Thoughts on The NAR Ruling, $ Needed to Get Started, and More (Office Hours)

Tyler hosted his weekly commercial real estate office hours livestream where he discussed a recent antitrust ruling impacting real estate commissions and answered questions from listeners on topics like development, land deals, and breaking into the industry.

Get commercial real estate coaching, courses, and community to jumpstart your investment journey over at CRE Launch Pro: www.crelaunchpro.com

Key Takeaways:

• Tyler discussed the recent NAR ruling on real estate commissions and how it may impact home buyers and sellers. He had mixed views on the ruling.

• Tyler shared updates on his recent trip to Buffalo and some of his upcoming speaking engagements and projects he's working on.

• In the Q&A portion, Tyler provided advice to various commercial real estate questions from listeners regarding development projects, land ownership structures, and strategies for new investors.

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:

0:00

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. Learn 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 copper group Studios here in Nashville, Tennessee for another episode of office hours diving into whatever questions you have around commercial real estate. I got a lot of questions coming in from YouTube comments, things like that. And I decided, You know what, let's just go ahead and create a live stream where I can answer these questions live. Because if you have the quote, if you've got the question, somebody else probably has that question too. I'm trying to figure out how to go live on Instagram as well. You know, that's that's one thing that I've been trying to do for a little while. And for whatever reason, I cannot get the streaming software to cooperate with me. So that's kind of why I'm a little bit distracted trying to get this go on. But today, not a whole lot of updates. On the past week, I was out of town for a few days, visiting some friends up in Buffalo, New York. Pretty cool. I always love getting up there and visiting that town.

1:17

It's interesting, you know, of course, anytime I go to another city, I pay attention to how the city's laid out how walkable it is, how the, you know, residential units compared to the commercial units. And, you know, Buffalo is a pretty advanced city in many ways. I mean, it's there's sidewalks everywhere. They have a pretty strong presence of you know, neighborhood commercial mixed within neighborhoods, which is very important. There's a lot of places in Nashville, for instance, has a lot of neighborhoods that don't have any neighborhood commercial. And that always blows my mind. They actually have transit, they have a light rail that runs you know, I mean, it's kind of a straight line through the city. But hey, they still have light rail going through the town, which is always pretty nice. And

2:02

man, is it affordable compared to Nashville, it is a night and day different city.

2:07

Let's see last week, I gave a presentation with to better life, which is Brandon Turner's mastermind, you may know Brandon from bigger pockets. He's now off doing his own thing, really excited for him and to see what he's doing. I'll be speaking at his Rei summit in Denver, in May, if you're interested in checking that out and attending that event, I highly recommend it. He's he's making it a very actionable real estate event. So every talk is a how to x, right how to do something, right. So my talk is gonna be how to get started in commercial real estate. And there will be a lot of other very actionable talks at this at this event. So go check that out Rei Summit. But last week, I gave kind of a preview in his mastermind of that we did record the program, it was about, I think, 30 minutes of content that I created specifically for that mastermind, and then another, you know, 20 to 30 minutes of q&a. So if you all want me to release that content, we've got it recorded. Let me know in the comments below. And we'll see about getting that out to you guys, letting you all have it.

3:16

The

3:19

CC CCC, Nashville April 25, we are bringing that event to Nashville it is the number one commercial real estate networking event hands down. A lot of you all have already started applying for the event. To appreciate that we'll make sure that you guys are able to get in and attend. If you're interested in coming. It's April 25. In Nashville at the fontanelle from five to 9pm go to Nashville dot contractors closers. connections.com, or check out the link in the description below. And we'll dive into it. You know today what I really want to talk about is this NAR ruling when it comes to real estate commissions. So I'm gonna go ahead and pull up this article

3:58

from from CNN business and I kind of want to touch on this real quick because I am not a residential real estate agent. I don't have a dog in this fight. But I do think that this is a really interesting thing that is happening in American culture right now. So if you are unaware, there was a multibillion dollar antitrust ruling against the National Association of Realtors. That led to a settlement here within the last week that will loosen the powerful trade group strike stranglehold on America's housing market. The $418 million settlement with a group of homebuyers is expected to take effect sometime around July pending a judge's approval. Basically what happened is some sellers got together said hey, we don't want to have to pay buyer's buyer's rep commissions. If if the buyer has a realtor, they should have to pay their own commissions, which is really silly because sellers are also buyer. I mean they're also buyers. So there's a lot of things I think don't make any sense of as but let's let's kind of go through what you know the facts and then I'll give you my opinion

5:01

So I actually love this about seeing in business, they have a TLDR too long didn't read 6% commission split between the buyers and sellers, brokers will no longer be the norm. agent commissions are expected to fall in some cases dramatically, because they will be competitive and negotiable. And sellers will be able to shop around for better rates, and other broker tactics that critics say are anti competitive, such as a rule that made sellers agents set compensations for buyer's agents will be prohibited.

5:27

I've never actually seen that happen ever before and Nashville, so maybe it's different somewhere else. But a lot of this doesn't actually apply to any of the transactions I've seen happen in Nashville. It's not all good news. Buyers may have to pay their broker directly in the future, which could be tough for buyers accustomed to financing that commission as part of their mortgage. And some buyers could choose to forego using broker all together. Also, a bunch of brokers are probably about to quit. I think that's funny. It's very true. I mean, look, at the end of the day, it's going to call the herd it's going to get rid of a lot of the brokers out there, the real estate agents that don't deserve to be in this business, because they're not actually providing a service to their client. There are a lot of residential agents out there that are worth more than 3%. In my opinion,

6:11

I could not touch residential real estate with a 10 foot pole. home buyers and home sellers are some of the most unbelievably emotional people that you have ever dealt with. And a lot of it is unreasonable. And these real estate agents make sure to keep the train on the rails.

6:30

Now I'm not saying that that's the case for every single homebuyer and every single home seller that's that's ridiculous.

6:35

But more often than not, these situations get ridiculous, right? I mean, it's not uncommon for everybody to know, you know, a friend that was buying a house and some crazy stuff started to happen, because just emotions got involved.

6:48

The thing that's interesting to me, I see a lot of residential agents that are freaking out about this. I think that's the funny part. I don't think that real estate agent should be really freaking out unless you're afraid for your job, because you're not good at negotiating your Commission's commercial real estate has been this way, since I got started and way, way before, right? It's always been, you know, you as the brokers have to negotiate your commission on every single deal, every single deal, I have to negotiate my Commission's. And if I have a buyer or a seller, that's not willing to make sure that I get compensated for pulling this deal together, I'm not going to work on that deal. I don't work for free, you're not going to get access to my 10 years of expertise, pulling, you know, massive deals like this together. For free. It's just it's not worth my time. So if you're not willing to pay for it, you can go and navigate your yourself and that's totally fine. But the thing is, in residential real estate, you don't have sophisticated buyers and sellers more often than not, I mean, how often are people really buying and selling homes throughout their entire lifetime? Not very often. They don't really know what they're doing. And so, you know, at a bare minimum residential real estate agents actually bring structure to the table, hey, here's how this process goes, I'll connect you with all my contacts will make this happen. Do I think that 6% In some cases is way too high? Sure. But I also think that in many cases, it's also justified, you don't understand how much work like if you think 6% is too much, you don't understand how much work typically goes in to pulling one of these transactions together when you have a good set of real estate agents. Now 6% is too high, when you have a seller's agent that's doing all of the work and a buyer's agent that does literally nothing. I mean, that happens all the time, there is no reason for it, you know, these agents to get compensated the way that they do when they're actually not bringing anything to the table. We've got, I mean, I've got friends that are residential real estate agents, that more often than not, they're carrying the entire transaction because the other agent on the other side is so incompetent, they have no idea what they're doing. And the sellers agent, my friends are not willing to let the deal just fall apart because the other agent doesn't know what they're doing. So that agent is doing basically twice the work for the same pay as the person that's doing nothing. So anyway, I think it's really interesting. It's something that you know,

9:09

want to keep an eye on. I think it really screws buyers, I think those are the people that should actually be freaking out about what's going on here. Because at the end of the day, even if you negotiate with your your real estate broker for 1%

9:24

that is 1% that you're gonna have to pay closing, there's not 1% that you can really finance unless a bank is willing to go ahead and finance that for you and add that onto your loan, which either way now you've got to have a conversation of how are you going to end up paying for this and who's gonna pay for it and you've got to broach that whereas before the sellers who are getting all of the money at closing are paying out fees. So you know, the buyers and the sellers are both paying the Commission's one way or another, right. This just makes it more complicated for buyers to be able to afford to purchase homes. Most homebuyers are using three and a half percent down

10:00

loans, right FHA, that's what I used when I bought my first house, I put down three and a half percent, it was great. But now you're telling people, they're gonna have to put down four and a half percent, or at least pay four and a half percent at closing, because three and a half percent going towards the house and one percents going towards a buyer's broker or 2%, or 3%, whatever you're able to negotiate, it just makes it to where now you're, you're potentially adding 30 to 100% fees on top of what you're already planning to put down. So now you have to plan to either put down more closing, or buy smaller property, because of how it's going to work. So I think the whole thing is silly. I know I've kind of rambled on about residential real estate long enough on this, but I think it's interesting to kind of dig into that and see what that could imply for the real estate market as a whole. I think that it's not a good thing for the majority of homebuyers out there. So yeah, there we have it. All right, we got a bunch of comments. Let's get to it. Jorge saying good morning, Tyler. Great to hear about all the exciting plans for the year. I'm sure you will succeed with all of them. But please don't overdo it. We need you healthy, bright and alert. I appreciate that, Jorge.

11:07

Yeah, it's funny. I was having a conversation with a friend the other day, and I was like, You know what, I feel like I need to slow down and take a month off. And they're like, Well, you just had a sabbatical where you took a month off. I was like, yeah, maybe I need to take a whole year off. I don't know. Cuz I keep I can't, I can't sit still I've got I just enjoy so much going and going and going and going. I mean, you know, to put it in perspective. Right now we're working on five projects in Chattanooga. I've got a construction project here in Nashville. I've got

11:38

we're working on a book. We're working on YouTube videos all the time, we're still working on a documentary.

11:44

I am working on putting together a mastermind. We're talking to a local university about teaching a commercial real estate investment course there. So it's a lot, but I love it. I do enjoy it. So I'm still getting eight hours of sleep every night. And that's what matters most. So I appreciate it. All right.

12:00

He's also say also a great guest you should interview is Alana Preus, founder of recast city great resource on how to redevelop neighborhoods our mutual interest. Yeah, I'll I'll check her out and see.

12:14

See if I can get her on the show.

12:16

That sounds gonna be a fun conversation to have.

12:19

Tony is saying good morning, Tyler. My partner and I are currently conducting a feasibility study on mixed use food retail and entertainment development project. Can you provide any tips for a couple of new developers? Absolutely, Tony. So a couple of tips. Right off the bat, make sure that you have a phenomenal architecture and engineering team. Make sure that you've I mean, if you've if you've never gone through construction before, I would highly recommend hiring a third party project management team.

12:48

You know, some commercial real estate brokerages have these. But I would make sure it's somebody that is not necessarily affiliated with a contractor, this person will represent like we do this for my development firm, right, we have third party project management services where if a tenant is doing a build out, they hire us, then we go out and we hire the contractor, the architect, the engineer, because we've been through the process before we know exactly how this is supposed to go, how to negotiate everything, what we should be paying what we shouldn't be paying. And so it makes it Yes, like the tenant or the client has to pay for our services. But typically, they end up saving money in the long run, because we make sure that the process is done properly. So it's worth probably exploring hiring a third party project manager in your market to help you knock out this first deal. If nothing else, they'll give you all the systems you'll get to see kind of how it's done right. And then you can go do your second third projects on your own.

13:39

Make sure that you start talking to banks today, right? Or yesterday would probably be even better to make sure that you can actually get funding for the project development is relatively risky. And banks are very wary of commercial real estate development today. It doesn't mean that you can't get this project done at all. It just means you might have to go find another partner that has a very strong balance sheet, or a significant amount of cash just sitting in the bank to make the bank feel better. Right. So that's, those are a few tips right there. Hope that helps Tony?

14:11

Yeah, I love development. It's a fun thing.

14:14

PAUL SMITH saying when buying a Walgreens, Starbucks or dollar store, triple net lease, do they usually own the land or lease the land of the building sits on? That's a great question. So it's kind of a mixed bag. The majority of deals that I see for all three of these, they they own the land, and it's not necessarily Walgreens or Starbucks or the dollar store that owns the land it is the developer, the preferred developer or the owner that is doing it. However, there are some instances where somebody does a long term ground lease to a developer who then builds a building for Walgreens and then sells that that's called a leasehold interest.

14:55

You want to go for fee simple interest in my opinion, you want fee simple that means that you

15:00

We're actually buying the entire you're buying the land, you're buying the building, you're buying everything in a leasehold interest, you're basically buying the building, and the lease that comes with it.

15:10

So, one, they're tougher to finance to you don't get anything, once your ground lease runs out, right, you actually give the building back to the owner of the land.

15:25

So, you know, I mean, on the positive sides, like, yeah, you're still buying the cashflow, you're still buying the depreciation, right, because you own the building.

15:34

But we typically tell our clients to stay away from that, because at the end of the day, it's really tough to finance it can be, you've got to really get a an amazing cap rate in order to justify it, in my opinion. Now, there are some people that are willing to pay six and 7% cap rates for leasehold interest deals and it doesn't make any sense to me.

15:56

And it makes it more difficult to sell on the back end. But just think about it. I mean, who's who like there's a very limited pool of buyers out there that are willing to buy a building that they then have to pay a ground lease on. So you know food for thought I would stay away from it go for fee simple interest.

16:12

And, you know, just buy deals that actually come with the land.

16:16

Rich with cars saying good morning, Tyler, in reference to the NAR settlement. Do you think that'll affect commercial real estate brokerage to any degree? No, I really don't. I mean, I think it's interesting, because, you know, we, as commercial real estate brokers have always operated this way, right?

16:33

Commercial real estate brokers have to negotiate their own fees on every single deal. And it's, and that's part of it, right? I mean, I've had to have that conversation with my brokerage team before when they got involved in a deal. And, you know, got overly excited because it was a $40 million deal, and didn't get a commission agreement signed with the seller. And then after Letters of Intent were traded.

16:53

Everybody had to start arguing over who's gonna start paying commissions. So it's like, you gotta get the you got to have that conversation on the front end. Otherwise, it's not worth putting anything to work.

17:03

I think that.

17:05

I mean, the really interesting thing is, in my opinion, the way that residential real estate was structured was actually to the benefit of buyers and sellers. It made it very easy. Nobody had to have that conversation. It's just like, hey, this is how it's handled. That way, you don't have to have these additional negotiations for people that are not sophisticated enough to be negotiating items like this. And to it made it affordable for people that can barely afford to buy these homes anyway, so it gave you an easier way in to homeownership. Now if you're telling, you know, these homebuyers like, hey, you know, in order for you to buy a house, you're gonna have to pay an additional 25 to 100% of your downpayment, right? So if you're putting $12,000 down, now you're gonna have to pay another three to $12,000. So $24,000, potentially, to buy this house, people are gonna start looking at that going, Well, I'm gonna have to buy a house, that's half this cost, because I can only put down 12,000 total. Right? So it just, in my opinion, it makes things way hairier than it really needs to be. I think it's so silly. But you know, that's what happens when when attorneys get involved, and they just want to, you know, sue a bunch of people. And I mean, I can't believe the judge ruled that the way that they did, I am also not a big fan of the National Association of Realtors. I have not been a member since 2018. And I don't like the way that they approach business. I think that and I've had words with them about about that as well. So I'll just leave it there. I think that residential real estate agent should start to question NAR, and you know, what your fees are going towards and why it's worth it?

18:36

So

18:37

let's see John markets. Good morning, what are your thoughts regarding

18:44

the best manner to structure a new partnership for to newer passive investors wanting to start buying properties?

18:51

John, it's going to depend on a lot of factors, I mean, how much money you're putting in how sophisticated the active member is,

18:59

you know, if it's if I would have to know more details about how you're actually structuring this deal, like if it's just you and a buddy, and you're saying, hey, as passive investors, it's just gonna be the two of us, we're gonna go buy single tenant Net Lease Starbucks across the country, then I would say, just break it down on a

19:15

you know, dollar for dollar basis, if you put in 51% of the capital, you get 51% control that deal and, and go, you know, kind of on a deal by deal basis.

19:24

But, you know, outside of that, I think we'd have to have a conversation about you know, kind of what you're going for what it actually looks like.

19:31

And, and you know, kind of how you guys are actually approaching some of these deals.

19:38

For me to really give you the best advice possible there. Let's see what else we got here. Street Street. I'm a new agent, but had been a commercial real estate investor for the last eight years. Ever since becoming an agent and when I put in an offer even for myself, listing agents aren't happy because they had to split commission. How do I get past this issue and still win the deals? Right now? They tend to not favor me

20:00

A

20:01

story story that is their problem, not yours. They, as a commercial real estate broker, you have a fiduciary responsibility to your client to present every single legitimate offer that comes through. If you are putting an offer in and you're representing yourself as the buyer, there is no difference there, then if you had a third party agent representing you, it's the same thing. They're going to have to pay those Commission's either way. So, you know,

20:29

I would put the offer out, and if you feel that they are not showing that offer to the sellers, if you're not getting any response whatsoever, you know, then I mean, that becomes a much more complicated conversation of do you go around the broker? Do you?

20:45

You know, how do you figure out that they're actually not showing it?

20:48

Look, I don't like going around brokers, it's not a practice that I'm in the habit of, and I don't typically recommend it. But if you have somebody that has made it very clear to you that they are not going to, you know, share your, your offer with the seller, because you have agent commissions, I mean, that's insane, then I would call a seller and have a conversation with him. And just make sure that that's exactly you know, what the problem is,

21:15

you get into a very gray area there, a lot of people will handle this in many different ways. I totally understand that. But that's that's how I feel. I mean, because like as, as a property seller, if I had an agent do that to me, I would fire them off that listing. So fast, their head would spin and I would also report their license, because that is not representing me. And my best interest is the seller, and they don't deserve to be working on that deal. It just doesn't make any sense. And I've always I've always, you know, kind of gone with the philosophy of like, I would rather have 3% of a deal than 6% of nothing, because I'm refusing to work with other brokers. There are brokerages out there that just refuse to work with other brokers, they tried to get stuff done internally so they can make the full 6%. That to me is the worst way of going about doing brokerage.

22:01

Joe H is saying range for dollars per square foot, you purchase raw land for iOS?

22:07

Five bucks a foot? I mean, the problem is, Joe, it's really tough. It's really tough for me to give you numbers, man, because it depends on where you are in the country. It depends on

22:19

zoning, it depends on many factors, right? So like $5 a square foot and Texas and Tennessee and you know, the South,

22:27

you know, could work $5 A square foot, you won't find that in California, Portland, Oregon, you know, places like that. So

22:35

it's tough to say.

22:37

But you know, I think $5 a square foot is probably a good starting point, no matter where you are.

22:44

Rich with cars in reference to Paul Smith's question. Also be careful with ground leases as you cannot benefit from depreciation expenses.

22:52

Yeah, when you get the write off on, I'm trying to figure out what you mean rich. You get the write off of paying off the lease, you get to depreciate the building. Maybe you saying you don't get to depreciate the, the infrastructure that's actually in the land. And that's possible. I think it depends on how the the lease and the sale is structured.

23:14

So

23:15

let's see Joe saying well should also appreciate you taking the time out of your day answering commercial real estate questions. Most don't. Absolutely, Joe, happy to do it, man. I mean, that's, that's what these office hours are for. It's really fun. I mean, today, I'm looking at the numbers, we got 93 People watching live. It's fun, you know, I got started doing these office hours.

23:35

Gosh, I guess it was four or five months ago. Maybe it could be longer than that. I have no idea when I actually started doing these.

23:43

And you know, I had like 10 people when I first started so it's it's fun. Slowly watching that number grow and, and I love you know, getting the questions and answering them. I mean, it makes makes my morning fun. It's always a good way to start the day, that's for sure.

23:57

Chase is saying good morning, Tyler, you have $250,000 I'd be nice. Thanks. Are you wearing it to me?

24:04

Just starting out in commercial real estate, what are you doing? Alright, chase for 250 grand, what am I doing?

24:12

I'm just starting out in commercial real estate. I am going to go and find a partner

24:17

that has been there and done that before. Right? So

24:21

in this is what I did do, right? I did I still do this today on the projects that I do. But $250,000 I would go out find a partner say look, I will I will be the money guy.

24:32

Let's go find you know, a $752 million property. I'll put up 100% of the cash. You know, I'll give you 20 To 30% to run the deal. And you show me how it's done.

24:46

A lot of actually good investors out there would take that deal. Right because they're not having to put any cash into it. They just have to go find a good deal.

24:53

You know, chances are good you'll be able to qualify for the debt. I would probably have both of y'all sign in the debt and DO IT pro rata, right. Don't do

25:00

Join several go pro rata. So if they get 20 30% of the equity in the deal, they are signing on 20 to 30% of the loan, that way, they have a little bit of skin in the game.

25:08

And, you know, go out and do your first deal that way, and just have them show you everything, the ins and outs, I would make sure that you vet this partner day in and day out, talk to everybody that you can to make sure that they are actually reputable. Because, Chase, you could go out and do a project on your own when you're first getting started. But I think that you could learn a lot more and kind of cut down that learning curve significantly, by getting involved in a project with somebody that knows what they're doing.

25:38

And saying, Look, you don't have to put any any money into it at all, I will fund the deal. I just want you to show me how to do it. And you know, you'll get paid equity

25:47

on the back end, you know, when we sell it, or through the cash flow, for pulling the project together. I mean, if somebody came to me and said, Hey, Tyler, I've got $250,000, I want you to take 20% of my project 30% of my project, and I'll sign the deal with you. I would do that deal all day. Like that's, it's tough to turn that down. And that's kind of what you want. You want to go find somebody that's really good partner with him in that way to where they can't say no.

26:13

That's what I would do. Alright, Marco. Morning, Tyler. I'm set to graduate from Clemson University, this may I'm wanting to break into commercial real estate brokerage? What advice do you have for someone wanting to break into the industry? So Marco, great question, man. I would go ahead and get started today, start reaching out to anybody that is in your network.

26:35

And saying, you know, what kind of meetings that you could set up right, so if you're graduating from Clemson, there's going to be a ton of people that are you know, graduates of Clemson that have gotten into commercial real estate brokerage, like it's just gonna happen. So go into LinkedIn search for people that are in commercial real estate that went to Clemson University, and just start reaching out to them because you've got this like automatic in and connection with them already. I had people do this to me all the time. Like they're like, Oh, I graduated from University of Tennessee to like, I only have like one year of UT under my belt. I'm not a graduate by any means. But people use that as a as an end. And I think it's very smart. So you can reach out say, hey, look, I'm graduate, I mean, exactly what you just told me, I'm graduating from Clemson want to get into commercial real estate brokerage, I would love to sit down with you, you know, buy you coffee, I just want to hear what your experience is like, and get any advice for how to get into the industry.

27:30

That is a very subtle way of sliding in and not saying hey, I want to meet with you and see if you like me enough to give me a job.

27:38

If the conversation goes well enough, and they like you, they might ended up saying hey, why don't you come Junior broker for me? Or why don't you apply here. So I mean, I would kind of treat it as like a pseudo interview without them knowing that it's necessarily an interview, and just come prepared to try and you know, buy their socks off and make it a really fun, fun time.

27:59

Let's see.

28:02

Joe saying for Flex is about $5 a square foot. So I'd assume iOS would be a bit cheaper unless the cost is almost the same.

28:10

So for iOS, it's going to be about the same no matter what kind of you know, it's kind of the same real estate, flex, you're buying dirt at $5 per square foot, then you're having to develop this entire building, then you're leasing it out at you know, what's a $16 a foot triple net, takes you a lot longer $5 a square foot on iOS is going to be about the same, right? So 250,000 500,000 an acre somewhere in that range is where you really want to be for iOS. It depends on your local market and what you can charge your rental rates and you know, sometimes you just gotta back into it, right? Like if you see, okay, you know, they're able to charge $125 per month per parking spot. Well, if I can fit 40 cars, you know, at $125 a month, what could I pay for away and to make it make sense, right? So you can kind of back into the calculations from there. So I mean, industrial land for flex and iOS is the same piece of land. It just depends on how much work you want to put into it to make it cashflow.

29:11

Rudy is saying just found out you helped get one of my first wholesale deals done last year off of Trinity. Oh, that's funny. Well, cheers, ready? Glad we got that one done. I hope hope you had a nice dinner and

29:23

you know, got to celebrate with that commission. That's awesome.

29:26

Chase is saying thank you absolutely. Chase anytime, man. Evan, if you had $1 million in residential land that you owe nothing on? Would you sell it to put towards commercial or just borrow against it tax free?

29:40

Oh, man, that is a lot to unpack there. So it depends, right? And I know you guys probably hate me right? Because that's that's my answer so often in commercial real estate.

29:50

Oh, sweet. We're at 105 years. That's the first time we've ever broken 100 In this in this live stream. So cheers guys. Appreciate you all for joining us.

29:59

So if I had a million dollars

30:00

Residential when I would have to check and see what the future growth potential in that area looks like, if I feel like I'm in the path of growth, and in the in the future, it's going to go up significantly, then I might hold on to it for a little bit, you might want to look into your planning and zoning for the area and see what the future plan for that corridor is, right. So again, Nashville, we have the plan of Nashville. And I can or Nashville Now next, whichever one you want to look at, and I can go in there and see like, Okay, I own this piece of land.

30:31

In the future, they actually see this becoming high density mixed use commercial. So then I would say, well, I might just hold on to it, because I could probably get this rezone and flip it for two $3 million, instead of, you know, a million dollars to residential. If, however, you feel like you've kind of capped it off, you're at the absolute peak of what you're going to do, I would just sell it. To me borrowing against residential land that is not income producing is incredibly risky.

30:59

Because you know, the people that lost everything in 2008, a majority of them owned a bunch of non income producing land that they had to pay mortgages on every month, and didn't have any money coming in. So you know, there's always a chance I know, if you're borrowing against it, you're putting that money to work, and hopefully the cash flow is covering your expenses on paying the mortgage. But it's a risk I'm not necessarily willing to take, I would rather sell the land 1031 exchange that million dollars into a $3 million, a triple net asset, like a shopping center, something like that, where I could easily add some more value get up to four or $5 million, sell that 1031 And keep the process rolling. So appreciate you guys for joining us today for office hours again, we do this every Tuesday morning 8:30am Central Standard Time, jump in, ask your questions about commercial real estate, and we will see y'all in the next one. 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. Learn how to confidently buy your first commercial property today at www dot c r e launch pro.com