managed and we got a statement and a check every month and it was like, wow, this is way easier than a whole company managing apartments with on call, maintenance, people, overnight calls and all the problems that come along with a bunch of multifamily units.

There's 300 tenants instead of like 10, they don't want to pay you instead of the 10 that do the tenants in a retail deal. Uh, they're only there during the day when it's, you know, light outside and they have to fix their own shit, you know. Yeah. And so what was, what was cool was a broker was doing their due diligence and they looked up uh retail shopping center sales to find people who were buying similar shopping centers as the one they were listing genius. And, and so they called me up and they said, hey, Joe, I was in the car, I remember I was in the car driving to a multifamily uh walkthrough and he said, hey, I saw you bought a retail deal in Tulsa about $6 million. And I'm like, yeah, I did. And uh you know, I don't know who this is. And he says, well, I'm over here in Little Rock and I've got a, a retail deal and it's about the same size uh as the one you purchased. And I was like, ok, well, uh at the time I, I didn't know that I would buy any more retail, but I said, send me the deal and that is what started, uh, us on a path to buy, uh, a few $100 million worth of retail centers outside of our primary market.

Just taking that phone call, being willing to drive over and take a look at it. And guess what? I drove over there and a stone's throw away is a whole foods. And the demographics were some of the highest in Little Rock and traffic counts looked amazing when I was there and it was in the, the parking lot of a hobby lobby, which is a great company. And so I thought, well, this looks all pretty good and we purchased it and it did exactly what we thought it was gonna do. It paid us every month, just like our deal in Tulsa did. And so, so there was, there was a lot in there that we need to unpack because what we're trying to drill down on here is there's fundamentals that you can rely on of just like in, in Tulsa. Right? You can't just go and say this is a good area of town. Let's unpack. Why? It's a good area of town. What makes this area of town? Let's say we're talking about 91st and Yale, you said there's a Whole Foods next to it. What makes 91st and Yale and Tulsa a great part of town. Well, there's a ton of cars driving by ton of cars. You've got great arterial access to the creek. Turnpike. You've got grocery stores, you've got the nicest office building in South Tulsa, the Geotechnical center right there with hundreds, maybe 1000 jobs or, or something crazy right there.

There's homes everywhere, everywhere. Household income. Yeah. Really nice houses. Which means people have disposable income to spend on retail. So now let's take that and we'll take away 91st. And you know, and we can just say, ok, high income, high traffic counts, good arterial access, maybe a grocery store, super dense jobs, close offices, school, good school district. Ok. If we can put these 89, 10 things on a list, say man, if I could find this, I would buy it. So how many times have we had this conversation in the past few weeks of what markets are you guys in? Well, I can tell you what markets I'm out of, you know, but other than that kind of open, yeah, we're, we're in, it's a uh let me ask you a question if you're listening and let's say you're from Tulsa, I'm gonna mention some intersections, you know, 71st street and highway 75 uh 71st in Mingo, 91st in Yale. Do you think for a second that those intersections don't exist in every single uh mid to large market in, in America? They absolutely do. Every, every, every city has several good school districts.

Uh Every city has areas of great demographics. Every street corners have some uh traffic counts that are over 20,000 cars a day. Ok. So if you start checking out those boxes, why do you think that the retail center uh in those markets and on those corners will, will perform any differently than, than the one in your market that you feel so secure in buying? Right? So let's talk about the pros of buying out of market. Let's let's name another few corners, right? Like let's name 31st and Garnett like, oh yeah, love that corner. Let's go, let's go spend $5 million on 31st and Garnett, it sounds kind of insane if you're from Tulsa because it's maybe not the best area of town. That's a, that's a super workforce area of town. But I guarantee you if you drive by 31st and Garnett, there's no vacant retailer there, there's no vacant space. They're all filled with retailers that, that service, that demographic. We've got properties that are in the middle of a of a probably fairly bad part of town, but because we don't live there, we don't go in there with that predisposition of, oh, this is a bad area of town. I don't want to be here.

We go in with man. Great, great traffic counts. It's a super dense area. Um and the retail is fairly full in the corridor and the tenants match the retailer, you know, we've got discount, goods and services to, to match the demographic. It's not a, it's not a whole foods. Sure. But if you put a Whole Foods there, it wouldn't last very long because nobody could afford the groceries at the Whole Foods. Right. It's gonna have a Walmart, uh, neighborhood market. It's gonna have a ross dress for less. You know, it's gonna have church's chicken. It's gonna have these things that, that people still love to shop at and buy. Yeah. So, Joe, you made a great point before we started. What if uh Starbucks was worried about expanding? What if they had only stayed in Seattle? And oh, we're worried, we know Seattle. So we're just gonna stay in Seattle. Anything. Any Starbucks here in Tulsa, nobody at Starbucks knows anything about Tulsa. I never been here and, and you can look at all the right. They're all opening stores all over the country. And so why are they doing, doing that? Because they know, uh based on the, the, the metrics that we've already talked about that they're going to be successful.

We are doing a deal in Princeton right now and it is a field. It is a field and we have signed leases on this field. Chipotle signed a lease like this field is great. I love this field. I wanna build a Chipotle right where this tree is. We're tearing down those trees right out in the field, but a Chipotle, it's great, right? But like they went in the middle of nowhere, it's the middle of nowhere. It's Princeton for, for all, as I'm concerned, it's the middle of, you know, they did their research though. Right. Yeah, that's the point that he, that we're making here is these companies, they're not idiots. They have whole teams of people that are doing research on where the growth is going. How much disposable income is there. What the trap accounts are gonna be two years from now? They're better at it, way better at than we'll ever be. So, if you, if you were in doubt, then just try to find some, some high growth retailers that are going in an area and then know if you're gonna buy in that area, you're gonna be fine if, before you, let's say, um, you're looking at it before you go out there. Are there any local brokers, either someone who's managing the property or maybe is the, the listing broker? Can they give you good info information too? A absolutely.

And, and that's another step we do is if we find a property that we like, uh, when we go out to the property, we'll call several real estate, uh, commercial brokers and property managers of that type of commercial property and we'll meet them out there and we'll get their opinions. Hey, what's the school district like? Where's the growth going? How do you, what do you see this intersection in 10 years? Uh, you know, and they're gonna tell you, uh, they're very, very honest, especially if they think that they're going to get business like, hey, this is a tougher area to manage. I would look over here, you know, you're gonna get a red flag. It's a red flag, right? And I think, I think it's, we may be desensitizing it a touch, right? Because we look at a ton of deals. Most of the deals we do not like because of stuff like that, we go toward deals, we spend money on deals, thousands of dollars and then we get information. It's like, man, I do not want to own this. This I this could be bad. This could be bad, right? So most deals are not gonna be good, but you gotta think you have nine or 10, you know, key fundamentals, we're looking for it.

It's not going to satisfy all of those, some of them you can work beyond right? But like don't be afraid to chalk up the deal as a loss. The next best one is right around the corner. Yeah. One caution I want to give everybody is that I know you brought, bought a property one time without going out there. But personally, I don't feel comfortable if everything looks good on paper and, and everything looks like we want to buy it. In fact that that's happened to us, right? We're like this is a great deal we got, ok, let's go look at it and when we got out there, it really wasn't what it said on paper. Yeah. Uh, Brayden. You and I went out to New Mexico, uh, and we drove up and as soon as we drove up I didn't, I didn't get a good feeling and, and the guys that's as simple as it is for me sometimes is when I drive up, how do, how do I feel? How does the, the area make me feel? I know. It sounds stupid but sometimes it's simpler. Sometimes it's, how far away is it from the airport? Now, I'm out, I'm not sitting in a car an hour from a nap. No, no, no, I'm out. But I gotta tell you a, a six or $700 plane ticket to fly to wherever you need to go, fly out in the morning, you can do all this in a day, fly back that night.

Spending seven or $800 is well worth it. Well, it's not about spending $700. It's about downside protection. Right. Like you're gonna have the same argument with somebody who doesn't want to use an attorney. An attorney is $500 an hour. They are. But if you actually have to use them, they're gonna save you $50,000. So, and everybody knows someone else in other cities. Uh, I, you know, I've got relatives in Kansas City so if I have a deal in Overland Park or, or whatever, I'll just call them, they'll drive by and I trust them. So do you have several people in, let's say four or five different cities in, in the U that you could trust? So then maybe if you're saying, I just don't have $600,000 to, to potentially risk on this deal. Great. Only look in the markets where, you know, somebody maybe to start, it's like a vacation spot almost like how, how often do you, you ask a friend or a family member? Hey, what do you do when you go to New York City? Hey, when next time you're in Philly, what's the next, what's the best spot I need to be at? Where, where do I need to stay in this part of town? I mean, it's so easy and just like, uh, Brent was talking earlier, sometimes you just have to, you know, do a little massaging of the truth and say, hey, you know, I've got this property contract down the corner and it seems like maybe a rough area of town.

Is this a little harder to manage town? Oh, yeah. Yeah, it's definitely harder to manage than the other one. You, where you need to be looking if you want something to easy manage is over here. Right. And like you've got a call, I'm sure the Chamber business Chamber, uh, small Business Association or whatever in the city and they'll, they'll probably give you, uh some good advice. So, maybe a rotary club. Yeah. So I, you know, we don't want to be labor. This, uh we wanted to make it a short episode. All we want to do is to sell the myth that it's somehow inherently risky buying in a city that you don't live in. And that's just not the case evidenced by all the companies that, that open new locations and markets that they are not in today and they do just fine based on metrics uh that you can find out. So hopefully that gives you the confidence to widen your search and, and make a lot more deals uh available for you guys. I like it. See you guys next week. All right. See you next week. See you next week.