Why I'm Getting My GC License, Leasing to The Govt., Marketing Space for Lease (Office Hours)
This episode of Office Hours dives into why I’ve decided to get my contractor’s license, what it looks like to lease to government municipalities, marketing space for lease, and more.
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Key Takeaways:
Tyler is getting his general contractor's license because he has found many general contractors to be incompetent.
He is flipping his first house after the original contractor went bankrupt.
He thinks Birmingham and Huntsville, Alabama are good markets to invest in.
When starting in development, he recommends finding an experienced developer to mentor or partner with.
For marketing commercial space, he recommends strong SEO, videos, floor plans, social media, and working with the local economic development department.
About Your Host:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors.
Episode Transcript:
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This episode of the commercial real estate investor podcast is brought to you by cre launch Pro. This online commercial real estate program is designed to take you from beginner to pro commercial real estate investor with access to all of my courses, our online community and monthly group coaching calls on how to confidently buy your first commercial property today at www dot c r e launch pro.com. Welcome back to the commercial real estate investor podcast live from the Cabo group studios. We are broadcasting from our brand new set up today which I'm very excited to to be releasing out into the world. We've been working on this for a little while now as you can see, if you're joining us on YouTube, you obviously can't if you're on the podcast, I've got a new round table here with four mic setups. So we're gonna start live streaming from here with guests in the studio in the coming months so pretty excited about that. I think the first person that's going to be joining me is Ian Horowitz from equity warehouse we're gonna be diving into self storage here in a couple of weeks when it comes to Nashville so if if you are a an acquaintance of mine and you know something about real estate hit me up next time you're in Nashville, we can get you into the studio and and have a have a really fun conversation. I want to kind of build a reputation of the studio of being the spot when you're in Nashville. You want to come hang out of the studio. Hardest thing great day for a great day. Couldn't agree more. It's beautiful out. Just got back from Chattanooga. Last night I was out there for the day, working on some stuff for peerless Mills, it's pretty good. You said oof, look at that studio. Very nice. I appreciate it. Man. It was good meeting you at bigger pockets. It's pretty nice to finally have this studio done. And well, at least mostly dub, we still have a couple of things left to do. We got to work on the lighting a little bit. But the soundproofing in here is a million times better, which feels really good. If you're not aware, this is our office hours live stream where I go live doing the things that I wish somebody had done when I first got started in commercial real estate, giving you advice and answering whatever questions you have on investing, buying, leasing, becoming a broker, running a business and commercial real estate, you know, whatever you got. So feel free to drop those questions in the live chat. If you'd like to join us live, we go live every tuesday at 8:30am. Central Standard Time. Let's see Michaels saying looks nice. I'm up there once a month. Well, Michael, hit me up, man, if, if you've got some properties or something interesting to talk about. Let's get you in the studio. We'll talk about it a couple of quick updates before we dive into any questions while you're thinking on those. I decided I announced yesterday on my Instagram. I'm going to be getting my general contractor's license, I am fed up of dealing with the general contractors that are out there. I don't know if it's I know it's not just me, because a lot of y'all were DMing me saying you're dealing with the same problems. But man, you know, I don't know if it's if it's Nashville or if it's the entire country. But it is amazing how many incompetent general contractors are out there. And you know, honestly, after looking into the licensing requirements, I can see why it is way too easy to get your general contractor's license, you actually don't even have to really know anything about building. It's wild the the exam that you have to take to pass and get your general contractor's license is open book, open book. I mean, think about that Isn't that wild? An open book exam, it is harder to get your real estate license than it is to get your contractor's license. And that is mind boggling to me considering the implications of building, right and all the accounting and the complexities that come with each division of construction. Pretty interesting to me. But yeah, we're gonna start with some smaller commercial and some residential actually, that's you know, y'all, y'all have probably heard me talk about I'm doing my first house flip. So we'll be documenting that whole journey, I'm going to show you guys what it's like going through getting my general contractor's license, and why we're adding that vertical to the commercial real estate firm. I think that it is going to be, look, it's something that I wanted to add from the very beginning of founding my company. You know, when I started the cobble group back in 2018, I always envisioned four pillars of the firm. It's brokerage, property management, development, and construction. Now we've got the other three we've got brokerage, property management and development. But you know, for the longest time I thought, You know what, it, it may just be easier on us if we don't get involved in construction. Right. It's easier to be on the development side holding the general contractor to the fire than it would be to be the guy that's being held to the fire. But what I have found is that there's not a lot of repercussions for bad contractors. is wild. I mean, I know what I'm doing. I've been doing this for 10 years, I grew up in the construction business. And even still, with all of the systems and processes and contracts that we have in place, we still run into issues with bad contractors. So it's, it's, it just makes sense for us to move on to that. Let's see, Michaels dropped in a super chat. Have you ever leased or sold to municipalities? You know, what I haven't? Michael, that's a great question. I know that there are some investors out there that will exclusively by post offices for that very reason. Because you know, the government, I mean, what better tenant could you have? Right, if the government stops paying rent, we've got bigger problems in the world, but they usually sign very long term leases, they have incredible credit, lenders are usually willing to give you pretty aggressive loan terms on them. You know, I would say I would say municipalities are up there, along with medical professionals, you know, dentists, doctors, those are some of the best tenants you could ever have in a property. Actually, that's not true. We have leased to a municipality, we've got them and one of our properties up in Madison, and it is a what is it, it's, it's a part of the correctional facilities here in Nashville. But it's not processing or anything like that, it's in a retail shopping center. And I have to go back and look at the lease and see exactly what they do. But I know that they will have, you know, people that are on parole or something like that, like come in and check in. So it's not really like a parole type of spot, but it's something like that, I will say they, they can be a great tenant, and they can be a total pain of a tenant, they're great, because, you know, they take up a bunch of space, they always pay, that can be a pain, because they are they don't want to handle anything, the way that they structure their leases. And this is a lease that we inherited. Right, so so we just we bought the building they were in, they don't want to do anything. So I mean, if a light bulb goes out, they're calling us which we're, you know, we're accustomed to on the office side. But this is a, you know, supposed to be semi triple net lease shopping center, and they are the one lease that is not, they have a very interesting process that they go through, because I've talked to gosh, I forgot what it's called, I can look it up and share with you guys later. What it is, but, you know, we'll get notices every now and then from the government that they've got a an entity that is looking for space out there, they have to go through a full process of of deciding which space are going to lease, it doesn't really work like a typical tenant. Because as they're going through it, they have to be able to show complete transparency, that they did all of the work to make sure that that space is the right one. And that's another good and bad thing. Right? It's good, because if they pick your location, they're probably never going to leave. Or you know, very rarely will they leave. But you've got to go through this whole bidding process. And you know, it's it's, it's very unlike any other lease that I've ever worked on. So yeah, Michael saying that's interesting. So no triple net municipalities. Yes. And no. For whatever reason, this entity it because there's so many different branches, right, like, you know, I mean, you've got all sorts of different divisions within a municipality, you know, from from trash collection, to administration to taxes and audit. And, you know, there's so many different levels, and I think every single one kind of has a different director that decides different things. So some of them I believe post offices are a triple net basis. It could vary depending on the municipality, but I have seen post offices out there that were on a triple net basis.
Rich with cars are saying good luck on the GC license, my girlfriend is preparing for hers, but she's going for the NASSCO license, which is a multi state license, you should consider that given that you look at projects outside of Tennessee. That's great advice. Rich, I appreciate that. I will definitely be looking into that. One thing that's interesting about GC licenses, they're far more reciprocal, is that a word? For reciprocal across state lines than like a real estate license is you know, when back in the day, if you got a real estate license in Tennessee, all of the states surrounding it would reciprocate. So be very easy for you to apply and get your real estate license in those states. Now it's it's really difficult, you got to go through, you know, the education again, or you got to retake the exam or you got to do some some sort of extra steps, which I get it but I mean, I've been doing real estate for 10 years in Tennessee. It's pretty much the exact same in Kentucky. I should be able to just go over there and apply based on my spirit's to get my license. But, you know, it is what it is. Let's see Anthony saying good morning, Tyler. I'm 25 years old working on currently working on a $60 million project, which is for commercial. Congrats, Anthony. That's awesome. That's a it's a pretty big project. Sounds like it could be a good one. Rich, we're selling them a vacant parcel of land for development. They're looking to build a fire station alongside a training center. Oh, sorry, his earlier one was, I'm in the process of selling to a county here in Florida. Quite a different process. Yeah. I mean, that sounds like a pretty good deal. You know, you can't really ask for a better buyer than than the government. Right? I mean, again, it's gonna be a process they go through. I mean, they put you through the trials, that is for sure. But good thing is they've got money, right? You don't really have to do a credit or you don't have to do a, you know, check the funds on that one, right. Ken is saying hello. Good day, everyone. Yeah, you guys should jump in the live chat and start connecting with each other. I mean, that's one of the great things about doing these live streams. There's so many people that are like minded jumping in here. Y'all should y'all should definitely all be connecting. But yeah, the GC license is gonna come in handy. I mean, we're looking at I mean, we're doing a house flip. I, you know, made a joke yesterday on Twitter, like, Hey, I got into the hard money lending game. And, you know, on a totally unrelated note, guest who is flipping his first house, the contractor that I went to ended up going belly up 30 days into it, I typically wouldn't have made that decision, but it was an old friend from high school. And that is a good lesson right there to never go out of your way to help someone, no matter how well you know them always maintain your standard processes as if they are a stranger, I probably would have done a more thorough background check. Last week ws envy ended up running a an investigative report on him, he's stolen over $300,000 from other homeowners. And he called me and said he's filing for bankruptcy. So that's how I ended up with the house back. And it's gonna be a fun process, I'll definitely do a vlog and tell you guys all about that story because it's interesting. Just you know, the risks that come with hard money. And you know, if you're if you're going to do that, you gotta be prepared to take the house back and finish the project yourself. Because that's really the only way you're going to be able to make money on it. Of course, if you if you wind it at the correct you know, loan to values, then you know, maybe you could just flip it make your money back make a little bit of profit move on but you know, get it was a high school buddy, so I didn't didn't go as strictly as I normally would have. But I did look into the deal. I knew that you know, hey, if we have to flip this we'll make all our money back and a pretty decent profit. So it's, it's kind of like how I started the cobble group. You know, it wasn't something I'd really been planning on it kind of got pushed into it, which ended up being the best thing ever. But it's gonna be great because we're adding the residential vertical back to the development firm. Y'all y'all may know that my first development project was 42 townhomes down at Bellevue, a For Sale project. And you know, I haven't really done residential since that development. And just because we've been so hardcore on commercial but with where the market is right now. where interest rates are where the risk is the winder sentiment. Residential is looking pretty attractive. And based on the programming that we've got, we think that we can make about 100 $250,000 of profit per flip and that is kind of hard to turn down. Especially when you could do multiples of those a year ago saying is it Tennessee and what is your perception of investing in Alabama? Don't hold back. I love it. You know, it's funny, I went to the University of Tennessee for a whole year and grew up in Tennessee, not a big vols fan. But let me think about it. I was there in 2011 2012 they were total garbage really tough to watch. And of course you know this this past weekend was the Tennessee Alabama football game. I don't even know the outcome I think Tennessee I think Tennessee was winning last time I saw but I'm pretty sure Alabama came back and smoked him. But you know, I actually like Alabama. I think Birmingham is one of the coolest cities in the southeast. I think it's very overlooked because it doesn't have a lot of of the industry going for it that Nashville Atlanta, Charlotte do. Birmingham is a really cool tertiary or maybe cautionary market. I mean, you know, Nashville used to be a tertiary market or a secondary market and I feel like it's definitely primary now and if Nashville is primary, Birmingham has got to be secondary or tertiary. But anyway, you know, Birmingham is is beautiful. It's got a lot of older industrial buildings just because it was you know, it was doing really well in the in the 1800s, early 1900s And then it kind of fell off So, when that happens in a city, same thing happened in Louisville, and something similar kind of happened in Chattanooga, you get all of these old, beautiful historic industrial buildings that never get torn down for parking lots like what happened in Nashville. So there's a lot of really cool investment, you know, value add, or adaptive reuse opportunities there. I think Huntsville is obviously incredible. It's one of the top multifamily markets in the country. But honestly, outside of those two cities, I haven't looked at Alabama at all, I don't know what is going on to the rest of that state. To me, it seems like there's obviously nothing really happening. But I would be interested in investing in those two cities almost built. We were looking at a project down in Huntsville, for I want to say it was 127 apartment units, we ended up passing on the project, it was a really good price per door this probably two three years ago. But even back then, you know, it was it was tough to see the exit strategy, right? Because when you're building 127 units, you're not going to flip it to an institutional group, it's got to be a syndicator or something like that. And, you know, new construction, it's just kind of tough. And I didn't really want to hold apartments in Huntsville. At the st. I've been wanting to get into either buying or starting a ground up development of my own. Do you have any advice of what I should do to finally get started, I do have a business degree just need help. Anthony, if you want to get started in development, the best thing you could do is find a commercial real estate developer that is doing exactly what you want to be doing. And somehow turn them into a mentor, the best thing that I ever did, when I first got started was I worked for a development firm for almost five years, which meant that I got to sit in on all the weekly development meetings, I got to see how they, they put these deals together to work on the insides and outs of what's going on there. And that meant that I knew the exact sight criteria that they wanted to see. So went out found some land, put it under contract pitched it to the development firm that I worked for, and ended up partnering with him on it. So you can do the exact same thing, you don't necessarily have to go work for somebody, although it does really, really help. You could just spend a lot of time getting to know somebody figure out what their side criteria is and go out and find them a deal, put it under contract, pitch it to them. And and partner with them. Now I got 10% of that deal. One thing that I see that people do far too often is they try and take like 50% of the deal, I found the project and went 50%, no developer is ever going to give you 50% of a project considering you know, unless you've got unless you're putting up all the cash, or you have such a strong balance sheet that they don't have to sign on the debt. So if you don't have any experience, you don't have a strong balance sheet, you don't have a lot of cash, getting two and a half percent to 10% of a development project is amazing. If nothing else you're going to learn and you're going to get a lot of experience. And you'll have it on your track record. So I highly recommend taking that approach if you're looking to get into development.
Entrepreneur journalist saying Hey, Tyler working as a developer on a deal, but I'm not sure how much to charge my client, I have no equity in this deal. Just offering development services. Any thoughts? That's a great question. So we do third party project management, it's really project management development, it's the same thing. My firm does third party as well. And depending on the size of the deal will charge anywhere from 3% to 10%, with a fixed monthly rate as well. So it's the greater of the two. Because when you're first getting started in project management or development, the very beginning of the project, like when you're going through the engineer, the civil engineering and the architectural design phases, there's not going to be a lot of of, you know, expenses that you can throw your three to 10% charge on top of, right, but you're still gonna have real costs, right? It's either your time or your team's time. And so that's kind of how we structure ours, obviously, the bigger of a deal it is, you know, we're charging closer to 3%. If it's a smaller deal, like you know, 200 $300,000 where we're just overseeing a build out for somebody, you know, we're probably gonna be charging eight to 10%. Really just depends on the project. We're getting a lot of questions guys, keep in mind, super chats get bumped to the top. I know we always end up running out of time here since these are only 30 minutes long. Ted, Hi, Tyler. Do you have any advice on marketing commercial space release? Yes, I do. That is what we have cut our teeth on and that is what we are the best at. I think that a lot of commercial real estate investors and brokers get this wrong, because we are marketers first, you've got to be the best marketer possible. It doesn't matter how good you are at sales if nobody knows about your property. So the first thing that we do, we have really strong SEO on our website now because We have created all of these web pages for every single listing we've ever had, as well as writing blog posts on them, et cetera, et cetera. Now, what that does is when somebody goes in searches retail space for lease in East Nashville, which is incredibly specific, right, chances are good, one of our spaces is going to pop up. And if it's not available anymore, they'll likely contact us because we had retail space release any statue at one point. We also do, you know, videos, get a drone. I mean, I spent $2,000, on a drone, like five years ago, it still flies, it's amazing one of the better investments we ever made, because you can get some really, really good photos of the property with that. And then we will get, you know, videos, photos, you know, on the ground, anything you can do to show off the space without somebody having to walk through it. And then we'll do floor plans. That's one thing that I see a lot of people just not doing, they'll like do hand drawn for plants. I mean, now you can go and there's a couple of different groups out there, I'm forgetting the names right now. And one of them is box brownie. Forgot what the other one is, maybe box double, something like that, where you can just literally walk through, take a video of the property, send it to them, and they will create a floor plan for you. So it's, there's no excuse to not have a floor plan and it's only like 20 bucks. But then, of course, you know, build out your, your email list, right? So make sure that you have every single commercial real estate broker in your market on that email list. Posted on LoopNet CoreXY Craigslist, I get a surprising amount of leads from Craigslist, because think about it, there's a lot of small business owners that just go to Craigslist, they're used to looking for space for rent, they're notify your economic development department, do a walk through, you know, start a YouTube channel, do a walkthrough vlog on how cool the space is. I mean, that is some of the best marketing we've ever done. And of course, you've got social media. So post it on LinkedIn, post it on Instagram, Facebook, you know, I always like to do behind the scenes instead of just a pitch of like, hey, check out this you know, space come rent it from me, it's more of like, we'll get this awesome property that we've got available. And that tends to do pretty well. Joe and Martin, I'm a comer. I'm a new commercial agent here in Miami. Is there anyone you know that I can reach out to for mentorship? Jalen, I don't personally know anyone in Miami, but I have a broker that just moved here from that to Nashville from Miami, that may be able to pull you the right direction. So shoot my office and email office at the cobble group.com. And I'll see what Anthony has to say in terms of finding a mentor in Miami. Rich with cars just saying if you had your own capital, would you prefer going in on a value add project on your own? Or would you still look to for a partner to mitigate your investment risk? Assume you have real estate experience? Great question. You know, a year or two years ago, I would have said go find a partner, you can make your money go so much further. And you know, syndication was great for us for a while we're still going to be syndicating. I mean, it's not like we're completely hanging up our hat on that one. But, you know, dealing with partners. And all of that is just so complicated. And I would look back on the amount of money that we were making on our syndications and the amount of money I was making deals where I had partners that I'm now there are still circumstances where I will absolutely partner with somebody, if they bring something to the table, then yes, I will partner with them. But as far as like just a strict, you know, money partner or they're just sitting on the debt. I don't know that. I'm really interested in that right now. I mean, I may be again at some point in the future. But I want a group of people that are helping me pull these deals together because these projects are not easy, right? I mean, it is very tough to get all of this done. So I would rather do a project by myself have 100% control and and probably make the same if not more money, even though I can only do one project at a time instead of maybe two. But honestly when you're when you're not diverting your attention to multiple projects, it makes your life a lot easier and you can make that project even better. And then he's saying thank you really helpful information. Do you have any contracts that I could possibly contacts that I can possibly reach out to in the San Antonio area? Again, I don't have much into commercial real estate but I can build it. Anthony I don't know anybody specifically in the San Antonio area, but my partner Bruce Peterson is an Austin so he may know somebody in San Antonio feel free to reach out office at the cobble. group.com We'll see if I can hook you up with somebody out there. I'm trying to think through who I am. I know I know. I've got some contacts in Dallas we're actually headed out there this week we're gonna be filming a vlog which is going to be really cool very desk, which is the the modular desks that you can get in your office is actually flying us out to do a walkthrough of their facility so really excited to see that entrepreneur journal saying I would love to see an example of your contract structure if that's okay, how can I reach out I do not share those kinds of contracts, just because they're so specific to us, and we paid an attorney to put those together, what I would recommend is just reaching out to an attorney that has worked with project management groups before, and ask them how you would structure them. That's what I did. When I first got started, I reached out to an attorney that I knew had been working with other project managers in the market. And I just said, Hey, well, you know, here's what I want to do, how should we structure this, and we kind of talked through it, and he ended up tailoring it to us. So that's what I always recommend on contracts. Because every state is different, every group is different. Your scope of work could be different. So I would highly recommend just reaching out to an attorney and having them put one together for you. Don Johnson, I have two potential multifamily properties available. To me which one of your products that you sell, would you recommend to help me analyze the deals make offers track due diligence and close? So we do have an underwriting spreadsheet for multifamily that that we put together with Bruce Peterson, who has syndicated you know, well over 1200 apartment units. It's a great spreadsheet, very straightforward and easy to use. As far as tracking due diligence, I do have a free checklist download on my website. If you go to oh my gosh, what is it under? I think it's Tyler cauble.com/resources. If you scroll all the way down to the bottom of that page, there is a free due diligence checklist download. That is the the checklist that we use on every single property that we do. So that's a good one for you to go through. Let's see here. Also get another Super Chat Kenda Williamson, just a just super chatted, no question. Well, Kendall, if you've got a question, that was an accident, just drop it in the chat, we'll get to it. Let's see here. Of course, I lost my lost my spot. Kindle is saying when you're starting out is syndicating with high net worth individuals the way to go. So not when you're just starting out, you got to have a bit of a track record to go and raise capital from people because that's the first thing they're going to ask is how many times have you done this before? And what has your experience been? So you can start out doing that route, if you have a partner that has that track record. And that has done all this before. That's what I did. I mean, I had developed a property, but I hadn't syndicated ahead and bought office buildings and renovated them. So I found a partner gave him the lion's share of the GP because it was really because of his name, his net worth, that I was able to raise the capital and secure the debt on the property. And it was the best thing I could have ever done. I mean, again, I had a minority position in that general partnership. I made good money on that deal. But it wasn't like, you know, hey, I'm retiring off of this. But it allowed me to go raise for three more properties that year. So it was the best move I could have made was just finding a partner that had been there and done that. So highly recommend taking that route. Let's see Victoria. How do we find the traffic and demographic information surrounding a commercial property?
Can you list some sites or tools so we can create a marketing package with info about the space you have Victoria, when I was in the in the midst of my you know, demographic and traffic information, I would use site to do business. I think I don't know if you have to be a ccm member to get access to site to do business, you may be able to just pay for it on its own. It's worth being a CCI member. You don't have to go through the CCI and courses at all to be a member. But you do get access to some of the resources site to do business is one of those where you can type in an address and it pulls up a lot of that that demographic information. The other thing that you could do is just look up traffic counts in your state. Like in Tennessee we look up T dot traffic counts. And there's you know, they keep track of I think it's a DI T maybe where they keep track of all of the traffic around the site. And, and we can just go in there and kind of pull that information as far as demographics go, you might have to do a little more digging. You could probably find it without paying for it. But it's honestly just way easier to use a tool like site to do business or STD b.com to find all of that. Alex is saying Hey, Tyler, Alec, what's going on, man? Good to get to see in here. What do you think of Raleigh and Durham, North Carolina. I love the markets. I mean, they're very similar to Nashville, Denver, Austin. They're a little bit smaller. They're really cool and hip. I mean, there's a lot of millennials there. So I think they're great markets. We did a deal for a client in Raleigh Durham, gosh, probably about a year ago. And it was a home run of a deal of a triple net investment that we ended up negotiating like 50 or 100 basis points higher than ask and they still had like a 10 year lease on it. So it was a two Take five oil, I think. Pretty good deal. I like that market. It's really cool getting to spend time there. Guys, that is all the time that we've got for office hours today. Tune in next week 8:30am central standard time to come in and ask your questions about commercial real estate. If I didn't get to your question, feel free to either join that live stream or leave me a comment in the comment section below. And I will get to it. Appreciate you all.
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And I will see y'all next time. This episode of the commercial real estate investor podcast is brought to you by cre launch Pro. This online commercial real estate program is designed to take you from beginner to pro commercial real estate investor with access to all of my courses, our online community and monthly group coaching calls on how to confidently buy your first commercial property today at www dot c r e launch pro.com
In an upcoming discussion with Jacob Kromhout, my project manager from Bentwood Construction, we'll share the latest construction updates at Salt Ranch, my boutique hotel in East Nashville.