Is the CRE Job Market Cooked? (Office Hours)
In this episode, we'll be discussing the current state of the commercial real estate job market. Is it tough to find jobs right now, especially in asset management and private credit? I'll share my insights and advice on breaking into the industry, even if you're just starting out. We'll also cover creative financing strategies that can help you get deals done, even if you don't have a ton of capital.
Get commercial real estate coaching, courses, and community to jumpstart your investment journey over at CRE Central: www.crecentral.com
Key Takeaways:
The commercial real estate job market is challenging right now, especially in sectors like development, asset management, and private credit. Tyler discussed how high interest rates, construction costs, and reduced transaction volume are impacting hiring.
To break into the commercial real estate industry, networking and building relationships are crucial. Tyler emphasized the importance of connecting with brokers, attorneys, CPAs, and other industry professionals, as many jobs are filled through personal connections.
Creative financing can be very helpful when capital is limited. Tyler discussed strategies like seller financing, investor partnerships, and 1031 exchanges as ways to structure deals without needing a large down payment.
Underwriting and analyzing deals is a critical skill. Tyler advised aspiring investors to get good at financial modeling and understanding market dynamics, as this makes you more valuable to potential employers or investment partners.
Despite challenges in the market, opportunities still exist. Tyler shared examples of his own projects, like acquiring an underperforming self-storage facility and planning to add more units to boost NOI.
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:
Tyler Cauble 0:00
This episode of the commercial real estate investor podcast is brought to you by my cre accelerator mastermind, where you'll get access to my step by step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way. Go to www dot cre central.com to learn more. Welcome back to the commercial real estate investor podcast. It has been a while since we've been live on YouTube, over 30 days, to be exact, I have been out on sabbatical and excited to be getting back to it every year, December 15 through January 15. Give or take, I take 30 days off this year. I took it through basically yesterday, January 20, because since we have the Siri accelerator mastermind now, I'm hosting those calls every Monday. So I figured, you know what? I'll take most of the week off. I'll work on Mondays to make sure that I continue running those calls, which has been a lot of fun. So got didn't get to tune out as much as I have in previous years. Last year was an incredible year for my sabbatical. I was truly able to completely tune out, work on things around the house, read a lot, do whatever I kind of wanted, other than work. It's a good time of the year to do it, if you're in commercial real estate, because December 15 to January 15, nothing is really happening anyway. People are out of the office at the end of December or the beginning of January, and so it's really tough to coordinate with everybody else. So I learned that taking that time off is a great time to do it. We are back with Office Hours. This is where I go live every tuesday morning, at 8:30am central standard time to answer your questions about commercial real estate. So feel free to jump in the live chat and we'll get your questions answered. I'm actually probably going to be changing up the format a little bit of these office hours episodes probably going a little bit longer. Typically, we've gone 30 minutes 8:30am to 9am Central Standard Time. Maybe looking to do 45 to 60 minutes, moving forward, depending on kind of how it goes. We're going to test it out today and see what happens. What I'm going to be doing is, I'm a big fan of the commercial real estate subreddit, and there's a lot of good questions and topics in there that I figured would be good for us to review and to cover. And so today we're going to look at a couple of posts on the commercial real estate job market, because there are some people that are saying, hey, it's tough to find a job. Is anybody hiring? How do I break into the commercial real estate job market? So today we'll be diving into that. I'll be reading some of the questions, the comments from those Reddit threads, and giving you my thoughts, my opinions on them. Today's question of the day, I think, is very appropriate for what we're going to be diving into is the commercial real estate job market cooked. Let me know what your thoughts are. It's interesting, because when you know, when I first got into the business, I didn't have a problem, right? It was 2013 I was lucky. I wasn't trying to get into commercial real estate, and I was just offered a job. It took me a couple years before I realized that commercial real estate in general, before the market was where it is right now was already tough enough to get into. I had a buddy that went through over 50 interviews and conversations trying to land a job. He ended up getting into the insurance industry. Instead, there's just not a lot of commercial properties out there compared to the amount of commercial brokers that are needed to handle them, right you think about how many homes there are in Nashville, and there's probably 12 or 13,000 agents, residential agents that work on those homes. That's a, you know, that's probably a pretty good ratio in commercial real estate. It's probably fewer than 500 agents in Nashville that are really doing the overwhelming majority is probably fewer than 100 that are actually doing about everything. So there's just not that many that are needed. Same with, you know, property management, same with asset management, same with some of these. You know, even even on the analysis side of things, it's a tough industry to break into. But before we dive into that, want to catch you guys up on what happened with me the last 30 days. Like I said, I took my sabbatical. It was really tough for me to completely tune out this year, we just had too much going on. My buddy Jacob, who owns sixth man movers here in Nashville, he and I ended up buying a 105 unit self storage facility on December 31 I am not a fan of closing deals at the end of the year, especially the last day of the year, for very obvious reasons. But this deal popped up in September, October ish, and it was a good enough deal to where we just we couldn't pass it on right 1.7 million for 105 units in. Seriously underperforming operationally, because the the previous owner just wasn't even answering the phones, wasn't responding to anybody. Actually found out after we did the takeover and went through all of the units that they were lying about the number of paying tenants, which is an interesting situation, right? I mean, we could technically claim fraud and go after them for that, but at the end of the day, is it worth it? Absolutely not. We're just gonna get in there and turn the operations around and it's fine. You know, I brought in an additional $70,000 at closing, just for carry costs and for whatever else we wanted to spend money on, right? Just being safe, right? You never know what is, what is, what you're actually going to find once you take over the operations of a property and so excited for what we've got going on there. Jacob and I are actually going to be doing a podcast, live stream here on YouTube every month for the foreseeable future, for as long as he and I are working on this project, breaking down everything that we have accomplished that month, so that you all can see what it's like to take over a self storage facility. And we're getting into the numbers, right? I mean, we're at 72% occupancy right now. That's pretty bad. Market rate's probably 90 to 92% occupancy. So there's a lot of value out on that project simply on the operational side, just answering the damn phone and being nice to people and giving people self storage units that want. Self storage units. The interesting thing is, it also sits on a decent amount of land. We've got some truck parking, we've got some some open land, but running the numbers on the truck parking, there's just not enough of it there for it to really make financial sense. So last night, Jacob and I were talking about, what would it look like if we brought in some additional units. Started running the math, and I think that we could add another 30 or 40 self storage units to it. So increase it by 30 to 40% the interesting thing about that, because it was run so poorly, we could increase we could double our noi as it sits today, just by adding 30 or 40 units. Right? Because adding that many units doesn't really increase our costs. You know, those costs are fixed. They're there no matter what. So that's what we are digging into. Now, the great thing about self storage units. If you're not doing climate control, they're relatively inexpensive, right? I mean, we think that it's going to cost us probably somewhere between 20 and $30,000 to add those new units, and we'll probably make that back within the first year to two years depends on how long it takes us to lease them up. Typically, you average around 3% per month on the Lisa, but it completely depends on kind of how you approach it. I am also working on another self storage facility out in Chattanooga, 350 units at the peerless mill. So that has been a lot of fun. I'm really excited to get that going. It's gonna be a really interesting one. We'll do a video series on this one for YouTube as well. Because I have decided, with a partner that we're going to do a 1031 exchange out of a property that we sold at the end of November into peerless in order to do this self storage facility. And that means that I have 120 days to spend $1.6 million and get it built out. So it's definitely going to be a challenge. It's going to be a lot of fun, and we're going to document every little bit of that. I have a feeling that I'm going to be living in Chattanooga for the foreseeable future as we work to get this project done. So that'll that'll be good. We're also in the middle of a capital race for Lost and Found. Pretty excited for that one. It's a hospitality concept that we announced over here in East Nashville, similar in style to the wash, but very different. So we've got a bar that's really the anchor, that's, that's, you know, heavily focused on on wine by the bottle, with a really cool backyard. It's, it's very much an open air concept. And then we've got a handful of food trucks and some micro retail they're going to be there. So it's really going to be like a community park, right? That's what we're going for, is a community park for you to come and hang out in. And so that's been fun. So we're kicking off 25 really roaring. It's funny because, you know, I didn't buy anything for about two years. I just never found a deal that was worth spending my time and effort on. And now it feels like we've got a lot of stuff really rolling in,
getting going here, which is which is pretty exciting. All right, let's dive into some of these questions from Reddit, talking about what the job market looks like in the commercial real estate world. So this is a thread by Rick at 12 asking, when is the commercial real estate job market coming back, specifically Asset Management and private credit? He's saying, I've been looking for a job, specifically in Boston for over a year now, and have had no luck. I don't know. If it's my resume competition or just a bad market, what is your outlook on the commercial real estate job market in 2025 and any recommendations would be appreciated. You know, before we dive in and even start looking at the comments, I mean, one, commercial real estate is a very tough industry to break into anyway, right? As I was saying earlier, you don't need a lot of people to really manage a lot of commercial space, simply because of the way that it is set up. That being said, it's also a an additionally trying time, because the market's weird, right? It's, it's, it's a very interesting market you've got, you know, I was talking about this on our mastermind call last night. Like this building here is 30,000 feet of office space, three floors that I bought back in 2019 it's 100% occupied. I had seven calls on it last week of people trying to come and lease space. Meanwhile, downtown, you had a couple of towers that were sold by a group out of the Northeast for a combined $115 million loss. Let that sink in. They lost $115 million in five years right down the road. And I've got an office building that's at 100% occupancy. So it's very strange. So what that means is, guess what? Groups like that are not hiring analysts. They're not hiring asset managers. If anything, they're actually letting people go same on the brokerage side if investors aren't buying and selling. I mean, there's probably some sales that are going to have to happen, but there's a lot of investors that aren't buying because some of these deals just don't make sense. So why would they hire somebody to go out and find deals? Right? Why would they work with brokers? So it's a very I don't know it's, I don't know how else to put it, but it's like a tale of two cities. Man, it's hyper localized. It doesn't seem like there's a general blanket that really fits all of the commercial real estate market. It really, really, really depends. Let's see. Here's a comment saying those are, those are the two sectors that I would say are fairly strong right now, talking about asset management and private credit development is the main one that continues to get hammered, unless you're in data centers or a hot sub market. Development is really tough. Development is really tough today because one, interest rates are really high. Two, construction costs are really high, which means that by the time you deliver a product, you've got to really get a high rent to justify it, and most businesses just can't afford that. They're going to go pay for something that's already existing, right? Three banks are just really not excited about development today, right? It's high risk at the moment, and so with that being said, it's really tough to qualify for these development loans. They're wanting you to bring 35 to I've seen 50% down in some cases, because they really, really want to de risk their position on these assets. So you've either got to have a hell of a balance sheet to make development happen today, or a lot of cash, or probably both, right? And so I don't think the development is really it's not where it's at right now, it'll come back. It always does. But it's to me that's like, the one thing that I'm definitely not going to be touching for quite a while, just because I don't see the value in it. I've got buddies that are home builders, that are building hundreds of homes that can't get them sold. Meanwhile, you've got other homes that hit the market and they just fly off the shelf. So again, it's a very weird market. Let's see this other comment saying commercial leasing is probably doing okay, but on the sales side, it is slow as molasses, probably not a good time to enter. I have a friend that owns a commercial brokerage, and he's at a 70% reduction in sales year over year. 70% is actually not uncommon for a lot of commercial real estate brokerages. I have seen that, especially in the bigger national groups, that's pretty common. Fortunately, at the cobble group, my commercial real estate brokerage didn't see quite that. I think we had about a 30 or 40% reduction year over year, which, you know, it's not great. But also, we had like, a 100% increase the year before, so just because everybody was trading. So I don't think that that's the worst thing in the world, hitting 30 or 40% but it is down, right? I mean, transaction volume is down. The only reason, the only this, I mean, this comment's absolutely right, the only reason that we were able to keep it to only 30 or 40% is because the team really went all in on leasing, right? And I was very proactive in telling my brokers this. When interest rates started going up, I started saying, Guys, I don't know where the market is headed. It seems like it could get a little bit dicey out there. Don't be too good for any deal, right? Take on those smaller leasing assignments, even if it's just pocket change, because one, it's going to give you something to work on. Two, you never know what it's going to lead to. And three, we're going to need everything that we can get right now, and I'm glad that we made that. Decision and made that move because it, you know, hopefully saved us from an additional 30 to 40% decrease. I mean, we for the first time in a long time, we closed more deal volume on the leasing side than the investment side, right? I mean, to put that in perspective, our average sale is between, really in the one to $5 million range, right? Like, that's, that's where, that's our bread and butter. That's where we feel better at our service level than most other brokerages in Nashville, right? It's that one to $5 million range. The average lease values like 250 to 500,000 you might get a lease every now and then. That's a million dollars, right? But it's tough. I mean, a million dollar lease is like signing a dental office for 10 years. Like it's tough, right? So if you think about that, the amount of investments that have to drop and the amount of leases that have to pick up in order for us to do more lease volume is pretty wild. If you're just now joining us live, I am going to be getting to everybody's questions here in a minute. I just wanted to dive into the commercial real estate job market and talk about this for a little bit. So looking forward to getting to those. Let's see this other comments saying the job market is tough because positions get filled by people that know people. After reading that Q and A in the comments, I agree you'd be valuable to some credit firm. Breaking into a place is hard, though, good luck. Real estate is not about what you know. It's about who you know. Because none of this is rocket science, right? None of this is so complicated that you really have to have specialized degrees and knowledge to be able to do it. A lot of it comes down to, who do you know? Can I trust you? Do I know that you're going to show up and make this happen, right? And so that's, I mean, that's that's happened for me, right? I wouldn't have gotten a job in commercial real estate if it hadn't been for knowing the developer that gave me the job offer. Right? There are plenty of listings and, you know, opportunities that I've gotten to work on that were simply because I knew the people and had known them for a while, and they knew liked and trust me, trusted me. So always be out there building relationships. Spend time going to networking events. If you're looking to get a job in the commercial real estate market, don't just, you know, pepper your resume out there, actually show up to the office, shake hands, meet people in person, take brokers out for coffee or lunch or dinner or drinks. You know, be the one that buys them right set the right impression as you're trying to break into the market, because all of that makes a big, big difference when it comes to,
when it comes to really landing a foot in the door, right? So there you have it. Just wanted to kind of touch on, you know, how people are feeling about the job market today. It's very interesting when it comes to commercial real estate. I think there's some job markets that are doing a little bit better than it, for sure. But, you know, it's, it's nothing out of the usual, in my opinion, is it probably tougher today to land a job, sure, than it was, you know, five, seven years ago. But commercial real estate's always been tough. It just is. So I think focus on building the right relationships. That's really what matters. All of the specialized knowledge that you can get as well certainly isn't gonna hurt. I'm not saying like, Hey, don't go learn anything like take the CCIM classes, take the online courses, go to, you know, seminars, take webinars, whatever it is, right? Read the books, listen to the podcast. Get that knowledge, because that just makes you an easier hire. They don't have to worry about the barrier of entry there with having to teach you everything you know, it's steep learning curve. All right, let's get to your questions. Evan's saying, uh, going to build flex space and feel confident the market needs it in the area and other areas seem least recommend I still do a feasibility study. If so, any recommendations on who to use so Evan, I would, if you're looking to build flex space today, I mean, I would go talk to some commercial real estate brokers in your area that would be the ones that are handling the leasing side of things there, and ask them how many calls they're getting from those types of tenants that would be leasing from you. And you know what the demand actually looks like out in the market? Right? Most brokers, in my experience, will say, Hey, I get calls from people wanting 1200 to 1500 square feet all day, but there's nothing that I can put them into, right? And if, and if that's the case, man, that's that's really the feasibility study that you need, in my opinion, now you could always go out and hire somebody to do a true feasibility study, to do these for you. You may be able to hire a big national firm, like a CBRE or like a JLL to probably do that for you. I've never done that, just because I've always had such a finger on the market to know who's looking for what kind of space. Like I was always the one that was getting those calls from tenants saying, hey, I need space. I can't find it anywhere, right? That's how I came up with the idea for the wash. I had a bunch of restaurants that were just calling me all the time saying, hey, we want to lease space. We can't find anything. Well, that's how I came up with the wash. Decided to take that route there. So unfortunately, I wouldn't have any groups other than, you know, kind of those that I mentioned that would do a feasibility study. If anybody has hired a group to do a true third party feasibility study for industrial flex or for retail or something like that, feel free to drop it in the comments. I want to know, because you know, the only groups that I really like when it comes to hotels and self storage, I know exactly who to call, right? Because those are such specialized products that you really do actually want to do a feasibility study. Whereas you know when I'm when I'm just doing retail, I kind of already know what's going on on the market. So unfortunately, I don't have anybody good to recommend you do? I hope that helps. Man, Tina trees is saying, Good morning. I hope not. I'm getting my real estate license to become a commercial real estate agent. She's talking about, hopefully the commercial real estate job market is not bad. I mean, the good, the good news, T is that it's, it's it's all about just getting a foot in the door, right? Kind of like I was saying, just get to know somebody, and be very intentional. I mean, look and be relentless, right? That's what people want to see, is that you are relentless when it comes to to getting this I got a guy that reached out to me last summer about getting an internship with me. He's going through his masters of real estate development at A and M and reached out to me last summer. I said, Hey, man, you know, it's, it's end of the summer, reach out to me next year and we'll plan something for you. Guess what? He's been kicking down my door December and January to get something lined up for this summer. So we had a call yesterday. I kind of told him what I was, you know, thinking for the internship, and I got to hear what he was thinking for the internship. And so I'm having him put together a proposal to come and work with me for the summer. So, you know, it took him some time to get a foot in the door, sure, but the fact, like, I knew that he had reached out to me last summer. So when he reached out to me again, when I told him to I was like, that's actually pretty impressive. I really like that, you know, so so be relentless when it comes to follow up so high saying, Hello Tyler, hope you're doing well. I appreciate that so high I am doing great. Is a wonderful Tuesday morning. Feels like a Monday though. Be very honest with you, that's, that's the great. You know, the funny thing about coming back from sabbatical after 30 days like, yeah, I didn't really miss a lot, but I missed a ton, and I've got a lot to catch up on. I mean, I was in the office last night until probably 730 so and I'd get up early too. So I put in some long hours sometimes, but I enjoy it. This is fun. Okay, well, Baker is saying I own a roofing company, DFW. We're about to sign our lease, which is 1900 square feet in the heart of Keller, for 2200 a month. Now that sublease is over, it's going up to 3100 a month. Yeah, I could see it, you know? I mean, there's a lot of industrial being built in the Dallas Fort Worth area. In fact, it's, it's the number one market in the country right now, which means there's gonna be a lot of demand. There's gonna be a lot of people that are wanting to move companies. Wanting to move companies there to take advantage of what's going on in that market. And I mean, a 50% increase in rent is crazy, but doesn't sound too out of pocket to me, honestly. I mean, 1900 square feet for 3100 a month also isn't that bad, right? I mean, what's what's wrong? The math on that maybe it is bad and I'm just an idiot. Okay, 3100 a month times 12 divided by 1900 that's 19. That's 19 and a half dollars a foot. That's pretty cheap. Actually. I would think, I mean, I know that's probably, you know, high. It depends on what kind of warehouse it is and that kind of stuff. But sounds to me like you've probably got some flex space. And, you know, typically where you're seeing flex spaces in that 16 to $18 a foot net range depends on the market completely, though, right? So Don't, don't, don't, quote me, that out in the middle of, you know, Midland, Texas, or in the middle of New York City. But so, so 20 bucks doesn't sound too far off, but yeah, I know 50% increase is tough. Sonia saying I was thinking about using other people's money. Do you think it would be worth me trying to get creative finance for this deal? 100% Yeah, I love creative financing. You know? I mean, I'm, I'm trying to buy a farm right now, and I'm negotiating something creative with them on that too. Like, everything that I do, I'm like, How can we make this a little more creative? Because the less money out of pocket that you have in a deal, while also de risking the deal, that's a big portion of this, the better it is for you. Right? Coming out of pocket, you know, 1% on a deal. Bill and or 5% or only 10% but signing a personal guarantee on the note and your mortgage payments are too high can very quickly get you underwater and in a bad way, right? Like there's a reason that banks like for you to bring 2025, 30, 35% down, because it keeps your mortgage payments lower. It means you have a better equity stick built up into the property, and overall it de risks the investment, right? So I know it's tough to look at these deals and say, Oh, 20 25% down. I'd rather go for 5% or 10% but it does actually significantly de risk your investment. So, yeah, Sonia. I mean, I love getting creative, right? Do some seller financing, or maybe even a seller carry back on a portion of the note, right? That way you don't have to bring as much money down, just make sure that you know your monthly payments aren't don't get too high, and that the project can sustain it. But I love getting creative because it really makes it easier, right? Like a lot of my deals, I get very creative on them. And, you know, I mean, hell, I didn't have any money when I got started back in 2019 buying buildings. I mean, I was, you know, I just started a commercial real estate brokerage. I was trying to save up as much money as I possibly could so that I could go out and start buying properties. But I was also afraid that the market was going to crash, right? Because it was 2019 Well, I mean, good thing, I saved a little bit of money because of 2020 but, you know, 2019 I was getting creative on all of my deals, right? I was rolling my commissions in on those deals as my equity stake, and I was raising capital from investors and negotiating seller financing that doing anything that I could just to get my first few projects under my belt. And even to this day, we still get creative on the finance right, kind of like what I was talking about with the Self Storage Facility earlier out at peerless. I mean, I don't want to go raise $1.6 million to do that project, but we just sold another project. I've got to buy something. So why not just do a 1031, exchange into that? Right? I mean, the cash on cash return is going to be insane too. It's going to be like a 30% cash 25 30% cash on cash return each year. So we're pretty excited about that. It'll be good. That's what we need, right? We need the cash flow on that deal so we can start reinvesting into the rest of it. So hi, is saying, can you advise me on some books or courses to become a real estate agent? I'm so interested in real estate, especially commercial, industrial real estate. Well, so hi, I do have a book open for business, the Insider's Guide to leasing commercial real estate. So that'll walk you through the process of leasing. So you're more than welcome to go check that out. It's on Amazon.
Let's see. There is a book on negotiating commercial real estate leases. That is one of my favorites, hands down, actually, if you go and search, what is it? Just best commercial real estate books. Cobble right my last name. I have a list that I put together of the 10 my 10 favorite or give or take commercial real estate books for you to read, and that'll get you started. I've got a course, right? The Beginner's Guide to commercial real estate investing. It's a great course. We've had hundreds of people go through that, and it really goes in depth. I think it's like over 20 hours. I've got 25 downloads, including all of my spreadsheets, all of that kind of stuff. That really sets the right foundation for you as you're getting started. You could also do CCIM. I love CCIM. It's great. I'm trying to think through some of the other I know that you can go to, like the Wharton School of Business or Columbia online, some of those universities have some online programs for real estate that could really help you get started as well. So other than that, find a mentor. Find somebody that is doing commercial real estate brokerage in a location in a manner in which you would like to do commercial real estate brokerage. Buy them coffee, buy them lunch, buy them drinks, whatever, and just ask them questions, and just see if you can shadow them right. Go, go, be their junior broker. Do all the stuff that they don't necessarily want to do, because it's going to help you both in the long run. Curious, to warn us saying, Hi Tyler, big fan of your commercial real estate. Community Leadership, I appreciate that. Curious, pretty cool. I'm from robotics and AI eager to pivot to cre what are the best entry points into commercial real estate for someone starting with limited capital? Great question. So there's a couple of ways for you to get started if you have limited capital in commercial real estate, one invest as a limited partner in other people's deals, right? So like I said earlier, I'm raising money for our project. Lost and Found. We're taking investors on it 50 to $100,000 a pop, right? You could not go out and buy your own project for 50 or $100,000 let's caveat that with Yeah, maybe you can go find a $300,000 or $400,000 commercial building. It's probably not going to be worth buying today. Just consider. Where things are. So that's a good way to do it. There's a lot of you don't have to just invest with me. There's a ton of syndicators out there that are doing multi family deals, or self storage deals, like whatever you're interested in. That's a great place to start, because you get to learn from them, right? You get to see kind of how professionals do it. They're raising a lot of capital to go do these deals, and you'll make some. You should make some pretty good money along the way. Right? Of course, do your due diligence, make sure that you get your CPA and your attorney involved, and you go through that whole process to make sure that you understand who you're jumping into bed with, because you really have to trust, trust whoever's running the deal, right? The deal, the deal, the deal, almost doesn't matter. It's almost all about who is actually running it. You could also, you know, I mean, if you're looking to completely pivot out of robotics and AI and you wanted to get a job, I think a commercial real estate broker position is a great way to get a foot in the industry, because it is. I mean, you learn everything, right? You learn how to go find deals, you learn how to find tenants. You learn how to lease space. You learn how to analyze rental rates. You learn how to negotiate. There's so much that you have to do as a commercial real estate broker that you know you're going to get paid. Basically. Learn how to be an investor, if you're very intentional about it. There's a lot of brokers that screw that up, and all they do is broker for the rest of their lives, and that would be miserable to be stuck brokering deals for other people. But if, if you were very intentional about it, and you got in there and you learned and you analyzed how other people review these deals and look at it, could be a great way for you to get started. Also, you can invest in real estate investment trusts, right? Those are basically like stocks for real estate. You could invest in crowdfunded deals, you know, through, through companies like Fundrise or, I forget what all the different ones are, so that could help you. The other thing, of course, curious, is go, go raise some capital, find a couple of buddies and buy a building together. You know what I have, what I have learned in my gosh, almost, I guess, over 11 years in commercial real estate now, is that a lot of people are very interested in investing in commercial real estate, but they don't have the opportunity to find deals, or they don't know how to look at deals. And so if you become that person, they'll probably invest with you and go, go do these deals. So I would take a look at that. Matt is saying, when prospecting, what do you write in your letters to property owners? That is a good question. I have a, I think I've got a download somewhere on my prospecting letter, and I'm trying to remember which download it's in, I don't know, check the check the comments, or, I'm sorry, check the description. You might be able to download my direct mailer. If you also search this direct mail, Cobble, it might come up, if not, let me know in the comments, and I'll get it posted for you guys, for y'all to just download. It's very simple. There's nothing special about it. It just says, you know, I've got a couple of different ones, but basically, like, from the brokerage side, and I've bought plenty of deals through this letter just says, Hey, you know, I'm a commercial real estate broker here in East Nashville, you know, specializing in these three zip codes. And you know, been looking at your building for a while, and, you know, would, would love to talk to you about it and see what your plans are. You know, it's basically that, right? I mean, it goes a little more in depth. That's pretty much it, right? I mean, the biggest thing is to just do it, just get the damn letter in that mailbox, because nobody else is doing that when it comes to when it comes to commercial real estate, I had a client call me back one and a half years after sending them a letter. This was actually for for sale, but then they called me to lease it. They were they tried to lease it themselves. They couldn't find anybody to lease it, and they called me back and they said, Hey, we kept your letter, and want you to take this over. That was six years ago, and we have been managing and leasing that property ever since, off of one letter that cost me, like, 50 cents, right? Hell of a return. So let's see. Curious is saying, starting in commercial real estate, what key professional relationships should I build early? How can I effectively network with lenders, brokers and other key players to grow in the industry? Great question, curious. So really, what I would say is commercial real estate brokers, number one, right? Number one because they they can be the toughest to break into with regards to just building a professional relationship with. Right? A lot of these brokers have their relationships. They already kind of have their circle, you know? They try to keep it tight knit. However, if you're ever going to be sitting across the table for them, or if you're ever going to get a deal done with get a deal done with these people, it's really good to know them first, right? I mean, I've found networking with every commercial real estate broker that can get my hands on is a pretty good move, because I'm probably going to be negotiating across the table from them at some point, and it's a lot easier for us if we have a relationship to. Just call each other and be like, hey, you know what's it going to take to get this deal done? I am not the commercial real estate broker or investor that's drawing hard line negotiations. Am I leaving $1 on the table because of that? Maybe I don't know. I mean, who could actually calculate that I'm here to get deals done? Right? I see so many people that don't care. They want to screw everybody over. They want it their way or the highway. And I see brokers who and investors walk away from deals and like you were going to make good money on this, your ego got so far in the way that you're not getting a deal done. If you have a relationship with those brokers, probably not going to happen right after brokers, I would say, find yourself a really good attorney, right? And it has to be a commercial real estate specific attorney, because they're going to help you negotiate everything from the purchase and sale agreement to your loan documents, right, and even the lease reviews and all of that kind of stuff. They're very important a good CPA, right, to make sure that you're taking advantage of all of the tax benefits of commercial real estate, everything from cost segregation to, you know, I mean, everything. There's a lot involved on the tax side, so make sure that you have the right team there. Other than that, those people will always, I mean, nine times out of 10 will be able to point you to every other relationship that you will need. Right attorneys know the good lenders. Brokers know the good lenders.
So those, those few points of contact can really be like the center of your universe when you're getting started. Grady saying, Hi, Tyler, I'm a junior in college studying economics and real estate. I want to get into brokerage once I graduate. What are the best tools I can use to improve my technical skills. Grady, get really good at finding and analyzing deals, right? You don't necessarily need to get really good at finding deals today, but just keep that in mind as you're going through it. The better that you can analyze a deal, the better that you can understand what market rental rates are compared to what the property is getting today, or the better that you could understand what the operational value add of a property could be, or the physical value add, right? Operational is just coming in and running the property better, responding to phone calls and signing leases with people that want self storage space, right? Whereas physical is like, hey, let's paint the building, let's reseal and Stripe the parking lot, because tenants will value that and they'll pay us more in rent, right? The better you can get at underwriting and analyzing deals, the more valuable you're going to be to anybody right. Like those are skills that whether you want to get into property management or brokerage, or you want to go work as an asset manager for a big development firm, whatever it is that's an incredibly important skill to have. So, I mean, I talk a lot about underwriting in my course, CC, I am 104 has a like that is all about underwriting. You can go take, like, college courses online about underwriting. So highly recommend anything that you can do get get good at underwriting, right? And it really just comes down to practice, underwrite a deal a day and find a mentor that can, kind of, you know, oversee that with you. That's like 90% of what we cover in our mastermind, to be honest with you, is just underwriting deals, right? We went through a deal last night, analyzed it, underwrote it, because that's just what it takes, like, that's 90% 80% of really what you're doing in the commercial real estate market. It's just analyzing deals. The better you get at it, the faster you can do it, which means the less time you're spending on deals that really aren't worth it, right? Phil is saying, I have a commercial strip mall with lots of equity. I do have an adjustable rate mortgage. I do send extra every month. But should I try to lock in a conventional or wait for this to run out. Phil, I would lock in. I would lock in a fixed rate mortgage. I'm not a fan of adjustable rate mortgages whatsoever. I've said multiple times on this podcast, I don't think that there has ever been a good time in American history to get an adjustable rate mortgage. It's just too risky. I would rather pay, you know, a couple extra basis points for a fixed rate loan to count that as like my insurance policy, right? If you look at all of the developers and investors that went bankrupt in 21 and 22 they had Adjustable Rate Mortgages, right? They went from 4% to 8% overnight, and were underwater so quickly Their heads were spinning, right? I am not a fan of adjustable rate. I think even if you got to pay a little bit more, just for the security, just for the peace of mind going in, getting that fixed, and waiting, because we don't know where it could go, right? I mean, I have a feeling if tariffs get into place and we start, I mean, which it seems like they're going to happen now we're going to have more inflation. It's just going to happen, right? Prices are going to go up on everything. So that means that interest rates are going to have to rise, the Fed's going to have to rise, raise the interest rates in order to keep up with the inflation. Yeah, which means that you could very quickly find yourself underwater on a deal. So, of course, you know, consult your professionals, consult your CPA, your lender, you know, I would, I would have conversations with them to get their opinions on it. That's, that's my opinion as a humble real estate investor. Brown's candy kitchen is saying, Good morning, good morning. Brown's thanks for joining us. Curious is saying, towers a real estate license needed to start in commercial real estate. Are there other certifications required, or are there alternatives that don't need licensing or certificates to start a commercial estate business? Great question. Curious, if you're not looking to broker deals for a third party, you don't have to have a real estate license at all, right? If you are, you know, buying deals for yourself and you're leasing deals for yourself, you don't have to have a real estate license to do that. Now, if you're going to go out and you're going to start pitching your services to other people, of, hey, I can help you buy a building, or, Hey, I can help you lease your space up. Then, yes, you will need to get a commercial a real estate license for that. It's the same license as it is in residential, there's just one, you know, global real estate license, and it's, it's really done state by state, so no certificates either. I mean, it's pretty, pretty simple, man. I mean, look, I'm a college dropout, I'm an idiot, and I can do this, so just about anybody can do it. That's the great thing about, about commercial real estate, is it really just comes down to who you know, and how hard you're willing to work. You know, like I said last night. I mean, hell, I was in the office until 730 I enjoy this stuff. It's a lot of fun. I mean, I have, like, addicted to just getting deals done. I think it's, really cool. So yeah, I mean, now you could, you could wholesale deals for other people without having a license. There's a very gray area there. But yeah, I mean, look, if you're just looking to invest or develop or whatever, I think, I think you're good without it. Luke is saying good morning. Creative financing is certainly an interesting topic. For me. It's one of the most interesting things about commercial real estate. I couldn't agree more. You know, just get creative on it. That's the thing. Okay, here's the thing, like my favorite phrase by miles or my favorite quote by Miles Davis, you got to know the rules before you can break them right. The better you understand how traditional commercial real estate deals are set up, the better you can understand how to break them right in a way that benefits everybody, right? So I actually get asked that question a lot in the mastermind it's like, hey, how would you creatively do this? Because I've just been thinking outside of the box on structuring deals for so long. Now that I hear about something, I'm like, oh, we should do this, this and that. Like, what if we got creative here? And what if we did this? Because it just, I mean, why not? Why not get creative? Why do we have to just go to a bank and put down 25% and sign, you know, a personal guarantee for 75% right? If you can go out and, you know? I mean, look, getting creative can be as uncreative as just getting money from somebody else, right? Go get the down payment from a couple of investors. You know, that's creative, right? Because traditionally, it's just, hey, you're buying a million dollar property. You bring $250,000 well, forget that. What if you brought zero down you got two investors at $125,000 each. You gave them 80% of the deal, plus a preferred return on their money, and you got 20% you didn't have to put anything into it. That's a hell of a return, right? I mean, it's tough to I mean, now you've actually got to go and work it and make it work. And there's, we're skipping over some details here, but there's a lot of work that goes into that. But you didn't have to have the $250,000 right? So, like, money is not a barrier in commercial real estate. So I to me, that's not a thing. You don't have to have money to do commercial real estate. I love creative finance. Now there's also a fine line. There are other creators out there on YouTube and wherever that actually promote bank fraud. You guys have probably seen me do a video on pace morbid Morbi method, right? Like that is literally telling you to go commit bank fraud. So be careful. Make sure you talk to your attorney about how you know creative structures can work, because not everything creative should be done. It's probably not legal. Curious, to saying, I'm interested in your mentoring program. Does that also provide a way for me to contribute my investments in your deals while also learning the ropes from you? Yeah? Curious, absolutely. I mean, that's, that's the great thing about the mastermind. We've got like 107 people in it as of last week or yesterday, and it's a really good group. We've got people that are investing with each other. We've got people that are learning from each other we do in person meetups, and actually get our hands dirty and go out and look at these projects like we do quarterly in person meetups as well as weekly calls. Right? So this quarter, March 14 and 15th, we're going down to Birmingham. Him. We're touring one of our students, flex spaces, developments that he did some of his car washes. We're gonna hear from his lender, hear from his broker. We're diving all in. I'm gonna teach a class on how to develop commercial real estate. And then, you know, we've got people that are better at finding deals, so some of the other members of the group will invest with them. We've got people that have more money. So, you know, it's, it's all over the place. It's, it's a lot of fun. So, yeah, man, I mean, look, I'm an open book. You guys can tell I share pretty much everything on this podcast. But in that mastermind, we get really into details. Man, I was sharing term sheets and floor plans and all sorts of stuff on deals that I was working on last night with the with the group so high is saying, What's creative Finance? Good question. It's basically just any type of finance that is out of the box, right? Something that's not traditional. Maybe you're getting seller financing. Maybe you're which is where the seller actually carries the note instead of you getting a bank loan, maybe you're doing a seller carry back, which is where the seller is actually loaning you a bit of your down payment, you get a traditional bank loan, you get a little bit of money from the seller as a loan, and then you bring a little bit of money of your own as equity. There's all sorts of different ways for you to do it.
Grady is asking, can you explain a CMBS loan? Grady, unfortunately, I couldn't. I'm not that smart. I know it's a commercial mortgage backed security. I don't exactly know how those work, because I have never done a CMBS loan. We have explored it before, but it hasn't made sense with the types of deals that we're doing. So I'm happy to have a lender on the podcast, and we can dive into CMBS loans and get really detailed there, but that's probably a little bit out of my wheelhouse. Sorry, man. Matt is saying, Thank you, Tyler. Of course, Matt, happy to do it anytime. I love these. I'm really glad to be back doing office hours. It's a lot of fun hanging out with you guys. I appreciate y'all jumping in the comments. I mean, this is, this is fun for me, right? Like, when I started, we've got what, 74 people in here watching live right now, when I first started these office hours. I mean, I was going live and like, one person would jump in, and I was pretty sure it was my mom, you know. So it's, it's, it's really cool to see all jumping in and actually having a conversation and going all in on commercial real estate. So thank you guys. I really appreciate it. Let's see Jamie is saying, Good morning, Tyler. How are you? I'm doing great. Jamie, it's been it's an awesome morning. I wanted to know, where did you get your commercial real estate license from? Good question. I get this asked all the time from, from people that are looking to get started, like, here in Asheville, like, whenever I would grab coffee with them, and I did mine online. This was 11 years ago, so I don't remember where it was. I tell everybody, go do it in person. A couple of reasons why you'll get to meet people, and you never know where those relationships could go, right, if you go to the classes in person. The other thing is, and maybe things have changed since then, but back when I did it, I would go through Read, read, you know, through the section, take the quiz, get a 92% on it, and then I would have to wait and move my mouse around for 72 more minutes, because it's like, there's a time requirement of how long you have to spend on this stuff. And I was like, Dude, I'm not I already got a 92% on it. I clearly don't need to go through this and, like, this and, like, really study it that much. But every section was like that. It had a time requirement. So, man, I would just end up cracking open a beer, sitting down on the couch watching TV and just moving my mouse for hours at a time was so ridiculous. So I highly recommend taking it in person. Unless that has changed, maybe it has, I don't know. At least that was the way it was in Tennessee. Elad is saying, Hi, Tyler, I plan to start cold calling different commercial warehouse owners. What types of owners do you see that are more motivated to sell? Ooh, that's a good question. I mean, institutional guys are really tough, just because they probably already have relationships with brokers. They probably have a long term vision, a plan already built out for the types of deals that they're doing. The people that I typically see more often motivated to sell. Like if I were in your shoes and I was thinking, okay, how am I gonna put a list together? I would go find people that have owned warehouses for seven years or more. If you really wanted to get into it, their mailing address is that warehouse, right? Because sometimes what you'll see is like it's it's owner occupied. Like that means it's owner occupied, right? Because most institutional, most investors, most syndicators, they will own for five to seven years, then they sell and move on. So anybody that's owned more than seven years, probably an owner user, or just a smaller Mom and Pop investor. So really good opportunity there for you to find something as opposed to anything shorter than that. Sometimes, when somebody's own something for only three years, they want an insane number as well, because they have to get one in order to make it work right, because they're. Spending on on it hitting a certain return over five to seven years instead of three, right? So that's what I would do if I was going to find some people motivate him. Luke is saying I messaged you on Instagram yesterday about a deal I'm working on, property listed at 700k current noi of 49k but it's super underutilized. Let me run the math on that real quick to determine what the cap rate is. So 49,000 divided by 700,000 so it's a 7% cap rate. That's not bad, especially if it's super underutilized. He's saying Our issue is we're too new and under capitalized to take on a building that large, limited network, definitely not enough assets, no bank relationships. We've got the energy and the skills to take it on. I love this, man, okay, so we've got, we've got some work to do, okay, and so I'm assuming that you're wanting to figure out how to pull that deal together. Man, what I would do, and I've done this before, is if you can get the deal under contract with minimal money out of pocket, right, like and do all the due diligence on it at the same time, simultaneously, you are networking like crazy, right, talking to everybody that you can. Here's the thing, either you'll find somebody that will help you get this deal done, right, and give them the lion's share, right, if they're going to bring the money, you're the money, if they're going to bring the balance sheet, if they're going to bring the experience, dude, my first deal, I did a a 42 unit town home development down in Bellevue. I had no experience. I had no money. You know, if I had signed on the note, the bank would have raised the interest rate, right? Like, that's, that's where, that's where I started off. I didn't I got 10% of that deal. I didn't have to do any of that because I went and found it, I put it together. I ran it for two years, but the developer that I partnered with, he brought all the cash. He brought the banking relationship. I was more than happy for my 10% I will take 10% on any deal that I don't have to put any money into or sign in the debt for absolutely if you have a deal like that, give me a call. I will gladly partner with you on those deals, because they're tough to find. So for you, maybe you go find somebody that has the balance sheet, they have the money, they have the experience and and you're willing to put in all the sweat equity to make it happen, right? That's the thing that people with a lot of money and a lot of assets don't have, they don't have the time to really dive in and make that project work with their time. So highly recommend that, if nothing else, maybe this deal fails. If nothing else, then you've gone out there, you've built a lot of relationships. Keep on that you here's the thing I get asked, you know, should I raise capital first, or should I find a deal first? I think one of the biggest lies that you've ever been told in real estate is that if you find the deal, the money will come. No, it won't. If you don't know people, it won't. So you're raising capital right now. If you're listening to this, you're raising capital today, as you're going around and you talk to people, let them know that you are interested in doing commercial real estate, or you're actively looking for a commercial real estate deal, and ask them, would you be interested in investing in something like that? With me, just start the list today, right? Start building it up, because when the time comes, you'll be able to call them, and they already have an idea of what you're doing, right? One of my mentors very early on, this is back in 2015 he did residential real estate. So he was Single Family Guy, without fail, every single time this guy would go anywhere and meet anybody new, the first thing he said is, my name is Philip. I raise money from investors to buy single family rental homes. Are you interested in investing in investing in residential real estate? Every single time, his first question, guess what? Was it hilarious, yes, because it was like, you know, a pre programmed, you know, like, phrase, the catch phrase that he had, dude raised a ton of money. Dude raised a ton of money because everybody knew that he wanted money to go do these deals. So, so that's what I would recommend. So Luke, keep keep me in the loop. Man, I want to hear what, what happens with that deal. Curious is saying, follow up to mastermind program. I'm out of Boston. Can I still apply and join the training program? Hell yeah, you can. I've only got like two or three people out of Nashville, out of 107 give or take. So, I mean, we've got a bunch of people in Atlanta. We've got a bunch of people in Texas, California. You know, we're from like California all the way to Pittsburgh. I mean, there's people all over the country. So, you know, I mean, the good thing is, the calls are virtual, so you can jump in on those from wherever we've got, we've got a student out in Hawaii, right? So you don't realize how many different time zones away Hawaii is until you have somebody that's trying to coordinate calls with you. It's kind of wild side note. So, yeah, dude, anybody can do it. I mean, as long, you know, as long as you can hop on a plane and come hang out at our quarterly meetups you don't have to attend, but it's totally up to you. Yeah, Boston's super easy to get to. I. Love Boston, by the way, I went up there a couple years ago with my girlfriend. We had a great time. All right, I'm sorry, guys, this is my last question, because I have got to run. I'm probably going to be late. I've got an on site meeting at Salt Ranch, my hotel that I'm building. Let's see. Tahid is saying, Can you do a commercial real estate project with a full time job? Absolutely, you can. If you hire the right team, you get the right people in place and you manage it properly. Anybody can do it. I've got friends that are doctors that do developments. I've got friends that, you know, they're, they're full time, you know, contractors that are doing developments. You know, whatever it is. I've seen people that are, you know, basically, it's a, it's, it's a side gig. You can totally do it as a side gig. Just depends on how you want to set it up and what you want to do. You want to do. So appreciate you guys for joining me Happy Tuesday. We will see you all next week, 8:30am central standard time diving into more of your questions. This
episode of the commercial real estate investor podcast is brought to you by my cre accelerator mastermind, where you'll get access to my step by step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way go to www.crecentral.com, to learn more you.
In this episode, we'll be discussing the current state of the commercial real estate job market. Is it tough to find jobs right now, especially in asset management and private credit? I'll share my insights and advice on breaking into the industry, even if you're just starting out. We'll also cover creative financing strategies that can help you get deals done, even if you don't have a ton of capital.