How Commercial Brokers Provide Value, Brokers Mastermind, ARV without Comps (Office Hours)
Tyler shares insights on commercial real estate investing, including education and coaching platforms, accountability pods, brokerage models, and strategies for earning, keeping, and investing a million dollars. He discusses the importance of knowledge and skills in the competitive industry and highlighted resources available through his platform, Commercial Real Estate Central. Cauble also covers the difficulties in real estate development in Nashville, including zoning changes and legal challenges, and shared strategies for building wealth in commercial real estate, including understanding the local market and identifying the right property type for investment.
Get commercial real estate coaching, courses, and community to jumpstart your investment journey over at CRE Central: www.crecentral.com
Key Takeaways:
Commercial brokers can provide value by knowing their local market extremely well, including tenants, rental rates, and vacancy times. This allows them to be a trusted resource for investors.
Affordable housing development faces challenges from lack of understanding and resistance from some politicians and governments.
Micro apartments and efficiency units can help address affordable housing needs, though securing approvals can be difficult.
Commercial real estate investing strategies like value-add deals may be better for wealth building than passive triple net lease properties.
Alternative sources of financing like other SBA lenders or hard money loans should be explored if initial financing options have high rates.
Opportunity zones can provide tax benefits but have been criticized for uneven distribution of benefits across qualified areas.
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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Are you looking to take the next step toward investing in commercial real estate but don't know where to go? Series central offers a comprehensive education and coaching platform designed to help you get started. Our online courses cover a wide range of topics from the fundamentals to advanced strategies, ensuring you have the knowledge and skills needed to thrive in this competitive industry. As a member, you'll gain access to our exclusive online community and monthly group coaching calls, providing you with valuable networking opportunities and personalized guidance from experienced professionals. Whether you're a beginner or looking to take your career to the next level, cre Central has the resources you need. Visit www dot cre central.com. To learn more. Welcome back to the commercial real estate investor podcast live from the cobble group Studios here in Nashville, Tennessee. For another episode of office hours. This is the weekly question and answer forum that I am doing here live on YouTube on Tuesdays at 8:30am. Central Standard Time. Quick update on my week before we start diving into questions. If you've got questions you're joining us live, feel free to go ahead and drop those in the live chat. I will get to them. Let's see. This past week we launched the accountability pods for for my Siri accelerator program. And that has been a lot of fun. We've been working on that for a little over a month. Making sure that we kind of get it right. But yeah, the accountability pods we broke everybody out into four to six person groups, we've now hit over 40 members in the community which is really exciting to see. And they're starting to have their weekly accountability calls, getting to know each other better and holding each other accountable to their goals. That's been something that's been very impactful for me in the masterminds that I am in so excited to have that in our community. Thursday and Friday, I was out in Kansas City for the first time, which I gotta be honest with you, Kansas City might have the best barbecue. That's that's tough to say coming from a Tennessee boy. But I was very impressed. Logan Freeman showed me around the town spent a couple of days with him diving into commercial real estate brokerage models. And working on our commercial real estate brokers mastermind Some of y'all may know that he and I have been working on that for a little bit we actually set a hard date for the launch of October 1. So we will be launching the brokers mastermind on October 1 really excited to be bringing that to the world. I mean it's there's nothing really out there like it. So if you want to sign up for the waitlist, you will be hearing from us very soon because we're getting everything ready. Go to brokers mastermind.com and you'll be hearing more from us here pretty soon on exactly what it will be like but it's gonna be pretty intense. I mean, that's that's why Logan and I are spending so much time to get ready for it before it launches. We're going to be offering there will be weekly calls, you know, coaching and accountability calls. We have quarterly in person meetups, we'll have an annual mastermind retreat and a lot of other items involved with us so if you want to take your brokerage game to the next level, we're teaching commercial estate brokers how to earn a million dollars how to keep a million dollars and then how to invest a million dollars that's that's kind of our motto earn a million keep a million invested million. So yeah, I had a good time in Kansas City. I've never been there before. And I was really impressed with with the city. Their architecture is is unbelievable. And Logan showed me if you follow me on Instagram, Logan showed me this this type of apartment building that they have. They're called the KC six shooter, which I thought was really interesting. It's essentially loaded. Six unit apartment building kind of looks just like a really big mansion. But it fits on these you know smaller urban lots. It's something that I wish we definitely had in Nashville. It kind of solves that missing middle problems. So would love to would love to see that. Jorge is saying good morning Tyler. Hope all as well. Good to see you, Jorge. Thanks for joining us. Viken San. Good morning, Tyler. Good morning Viken. Let's see the CRA group is saying good morning from no DAC. Hey, Kristen, good to see you, Alison. Good morning. Hope your week is off to a good start. It is off to a good start, which I'll tell you a little bit more about that here in a second. Very interesting. Very interesting week so far. Yesterday, I was in a deposition all day. I have never been deposed before. So it was a very interesting experience for me. I'm in the middle of a lawsuit. I can't really talk about it. Since we are obviously in the middle of it. But as soon as I can I will happily share those details. with you all, I think it'd be interesting for you all to hear, lawsuits are an unfortunate side effect of being in real estate. One of my mentors said, if you're not getting into lawsuits, then you're not doing any business. And unfortunately, that seems to be true. So I am the one that is actually suing the other party. And, you know, again, I don't want to go into details today, considering the fact that it is an ongoing lawsuit, but I will update you. I mean, it was it was, you know, when I can't, it was interesting. We started at like, 930, and didn't leave until 215. And that stuff is mentally exhausting, right? Because you have to be on guard with attorneys. Because you never know, like, everybody's playing 3d Chess, right? You've got to really stay or 40 Chess, in a really stay ahead of the game there. And I think we did pretty well. So I actually kind of enjoyed it in a weird way. Just because, you know, I love commercial real estate. And I feel like I know my projects really well. So it was, it was fun, I will update you all more again, as I'm able to. We also had a planning commission hearing last night for a for a project that we've been working on for a little while now. And it's essentially an apartment, I'm sorry, a hotel to apartment conversion. And, you know, we've done these types of projects before, if you're familiar with this ohana, we worked on that one here in Nashville, which was, again, a roadside motel conversion into micro apartment units. And we're having a hard time getting this particular city to wrap their minds around people wanting to live in 228 to 278, give or take square feet. And, you know, that's the biggest problem that that real estate developers, neighborhoods, and honestly, just people are facing today. That's why we don't have missing middle. That's why we don't have affordable housing, is because a lot of the people that are in power that are ultimately making these decisions, don't really care, they don't really understand what the problem is, you know, we're looking at providing these units for people with an income of between 45 and $60,000. There is nothing affordable for that income range today. And at one point, I asked one of the commissioners, you know, you know, how long have you been in your house? He said, 30 years? And I said, Okay, well, is it fair to say that your mortgage is probably well below $2,000 a month? And he said, Well, it would be if I had a mortgage. And I was like, exactly, I mean, you don't understand how expensive housing is today, you may not want to live in 228 square feet, but it provides somebody with that with a home. And they just couldn't wrap their minds around why they should be on board with a zoning change. I felt like we did a really good job, you know, really conveying it to them, we got deferred to the next meeting. So we'll see how it goes. But you know, that's, that's what we're up against out there. People want to make, you know, real estate developers want to make our communities better and provide this missing middle housing. And a lot of our politicians. Metropolitan governments don't really care for it. They say they want it, but then when it comes to actually getting these projects approved, nobody will approve them. I mean, you think about that Kansas City six shooter that I was talking about, you know, a six unit apartment complex, that basically sits on a single family lot. That's, you know, less than a quarter of an acre. And it that density would solve a lot of housing issues, especially like within the Nashville area, but I'm sure throughout the southeast of the country, and a lot of municipalities don't want to deal with it makes no sense to me at all. But that's where we are. So anyway, that is that's a lot of my opinions on something. I guess that's why you're tuning into my podcast to hear my my thoughts on these items. Hessen is saying in what ways can a new commercial broker provide value? Well, Heston? That's kind of a loaded question. There's so many ways that a commercial broker can provide value, but who are who are you trying to provide value to? Is it your seller? Is it your buyer? You know, it really depends on who you're working with. But number one, just know your market better than anybody else.
Right? When I first got started as the new broker of the cobble group, right, in 2018, when I founded the company, I went out and I learned East Nashville better than anybody else. Anybody else. I mean, hands down, I could work this market better than anyone. So when I was talking to people, I could confidently say, I am the guy to work this market for you. Here's all of the other properties that I've worked on over here. Let me work on your property. And it was tough to break into it first, right because it was a boutique broker. I had a couple of national brokerages that were that had some deals over here that I was competing against. And you know what the the owners ended up going with the National brokerages, they felt like, oh, well, these guys have more resources, they have a bigger team, they're gonna be able to do it better. And turns out, those guys didn't know the market as well. They didn't care about those listings as much as I did. And they failed. And I ended up taking over I'm thinking of two listings, specifically, I took over from national brokerages over here in East Nashville and crushed it, they had those listings for over a year, got nowhere, I took them on and had them done within three to four months. So if you know your market better than anybody else, you know, the tenants that are in that market, the buyers, the sellers, you know, what is driving change within that market. That's how you add value, because then you become the go to resource for any investors in that market. Right. I mean, if an investor is thinking about buying a building, and they know that you know, every single tenant that's looking at moving in the market, they're calling you, you know, hey, Heston, I'm looking at buying a 10,000 square foot industrial building and you're in your neighborhood. You know, what do you think the rental rate is going to be? How long do you think it's going to be vacant? What kind of tenants do you think are gonna go into it? You're gonna get that listing every time. So hope that helps man. Here's more saying good morning. Terrell is saying good morning. Good morning. Joelle. Good to see you, man. Isn't my Siri accelerator program. Ha Montel. What's up buddy? Saying long day? Yeah, yesterday was a long day. I mean, it was I got to my attorney's office at eight. And then I left at 215 ran home to take a nap because I was so mentally drained. And then as soon as I got up, had to go to the planning commission hearing didn't get out of that till like 730. So yeah, it was it was a long day. Robinson said good morning, Tyler who can attend that mastermind event? So So Robinson, the brokers mastermind is going to be a year long program. So 12 months? I mean, really, theoretically, anybody can join it. It is intended, like the education, the conversations, the coaching, the events is all going to be focused on commercial real estate brokerage. So I mean, theoretically, if you're just interested in commercial real estate brokerage, but you don't want to be a commercial real estate broker, you could certainly join. But it's all going to be about making and creating the best commercial real estate brokers we possibly can. Petru is saying, Hi, I currently have a property under contract. Awesome. Congratulations, Petra. That's very exciting. Here's a more it's Sandy. It's one of those rare moments I can attend this because I'm in Pacific Standard Time. I'm part of the CRE mastermind. And it's been a great experience. So far. Sandy, thanks for jumping in. Sandy just joined us a couple of weeks ago. And we're working on a deal that she actually posted in the group, which is really exciting to see. So Sandy, thanks for joining us. Edie say good morning. We'd love to hear about the lawsuit when you can I like your accent wall that. What finishes do you have for your ceiling and floor? Yeah, it's gonna be a fun one. It's, you know, it's one of those deals where it's like, nobody likes to be in a lawsuit. But at least this one is a little bit entertaining and fun. To a certain extent, right? I mean, it's still a still lawsuit. Let's see, I've got like my accident wall. I can't recall what color blue that is. But we literally just took I think those are one by twos, maybe I just cut them up and did a little pattern. My maintenance guy, Joe did all of this for me. And other than that, I mean, if I could show you it's literally a drop ceiling. We just have, you know, some lighting here in the studio. But I am making some upgrades to the studio as well. If you've ever been here, which I'm sure probably none of you have, there is a few more rooms that actually have here that are all totally separated. And I've got a contractor that was actually in here about 10 minutes ago. That is looking at demoing out some of the space redoing it. And we're going to add a couple of other rooms to the studio. So really excited to be kind of offering something new here. So yeah, I mean, all in all, like it was it was relatively easy to do. I mean, of course, you know, hung my guitars on the wall. I've got a bunch of guitars. So let's see, I'm ready to say hey, I'm gonna How you doing? She said do these hotel rooms get kitchens? Yes. So when we convert these, these hotels to apartments, they are essentially efficiency units. So their studios, right? I mean, you may or may not have a Murphy bed, right? I like the Murphy bed idea because it basically turns your bedroom into a living room and a kitchen and then you have an efficiency kitchen. So you may or may not have a full sized fridge, it's probably going to be a micro fridge or you know, like a half sized fridge and typically you'll have either an air fryer or hotplate with a sink. And then of course, you'll have a closet and a bathroom. So they're very efficient units. I mean, I will say, we signed 124 leases in six months on the first one of these that we did. That is an incredibly fast to lease up. So whether or not you would want to live there, there is high demand for this type of unit. Because, I mean, think about it 1200 a month. I mean, a lot of people are paying 800 a month to have a bunch of roommates. So for 1200 a month, you get your own spot. I mean, I would do that just out of the convenience of not having to live with other people. And let's be real, I mean, most people aren't hanging out at their house all the time. And you've got nice amenities on site, to where people can, you know, their living room becomes the the movie theater that you did on site or the gym or the lounge that you have in the in the front office or the podcasting studio, whatever it is, there's so many different amenities that you can do. But see, Armand is saying total disconnection. Yeah, I mean, talking about the, you know, our politicians and what they say out of one side of their mouth, and then what they're willing to approve, unfortunately, I have dealt with that for years in the city of Nashville, there are council members, that that, you know, they will say publicly, we want affordable housing, and then you get behind closed doors with them. And they say, I will never approve this, I'm not going to do it in my neighborhood. I will say that we have some phenomenal council members in Nashville, and they are pushing the affordable housing agenda forward. And it is phenomenal to work with them. And the way that they operate attracts even better development to their neighborhoods and constituents, which makes the neighborhoods better. So it just, it's this self fulfilling cycle, right? Either you've got a politician that is trying to figure out how to solve these issues, or they really don't. And if you're trying to solve the issues, it moves your neighborhood in a positive way. If you don't, it just spirals downwards, because nobody wants to work there. Nobody wants to invest money into that community. That's how it happens. I mean, Memphis is a great example of how this has played out over decades, you have a lot of politicians that are that are really corrupt, a long line of corrupt politicians. And it took the biggest city in Tennessee, that used to be like the golden child of Tennessee. And just over the years, that corruption has destroyed their neighborhoods, and it's destroyed the city's reputation. You know? Let's see Jorge saying, glad to see you. You're working on micro apartments, these spaces can be made livable, comfortable and efficient, looking to do the same thing. And Chicago, they're great little units. I mean, I, it's efficient. I mean, you know, it's like it's smaller than what I would want to live in today. But when I was living in an apartment complex, I had 750 square feet in my apartment unit. And I don't cook, right, like, I'm usually never at my apartment, cuz I'm working all the time, or I'm out with friends or I'm out with clients, whatever it is. So I literally would go home just to go to sleep, and then get up and leave by 630 the next morning. So it was just a place to rest my head. Well, I had a third of my unit was a kitchen. So I was like, Man, I'm really I could probably get away with 500 square feet. I don't need all of this. So take that for what it is. Let's see Petros saying I have industrial property under contract. But I have a hard time finding financing. Seven, eight, it's about 13% it's pretty high. What's your opinion on that? Petra believe you're saying the SBA seven a finding. Financing is at 13% interest. That is pretty high, I wouldn't be going that route. I don't know how you can make a deal really work at that unless you are getting a significant discount on the property. Otherwise, I would find either a different form of financing paying all cash raising capital from investors or passing on the deal altogether. To me 30% interest is just unbelievably high. But again, I mean, if you're able to get the property for half its value 13% interest really isn't all that bad, right? So it's all on perspective. You can't pay 2021 22 pricing at 13% interest. But if you can get 2008 pricing Hell yeah, man go for it. Moxie is saying nice. I'm a commercial real estate broker specializing in retail for the past 10 years licensed in New York and consult all over the country. Glad to hear it.
Thanks Moxie. Kev is saying what's up Tyler? I'm looking to get into absolute triple net lease properties. Any advice on how I can get my first property? Hey, cam so I had a call with a with a student of mine this past week. He wanted to get into absolute Triple Net Properties to start building wealth. And you know, once I started breaking it down, I was like, You know what, here's absolute net properties are phenomenal. But they are wealth preserved. ration, they're not wealth building. Because unless you have two to three to $4 million in cash, they're not really going to get you the level of return that you honestly want. And if you're going out and you're raising capital from investors to do that, then it's even worse of a prospect. So cam, what I would say is, it depends on what your goals are. If you're, if you've got a lot of cash, and you just want to preserve your wealth, and make sure that you keep a consistent income coming in, hell yeah, go for absolutely Triple Net Properties. If what you're trying to do though, is build wealth and get to a different, you know, economic income level, then I would say, go for value, add, go work on something where you can put some sweat into it and increase the value, disproportionately, right? I mean, you know, the first deal I ever did that I syndicated on, we bought the property for $980,000, we put $230,000 into it. So let's just say it's $1,200,000 all in. And we sold it within 16 months for 1,000,006 50. But that's because I spent a bunch of money renovating the building, then I signed 17 leases. And then it was worth $450,000 More to the next guy. So because we did that we kept like a 30% IRR for our investors. So it's worth when you're first starting out to spend the time, creating the value and then benefiting on the back end, I'll use another example. A porter and I bought a 1.7 acre piece of property a couple of years ago, that was zoned for 11 units, we bought it for $618,000. We're under contract today on it for 1,000,005 50. Because we rezone it to 63 units, well, we're gonna walk away somewhere around $1.1 million in cash net from that sale. And we're probably just going to 1031 exchange that into a single tenant net lease deal, right and forget about it. So we went out, we actively created the wealth. And then now we're putting it into something passive. And then we'll just go rinse wash and repeat that several more times. So hope that strategy makes sense. That's my favorite strategy to use. As we're going through creating wealth in commercial real estate. Darren is saying having a tough time determining ARV of small commercial property in historical area where nothing has been sold in 10 plus years, any help is appreciated. Darren, what I would do is, you know, go through and just look at Cap rates in your area and determine you know, what your NOI is going to be based on lease rates, and just estimate it that way. Right. So I mean, if you're in a small area where nothing is sold, it's probably going to be you know, 7.75 to 8.25% cap rate, right, you're gonna have a high cap rate just because it's a less desirable area. But that could be fine, depending on what you're you're buying the building for renovating it for and what you are leasing it in. Right. So So I would kind of back into it that way. And see kind of what value you can come up with. You could also just hire an appraiser to come in and do you know, an after repair value for you. Sandy See, my first apartment was 400 square feet. It had a kitchen and a Murphy bed. I agreed on the rent. It was $1,100 back in 2012. The apartment had a great amenities. Yeah, I mean, that's, that's like all you need. I mean, it makes it super easy, especially when you have a Murphy bed, you basically get twice as many rooms in my opinion. Heston is saying, how are you able to gain a deep understanding of financial terms of modeling without going to college? It's good question. I just I just because I didn't go to college doesn't mean that I haven't spent a lot of time educating myself. So I think there's a big difference there. You know, college is fine for teaching you how to learn. But it doesn't really give you the principles that you need for your specific industry. So really, after you get out of college, you then got to go learn all over again. Your industry, right? So instead of wasting time going to college, I just immediately started buying every book I could get on commercial real estate started having conversations with everybody that was already established in it. Going to classes, finding mentors, finding coaches. I mean, I did everything. I've spent a lot of money on coaching, on masterminds on conferences, on further education, just to get to the level of where I am today. And, you know, it just it takes time. I mean, it honestly does, especially in an industry like commercial real estate where the learning curve is just so steep. But that's really yet I mean, it's it's spending the time having the conversations working through it. Watching videos on YouTube. Listen, I've listened to a lot of podcasts, I mean that the number of podcasts that I've listened to over the years is poor Probably like scary. But you know, I just tend to not listen to music anymore. I love music. It's my favorite thing. But when I get into the car, I'm like, I gotta continue to learn. I've got to learn something new today. That's kind of an obsession that I have honestly. Sandy saying find another SBA loan provider. There's seven 8% out there. That's, that's great. So Petru. Yeah. I mean, go go look into other SBA loan providers. There are a lot of preferred banks out there that will do SBA owner occupied loans for you. So I would definitely get out there and take a look at that. Yeah, Moxie saying 13% is insane. You can find more attractive, hard money loan out there, if that's what you need. Yeah. I agree with that. Jeff, What's up, buddy? Good to see you, man. A topic in this realm is opportunity zones, your thoughts? advantages, disadvantages are Ozs the answer to read gentrification. So opportunity zones were super hot back in 2021. They're not as hot anymore. But, you know, I still think that they're interesting. I don't find them to be as interesting as they used to be. Opportunity zones were really created by the federal government to incentivize investment into blighted areas. The problem that I see with opportunity zones is that whoever was deciding what is supposed to be in a nosy and what is not either wasn't paying attention, or they were doing some things that were self serving Lee, because there's parts of East Nashville that have million dollar plus homes that are in an opportunity zone. And then parks that have you know, run down abandoned buildings that should be in a nosy, they're not. So I don't really know how that was all determined. Maybe they'll fix it at some point. But opportunity zones are great. I mean, if you go in and you buy a property and are nosy, this was, you know, back in 2021. Go watch my episode with Ashley Tyson. We recently just did an interview with him on this channel, talking about diving into Ozs again today, because I had him on the show a few years ago, and I actually did set up my Ozy fund through him. He's great. So, you know, I don't know exactly what all of the benefits are today. But, you know, what I will say is they're worth looking into, I am looking forward to seeing if they have the impact that, you know, the federal government was hoping would have, there are some neighborhoods in Nashville that have significantly benefited from having opportunity zones, the real benefit to investors being you can move your capital gains, you know, I guess, exposed money into it. And at the end of 10 years, you know, theoretically can pull out 100% of your cash, capital gains tax free which is a big deal. It's the only way that you can do that right. Most people just kick the can down the road by doing a 1031 exchange but at some point either you die and you pass it on and then they have a step up basis and they don't have to worry about those taxes or you sell that building then you've got to pay a whole bunch of capital gains taxes so it's that's why it was so attractive to so many investors for for a little bit mad saying Daniel lost track of time and I'm so Wait, so I met Yeah, we've we've only got a couple more minutes but feel free to jump in earlier next time. Heston appreciate the responses man your info and content is priceless. Happy to do it, Heston. That is what I'm here for. I just love doing. I've been saying how I connect my own small warehouses with clients or businesses. Ivan, what I would do is, you know, put some signs up, get it posted on the Internet, do some videos, do some marketing, get out there and hand out flyers to local businesses. Go talk to the Chamber of Commerce, talk to the economic development board, call every single commercial broker in the area that works on deals like that. And that is how you can get your property leased. Thank you all for joining me for this week's episode of office hours.
Join me next Tuesday at 8:30am Central Standard Time, and I'll see you all then. Are you looking to take the next step toward investing in commercial real estate but don't know where to go? Series central offers a comprehensive education and coaching platform designed to help you get started. Our online courses cover a wide range of topics from the fundamentals to advanced strategies, ensuring you have the knowledge and skills needed to thrive in this competitive industry. As a member, you'll gain access to our exclusive online community and monthly group coaching calls, providing you with valuable networking opportunities and personalized guidance from experienced professionals. Whether you're a beginner or looking to take your career to the next level. Cre Central has the resources you need. Visit www dot cre central.com To learn more
Each week, I'm going live at 8:30am CST for my "office hours" to answer your questions about commercial real estate on the show. Let's hear what you'd like to know when it comes to brokerage, investment, and development!