2024 Year in Review: Wins, Lessons, and Goals for 2025

(0:09) All right, what is up? (0:10) Welcome back to how to invest in commercial real estate. (0:13) No guests today, just us. (0:15) Yeah, just us giving you the year in review.(0:17) Yeah. (0:18) What were you going to say about boring? (0:20) Speak for yourself, Brian. (0:21) I was going to say just boring old us.(0:22) Nope. (0:22) Just you. (0:23) No exciting guests today.(0:25) We're hoping Brian actually adds some interesting information today. (0:29) Hoping. (0:29) Hoping.(0:30) Yeah. (0:31) It's 60 degrees out. (0:35) Not even 60 degrees out.(0:37) Okay. (0:38) Anyway, we just finished our internal kind of 2024. (0:44) We always talk about setting goals, so we reviewed our 2024 goals and just compared (0:49) ourselves to what we thought we wanted to do versus what we did.(0:54) And then in that process, we reflected and thought, what are we going to do for 2025? (0:57) This could be a good time to just talk about the importance of setting goals. (1:02) Sometimes it seems ridiculous, but it's awesome. (1:06) And we created this spreadsheet where we had 36 goals, and I think we hit 25 of them.(1:12) 25 of 36. (1:13) And some of them were just like, start sending a monthly newsletter out. (1:17) Some of them were increasing contacts on the investor list.(1:20) Some of them were acquiring properties or internal infrastructure. (1:24) But they were important to us at the beginning of the year, and just by writing them down (1:28) and saying they were important to us, we accomplished a big chunk of them, which is really awesome. (1:35) I was actually shocked when we sat down.(1:36) I knew we had put some audacious goals out there last year, and I hadn't really reviewed (1:41) them over the last six months or so. (1:42) And it was really impressive, and I was quite shocked at how many we were able to achieve. (1:48) Guys, if you're not goal setting, your life is about to change if you take up the endeavor.(1:53) I can't stress it enough. (1:56) There's just something magical about the commitment to a goal, and you've got to write it down. (2:01) And I know that sounds silly.(2:01) You're like, oh, I got it in my head. (2:03) No, you don't. (2:04) Right? (2:04) You don't have it in your head.(2:05) Your head isn't going to do anything with it until you write it down. (2:08) And it's weird, because when you go to write down your goals, you're going to have some (2:13) resistance, and you're not even going to know why. (2:15) That is your subconscious, and it is sabotaging you, because it doesn't want you to commit, (2:19) because your subconscious knows that if you don't achieve that goal, there may be some (2:23) disappointment, and we spend a lot of time in our lives trying to avoid pain and avoid (2:27) disappointment.(2:28) And so you're literally, your self-conscious is blocking you from really committing to (2:32) those goals, keeping you from writing them down. (2:35) So if you want your life to change in 2025, decide what you want, take a few minutes, (2:40) and write it out. (2:41) What do I want? (2:42) What do I want to do this year? (2:43) What's important to me? (2:44) What do I want to have? (2:45) What do I want to achieve? (2:46) And then look back a year from now, and you'll be amazed at the progress you made.(2:50) And you may not hit them all, but you're definitely going to be way ahead of where you would have (2:54) been otherwise. (2:55) We hit 25 out of 36. (2:56) We hit twice as many as we missed.(2:58) Rob, you were about to say something. (2:59) Well, some of our goals, yeah, it's 61 degrees now. (3:04) What I was going to say was some of the goals we set, we look back at them and we're like, (3:08) why did we say that? (3:09) That's stupid.(3:09) And we just crossed them out. (3:11) Sometimes you might set a goal that you look at at the end of the year like, I don't even (3:15) know why we did that. (3:15) Scratch.(3:16) We're not doing that in 2025. (3:17) But the other thing is, I think we should do, which we have it in our head, but we don't (3:21) have it written down. (3:22) These are all 2025 goals.(3:24) Why are we not putting down 2030 goals, right? (3:27) Where do we want to be in five years? (3:28) Where do we want to be in 10 years? (3:29) Now you say this shit. (3:31) You don't bring it up in the meeting, hindsight, Harry. (3:33) That's a great point because we did talk about some of the audacious goals we have.(3:38) I think we even talked about 10 year. (3:39) We have. (3:41) But we've got to write them down.(3:43) They should be on that list. (3:44) Okay. (3:45) A goal to create long-term goals.(3:48) Yeah. (3:49) It's on the list, folks. (3:52) And I would say if you're willing to challenge yourself on a 10 year, 20 year, 30 year goal, (3:57) that that 30 year goal, it's almost nothing is impossible.(4:02) Thirty years, you literally can accomplish almost anything that you can conceive and (4:05) believe you can do. (4:06) That's kind of a long timeline for me, but yeah, I mean, Brian, his goal is to be alive (4:11) in 30 years. (4:11) Really? (4:11) Can I be here? (4:14) The CEO of Abercrombie and Kent, he's a billionaire and he asked what was attributable, what's (4:20) the one biggest thing that you would attribute to becoming a billionaire and your success? (4:24) And he said, dedicating your time and energy and the long-term effect.(4:27) He ran that company for 61 years. (4:30) The long-term compounding effect on focusing on one thing is huge, right? (4:35) Just like you said, being purposeful about having long-term goals, focusing on that. (4:39) Why are we doing that? (4:40) Why are we doing the yearly goals? (4:42) Yeah, make decisions every day towards that 10 year goal or 20 year goal over time.(4:47) Just having an idea of what you want, then what it does is it maps out your weekly, monthly (4:56) and yearly goals in order to get to that 10 year goal. (4:58) But if you don't set that 10 year goal, then you're going to meander through these years (5:02) because you're not going to know where you're going or where you want to be. (5:04) But once you set a certain goal, I don't know for people what it's going to be, well then, (5:10) hey, how much time do I need to spend a week, a month doing something? (5:14) Can I afford to do this? (5:15) Do I need to take this job? (5:17) It will decide and then you'll start to make decisions in light of where you want to go.(5:23) And you're like, no, I can't spend time on this. (5:25) It's not going to get me to where I want to go or it's not going to get me there fast enough. (5:28) Like, hey, I want to own 10,000 units.(5:31) Okay, are you going to buy single family homes? (5:33) No, you can't get there. (5:35) And so that automatically forces you to think of a different plan to get to the goal that (5:39) you want to be in 10 years. (5:40) You can't buy houses if you want to have 10,000 units.(5:43) And that's the kind of point that I think we're trying to make. (5:45) Okay, so how do we do in 2024? (5:49) Brian. (5:49) Horrible.(5:50) Oh, we did good. (5:52) Let's see. (5:53) So we invested and employed $19 million last year, which we calculated to be $75,000 per (6:02) working day.(6:03) Yes, that was a failure, epic failure. (6:06) We were supposed to deploy 25 million. (6:08) Oh, man.(6:09) We only got 19. (6:10) Well, we only got 19 million. (6:12) Shame on you guys.(6:14) Hit the phones harder. (6:15) Yeah, I thought 19 was an amazing goal. (6:19) I don't know what we deployed the year before.(6:21) We probably should have had that number, but it's a huge increase over that. (6:25) And once again, just setting that goal, I mean, we almost got there. (6:29) We had a couple of deals delay here towards the end of the year, had a deal in Chicago, (6:32) had a deal in Michigan that we're not going to be able to close.(6:35) That would have gotten us even that much closer. (6:37) If we would have done the Oklahoma, if we would have closed out the year like we thought (6:41) we should, we would have been within a few percent of the goal. (6:46) So we deployed $19 million of equity into deals in 2024, awesome.(6:50) And I think that's a learning point. (6:52) Don't set a goal that you know you're going to achieve. (6:54) It should be uncomfortable and out of reach when you set it.(6:57) I agree. (6:57) I like that we set 2025. (6:59) Because you're going to grow throughout the process and you're going to be able to reach (7:03) further.(7:03) You're going to be able to compound a little bit. (7:05) So the idea that if you can just get it right then, that's not a goal, that's an action (7:10) item. (7:10) Yeah, that's right.(7:11) That's a to-do list. (7:12) Exactly. (7:13) All right.(7:14) We exited six projects on the year. (7:17) Exited. (7:18) What were they? (7:20) I think we may have only exited five.(7:22) The goal was exit six. (7:24) Oh, I have five, yeah. (7:25) Okay, so we exited the New Jersey Kiddie Academy.(7:29) We bought that, held on to it. (7:32) I think a year and a half, 24 months maybe. (7:36) That was coupled with another investment in Houston, actually.(7:39) But anyway, we sold that Kiddie Academy, got out of that. (7:42) Investors got their money back. (7:45) We did the Henderson Gas Stations.(7:47) Those are in contract and should close by the end of this year. (7:51) Four gas stations that we acquired actually just a few months ago. (7:55) We have a gas station in- (7:58) Dawson.(7:59) Yeah, we have the Dawson Petromax that is in contract, scheduled to sell before the (8:03) end of the year. (8:04) We have the Perfect Auto deal in Vegas that is in contract, scheduled to close by the (8:11) end of the year. (8:11) And then we exited the Callaway Nursery deal.(8:14) Yeah, the Callaway, that was a home run. (8:15) What was the IR on that? (8:17) Wasn't that the one that was- (8:18) Yeah, I think it was really good. (8:22) Even that exiting deals, that was one thing I said when we were going over our 2025 goals (8:26) I don't know why we're making it a goal to exit deals.(8:30) Yeah, great point. (8:31) I agree the developments, we want to exit them. (8:36) But I'm never making a decision to exit a deal because I set a goal to exit it.(8:40) I'm making a decision, a fiduciary decision to exit a deal when it makes the most financial (8:44) sense for us and our partners. (8:46) So setting the goal, I want to exit so many deals, it puts a timeline on it, which really (8:50) I'm never going to make a decision to exit based on a timeline. (8:52) Well, I think what we were thinking last year is we'd done so many developments that it (8:56) is our goal to get in and stabilize those and get out of them fairly quickly.(9:00) I don't know that we'd do that again because we've exited a lot of our developments, some (9:04) we still have to go. (9:06) It's like, yeah, we want to exit these developments and it should sell for two million, but December (9:09) is coming down the pipe, so let's fire sell it for a million dollars so we can meet the (9:14) goal. (9:14) We're never going to do that again.(9:15) So that's one we won't have next year. (9:17) But anyway, we did exit five deals, so great, what's next? (9:21) So our goal on exited deals was 25% average IRR. (9:27) How'd we do on that one, Brayden? (9:29) We beat it? (9:29) We beat that, yeah.(9:30) We don't have the final IRR number or the average IRR number just because some of these (9:34) haven't sold yet and we don't know the exact day, but yeah, we definitely beat the 25% (9:40) just on what we have closed and the ones that are in contract will be over 25% IRR. (9:46) So overall massive win. (9:47) And they're all closing before December 31st? (9:48) All closing before the end of this year, yes, sir.(9:51) I would say of the five deals we exited, one was less than we projected and the other four (9:58) were more than we projected. (10:00) Correct. (10:01) So 80% higher IRR exit value than we projected.(10:05) Yeah. (10:08) All right. (10:08) Another goal was the investor list.(10:12) And what was our goal? (10:13) Was it to increase by 25%? (10:16) Let me see here. (10:18) I think we wanted to increase it by 25% and we actually doubled it, didn't we? (10:22) Yeah, I think- (10:23) Yeah, we did. (10:24) We wanted to increase it by 25% and we ended up going from, yeah, we ended up going almost (10:31) double.(10:32) Yeah. (10:32) Not quite, maybe. (10:33) Yeah.(10:34) And this year I think we set a goal to double it again. (10:36) Double it again. (10:37) Which again, we missed it last year, but it's an aggressive goal for us and the action items (10:42) are talk to people about real estate, talk to people about what we do, get people to sign (10:47) up through podcast listening and referrals and just generally performing well so people (10:52) are giving referrals unsolicited.(10:55) Make a better podcast could help with that. (10:57) Yeah, slacker. (10:58) Come on.(11:00) So yeah, that's good. (11:02) Our investor list is getting really big and that's what helps us, you know, like in 2024 (11:06) we deployed an average of $75,000 per business day, $19 million in one year. (11:12) And I believe our goal for 2025 is to deploy 30 million of investor equity.(11:19) Yeah. (11:20) Yeah. (11:21) Yeah.(11:21) 30 million. (11:22) Yeah. (11:22) To deploy.(11:24) Right. (11:24) Which is a ton. (11:25) That's a lot.(11:26) It's like raising $100,000 a day. (11:28) Yeah. (11:29) Yeah.(11:29) That's right. (11:30) Almost. (11:30) Yeah.(11:30) That means we almost have to double it. (11:33) But yeah, 30 million deployed. (11:35) What about acquisitions? (11:36) We have- (11:37) We want, our goal is 75 million in acquisitions.(11:40) For 2025? (11:41) Yeah. (11:41) Okay. (11:42) I like that.(11:43) Yep. (11:43) What was it? (11:44) Let's talk about the acquisitions that we did in 2024. (11:49) Brayden, I think you, do you have that or Brian, do you have that? (11:52) Yep.(11:52) I have it. (11:52) So we have the five Petromax gas stations. (11:56) Like it? (11:57) Yep.(11:58) The first one we acquired in July. (12:00) I think the most recent one was beginning of November, maybe end of October. (12:05) We have Martindale Shopping Center in Amarillo.(12:07) That one's stabilized out, paid its first distribution on track to pay the second full one. (12:12) It's already outperforming expectations just on what we've been able to do so far. (12:17) We have the Little York Shopping Center in Houston.(12:20) Massive deal for us. (12:22) I think that was the biggest trade to date in the company. (12:26) That's a $14 million trade.(12:27) Biggest equity check we've gotten in the company. (12:30) Got a strong seven-figure check on that. (12:33) Really impressive.(12:37) I think that closed, what, September? (12:40) About then, yeah. (12:42) Maybe end of August. (12:43) And then the Florissant deal.(12:47) Another really big trade. (12:49) That was $10-11 million? (12:50) Yep. (12:50) Almost $11.(12:51) We bought that from a massive REIT. (12:53) I think that was a really good buy for us. (12:56) We've already been able to successfully split off the out parcel.(13:00) We've already drummed up a decent amount of interest off market on selling that. (13:03) I think we're going to get a really good price on the out parcel sale. (13:09) The American Freight bankruptcy, I think, could turn out to be a big positive for us (13:15) just in working with the operator, getting him to rebrand, the possibility of maybe allowing (13:21) him to just close that store if we get another tenant to backfill it.(13:24) He's at a super low rental rate, so we've got some flexibility there. (13:28) And then the Grand Rapids deal was supposed to close, so not that one. (13:33) So, five gas stations, Amarillo, Houston, Florissant.(13:36) Yeah, and we actually purchased Callaway this year, but we exited as well. (13:41) Another deal. (13:41) I guess we can't really include the Salad and Go in Owasso as a closed deal since it's (13:46) part of another strip shopping center.(13:48) Yeah, it's a partial sale. (13:49) Partial sale. (13:49) Yeah.(13:50) We started four or five developments this year, too. (13:53) Yes. (13:54) Yeah, four.(13:55) Four developments, four gas stations, three shopping centers. (14:00) It was a good deal. (14:01) I think in total, 13 kind of deals, almost a little more than one a month.(14:06) Yeah. (14:07) Idea, while we're sitting here, we need to go through and do an episode on all the shit (14:11) that didn't work this year. (14:12) I could come up with a ton of lost earnest money here, tens of thousands of dollars in (14:19) environmental studies that we probably didn't need.(14:22) That deal died. (14:23) Traffic study, oh yeah, deal died. (14:26) Thousands of dollars.(14:26) Pursuit costs. (14:28) People, they ask us, why are you guys taking this acquisition fee? (14:31) What's going on here? (14:32) You know, I mean, we only get to charge that acquisition fee on the deals that we actually (14:36) close. (14:36) We're spending money chasing after good deals for you guys all the time.(14:40) And if it's 10,000 or 50,000, we just have to write that off. (14:45) But that's what the acquisition, you know, pursuit cost covers. (14:48) Some of those pursuit costs that we don't get.(14:51) Just trying to keep it going. (14:54) Yeah. (14:54) So we have here that we wanted to acquire value shopping centers at over 36 million.(14:59) This is going to be, we hit that goal. (15:02) If you push Grand Rapids next year, we hit that goal almost exactly. (15:05) We were trying to buy something off of auction this year.(15:08) We monitored that close, probably not as close as we should. (15:11) We're kicking ourselves a little bit. (15:13) Also very aggressive terms on that.(15:15) So we were probably just being a little safer, maybe. (15:19) You know, for me, to buy those auction deals, it's got to be a really good deal just because (15:24) you're so tight. (15:25) Yeah, it has to be not only a really good deal, but it has to be the right size because, (15:30) you know, if it's too big a deal and we don't have the equity locked up, but you're non-refundable (15:36) day one on the auction, it makes it really, really hard.(15:38) So we have to find a really good deal that's also small enough that we can take it down (15:43) ourselves if need be somehow in the event that we don't raise the equity. (15:46) You only have 30 days start to finish. (15:48) Another interesting note, we had a goal to use three repeat lenders.(15:51) We did, which was pretty cool. (15:55) What it also tells me is, you know, out of the eight deals we did last year, we did three (16:00) with the same lender. (16:02) So five new ones.(16:03) Yeah. (16:04) So constantly looking for new lenders. (16:06) Those lending relationships are absolutely crucial, just as important, if not more important (16:10) than your equity relationships, your ability to get good debt on deals.(16:14) Those five, we're going to probably do deals with them again. (16:17) For sure. (16:18) For us, it's not, it's rare, very, very rare that I go into a banking relationship, close (16:23) a loan and like, yeah, never want to do a deal with them again.(16:26) You end up just doing several deals and then you max them out or they get less interested. (16:31) That bucket of real estate fills up. (16:34) So some of these goals were key hires.(16:37) We met those. (16:43) Redo the company website, we did that. (16:45) Yeah, I don't know.(16:46) What else do you have? (16:47) Well, didn't we set a goal in 2025 for eight shopping centers? (16:53) Yeah, let's talk about a couple of 20, $75 million in acquisitions in 2025, eight shopping (16:59) centers. (16:59) I think we may have written down, you know, doubling the investor database, deploying (17:05) 30 million. (17:06) Getting to 200 million assets under management.(17:10) I think we're going to far past that in 2025. (17:14) I think we need to change that. (17:15) Probably 250.(17:17) We're selling a decent amount, hopefully. (17:19) It balances out. (17:20) Yeah.(17:20) I think long-term goal for me, obviously the transaction volume gives you credibility as (17:27) a real estate syndicator, but I like owning real estate. (17:30) Real estate goes up in value automatically when you hold it, when you own it. (17:34) And so, you know, we have a long-term goal.(17:36) I'd like to have a billion dollars under management. (17:38) And I think when I first wrote that down years ago, even before Criterion was a thing. (17:43) Seems crazy.(17:43) My daddy was like, you know, are you kidding? (17:46) Like, you know, what are you writing that down? (17:48) But for me, like I was under the impression that nothing was impossible. (17:53) And here we are, I mean, between the two companies, I've got, you know, maybe over 300 million. (17:59) But Criterion's growing so fast, I just don't, it's not unreasonable.(18:03) You buy $75 million a year, maybe you sell 25, so your net is 50 million positive. (18:09) I mean, just not growing at all and doing 50 million a year. (18:12) You're there.(18:13) You're there in 18, 16, 18 years. (18:16) People who aren't in real estate as much may not understand. (18:20) It's hard to get into real estate and start owning and start doing deals.(18:24) It's very, it's much harder to hold the real estate, to not have to sell, to not be forced (18:31) to do something when the market turns. (18:32) Being able to hold your real estate and grow a portfolio that increases over time is a (18:38) very challenging thing to do because it means you're performing on the equity. (18:41) The equity is coming back.(18:44) They're giving you those distributions back. (18:46) When things are getting refinanced or sold, they're trusting you with more. (18:50) They're not putting pressure on you to sell.(18:51) You don't have to sell to realize some sort of promoted interest on your end. (18:57) You know, you're able to cash flow along the way. (18:59) It says a lot to be able to hold your real estate.(19:02) A lot of people, you know, can't. (19:05) I know a lot of syndicators, their goal is to sell because they make a couple points (19:09) on acquisition. (19:09) They make a couple points on the disposition, and then they get all that equity back in (19:14) their investor's pocket, and then they go do it again, and it's transactional, and they're (19:18) just looking for fee income.(19:19) We're not. (19:20) We're looking for generational wealth for us and our investors, and so we want to have (19:24) a bunch of real estate. (19:25) We want to hold it and grow that portfolio, and it makes you more secure because if you (19:29) have cash flow from all the money, from all these assets, then you can withstand fluctuations (19:35) in the market, and so for us, that's what we want to do.(19:41) Finance $20 million in development. (19:44) That's a 2025 or that one? (19:46) 2025 goal. (19:47) Okay.(19:47) Yep. (19:47) I think that's easily achievable. (19:49) I mean, the Aspen Dental deal, that's going to be a few million of it right there, and (19:55) we've got the opportunity to do more, and those look good.(19:58) Nagadishu? (19:59) Well, let's wrap it up. (20:02) You know, just kind of a year-end interview for us. (20:04) If you are a listener to the podcast, hopefully you found this interesting, but we don't want (20:08) you just to be a listener.(20:09) We want you to be both a partner and investor of ours because we want to try to make you (20:13) money, but we also want to help you get into this game so you can change your life and the (20:19) lives of those around you, and so if you're watching and you need more information, you (20:24) need encouragement, you have questions, hit us up. (20:26) Message us. (20:27) We will respond.(20:28) You can find out our email. (20:29) We want to get more people in this game that we love because we think it's both fun, rewarding, (20:35) it'll provide financial freedom and personal freedom, time freedom for you and your family. (20:40) Yep.(20:40) Yeah, and that email address is brian at thecriterionfund.com. (20:45) That's the complaint department. (20:46) That is the suggestive criticism. (20:48) Send me your suggestions.(20:49) And that is with an I, not a Y. (20:50) Yeah, if you guys have podcast ideas for 2025, hit us up with that. (20:55) We want to talk about what's interesting to you guys. (20:58) Also, investor gifts went out in the mail, so I know we've been getting a ton of thank (21:04) yous.(21:04) We love sending those out. (21:06) This year, there's more than ever. (21:08) We sent out a ton of custom Glacier chocolates, so be sure to eat those up.(21:12) Those are super tasty and a bunch of other cool stuff, but anyway, a lot of people getting (21:17) involved and it's really cool to see. (21:19) We had almost 200 gifts go out this year for Christmas. (21:23) Very awesome.(21:24) I love it. (21:24) Hey, get on our investor list. (21:26) Hit the like button, subscribe to the podcast, help us make it better.(21:30) And if we don't see you before the end of the year, hope you guys have a wonderful Christmas (21:34) holiday with your family and we'll look forward to hitting you back up in the new year. (21:38) Absolutely. (21:39) Thanks guys.(21:39) Thanks.