What is up and welcome back to how to invest in commercial real estate. And we are back with another super exciting topic about how to diversify in different markets, right. Which a lot of people I think are foreign to, a lot of people buy around where they live. But anyway, before we get into that last week, we mentioned we were launching a new investment opportunity and that investment opportunity was for a Nucky's sandwich shop development. Um Right. Can we get a new name? Like why do, why do we Nucky's? You know, I don't, I don't know what I think Nucky's is selling but it's not subway sandwiches. Their official name is Nucky's hoagies. I'm thinking they sell hoagies anyway. We are developing a Nucky's hoagies. Anyway. We, we sent that out last week out to the investor base and it sold out in record time. So if you were able to get involved in that, uh thank you for getting that um commitment and quickly we're gonna be circulating, circulating, I can't talk, circulating, offering documents this week and we should have another deal coming out very soon.

20 minutes. That's amazing. 20 minutes. It's sold out. It was pretty nuts actually. Yeah. And what's gonna be crazier to all that are listening that invest with us is once we start selling these deals, uh all we're gonna do is return uh 100 and 50% 200% of the capital that we we took from investors back to them. And so the fever pitch to get in the new deals is gonna be that much more competitive because everyone's gonna be flush with cash as we start to exit some of these deals in the very, very near future. So make sure you're on our uh investor list and you're checking it and, and we'll keep trying to funnel uh really great investment opportunities. Uh So there's plenty for everybody to get involved in. That's a good point. People are gonna have money and, and they're gonna see that this actually works and they're gonna wanna invest more. Yeah, we actually have several exits we're pushing to get before the end of this year. So I, I mean, obviously those take time. So September, we're kind of making the final push now to see if we can get something closed before the end of the year. But anyway, back into the topic all about how to diversify, using different markets, how to, how to diversify your real estate holdings.

And I think it's born for a lot of people, a lot of people I know don't own in um multiple markets. Yeah, and we've seen it, I've seen it with experienced real estate investors that still tell me, well, Joel, I, I, if I can't drive by it, I don't want to invest in it. And uh that, that's a problem that we want to help you guys through. We've talked about it a little bit before. Uh but today we want to talk about, ok, why should you, uh you know, consider investing outside of your primary market. What are, what are some of the advantages or some of the risks? Well, depending on where you live, let's use us. We live in Tulsa. Here's why I would invest somewhere else because there's a lot of other awesome places other than Tulsa. Yeah, but that's true about any city, right? I mean, no matter, no matter where you are, not just a city but a but uh you know, an area of the country you want to get outside that because you never know when something might happen to. Well, in Tulsa, you know, we kind of r we used to maybe not so much anymore. We used to rise and fall with the price of oil, right?

So you never know what's gonna happen. So you got to get outside of Toulson and uh get some other properties somewhere else. Look at, look at Dallas, I mean, Dallas has been a primary and growing market for decades and the writing has been on the wall that it's, you know, this Tinder Box for explosion. And every time you go down there they're still pumping away and there's just brand new cities that you've never even heard of that are just filled with skyscrapers. So, I mean, it's, it's opportunities like that. If you would have got into Dallas in a, in a growing primary market a decade ago, you would be reaping a lot of financial benefits today. Right. Yeah. And so that, that, that needs to be part of the strategy is, is looking for up and coming growth cities uh that, you know, may be growing faster than your current market. And so let you know, OK, Tulsa, we could say that it's a uh in between a tertiary secondary market, you know, primary markets guys, just for uh education's sake. They're the gateway cities, it's New York, it's L A, it's San Francisco, uh Dallas Miami, these are internationally known cities where international investors want to own uh because they're, they're huge markets, they're not going anywhere and they have strong, stable economies that are multiverse across industries, 1010 million plus, probably pretty easy in the population.

And so uh those are gonna be very competitive, not bad markets to purchase in, but you're gonna have to work really hard to find good deals in those markets because they're already so established and there's so much competition to own in those, you know, if you have a billion dollars and you just want to put some of it into real estate and wait 3040 years and know that that city is gonna be around 30 years from now. Well, L A or San Diego might be a great bet for that. Uh, you know, L A's not gonna go anywhere. It'll be L A, uh, 10 years from now and 40 years from now. But, you know, flipside, you wanna, you know, pick a, a small market in Oklahoma like West Oklahoma, Woodward or even Eastern Oklahoma, Miami or you know, Chandler, you know, we Woa some of these towns, we don't know what they're gonna be in 10 years and they may not even exist in 40 years. I don't even know what they are now. I gotta be honest. And so uh a lot of people live in those towns and we still want to encourage you to be a real estate investor, but you just don't have to, to, to buy in your, your smaller market. There are lots of opportunities in, in markets all around the country if you'll open your eyes and being willing to go there and do the research and, and figure it out.

So, uh kind of what you're saying is if you limit yourself, let's say we limited ourselves to the Tulsa area and let's say we had uh we had a, a property we want to buy in Tulsa and we had a property, we wanted to buy someone else somewhere else. But yet we decided to buy it in Tulsa but you can find better deals in other cities. Right. I mean, you wanna, you wanna look at other cities because you never know what's going on with that buyer, that market and you might get a better deal there than you can in your own town. Yeah. So, I, I think what we're getting at is we're all kind of chasing yield. We're chasing dollars, we're chasing a return, we're chasing some sort of up and promote. I mean, at some point, this is about money, right? So you look at that with markets, like you're saying, you can evaluate the exact same shop. I mean, not literally the exact same shopping center, but figuratively, a lot of the shopping centers we own look and are practically the exact same thing. They've got small tenants that are, you know, 2 to 12% of the gross leasable area of the shopping center. They have local credit. They're, you know, 1970 like we don't own anything newer than like 1990 unless it's brand new.

So you can take those criteria and, and type it in costar or loop net or, or anything and do a national search. You can say show me shopping centers that I like to buy under 100,000 square feet where the tenants aren't too big and it's not too new and show me all of them. And you, you can see immediately there's a massive disparity in yield. Some are gonna be 10 caps, some are gonna be a 12 cap. Some, some are gonna be a seven cap because it's in Frisco or it's in Dallas Texas or it's in Los Angeles. It may be a five cap and it is an absolute dump. It, it looks like a dump. You go there and it, and it looks even worse. It's filled with tendency. You don't know. But it's in L A. So it commands yield, right? And, and why, why does it command yield? Because it's, it's Los Angeles like the, it's, it's gonna be full, it's gonna be full. So you say it commands yield but, or it doesn't, it doesn't, it doesn't command yield. It, it commands security, right? It, it's, it's not, provides uh a potentially lower risk uh being in the center of a primary market, but you may not get the yield that you would get in other spots.

Correct. Yeah. Correct. So, ok, guys, uh if you think that the real estate market is perfect capitalism at work and everything is just perfectly priced and perfectly valued, there's no downside and there's no upside. Every seller just knows exactly what their property is worth. Well, number one, you're wrong. That's not how it works. It's not a perfect system. And so, you know, I'm gonna give an example of when I go to buy a car, when I decide to buy a new car or a used car I pick the exact make and model that I want. Ok, let's say, you know, my last car is 2020 BMW X six. Ok. So there's not that many of those in Tulsa. And if I look nationally I'm gonna find the exact same X six that, that's priced differently between cities. Why is that right? Is it because cars cost more in Miami or cars are less, cost less in Dallas? No, it's because every situation is different. Every seller is different. Maybe a, a person bought an X six and decided they didn't like it.

Uh And so they traded it in uh to a non BMW dealership and bought the brand new Lexus that they really wanted. Well, now we have a, a Lexus dealer that has a BMW that they don't want and they took a great deal on trade. They paid not very much for it. So they just want to get it off their lot because they sell Lexus, not, not BMW. And so you might be able to, to get that particular X six a little better deal than one at the BMW dealership in San Francisco. And so that's the point we're trying to make on real estate is we're opening up uh nationally to look for opportunities because there's gonna be a seller, their dad owned the property and he died and the estate now owns it and the kids just want to get some money for it and they're you know, they don't have any basis in it and they're gonna make a windfall as soon as they sell. Like, hey, I need to sell this quick because I got some stuff I need the cash for maybe that sells at an A cap in an identical center uh in another market that doesn't have that selling pressure. Maybe at a seven. We see it all the time if you guys are, are doubting me at any point. Go to crecy.com and look up shopping centers and, or apartment complexes and you'll see the exact same looking apartment complex with the same traffic counts and the same rough credit tenants.

And one might be a seven cap and one might be an eight and a quarter cap. Ok. Well, I'm, I'm gonna vet both but if all things are equal, I'm pushing toward the eight and a quarter or the 8.5 or the nine and people will tell me, I don't, well, you know, that nine has to have more risk because it's priced higher or at least the yields higher. And, and that's what, that's what losers say. They, they, they, they don't allow themselves to believe in the opportunity that, that there's something there. Uh, well, why are they selling, you know, it must be a problem if they're, if they're asking a higher cap, maybe, but maybe not. Well, it's uncomfortable. Right, because if they did the same thing thing in their own market. If they took two shopping centers in their own market that were priced differently, they wouldn't have a problem picking the one that made more money. They would not have a problem at all. Right. If, if all things were actually true, but you throw one in like Saint Louis and it's just like, oh, Lord, what are you doing? Now? Another reason to look nationally is, uh, to diversify your risk. Like we talked about you have small markets that might go away.

Uh And so there's no, and there's no real demand for that, that real estate in those markets. So you might be able to get a good deal. Oh and, and make cash flow. But when you go to sell it, can you really reap the rewards and you may not have any buyers quick. Uh Relative example, COVID shut down a lot of primary markets. A lot of primary markets were a lot stricter with the lockdowns where when you got into secondary and tertiary markets, they were way more relaxed because they have inherently less people, they have less population, they have less restaurants. So that was a benefit right then in that period of time to be in a smaller market was, was COVID. So there's, there's pros and cons on both sides. Yeah. And so where I was going with that is that if you can establish good real estate in multiple markets, you're just hedging your risk for eventual market. Conditions. You know, I, I'll go back to like a 2008 where, you know, Detroit and some of the Michigan uh suburbs of Detroit just were totally hammered auto industry was struggling. They were facing bankruptcy, laying off tons of people and the vacancies in those markets were off the charts.

So if you owned in those markets and you, let's say you had debt coming due, you're not gonna be able to sell it for what you want to sell it for. You may have a hard time refinancing it. So if you had all your property in that one market, because you just happen to grow up in South Detroit. Well, you're, you may have a problem but if you had one or two properties in Detroit, but then you had some in Chicago and you had some in Saint Louis and you had some in Cincinnati and maybe Oklahoma City. Now you have, you're diversified enough where some of those markets didn't get hit as hard as let's say, Detroit in 08. And so once again, you're just protected your overall nest egg of real estate. And we think it's a, it's a great opportunity to, to find not only find better pricing but also lower your overall risk of the portfolio. So what would you say to someone who said, well, how do I know what that market's like? What if I find a property in Saint Louis? How do I know that area of Saint Louis is good. How do I know the economy in Saint Louis is good. What's the future for Saint Louis? I mean, how does somebody, you know, someone might be hesitant doing that versus one in their own hometown where they kind of have a feel for what the economy is doing, what the market's like.

I would say if you don't know how to find the answers to those questions, you shouldn't be buying in ST Louis, right? Like you just shouldn't because I, I this is not meant to offend. I feel like it's easy to find the answers to those questions. Well, let's tell them how to find some of them. We can't find all of those answers. We've done shows on this before, but give us the two or three minute summary. I'm meeting with a lot of people in ST Louis. I'm meeting with ST Louis Lenders. I'm meeting with Saint Louis property managers. I'm meeting with ST Louis leasing agents. I'm talking to people in Saint Louis that sell those types of properties. I'm talking to people in Saint Louis that buy those types of properties. Yeah. Think, think in your mind who in Saint Louis uh just, we're just using Saint Louis as an example of knows uh the commercial real estate game and the growth drivers in ST Louis who might know that. Well, uh retail and apartment brokers, commercial uh brokers, industrial office brokers, they're gonna know OK. Number one, number two lenders, like you say, lenders are gonna know lenders, they lend money in their markets. And so you're gonna, you're not gonna call up a lender and he's gonna see, oh, that's a crap area. But I want to loan you 10 million on it.

No, he's gonna say, hey, I don't love that area. I like this area over here and he's in the market and he's a, she, she's a professional and they're gonna know uh who else? I think this is the problem with buying in your own market is that you're too comfortable with that underlying influence that you already had that predetermined reputation that you don't actually look at all of this data, right? Where is when it's out of your market and you're forced to go and actually find these data points that should bring you some sense of security. And it may feel weird just because you're not doing it in your own market. But you should, you could be thinking, well, everything seems to be fine here in Tulsa, I'll buy here in Tulsa. There could be a Saint Louis could be thriving right now, right. So a couple of other people to call uh property managers, especially uh managers of the type of property that you're looking to buy, they would be a great resource. Well, you're going to need a property manager. So just start interviewing and just ask good freaking questions and you've got the chamber of commerce uh in those cities, they'll have information.

You've got the tenants on unemployment, on job growth. Uh you know, economics and you, and you have this thing called the internet and you can literally Google anything you want like, hey, I want to know the top 20 rent growth cities for apartments in the US. You're gonna get it. Where's the, where's the top 10 population growth cities in the US or states? All of this is gonna give you ammunition to, to make you feel more comfortable in buying out of your market. And we're not saying you have to buy out of your market, buy in your market eventually you're going to have to. But yeah, if you wanna, if you wanna buy a, you know, a deal or two a year, ok. Your market might be big enough for that. You want to buy a deal a month. Uh Your market's probably not gonna be big enough. You're gonna need to look outside. Um And you can only build so many nucky hoagies in Princeton. Princeton can only support so many nucky. All right guys. So don't be afraid to diversify out of your market. We, we've done it successfully and, and we think you should at least consider doing it. Make sure you do your research.

If you find opportunities outside of your market and you want an opinion, hit us up, let us, uh, look at your deal. We'll tell you some good, some bad maybe we'll even recommend you know how to do some research on it, call some brokers or some management companies. We want to help you guys get involved in commercial real estate. Alright, till next week. See you guys.