Episode 69: Bruce Norwood Makes Commercial Real Estate Investing Make Sense in North Texas

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What if your next investment?

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wasn't in residential real estate,
but something a little bit more exotic.

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Hello everyone.

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I'm Nate Carver,
your favorite mortgage lender.

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Today we're talking about
commercial real estate investing.

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My guest today is Bruce Norwood,
who is a commercial real estate

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expert in Texas.

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Hey, I'm Nate Carver and welcome

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to Between Two Doors.

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Hey, Bruce.

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Good morning. Nate. How are you doing?

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I'm doing fantastic.

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It's, hot.

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It's. It's hot.

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Yeah.

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It's, we're on the tail end of it,
though, so maybe a couple more weeks.

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We'll get into fall. Fall weather,
hopefully.

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How are things on your side?

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Good, good.

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You know, it's, everybody's
waiting for interest rates to change,

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so it's kind of been hit and miss,
but it's been, picking up lately

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a lot more interest. So. Yeah. It's good.

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Yeah.

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It's, those rates, they,

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they're going to do what they do,
and no one has any control over it.

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Yes.

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I always say get, get,
get your hands on the property.

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We can always refi.

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Hey.

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Tell me.

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So you started
in the commercial real estate space about,

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in 2019, is that right?

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That's correct. Yes, yes.

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Can you tell me a little bit
about your journey to that

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and then, then we'll jump down, jump
into the commercial questions?

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Sure. Sure.

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I was raised in Houston.

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Graduated Houston area.

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Went to Arizona State,
got a degree in psychology.

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Came back to Houston.

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Wasn't sure what I wanted to do
with a psychology degree,

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and worked for Randall's
Supermarkets, Rice Food Markets,

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and then left them
and went to work for Nabisco.

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And, in there I did sales,
merchandising and, account management.

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And I went to work for Coca-Cola
for years.

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I don't think I mentioned that to you
before.

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Spent a lot of years with Coca-Cola,
and I did a sales management

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account management there.

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Spent my last five years
before the real estate, with a food

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franchising company, and, traveled
all over the western part of the country.

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I was a western regional manager, and,

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that's where I got the passion
for commercial real estate.

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I realized
and I met a lot of commercial brokers

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across the country
on the location and space

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and what all these things meant
and how it worked.

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And, just remember, my real love
for commercial real estate came in

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nice.

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And to
date, you've done a little over $220

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million in commercial real estate
transactions.

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Yes. Wow.

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What was the very first one?

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Very first one was, just under two acre
lot in Anna, Texas.

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My client still owns it.

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And, so he hasn't done anything with it.

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It's still undeveloped.

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But that was my first,
and I learned a lot.

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I learned the,

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I think in real estate the first year,
you kind of learn what you don't know,

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and sometimes you don't even know
the questions to ask the first year.

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So I learned a lot through that process.

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And, I feel I've gotten better, not just
from myself, but mainly from my clients.

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Wow. So.

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Okay, so commercial real estate 101.

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Let's imagine, listening to this
podcast, and I own a couple rental houses.

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I've heard

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people talk about commercial real estate,
but I really don't understand it.

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What's the biggest difference

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between investing in residential
and commercial real estate?

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Well, residential.

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If you're talking just residential,

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someone owning a home, it's
there's a lot of emotion.

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I always use the example.

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The woman loves the loves the kitchen,
the man loves the man cave or whatever

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commercial is all
about the dollars and cents.

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How much profit money can it make you,

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whether the investor
or the end user, it's still about,

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if you put a business in there,
how much is it going to cost your business

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to have that building?

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So there's just a lot of variables.

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The biggest thing is it's it's income
producing.

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Okay.

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What kind of
what kind of properties are you,

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are you talking about
in the commercial space?

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Okay, so I do land.

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I do a tenant representation
for office buildings, retail space.

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I've done some, leasing, representation
for, tenants and landlords,

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and then I'm, I'm purchasing
some buildings for some clients also.

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And most of those buildings are office
retail.

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Office retail is there.

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I don't know.

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Is there like, ideal
sweet spot in the commercial space?

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Or is it

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come down to the

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the borrower, portfolio?

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So let's go back to your first question

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you asked about somebody
diving into commercial.

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I, I think it's easier for retail because

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the numbers are easily
is a little more easily explainable.

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Yeah.

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What kind of profitability?
What your cap rate is.

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What all the what all those things are
what your operating income,

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net operating income will be?

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I think those are easier to explain
in retail. So.

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Okay.

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On the property type,
is there one that you found

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that seems to be easier to,

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get to closing?

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Is there I know,

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well, I don't know.

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I, I'm just thinking, like,
you know, Elon Musk is about to build

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the world's largest building in the world
here in Texas.

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I can't imagine what that looks like.

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But then down the street, there's,

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you know, strip mall,
maybe four storefronts being built.

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And then anything in between, right?

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Yes. Yes, yes.

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Okay.

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I think the, Well, obviously with Elon
Musk, he's got the financials.

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Not too bad not to worry about it.

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That's his consideration.

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I wonder if he's taking a loan.

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Yeah, exactly.

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Exactly.

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You know, the retail space is my niche.

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I like that a lot because I like helping
mom and pops get started.

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And that's a term rather than national,

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you know, national chains like Chick-Fil-A
or Chili's or whatever it may be.

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I like seeing the mom and pops
dreams come true.

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And that's kind of my.
Yeah, I really like that.

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I love doing that,
helping people out to get that done.

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Okay.

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Any misconceptions,

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commercial
that you run into consistently?

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Like.

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I think people well, I

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think the biggest thing they think
is going to close like a house in 60 days.

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Okay.

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Going to close like a residential in 60
days.

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That's just not true.

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There's more details, more things
you need to look at.

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Once again, going back to the finances

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where we want to go through the previous
finances.

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Yeah. Building.

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And then on the personal side, they've
got to get their finances in a row, too.

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I know you'll appreciate this. Yes.

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They've got to get their Texas,
tax numbers in order.

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They've got to get their, a business
plan, all those things put together

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and, and, and then search
for the property they're looking for. So.

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Yeah, I'm, I'm working on one right now.

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It's, in month six.

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But, you know, on on on the

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the plan, if you will, I the ROI on
it is phenomenal.

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And, you know, I always like to think
in terms of mailbox money as an owner.

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That's it's fantastic.

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So they keep working through the
things that they need to do.

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A lot of it has to do with the builders,
not necessarily the lender.

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We've got.

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I've got my packet put together,
so we're just getting all the,

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the physical things done.

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So or set up. So.

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Yeah. Okay.

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Finding the right investment.

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Do you have do
people come to you and say, hey,

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I want to get in the commercial space,
but I don't have a clue

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what the what kind of commercial space?

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Or do they already generally
have that in mind when they come to you?

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They generally have that in mind.

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You know, some will come and go.

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I, I'm just looking for land.

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Well, that's that's easy, but, it's it
there's easy parts of it,

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and then there's hard parts of you get to
determine what the land can be used for.

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If it's zoned for anything.

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Are there any easements?

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Are there anything all those things that
go into play or is there any floodplain?

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And if you're going to build something,
how's that look?

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What's that?
What's that sound like? Okay.

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Building wise, you know, most
people have an idea what they want to do.

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I kind of tell people,
have they been in business for a year

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and the years
they've been leasing for 5 or 7 years.

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Look at their own building.

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And if they could build a building
that had themselves and two other tenants

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let the tenants help pay their mortgage.

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Yeah. That's a win win.

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The building equity and investment
in their business and, and the building.

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Right.

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Okay.

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Do you,

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Okay.

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So so if I had, let's say so
I think about this, getting a

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physical space instead of working from the
the mortgage bunker at the house here.

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If I came to you and said, hey, Bruce,

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I've got $200,000,

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I would like to jump
into the commercial space.

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I kind of have an idea.

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What's the first thing

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you're going to ask me?

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Well, I'm going to ask you
how much more you have,

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because I don't think
200,000 is going to get you very far.

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Little building. No.

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Yeah.

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If you take, let's just use
Anna, Van Alstyne or Melissa.

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If you take a home
and refurbish it to commercial,

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you're probably going
to spend 500,000 on a home and maybe

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a hundred, 200,000
more to get it up to commercial.

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Okay.

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So would it be a

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if a, if a if someone came to
you like that I said that to you.

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And is there a in your network,
do you have other investors

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that you might be able to marry them up
with?

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And maybe they do have a, a partnership

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or is that in your wheelhouse
to, to make those introductions to.

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Absolutely. That's okay.

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The network, building the network,

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even even a joint venture,
maybe with the landowner.

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You know,
there's all sorts of options there.

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So the landowner puts the land in
and you put in your amount,

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and then, as it grows,
we both profit from that.

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So that's what I like to hear.

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That's what I was hoping to hear.
Because you get. I get an idea.

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I know they'll have an idea, but maybe
individually they can or cannot do it.

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Yeah.

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But putting those together
and doing those things,

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I did that on a on a
an apartment complex on Abilene, Texas.

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It's very profitable.

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There is no way I could have done that
all by myself.

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Is that not possible for me?

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But we went in with a group, and,
I got a K1.

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Got a rental check for.

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We held on to that for five years.

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I got rents every month for five years.

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It was fantastic.

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And, it was all part of a partnership.

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Now, I owned,
like, I ended up in owning 1%

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of that property.

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Yeah, but that was money
I didn't have to go work for every day.

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Matter of fact, I never saw the property.

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Never? Never saw.

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I always told myself I'd go out there.
Never did.

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I never did. The great news.

250
00:11:59,440 --> 00:12:01,680
This the first of each month
it was in your mailbox.

251
00:12:01,680 --> 00:12:02,520
That's right. That's.

252
00:12:02,520 --> 00:12:04,040
You know, I didn't have to swing a hammer.

253
00:12:04,040 --> 00:12:05,880
I didn't have to paint anything.

254
00:12:05,880 --> 00:12:09,240
I didn't have to go rent that, hunt down
rent checks or anything.

255
00:12:09,240 --> 00:12:10,600
It was fantastic.

256
00:12:10,600 --> 00:12:13,800
So, Yeah.

257
00:12:14,880 --> 00:12:16,480
Okay, so let's talk about some numbers.

258
00:12:16,480 --> 00:12:21,040
What kind of numbers should an investor
understand before making an offer?

259
00:12:22,600 --> 00:12:25,880
Well, I think, obviously
everybody talks about the cap rate first.

260
00:12:25,880 --> 00:12:29,480
And that's basically your monthly,
you know,

261
00:12:29,480 --> 00:12:32,560
I divided by the price of the,
the the price of the property.

262
00:12:32,560 --> 00:12:33,960
That gives you a percentage.

263
00:12:33,960 --> 00:12:36,960
You know, right now in, in Dallas area,

264
00:12:36,960 --> 00:12:40,320
most of them are running five
and a half; you can find

265
00:12:40,320 --> 00:12:42,120
Some are six and a half, 7%.

266
00:12:45,120 --> 00:12:47,880
And then
the second one is obviously this, the,

267
00:12:47,880 --> 00:12:51,520
this DSCR, debt service coverage ratio.

268
00:12:51,520 --> 00:12:53,640
And, I'll just do an example.

269
00:12:53,640 --> 00:12:57,840
Let's say your income, your net
income of a building, is $300,000 a year.

270
00:12:58,520 --> 00:13:02,200
And your mortgage
payment is $200,000.

271
00:13:02,240 --> 00:13:07,280
So you divide that
and you come up with a 1.3 DSCR.

272
00:13:08,280 --> 00:13:09,280
Yeah. DSCR.

273
00:13:09,280 --> 00:13:12,840
And you realize that
that's basically one year

274
00:13:12,840 --> 00:13:15,840
and three months of payments
is all you've got.

275
00:13:15,840 --> 00:13:18,080
So you'd like to be higher.

276
00:13:18,080 --> 00:13:21,600
And if you're,
if you're doing a building, you're,

277
00:13:22,600 --> 00:13:25,800
if I was, if I was telling you
that this is a building

278
00:13:25,800 --> 00:13:28,680
I think you ought to look at,
I would be looking at the rent rolls.

279
00:13:28,680 --> 00:13:30,440
I want to make sure
most of the tenants are

280
00:13:30,440 --> 00:13:33,440
going to be done next year, or the year
after or three years away.

281
00:13:33,960 --> 00:13:37,320
I'm going to go back
and kind of contradict what I said

282
00:13:37,320 --> 00:13:38,520
earlier, kind of like what I said earlier,

283
00:13:38,520 --> 00:13:41,640
but are there any national chains in there
that have a guarantee?

284
00:13:42,200 --> 00:13:44,960
Mom and pops tend to fail.

285
00:13:46,800 --> 00:13:49,480
More trying to say this cautiously,

286
00:13:49,480 --> 00:13:52,480
but they fail because,
people don't plan ahead.

287
00:13:53,360 --> 00:13:54,720
And people get stuck in the business.

288
00:13:54,720 --> 00:13:57,720
They don't have time
to look ahead for the future.

289
00:13:58,280 --> 00:14:01,560
So so we could do, we could do a whole
nother one on investing, on investing.

290
00:14:01,560 --> 00:14:04,560
But, those are the things I would tell
people first of all.

291
00:14:04,680 --> 00:14:07,440
Okay,
we'll come back and do one on investing.

292
00:14:07,440 --> 00:14:08,160
We sure will.

293
00:14:08,160 --> 00:14:11,520
Speaking of investing, investors
hear people

294
00:14:11,520 --> 00:14:14,520
talk about the the cap rates all the time.

295
00:14:14,520 --> 00:14:16,600
Can you explain what cap rate?

296
00:14:16,600 --> 00:14:17,880
What?

297
00:14:17,880 --> 00:14:20,880
That briefly explain cap rate.

298
00:14:21,200 --> 00:14:24,640
I think the easiest way to to compare
it is if you've got stocks

299
00:14:24,640 --> 00:14:29,040
or if you've got an annuity and you know
your annuity is going to pay 5% a year

300
00:14:29,040 --> 00:14:32,640
just as a number, that's kind of
what the cap rate is on this building.

301
00:14:32,640 --> 00:14:35,480
If your building is $2 million,
you could expect 5% of that.

302
00:14:37,760 --> 00:14:39,440
At the end of the year.

303
00:14:39,440 --> 00:14:42,520
That's kind of that's kind of the biggest
parallel, easiest way I can describe it.

304
00:14:42,920 --> 00:14:44,680
Okay.

305
00:14:44,680 --> 00:14:45,080
All right.

306
00:14:45,080 --> 00:14:48,040
Any any red flags
you would immediately notice

307
00:14:48,040 --> 00:14:51,040
when evaluating a commercial property?

308
00:14:52,160 --> 00:14:54,160
Well, I think location is important.

309
00:14:54,160 --> 00:14:56,200
I always use the example.

310
00:14:56,200 --> 00:14:59,520
Once again, I live in Anna,
and I use the example of,

311
00:14:59,520 --> 00:15:02,880
Anna is growing, one of the fastest-growing cities
in the country.

312
00:15:03,320 --> 00:15:05,960
And, and sometimes people go, well,
why don't we have this?

313
00:15:05,960 --> 00:15:06,640
Why don't we have that?

314
00:15:06,640 --> 00:15:11,360
And I go, we have a lot, lot going on,
but there's no Walmart in Ozona, Texas.

315
00:15:11,400 --> 00:15:12,000
Nothing against

316
00:15:12,000 --> 00:15:14,480
Ozona, Texas, but
there's not enough population for that.

317
00:15:14,480 --> 00:15:17,480
So you have to have rooftops
to make your business work.

318
00:15:17,520 --> 00:15:17,720
Yeah.

319
00:15:17,720 --> 00:15:21,960
So population matters then the location
in that population also matters.

320
00:15:22,480 --> 00:15:25,480
Get your finances in order.

321
00:15:25,600 --> 00:15:28,440
Those are probably top three.

322
00:15:28,440 --> 00:15:29,880
They really are. Location.

323
00:15:29,880 --> 00:15:32,160
And, have a good business plan.

324
00:15:34,480 --> 00:15:37,200
And your finances.

325
00:15:37,200 --> 00:15:38,680
Let's shift gears a little bit.

326
00:15:38,680 --> 00:15:43,040
Maybe

327
00:15:43,040 --> 00:15:46,520
that's probably the most important thing.
You've got to have tenants

328
00:15:46,520 --> 00:15:48,520
that are going to pay their bills.

329
00:15:48,520 --> 00:15:50,800
How important is that tenant

330
00:15:50,800 --> 00:15:53,800
when you're determining the value
of commercial real estate?

331
00:15:54,440 --> 00:15:57,000
Well, once again, if we're if I
if you were to ask me

332
00:15:57,000 --> 00:16:00,160
to help you find a building,
a shopping center with 6 or 7 tenants,

333
00:16:00,560 --> 00:16:04,480
we definitely want to know what the rent
rolls are, what they're paying, and,

334
00:16:05,800 --> 00:16:07,440
and then

335
00:16:07,440 --> 00:16:08,920
that's a good starting point.

336
00:16:08,920 --> 00:16:10,840
Obviously,
you already told me you want to do retail.

337
00:16:10,840 --> 00:16:12,520
And we found something

338
00:16:12,520 --> 00:16:14,520
that fits in your range.

339
00:16:14,520 --> 00:16:17,520
And then we want to look at the rent rolls,
then we want to look at the building.

340
00:16:19,280 --> 00:16:20,880
I don't see this very often.

341
00:16:20,880 --> 00:16:25,280
But sometimes in residential,
people will pass on an inspection.

342
00:16:25,760 --> 00:16:28,760
I think, in a commercial building,
it's even more important.

343
00:16:28,800 --> 00:16:32,320
You may get an air conditioning
unit on the roof that's 12 years old.

344
00:16:33,720 --> 00:16:35,760
Right. All those things come into play.

345
00:16:35,760 --> 00:16:38,000
And I'd hate for you to have to,

346
00:16:38,000 --> 00:16:41,760
invest back in an air conditioning unit
within 18 months of your first buying.

347
00:16:41,880 --> 00:16:44,280
So there's a lot of pieces to it.

348
00:16:44,280 --> 00:16:45,720
Yeah, that could be.

349
00:16:45,720 --> 00:16:46,720
Especially in the commercial space.

350
00:16:46,720 --> 00:16:49,120
That could be extremely expensive.

351
00:16:49,120 --> 00:16:52,960
That's on an established building.

352
00:16:53,200 --> 00:16:55,200
So we're going in, we go and pick up

353
00:16:55,200 --> 00:16:58,680
a commercial property that's been there,
and it's got active tenants in it.

354
00:16:59,240 --> 00:17:02,400
How about on a commercial property?

355
00:17:02,400 --> 00:17:03,800
Say we want to build one.

356
00:17:04,800 --> 00:17:06,080
Those, and let's

357
00:17:06,080 --> 00:17:09,080
say it's six doors or six storefronts.

358
00:17:09,080 --> 00:17:12,080
How do you

359
00:17:12,960 --> 00:17:15,120
quantify what those do.

360
00:17:15,120 --> 00:17:17,560
You have no idea what those tenants
are going to be.

361
00:17:17,560 --> 00:17:20,760
Or do they have to line those tenants up
before they get this thing built?

362
00:17:21,840 --> 00:17:25,000
Well, I think all mortgage

363
00:17:25,000 --> 00:17:28,000
companies or banks would like to see
some letters of intent.

364
00:17:28,320 --> 00:17:29,160
Yeah.

365
00:17:29,160 --> 00:17:31,880
From a prospective tenant.

366
00:17:31,880 --> 00:17:34,880
I think the first thing is

367
00:17:35,480 --> 00:17:38,840
the buyer has to determine
what they want to build.

368
00:17:38,880 --> 00:17:40,320
Do they want office space?

369
00:17:40,320 --> 00:17:41,720
Do they want retail space?

370
00:17:41,720 --> 00:17:43,160
Do they want industrial space?

371
00:17:43,160 --> 00:17:45,320
And then from there,
you can determine that,

372
00:17:45,320 --> 00:17:48,480
I work with developers
all the time that are developing land,

373
00:17:48,880 --> 00:17:52,480
and they always come back and say, okay,
this is our price range for selling it.

374
00:17:52,480 --> 00:17:53,360
They pretty much

375
00:17:53,360 --> 00:17:56,440
have to put those numbers together
from their calculations and algorithms.

376
00:17:57,120 --> 00:17:57,560
Okay.

377
00:18:00,560 --> 00:18:02,000
When those tenants

378
00:18:02,000 --> 00:18:05,960
that they held, they'll have leases
and terms on those leases.

379
00:18:06,000 --> 00:18:10,920
Does that affect,
any valuation of the property?

380
00:18:11,200 --> 00:18:14,200
When a major tenant leaves.

381
00:18:15,040 --> 00:18:17,160
That on the property?

382
00:18:17,160 --> 00:18:18,440
Yeah.

383
00:18:18,440 --> 00:18:22,520
Well, it can, Here's what I guess.

384
00:18:23,520 --> 00:18:27,480
It can, because obviously
you're losing a large portion.

385
00:18:27,480 --> 00:18:29,640
Well, if it's a single tenant,

386
00:18:29,640 --> 00:18:32,800
let's say it's let's say it's a dairy
Queen that's on this one property.

387
00:18:32,800 --> 00:18:34,560
On a on a piece of property.

388
00:18:34,560 --> 00:18:37,760
Tenant on that property,
you lose 100% of your income.

389
00:18:37,760 --> 00:18:39,400
It definitely will affect.

390
00:18:39,400 --> 00:18:40,000
Yeah, the.

391
00:18:40,000 --> 00:18:43,000
Shopping center a 5 or 6,
and you lose one.

392
00:18:44,040 --> 00:18:46,520
You still got 4 or 5 rents coming in.

393
00:18:46,520 --> 00:18:48,120
So. Right.

394
00:18:48,120 --> 00:18:50,160
Yeah. That's. That makes sense.

395
00:18:50,160 --> 00:18:51,840
I know when I asked
that, I was like, well, that's

396
00:18:52,840 --> 00:18:55,440
that's not a that's a no brainer.

397
00:18:55,440 --> 00:18:58,440
But still to get it on the record.

398
00:18:58,480 --> 00:19:01,360
It's like, okay,
I want to share my first story if I can.

399
00:19:01,360 --> 00:19:03,000
My first,

400
00:19:03,000 --> 00:19:06,000
commercial showing I did was in Southlake.

401
00:19:06,360 --> 00:19:09,080
It was in an old Wendy's building,
and the,

402
00:19:09,080 --> 00:19:12,080
agent for the landlord had said, hey,
don't worry, it's unlocked.

403
00:19:12,080 --> 00:19:14,760
You the keys here and lock and go in.

404
00:19:14,760 --> 00:19:17,760
I opened the door and the alarm goes off.

405
00:19:17,880 --> 00:19:22,320
And it was my first, probably my first
month of commercial showing property.

406
00:19:22,320 --> 00:19:25,320
And the alarm goes off
and I'm in Southlake, Texas,

407
00:19:25,680 --> 00:19:28,520
so I knew the police would be there
pretty quickly.

408
00:19:28,520 --> 00:19:31,520
So I walked outside with a business card
in one hand,

409
00:19:32,080 --> 00:19:33,720
and the key to the building in the other.

410
00:19:34,880 --> 00:19:35,560
And two police

411
00:19:35,560 --> 00:19:38,560
cars come
screeching into the parking lot. Wow.

412
00:19:39,440 --> 00:19:40,520
Yeah.

413
00:19:40,520 --> 00:19:43,520
So minor details like alarms do matter.

414
00:19:43,640 --> 00:19:46,520
Yeah. Wow.

415
00:19:46,520 --> 00:19:47,400
All right. You said it.

416
00:19:47,400 --> 00:19:50,200
Location, location and economics.

417
00:19:50,200 --> 00:19:52,560
In residential real estate.

418
00:19:52,560 --> 00:19:55,560
Everybody says
location, location, location.

419
00:19:56,320 --> 00:19:58,880
Is that equally true?

420
00:19:58,880 --> 00:20:02,320
Or probably even more true
in the commercial real estate?

421
00:20:03,400 --> 00:20:05,920
I think it's more true for your business.

422
00:20:05,920 --> 00:20:07,640
Has to have the eyes on it.

423
00:20:07,640 --> 00:20:10,920
I know we have Google reviews
and all these things nowadays and all

424
00:20:10,920 --> 00:20:13,560
and but your eyes,
you have to have eyes on it.

425
00:20:13,560 --> 00:20:15,360
People have they drive by?

426
00:20:15,360 --> 00:20:17,520
Oh, I didn't realize that was there.

427
00:20:17,520 --> 00:20:18,840
That's a positive for you.

428
00:20:18,840 --> 00:20:24,040
If you can get in your shopping center
that has a a large what they call anchors,

429
00:20:24,240 --> 00:20:28,320
you know, whether it's a target or a H-e-b
or whatever, it is, a Kroger.

430
00:20:28,680 --> 00:20:30,800
Those are all important
because those people are going to shop

431
00:20:30,800 --> 00:20:33,800
and they're going to see your site,
your site, your sign every day.

432
00:20:34,440 --> 00:20:34,920
Right.

433
00:20:36,720 --> 00:20:40,080
The on those anchor stores,

434
00:20:41,880 --> 00:20:44,160
is it typically big box anchor stores

435
00:20:44,160 --> 00:20:50,160
or it's just locally famous
or well known in, establishments?

436
00:20:50,160 --> 00:20:53,160
What would qualify that?

437
00:20:53,280 --> 00:20:57,080
I, I just think, well, there
there's a large anchors like a Walmart.

438
00:20:57,240 --> 00:21:00,240
Sure. Like that Costco, potentially.

439
00:21:00,320 --> 00:21:04,680
You know, and then the smaller anchors
would be the Kroger's and even an H-e-b

440
00:21:04,680 --> 00:21:08,440
would, even though that's over 100,000ft²,
to still be considered a local anchor.

441
00:21:08,880 --> 00:21:11,160
But those are all, once again,
positive drivers.

442
00:21:11,160 --> 00:21:13,720
You know, you're going to have traffic
in front of your doors.

443
00:21:13,720 --> 00:21:14,480
Right.

444
00:21:14,480 --> 00:21:17,280
So maybe no other way to ask this.

445
00:21:17,280 --> 00:21:20,280
There's a little strip mall over there
just north of Anna.

446
00:21:20,280 --> 00:21:24,360
I can recall
right off the top of my head, there is a

447
00:21:25,640 --> 00:21:28,640
convenience store, a,

448
00:21:29,560 --> 00:21:32,560
nail salon and a gym.

449
00:21:33,000 --> 00:21:33,960
I think there's a fort.

450
00:21:33,960 --> 00:21:37,880
So maybe the fort is in the anchor,
but it's fair to say probably even in the

451
00:21:37,920 --> 00:21:41,640
a setting like that,
that one of those establishments

452
00:21:41,640 --> 00:21:46,320
is the anchor
for that commercial real estate property.

453
00:21:46,960 --> 00:21:48,120
Was that right?

454
00:21:48,120 --> 00:21:48,720
I think, though,

455
00:21:48,720 --> 00:21:52,240
I know the one you're talking to
in the fourth place is a donut shop.

456
00:21:52,800 --> 00:21:54,960
There you go. South again.

457
00:21:54,960 --> 00:21:57,960
Don't ask how I know that, but,

458
00:21:58,160 --> 00:21:59,680
I don't think
there's really an anchor there.

459
00:21:59,680 --> 00:22:03,960
I think that the building that was built
in, And you look at the space,

460
00:22:03,960 --> 00:22:06,960
I think the convenience store
is probably the smallest.

461
00:22:06,960 --> 00:22:08,600
The largest operator.

462
00:22:08,600 --> 00:22:10,480
Yeah, maybe the gym.

463
00:22:10,480 --> 00:22:12,520
But it's just kind of a space.

464
00:22:12,520 --> 00:22:15,240
It really doesn't have an anchor. It's
just kind of there.

465
00:22:15,240 --> 00:22:16,200
Okay.

466
00:22:16,200 --> 00:22:20,360
So that is the neighborhood around it on
both sides of, highway five.

467
00:22:21,360 --> 00:22:22,400
Yeah.

468
00:22:22,400 --> 00:22:25,080
And there's a lot coming up around that,
too. So.

469
00:22:25,080 --> 00:22:26,760
Yes, a. Lot, a whole lot.

470
00:22:26,760 --> 00:22:27,960
Goodness.

471
00:22:27,960 --> 00:22:30,960
I see it every day.

472
00:22:31,480 --> 00:22:34,480
What, what makes

473
00:22:34,520 --> 00:22:37,520
a great commercial location?

474
00:22:39,840 --> 00:22:42,280
I think once again,
we spoke about traffic.

475
00:22:42,280 --> 00:22:43,280
Yeah.

476
00:22:43,280 --> 00:22:44,640
The the vehicle count.

477
00:22:44,640 --> 00:22:47,760
You can pull those from text anywhere
in the country and anywhere in the state.

478
00:22:48,200 --> 00:22:50,680
The second thing is the rooftops.

479
00:22:50,680 --> 00:22:53,160
How many potential buyers do
you have there?

480
00:22:53,160 --> 00:22:55,800
And it may not always be single
family residents.

481
00:22:55,800 --> 00:22:59,680
It may be apartments if you've got to,
if you've got 300 door apartment

482
00:22:59,680 --> 00:23:03,720
complex going in, five blocks away,
and you're

483
00:23:03,720 --> 00:23:06,880
a retail space looking for getting people,
getting people in the doors.

484
00:23:06,960 --> 00:23:10,560
I mean, those people are going to drive by
you every day, going to and

485
00:23:10,680 --> 00:23:12,960
and on weekends
they'll stop in and see what's going on.

486
00:23:12,960 --> 00:23:14,280
So it's.

487
00:23:14,280 --> 00:23:15,000
Okay.

488
00:23:15,000 --> 00:23:19,680
Are you doing,
like economic or, demographic studies,

489
00:23:19,840 --> 00:23:23,920
for the, for the potential investor,

490
00:23:24,840 --> 00:23:27,080
to try to help navigate that

491
00:23:27,080 --> 00:23:29,920
or whatever it is
they're looking to build?

492
00:23:29,920 --> 00:23:31,440
Yes, I do that.

493
00:23:31,440 --> 00:23:34,640
If they're looking to come in to an area
to build, I always do that. Yes.

494
00:23:34,640 --> 00:23:36,440
I pulled up the city's data,

495
00:23:36,440 --> 00:23:40,040
the demographics, the, median income,
all those things matter.

496
00:23:40,320 --> 00:23:41,760
Yeah,

497
00:23:43,040 --> 00:23:45,840
I guess that,

498
00:23:45,840 --> 00:23:48,840
if someone said they wanted to come in
and build a steakhouse

499
00:23:49,520 --> 00:23:52,840
and there was already five
steak houses in the population's 10,000,

500
00:23:53,160 --> 00:23:55,840
I imagine that would not be a great,

501
00:23:55,840 --> 00:23:57,600
great.

502
00:23:57,600 --> 00:24:00,480
I guess the economics on
that wouldn't look real good.

503
00:24:00,480 --> 00:24:02,600
It's, You know, part of me says.

504
00:24:02,600 --> 00:24:03,920
Yes, but a part of me always says,

505
00:24:03,920 --> 00:24:07,200
if you see a CVS, you will see a Walgreens
across the street. So.

506
00:24:08,160 --> 00:24:09,640
There you go.

507
00:24:09,640 --> 00:24:11,960
And then a lot of restaurant
owners will tell you

508
00:24:11,960 --> 00:24:13,600
1 or 2 of the restaurants is not bad.

509
00:24:13,600 --> 00:24:16,880
That means they're coming there to eat and
they may pass them up and stop at jaws.

510
00:24:17,200 --> 00:24:20,920
But I think of steak houses in one place
would probably be a living issue.

511
00:24:21,520 --> 00:24:22,760
So yeah,

512
00:24:22,760 --> 00:24:26,480
that's why I say on the lending side
of all of this and near the commercial, I

513
00:24:27,720 --> 00:24:30,320
people, people start
asking me as a lender, they say, well,

514
00:24:30,320 --> 00:24:35,880
tell me what you think about XYZ property,
I'm like, "Nope. Go talk to Bruce."

515
00:24:36,240 --> 00:24:39,600
And that is, you know,
I'll stay in my lane on that

516
00:24:39,600 --> 00:24:42,000
and I can do the numbers,
I can do the numbers greatly.

517
00:24:42,000 --> 00:24:46,040
And, but but I, I go off on
I get off the reservation

518
00:24:46,040 --> 00:24:48,640
and start talking about interjecting
my opinion like that.

519
00:24:48,640 --> 00:24:51,440
So fair enough. Yeah.

520
00:24:51,440 --> 00:24:54,920
Let's how important I'm telling you,
I did it myself.

521
00:24:54,960 --> 00:24:55,560
Okay.

522
00:24:55,560 --> 00:25:00,320
How important are things like population
growth that you mentioned, traffic count,

523
00:25:00,560 --> 00:25:03,800
employment growth, and,
I guess household incomes

524
00:25:03,800 --> 00:25:06,800
in an area,
those all kind of play into that as well.

525
00:25:07,320 --> 00:25:08,600
Absolutely, absolutely.

526
00:25:08,600 --> 00:25:12,360
It's I mean, look,
let's just I'm working with a client now

527
00:25:12,360 --> 00:25:15,360
that wants to do a large med spa,

528
00:25:15,360 --> 00:25:17,920
and she's trying to decide
where to do this.

529
00:25:17,920 --> 00:25:23,760
And she's looked at prosper, she looks at
Frisco. She's looked at Melissa, Anna.

530
00:25:24,280 --> 00:25:28,200
And when you look at the incomes
in Prosper, Frisco,

531
00:25:28,680 --> 00:25:31,200
they're definitely higher than.

532
00:25:31,200 --> 00:25:34,560
And so we're targeting that area.

533
00:25:34,720 --> 00:25:36,720
So all these things come into play.

534
00:25:36,720 --> 00:25:40,720
And you know, like you said earlier,
one of the main points were location

535
00:25:40,720 --> 00:25:43,400
and getting your finances in order
and finding the right space

536
00:25:43,400 --> 00:25:45,920
and asking all the right questions
for the from the tenant.

537
00:25:45,920 --> 00:25:49,440
But then at some point,
you got to do your homework and,

538
00:25:49,960 --> 00:25:52,440
realize you're working every, every,
you know,

539
00:25:52,440 --> 00:25:57,320
every, deal we get done
is done for the for the client. So

540
00:25:58,920 --> 00:26:02,520
what areas, what areas of Texas,

541
00:26:02,520 --> 00:26:05,880
do you think investors
should be looking at?

542
00:26:08,040 --> 00:26:09,200
Good question.

543
00:26:09,200 --> 00:26:12,840
You're trying to get me to do the crystal
ball live or to be in five years,

544
00:26:13,080 --> 00:26:13,440
I know.

545
00:26:13,440 --> 00:26:16,440
Right?

546
00:26:18,360 --> 00:26:21,360
You know, up and down
75 corridor between,

547
00:26:21,360 --> 00:26:25,960
between 121 break off and,
75 and the Red River.

548
00:26:26,280 --> 00:26:29,920
I think going out, 121
toward Bonham, Paris,

549
00:26:30,560 --> 00:26:31,920
those are all going to be growing areas.

550
00:26:31,920 --> 00:26:33,120
I mean, as we said,

551
00:26:33,120 --> 00:26:36,800
the way the population is growing in Texas
will eventually get to the Red River,

552
00:26:36,800 --> 00:26:38,920
and they're going to decide
if they want to go across into Oklahoma.

553
00:26:38,920 --> 00:26:40,960
They're going to it's
going to sprout east and west.

554
00:26:40,960 --> 00:26:43,440
So, I think those are good ideas.

555
00:26:43,440 --> 00:26:47,440
You know, for example, Bonham area,
before

556
00:26:47,800 --> 00:26:52,080
Bois d'Arc was built, you could buy the land
for 10,000, 12,000 an acre.

557
00:26:52,680 --> 00:26:56,160
Right now
you find it for 25 to 35 an acre. So.

558
00:26:56,680 --> 00:27:00,040
Yeah, I've seen on the
residential side lots of,

559
00:27:01,200 --> 00:27:04,560
buyers going up 121 up towards Bonham,

560
00:27:05,160 --> 00:27:07,640
and into Bonham and surrounding areas
because they,

561
00:27:07,640 --> 00:27:10,640
they can get,

562
00:27:10,800 --> 00:27:13,680
more square footage for the same dollar

563
00:27:13,680 --> 00:27:16,240
and, on the residential side.

564
00:27:16,240 --> 00:27:19,560
And then, you know, as you said,
more, more rooftops.

565
00:27:19,560 --> 00:27:21,240
That's going to drive,

566
00:27:21,240 --> 00:27:27,040
more need for commercial restaurants
and what have you and all of that.

567
00:27:27,040 --> 00:27:31,080
And so I see a lot of that up
the 121 corridor,

568
00:27:31,560 --> 00:27:36,360
residential side Collin County,
Grayson County, still the number one,

569
00:27:36,360 --> 00:27:40,640
number two in the definitely in the state
and I believe in the country.

570
00:27:41,280 --> 00:27:44,280
I mean, it is a magnet here.

571
00:27:44,800 --> 00:27:47,800
In economic and residential growth.

572
00:27:48,560 --> 00:27:51,640
And certainly Highway 75,

573
00:27:51,640 --> 00:27:55,440
Preston Road corridors, that corridor

574
00:27:55,440 --> 00:27:58,440
all the way up to Lake Texoma, Red River

575
00:27:58,760 --> 00:28:02,400
and spilling into Oklahoma, with Choctaw,

576
00:28:03,360 --> 00:28:05,040
being right there.

577
00:28:05,040 --> 00:28:08,920
And and then the other Windstar,
you can see the two casinos,

578
00:28:10,960 --> 00:28:12,240
all that area.

579
00:28:12,240 --> 00:28:12,600
I'm sorry.

580
00:28:12,600 --> 00:28:17,440
I jokingly had had a lady ask me,
where can I find an acre for $20,000?

581
00:28:18,160 --> 00:28:21,160
And I said, you start at Choctaw and go
north.

582
00:28:21,760 --> 00:28:23,640
Yeah. You're right.

583
00:28:23,640 --> 00:28:27,120
I had a buddy that bought
a whole bunch of land up in Oklahoma.

584
00:28:27,120 --> 00:28:28,440
And it's north.

585
00:28:28,440 --> 00:28:31,200
It's north of Choctaw
Way, north of Choctaw.

586
00:28:31,200 --> 00:28:34,200
But it is it is beautiful, right?

587
00:28:34,480 --> 00:28:34,800
That's right.

588
00:28:34,800 --> 00:28:38,400
He couldn't have done that in Frisco.

589
00:28:39,000 --> 00:28:41,720
All right.

590
00:28:41,720 --> 00:28:42,600
Financial.

591
00:28:42,600 --> 00:28:45,520
Let's let's look,
financing commercial real estate.

592
00:28:45,520 --> 00:28:46,480
Let's talk about that.

593
00:28:46,480 --> 00:28:50,560
Let's let's talk about something
near and dear to me that's financing part.

594
00:28:50,960 --> 00:28:56,440
At what point should an investor
start talking to their lender?

595
00:28:58,880 --> 00:29:00,240
I think, the first

596
00:29:00,240 --> 00:29:03,240
conversation that I had with me
would be what they're looking for.

597
00:29:03,240 --> 00:29:05,800
What type of land building. Yeah.

598
00:29:05,800 --> 00:29:08,800
Next conversation has to be the finances
in the financials.

599
00:29:09,480 --> 00:29:10,560
Yeah.

600
00:29:10,560 --> 00:29:14,480
Getting those to a lender so the lender
can take a look at what they can do.

601
00:29:14,520 --> 00:29:18,520
I always, I always ask people

602
00:29:18,520 --> 00:29:22,560
to do that early
because, we do have a feasibility due

603
00:29:22,560 --> 00:29:25,560
diligence in commercial,
which you don't have in residential.

604
00:29:25,800 --> 00:29:28,960
But that takes a time anyway,
to get some things done.

605
00:29:28,960 --> 00:29:30,240
And if you have to go get rezone

606
00:29:30,240 --> 00:29:33,400
or whatever it may be,
or just the, the general process,

607
00:29:34,080 --> 00:29:36,880
and you don't want to start asking
for too many extensions

608
00:29:36,880 --> 00:29:38,280
because then this whole it's going this,

609
00:29:38,280 --> 00:29:40,920
this guy serious
or can you really get this done?

610
00:29:40,920 --> 00:29:44,400
So getting that financial piece done
early is beneficial,

611
00:29:44,800 --> 00:29:48,040
for your set for your buyer
and the potential seller.

612
00:29:48,320 --> 00:29:51,200
So yeah, man to get it done early.

613
00:29:51,200 --> 00:29:51,880
Yeah.

614
00:29:51,880 --> 00:29:55,200
Same scenario
in, in the residential space.

615
00:29:56,400 --> 00:29:57,280
In both.

616
00:29:57,280 --> 00:29:59,400
I like to

617
00:29:59,400 --> 00:30:02,880
be able to present back to the
that investor

618
00:30:03,560 --> 00:30:06,560
and the real
their commercial real estate agent,

619
00:30:07,000 --> 00:30:10,840
a real plan, on the finances
so that y'all can.

620
00:30:11,520 --> 00:30:15,280
It's a whole lot easier to find something
that fits the plan that it is to try to

621
00:30:17,040 --> 00:30:19,040
you get hooked on a

622
00:30:19,040 --> 00:30:21,600
physical property and then then trying

623
00:30:21,600 --> 00:30:25,080
to marry something to that
that doesn't quite work.

624
00:30:25,920 --> 00:30:28,720
I always use the example of my youngest
daughter, which is looking for a car.

625
00:30:28,720 --> 00:30:31,720
She came across this red neon

626
00:30:32,440 --> 00:30:34,160
that gives you an idea how old I am.

627
00:30:34,160 --> 00:30:36,360
But, she loves this car.

628
00:30:36,360 --> 00:30:38,640
And, we went, looked at it, and she.

629
00:30:38,640 --> 00:30:39,480
We drove it, and she.

630
00:30:39,480 --> 00:30:40,440
Oh, this is the car I want.

631
00:30:40,440 --> 00:30:43,160
I said it's not,
it's it's not a good value.

632
00:30:43,160 --> 00:30:45,720
But anyway, it's too expensive.

633
00:30:45,720 --> 00:30:48,720
So I'm telling her
the hardest thing to do is walk away.

634
00:30:48,960 --> 00:30:50,960
And so we walked away.
And of course she didn't.

635
00:30:50,960 --> 00:30:52,720
She wasn't happy with that. But,

636
00:30:53,840 --> 00:30:55,680
there are some there are some commercial,

637
00:30:55,680 --> 00:30:59,800
even land deals that aren't positive
and you have to walk away from them.

638
00:31:00,240 --> 00:31:04,960
In most cases, if you got your ducks
in a row and you know what you want, and

639
00:31:06,840 --> 00:31:09,640
there's, there's,
there's plenty of opportunities out there.

640
00:31:09,640 --> 00:31:10,680
So yeah.

641
00:31:10,680 --> 00:31:11,760
But once again.

642
00:31:11,760 --> 00:31:14,760
Are you seeing a go ahead?

643
00:31:14,760 --> 00:31:16,480
I was going to say
there are opportunities out there.

644
00:31:16,480 --> 00:31:19,480
You just have to do your research and
make sure you've got all the information

645
00:31:20,720 --> 00:31:21,560
right.

646
00:31:21,560 --> 00:31:24,360
What kind of problems are you seeing
if the investor waits too long

647
00:31:24,360 --> 00:31:27,360
to get their financing put together?

648
00:31:27,680 --> 00:31:29,400
Well, they're going to delay the closing.

649
00:31:29,400 --> 00:31:30,360
They're going to get,

650
00:31:30,360 --> 00:31:32,840
they're going to have to ask
for an extension,

651
00:31:32,840 --> 00:31:34,840
different things like that.
I mean, there's other reasons

652
00:31:34,840 --> 00:31:37,840
for extensions of the feasibility,
due diligence.

653
00:31:38,400 --> 00:31:42,640
But finances is one
that we try to get settled early.

654
00:31:43,280 --> 00:31:46,240
I mean, your example earlier,

655
00:31:46,240 --> 00:31:49,440
let's let's say you asked me, said, hey,
I want to find a $10 million building.

656
00:31:49,440 --> 00:31:51,960
And my question is, what's your budget?

657
00:31:51,960 --> 00:31:53,600
Can you afford a $10 million building?

658
00:31:54,560 --> 00:31:55,240
And then do you have the

659
00:31:55,240 --> 00:31:58,240
financial capability
to make it happen? So.

660
00:32:01,520 --> 00:32:02,040
Anything that

661
00:32:02,040 --> 00:32:05,040
they should have prepared
before they come see you.

662
00:32:05,360 --> 00:32:08,360
I'd love for them
to have a, full financial statement.

663
00:32:08,520 --> 00:32:11,440
Two years worth of taxes pulled
if they've got a business, two years

664
00:32:11,440 --> 00:32:16,040
of business of panels
and financials and taxes for that, too.

665
00:32:16,600 --> 00:32:17,480
Yeah.

666
00:32:17,480 --> 00:32:19,960
And if you're like I said,
I love working with Mom and Pops.

667
00:32:19,960 --> 00:32:22,960
I'd also like to have see them
have a business plan put together.

668
00:32:23,280 --> 00:32:24,320
Right.

669
00:32:24,320 --> 00:32:26,000
They always say, man,
I've got this great idea,

670
00:32:26,000 --> 00:32:27,760
I want to do this
and this is going to work.

671
00:32:27,760 --> 00:32:29,320
And I said, well,
do you have a business plan?

672
00:32:29,320 --> 00:32:32,320
And some of them go, oh, what?

673
00:32:32,440 --> 00:32:34,200
Or they go, yeah, I've got to start a one.

674
00:32:34,200 --> 00:32:37,200
I've got,
I've got three points in an outline.

675
00:32:37,320 --> 00:32:40,200
Well, give me a business plan of why
it's going to succeed.

676
00:32:40,200 --> 00:32:43,200
If I had to sell it to you, the lender,
why is it going to succeed?

677
00:32:43,480 --> 00:32:46,360
Right. Is there are there resources?

678
00:32:46,360 --> 00:32:50,480
Maybe the federal state level
for doing business plans?

679
00:32:51,880 --> 00:32:52,920
I don't know.

680
00:32:52,920 --> 00:32:55,920
I think there's some small business,
associations in the state

681
00:32:55,920 --> 00:32:57,160
that can help with that.

682
00:32:57,160 --> 00:32:57,840
Okay.

683
00:32:57,840 --> 00:33:00,840
Yeah. GPT will give you a good,

684
00:33:00,840 --> 00:33:03,440
That's true bullet point to start.

685
00:33:03,440 --> 00:33:04,960
This is true.

686
00:33:04,960 --> 00:33:06,600
I have people ask me how much.

687
00:33:06,600 --> 00:33:08,880
How much office building
can I build on half an acre?

688
00:33:08,880 --> 00:33:13,080
Well, I go to ChatGPT and start there,
and I'll go in Anna, Texas, for example.

689
00:33:13,440 --> 00:33:17,200
I want to build an office,
but office condo in Anna, Texas.

690
00:33:17,200 --> 00:33:18,840
How much can I build on half an acre?

691
00:33:18,840 --> 00:33:22,080
And it'll spit out with the parking
and the setbacks

692
00:33:22,080 --> 00:33:25,080
and everything,
you can build 5000 6000ft².

693
00:33:25,160 --> 00:33:26,320
That's what it'll tell you.

694
00:33:26,320 --> 00:33:27,920
So that's a great starting point.

695
00:33:27,920 --> 00:33:29,920
That's great. Yeah.

696
00:33:29,920 --> 00:33:32,640
I mean yeah, that's that's fantastic.

697
00:33:32,640 --> 00:33:34,400
I might actually try that.

698
00:33:34,400 --> 00:33:37,000
I run everything through chat.

699
00:33:37,000 --> 00:33:38,640
I don't know a lot of
I didn't think about that,

700
00:33:38,640 --> 00:33:41,840
but sure, that's,
that is an excellent starting point.

701
00:33:41,920 --> 00:33:43,440
I know it'll give you a template

702
00:33:43,440 --> 00:33:46,440
and it'll tell you where everything
you need to go on the hunt down and

703
00:33:47,000 --> 00:33:50,160
and and bring back
and and to create that document.

704
00:33:51,000 --> 00:33:53,320
I know my brother did
a commercial real estate project.

705
00:33:53,320 --> 00:33:55,200
He had a binder. That was

706
00:33:56,320 --> 00:33:57,440
it was big deal.

707
00:33:57,440 --> 00:33:59,760
It was a big deal.

708
00:33:59,760 --> 00:34:02,760
So this claim right now, I and ChatGPT

709
00:34:03,240 --> 00:34:05,960
verify everything that you see 100%.

710
00:34:05,960 --> 00:34:07,840
It drifts.

711
00:34:07,840 --> 00:34:09,400
Their dreams or drifts.

712
00:34:09,400 --> 00:34:11,720
I don't know, I'll have to read.

713
00:34:11,720 --> 00:34:12,840
I'll publish something.

714
00:34:12,840 --> 00:34:16,920
And I had to read it first, and,
because I'll put all my notes in there

715
00:34:16,920 --> 00:34:17,600
and it gets

716
00:34:17,600 --> 00:34:21,840
sometimes it gets real creative and like,
no, no, no, don't do this.

717
00:34:21,840 --> 00:34:23,920
So yes. Yeah.

718
00:34:23,920 --> 00:34:25,280
So that's that's true.

719
00:34:25,280 --> 00:34:27,080
Verify your chat.

720
00:34:27,080 --> 00:34:30,640
People can tell when you're using chat,
but at least at least

721
00:34:30,640 --> 00:34:34,040
right for now
anyway that may change in the near future.

722
00:34:37,200 --> 00:34:39,600
All right, let's, let's build a deal.

723
00:34:39,600 --> 00:34:40,480
Let's do this.

724
00:34:40,480 --> 00:34:43,560
My little scenario here.

725
00:34:43,560 --> 00:34:45,520
Let's build a hypothetical investment.

726
00:34:45,520 --> 00:34:50,160
I've got some money
available, decent credit, good income.

727
00:34:50,160 --> 00:34:53,400
And I want to purchase
my first commercial property.

728
00:34:53,720 --> 00:34:56,480
Walk me through the process.

729
00:34:56,480 --> 00:35:00,320
From our first phone call until closing.

730
00:35:01,520 --> 00:35:02,640
Oh, okay.

731
00:35:02,640 --> 00:35:05,240
All right. Well. Yeah.

732
00:35:05,240 --> 00:35:08,240
First phone call is, getting the details
of what they're looking for.

733
00:35:08,400 --> 00:35:09,480
Okay.

734
00:35:09,480 --> 00:35:11,680
I always ask them what their budget is.

735
00:35:11,680 --> 00:35:13,200
Ask them what their timeline is.

736
00:35:13,200 --> 00:35:16,200
Those are all going to matter.

737
00:35:18,400 --> 00:35:21,400
And then I just say, are there
is there anything

738
00:35:21,640 --> 00:35:24,640
because some mortgage lender
is going to be involved somewhere?

739
00:35:24,680 --> 00:35:26,160
Yeah. Think that's going to pop up.

740
00:35:26,160 --> 00:35:29,160
That's going to be a red flag
for the financials.

741
00:35:29,640 --> 00:35:31,360
Yeah I say no, everything's good.

742
00:35:31,360 --> 00:35:32,160
We're good to go.

743
00:35:32,160 --> 00:35:35,440
I start searching for properties.

744
00:35:35,440 --> 00:35:39,720
I try to get as much parameter as I can,
and then I start

745
00:35:39,720 --> 00:35:44,040
sending them some, some listings
to look at, some properties to look at.

746
00:35:44,040 --> 00:35:46,680
And, and I always tell them, look,
if you don't like it,

747
00:35:46,680 --> 00:35:50,040
if you tell me why you don't like it,
that helps me do the next search.

748
00:35:51,160 --> 00:35:53,240
So, if they

749
00:35:53,240 --> 00:35:56,320
say, you know what, I want to make sure
it faces south, just as an example.

750
00:35:56,320 --> 00:35:59,400
And I find myself with five properties
that are facing north or east.

751
00:35:59,400 --> 00:36:01,760
I'm going there. They're going.
He's not listening.

752
00:36:01,760 --> 00:36:03,640
So I try to listen to
what they're looking for.

753
00:36:03,640 --> 00:36:04,920
They say these are my parameters.

754
00:36:04,920 --> 00:36:08,880
And so I cinema
I try to set it two or 3 or 4 at a time,

755
00:36:08,880 --> 00:36:12,520
don't want to overwhelm them and say,
look at these, that these look good.

756
00:36:12,840 --> 00:36:16,720
We'll set up a time we mature or tell me
what's wrong with them.

757
00:36:16,920 --> 00:36:20,560
And once again, those notes are just
as important as the first conversation,

758
00:36:20,560 --> 00:36:23,880
because now that they see some buildings,
they go, I don't necessarily like that.

759
00:36:23,880 --> 00:36:27,480
They can check that off their box, and
I can take it out of my search parameters.

760
00:36:28,520 --> 00:36:29,400
But that's it.

761
00:36:29,400 --> 00:36:32,280
We come across a building that makes sense
price wise.

762
00:36:32,280 --> 00:36:32,840
They like it.

763
00:36:32,840 --> 00:36:35,400
They like the location and everything.

764
00:36:35,400 --> 00:36:39,720
And when before they we go tour it,
I'm going to pull the data for the city.

765
00:36:40,320 --> 00:36:42,920
The income,
the house, the rooftops, around the

766
00:36:42,920 --> 00:36:45,920
the vehicle count
all those things being prepared.

767
00:36:46,320 --> 00:36:49,080
And then so we meet,
and this is how you want to buy it?

768
00:36:49,080 --> 00:36:51,760
We put an offer, we do a letter of intent.

769
00:36:51,760 --> 00:36:54,440
You know, normally in residential,
they just go right to a contract.

770
00:36:54,440 --> 00:36:57,440
We do a letter of intent
and commercial and land,

771
00:36:57,800 --> 00:37:01,200
mainly because we're,
there's just so many variables.

772
00:37:01,880 --> 00:37:02,360
Yeah.

773
00:37:02,360 --> 00:37:05,360
So somebody if you're interested,
the letter of intent is a starting point.

774
00:37:05,360 --> 00:37:07,960
To write a letter
mean a purchase contract.

775
00:37:09,240 --> 00:37:11,480
And so
we then we get to the contract stage.

776
00:37:11,480 --> 00:37:14,640
Everybody agrees on the parameters,
the price, the down payment,

777
00:37:14,640 --> 00:37:17,840
all those things,
the feasibility period, the due

778
00:37:17,840 --> 00:37:20,840
diligence period.

779
00:37:20,880 --> 00:37:23,320
We get everybody to sign that,
we get it to title company.

780
00:37:23,320 --> 00:37:27,200
We tell the lender we've been dealing with
on the financials, we're ready

781
00:37:27,200 --> 00:37:30,600
to move forward with this,
and then we start checking out

782
00:37:31,680 --> 00:37:34,480
all the details
that were given by the seller.

783
00:37:34,480 --> 00:37:36,600
Let's say
it's a lease building for the rent rolls.

784
00:37:36,600 --> 00:37:37,440
Makes sense.

785
00:37:37,440 --> 00:37:40,440
Is the cap rate confirmed
all these things that go into play.

786
00:37:41,040 --> 00:37:41,600
We do that do.

787
00:37:41,600 --> 00:37:44,200
And you do that during your due diligence.

788
00:37:44,200 --> 00:37:47,200
So we can always walk away
if the numbers just don't seem right.

789
00:37:50,480 --> 00:37:52,720
So I was like I'm sorry.

790
00:37:52,720 --> 00:37:53,360
Go ahead.

791
00:37:53,360 --> 00:37:53,840
One more thing.

792
00:37:53,840 --> 00:37:57,400
So I've worked with
a few convenience stores and some stores.

793
00:37:57,520 --> 00:37:59,440
They will send you a pal.

794
00:37:59,440 --> 00:38:02,440
That's on an Excel spreadsheet
that you and I could do.

795
00:38:02,880 --> 00:38:07,760
And so I'll say, well,
it says your store does $120,000 inside

796
00:38:07,760 --> 00:38:12,320
sales a month, and most of those stores
will do 35 to 40% profit inside sales.

797
00:38:12,320 --> 00:38:13,400
So you can calculate that.

798
00:38:13,400 --> 00:38:17,400
And I said, so show me your controller
receipts for those sales.

799
00:38:18,120 --> 00:38:20,080
Well sometimes they will get those to you.

800
00:38:20,080 --> 00:38:24,200
And the controller's numbers will be
that they're doing 70,000 inside, not 120.

801
00:38:26,200 --> 00:38:29,280
So all these things can be double
verified.

802
00:38:29,320 --> 00:38:30,120
You know.

803
00:38:30,120 --> 00:38:33,120
I can introduce you to a great bookkeeper.

804
00:38:35,640 --> 00:38:38,040
Well, okay, let's let's get to the fun

805
00:38:38,040 --> 00:38:41,600
part for, creating wealth
through commercial real estate.

806
00:38:42,000 --> 00:38:42,880
Okay.

807
00:38:42,880 --> 00:38:45,600
Where do you think
commercial real estate fits

808
00:38:45,600 --> 00:38:48,600
into someone's long term wealth building
strategy?

809
00:38:50,280 --> 00:38:53,040
Well,

810
00:38:53,040 --> 00:38:54,120
I'll just tell you.

811
00:38:54,120 --> 00:38:56,160
Me personally,
I wish I had done commercial real estate

812
00:38:56,160 --> 00:38:58,520
20 years ago instead of six years ago.

813
00:38:58,520 --> 00:39:02,480
But the the investment strategy
and what's it look like?

814
00:39:02,920 --> 00:39:04,720
I think

815
00:39:04,720 --> 00:39:07,320
the old adage
there's never going to be more land.

816
00:39:07,320 --> 00:39:09,600
They're not
they're not creating more land.

817
00:39:09,600 --> 00:39:12,720
The price is going to go up, especially as
the populations will once again

818
00:39:12,720 --> 00:39:15,960
will take Collin County, the fastest
growing in the country for how many years?

819
00:39:17,320 --> 00:39:20,040
And the prices in Collin County
proved that and showed that.

820
00:39:20,040 --> 00:39:22,240
And now it's starting to bleed
into Grayson County

821
00:39:22,240 --> 00:39:26,040
and Cooke County,
going toward Gainesville

822
00:39:26,040 --> 00:39:28,080
and then even out toward Bonham and Paris.

823
00:39:28,080 --> 00:39:30,360
All those prices have gone up
because population

824
00:39:30,360 --> 00:39:32,160
wants to get out of the downtowns.

825
00:39:32,160 --> 00:39:34,200
They'd love to live in the suburbs.

826
00:39:34,200 --> 00:39:35,280
Right? Right.

827
00:39:35,280 --> 00:39:38,480
Whether it's ranch land
or just a two acres for their own home.

828
00:39:40,360 --> 00:39:42,360
You know,
and then at the end of that, when you

829
00:39:42,360 --> 00:39:45,480
when you go to sell commercial
or a large parcel of land,

830
00:39:46,320 --> 00:39:49,400
make sure you're protecting yourself
in your, in your,

831
00:39:50,720 --> 00:39:54,280
your next generation,
protecting their wealth also.

832
00:39:54,280 --> 00:39:57,280
So all those things go into play
to build your wealth.

833
00:39:57,880 --> 00:40:01,680
So, are investors in the commercial space,
are they looking at cash flow

834
00:40:01,680 --> 00:40:05,560
appreciation
tax strategies, diversification

835
00:40:05,560 --> 00:40:08,640
or some combination
that I mean, as part of their strategy?

836
00:40:08,640 --> 00:40:11,760
Or are you seeing one
of those that's above others?

837
00:40:13,200 --> 00:40:14,640
I think if it's

838
00:40:14,640 --> 00:40:17,640
if it's a retail business,
they're looking for cash flow.

839
00:40:18,000 --> 00:40:18,760
They want to see that.

840
00:40:18,760 --> 00:40:22,600
They want to see the net operating income,
once again, for that mailbox money.

841
00:40:22,720 --> 00:40:27,480
I think they're all looking
for diversification also.

842
00:40:27,480 --> 00:40:30,480
And, obviously,

843
00:40:31,080 --> 00:40:34,080
I've actually had a tax attorney
tell me that the

844
00:40:35,040 --> 00:40:38,040
the IRS was written
for those that want to take a chance.

845
00:40:38,720 --> 00:40:39,720
Yeah.

846
00:40:39,720 --> 00:40:42,720
So do you see some,

847
00:40:44,240 --> 00:40:48,680
advantages between owning the building
or leasing the building,

848
00:40:49,880 --> 00:40:51,960
like, if you,

849
00:40:51,960 --> 00:40:54,120
Yeah, that is it.

850
00:40:54,120 --> 00:40:55,640
Let's say I'm a business owner
and I'm on it.

851
00:40:55,640 --> 00:40:58,640
Am I better off leasing or owning?

852
00:40:59,200 --> 00:41:01,960
Well,
I think I think you're better owning.

853
00:41:01,960 --> 00:41:05,120
Just like it's better to own your house
than to lease.

854
00:41:05,120 --> 00:41:07,480
For long term rent for long term? Yeah.

855
00:41:07,480 --> 00:41:09,480
You're building equity. You're.

856
00:41:09,480 --> 00:41:11,240
You're paying someone's mortgage.

857
00:41:11,240 --> 00:41:12,240
That's right, that's right.

858
00:41:12,240 --> 00:41:15,480
I mean, if you're leasing,
let's just say an office space or let's

859
00:41:15,480 --> 00:41:18,480
say a retail space, you're
if you're spending $7,000 a month,

860
00:41:20,040 --> 00:41:21,640
to a landlord,

861
00:41:21,640 --> 00:41:26,080
and if you could build it or already buy
a building or whatever, that works,

862
00:41:26,480 --> 00:41:30,320
and you're paying $7,000,
that's $7,000 equity to your

863
00:41:31,440 --> 00:41:33,960
building. It's a lot more valuable
than paying

864
00:41:33,960 --> 00:41:36,960
the landlord's equity.

865
00:41:38,040 --> 00:41:39,480
Okay.

866
00:41:39,480 --> 00:41:41,520
All right. Million dollar question.

867
00:41:41,520 --> 00:41:43,880
If I had $1 million and I said, Bruce,

868
00:41:43,880 --> 00:41:46,880
I got $1 million,
what do I need to do with it?

869
00:41:47,680 --> 00:41:50,640
I'd say, call me first

870
00:41:50,640 --> 00:41:53,520
and then we will find you the right
opportunity.

871
00:41:53,520 --> 00:41:54,960
Okay.

872
00:41:54,960 --> 00:41:57,960
Fair enough.

873
00:41:58,280 --> 00:42:00,920
And you're in a fantastic location.

874
00:42:00,920 --> 00:42:01,640
So do you.

875
00:42:01,640 --> 00:42:06,120
You focus mainly in North Texas
or are you all over the state?

876
00:42:07,120 --> 00:42:10,080
I mainly focus North Texas,
but I'm all over the state.

877
00:42:10,080 --> 00:42:15,160
I've closed, some sales in San Antonio
and, down in the Valley.

878
00:42:15,160 --> 00:42:17,720
Yeah, the Rockport area.

879
00:42:17,720 --> 00:42:21,840
I tell everybody jokingly, I'd like to
stay north of 380, but that's not true.

880
00:42:22,560 --> 00:42:24,120
Yeah, just for the traffic.

881
00:42:25,320 --> 00:42:28,360
Is there is there a property type
that is like it's

882
00:42:28,360 --> 00:42:32,400
your number one, like,
oh my gosh, this is what this area needs.

883
00:42:32,400 --> 00:42:36,120
I would love to be this
in this transaction to make this happen.

884
00:42:37,360 --> 00:42:39,760
Yeah I love the retail space,

885
00:42:39,760 --> 00:42:42,960
shopping space, shopping centers and even,

886
00:42:43,440 --> 00:42:46,760
even if there were 4 or 5 units,
shopping space.

887
00:42:46,840 --> 00:42:48,960
I love that.

888
00:42:48,960 --> 00:42:51,720
I love once again,
those are more apt to take a chance

889
00:42:51,720 --> 00:42:53,800
on the mom and pops,
which I talked about earlier.

890
00:42:53,800 --> 00:42:56,800
One of my favorites to deal with
are people who have a dream.

891
00:42:57,720 --> 00:42:59,400
So yeah, that's probably my favorite.

892
00:42:59,400 --> 00:43:01,440
I mean, I enjoy land,
I absolutely love that.

893
00:43:01,440 --> 00:43:02,440
That's fun.

894
00:43:02,440 --> 00:43:05,320
Touring land and walking through land
and things like that.

895
00:43:05,320 --> 00:43:07,880
But my number one is retail space.

896
00:43:07,880 --> 00:43:08,800
Oh, excellent.

897
00:43:08,800 --> 00:43:09,560
Okay.

898
00:43:09,560 --> 00:43:11,240
I'm, we're about to run out of time,

899
00:43:11,240 --> 00:43:13,760
so I'm gonna throw you some rapid fire
questions.

900
00:43:13,760 --> 00:43:16,440
Okay? Just kind of A/B. You pick one.

901
00:43:16,440 --> 00:43:17,120
No wrong answer.

902
00:43:17,120 --> 00:43:20,280
So, cap rate or appreciation?

903
00:43:22,320 --> 00:43:23,320
Cap rate.

904
00:43:23,320 --> 00:43:24,520
Okay.

905
00:43:24,520 --> 00:43:27,240
Industrial or retail?

906
00:43:27,240 --> 00:43:28,360
Retail.

907
00:43:28,360 --> 00:43:30,000
Retail. Yeah.

908
00:43:30,000 --> 00:43:33,000
Single-tenant or multi-tenant?

909
00:43:34,320 --> 00:43:35,280
Multi-tenant.

910
00:43:35,280 --> 00:43:39,280
And the reason being
you've got more chances to have income.

911
00:43:39,880 --> 00:43:41,680
Yeah.

912
00:43:41,680 --> 00:43:44,680
Urban or suburban?

913
00:43:45,720 --> 00:43:47,040
Suburban.

914
00:43:47,040 --> 00:43:49,040
Yeah. We want those.
You want those rooftops?

915
00:43:49,040 --> 00:43:52,040
You want that traffic with that location?

916
00:43:52,840 --> 00:43:53,720
Yeah.

917
00:43:53,720 --> 00:43:56,960
Cash flow or an upside potential?

918
00:44:00,320 --> 00:44:03,720
Ooh, that's a tough one because it depends
on where you are in your finances.

919
00:44:03,720 --> 00:44:07,120
But, probably for most people,
I deal with cash flow.

920
00:44:07,560 --> 00:44:09,600
Yeah.

921
00:44:09,600 --> 00:44:11,400
You can always not spend it.

922
00:44:11,400 --> 00:44:11,960
That's right.

923
00:44:11,960 --> 00:44:13,080
That's exactly right.

924
00:44:13,080 --> 00:44:16,720
First year when I did it.

925
00:44:17,040 --> 00:44:18,360
Oh, so much for rapid fire.

926
00:44:18,360 --> 00:44:19,680
First year when I did that apartment

927
00:44:19,680 --> 00:44:22,920
complex, every check I just put,
I put in an investment

928
00:44:23,520 --> 00:44:27,800
and, made it go work for more,
more little green soldiers.

929
00:44:29,200 --> 00:44:31,600
Texas
commercial real estate in five years.

930
00:44:31,600 --> 00:44:34,320
Bullish or bearish?

931
00:44:34,320 --> 00:44:36,280
Bullish? Yeah.

932
00:44:36,280 --> 00:44:39,720
Unless the legislature does something
foolish and starts an income

933
00:44:39,720 --> 00:44:43,640
tax or, crazy things like that
and continue to be business friendly.

934
00:44:43,640 --> 00:44:46,640
I think the state of Texas
is the place to be.

935
00:44:46,680 --> 00:44:47,720
It is.

936
00:44:47,720 --> 00:44:49,240
Yeah, it is.

937
00:44:49,240 --> 00:44:51,720
I'm I 100% agree with you. Bullish.

938
00:44:51,720 --> 00:44:55,560
And as long as they don't
do something stupid down in Austin.

939
00:44:55,560 --> 00:44:57,520
So, All right.

940
00:44:57,520 --> 00:45:00,480
And finally, if someone's listening

941
00:45:00,480 --> 00:45:02,800
and they've got some questions
about investing,

942
00:45:02,800 --> 00:45:05,880
they're interested in investing
and picking up commercial real estate.

943
00:45:06,320 --> 00:45:09,760
What are the best ways
to get a hold of you?

944
00:45:11,440 --> 00:45:12,840
The best way to get ahold of me

945
00:45:12,840 --> 00:45:16,280
is my phone, which is always on.

946
00:45:16,640 --> 00:45:21,480
Also,
my company website is caprockrea.com.

947
00:45:22,200 --> 00:45:24,800
Let me get my phone number.

948
00:45:24,800 --> 00:45:25,800
I'm not opposed to that.

949
00:45:27,880 --> 00:45:29,240
Yeah, well, I'm going to.

950
00:45:29,240 --> 00:45:29,640
I'll. I'll

951
00:45:29,640 --> 00:45:33,080
put all your links, contact information,
wherever y'all are consuming this.

952
00:45:33,480 --> 00:45:37,680
Those those, Bruce's contacts
will be right there with you.

953
00:45:37,720 --> 00:45:39,000
So you're.

954
00:45:39,000 --> 00:45:40,920
Well, phone's easiest way to catch me.

955
00:45:40,920 --> 00:45:44,640
(214) 546-6736.

956
00:45:45,880 --> 00:45:47,240
All right.

957
00:45:47,240 --> 00:45:49,480
All right, Bruce. We're out of time.

958
00:45:49,480 --> 00:45:51,040
Thank you.

959
00:45:51,040 --> 00:45:55,360
I really appreciate you jumping in
and doing the commercial, conversation

960
00:45:55,360 --> 00:45:56,320
with me.

961
00:45:56,320 --> 00:46:01,120
As a lender, I've got a full suite
of lending opportunities

962
00:46:01,560 --> 00:46:04,320
to answer

963
00:46:04,320 --> 00:46:09,400
just about any type of loan that would be
needed in the commercial space.

964
00:46:09,920 --> 00:46:14,080
And certainly I would reach out to Bruce,

965
00:46:14,560 --> 00:46:18,000
about acquiring, a commercial property

966
00:46:18,720 --> 00:46:21,720
in, in North Texas.

967
00:46:21,840 --> 00:46:22,560
Fantastic.

968
00:46:22,560 --> 00:46:25,560
I really appreciate
you being on the Between Two Doors podcast today.

969
00:46:26,240 --> 00:46:28,440
Thank you.
Look forward to doing more deals with you.

970
00:46:28,440 --> 00:46:29,960
Thank you. Yes, sir.

971
00:46:29,960 --> 00:46:32,880
Thank you for this. Okay. Bye. Bye bye.