Episode #053- The POWER of Setting Goals in Commercial Real Estate!

Today our hosts Braden Cheek & Brian Duck from The Criterion Fund and Joel Thompson from Precision Equity discuss specific & practical goals for the beginner, intermediate and expert levels of Commercial Real Estate.

what I would say is if you don't have any uncomfortable goals, then you're not, you're not setting them big enough, you know, you should have, I mean, these are some of these things, we've been talking about our daily goals, uh maybe weekly goals, but what are you giving yourself conscious to go to work on? Uh what kind of questions are you asking? You know? Uh One of mine I've talked about was I set a goal to how do I make a million dollars on one deal. Another another goal that I gave myself was everyone was talking about, I want to be a millionaire, you know, I want to be a millionaire. Well, I know a million, they have a million dollars when they were 65 You know, $1 million 65 has to last you till you're 90. That that's not really in my head what a millionaire was. And so I came up with this idea that I want to be able to spend $1 million dollars in a year every year. Alright. Hey everybody welcome back to how to invest in commercial real estate. We are a podcast focused on breaking down commercial real estate investing for the average person.

Today, we're talking about an interesting topic and it's a topic we're very passionate about and talk about a lot because I think it's um underrated is the power of setting goals, setting achievable goals, putting a plan in action. And when you look at real estate, it's it's it's big, it's large, It's illiquid. It takes a long time to buy. It takes a long time to close, you have to typically own it for a long period of time. So it's not like a whim, you can just decide, hey, I'm gonna buy a shopping center today. Hey, I'm going to underwrite it tomorrow. Hey, I'm gonna sell it today after that. You've gotta have a plan or a goal of what you want to do with that before you can even begin. So we're gonna go over several steps on, on where you might start if you're interested in getting a commercial real estate, you know, hey, you're in commercial real estate, you know, a little bit what now and then for people already in the game, how do you set realistic stabilized growth goals to take your business to the next level? No, that's good. So I think the first one is, you know, you're interested in commercial real estate, you may be listening to a podcast called how to invest in commercial real estate. Buy a bunch of awesome guys or you could just be reading a book, your friend could have mentioned it to you, you own a rent house and you're just trying to figure out how to take it to the next level.

Where do you kind of set the foundation of, Hey, I want to get into commercial real estate and I want to do a little bit more than I'm doing now. Yeah, I think a lot of people that are listening to the podcast, I've had many of my friends say it to me, man, I I've heard commercial real estate's great, I should get into it. But most people, it's just like you say, it's such a big idea that they don't know how to start and we want to, we just want to give some people some tools that that they can use in order to get in the game and get started. And so for me, you know, now, having been through the process, what would I tell someone that that's her commercial estates? Great, don't know where to start. How do they set some goals for themselves in order to begin getting in the game. And now is better uh than five years from now and 10 years from now. So we want to encourage people to start taking action. And so some of the things that I would suggest for people that that want to get in and haven't started uh is what I tell friends that asked me, is that number one is get on amazon type in commercial real estate investing, and the books that pop up, you know, by five or 10 of those books, there's going to be, how to kill it in commercial real estate, you know, how to retire early with commercial real estate, how to syndicate commercial estate, you know, how to buy apartment buildings, how to underwrite, all of those books are gonna be there and there's just no better way to get started than buying those books and and carving out an hour a day and reading they will change your life.

But the main thing they're gonna do is they're gonna start giving you the knowledge to to take the next steps right now, if I told you go interview the best broker in town uh you know in commercial real estate, you don't even know what to ask them. Okay? But once you've read these books then you're going to read about how to multiply your roo I and how to you know increase your your I. R. R. And cash on cash, how to how to calculate that. And so you may have questions, well what are what's cap rates in my market and you know what what could I expect to earn my money if I bought this kind of deal? Well the books will help you get enough knowledge uh to go to the next step. Yeah. Well I actually did that and you guys probably did too. But so you know I started out as passive investing but when we decided to to to do um criteria. And I thought and you know I've done passive investing but that's not enough for me to you know underwrite deals or no which deals to get. So I did exactly that I went on amazon I put in the search bar commercial estate and you know there's thousands of them. But you just look and say, oh that yeah, I need to know more about that, I'll buy that one and uh I need to know, I need to know more about that one.

Just bought them and read them and it was extremely helpful. Yeah, I think you've just got to be around it, you know, you're the average of the five people you hang around your, you become who you are around, you're gonna absorb like a sponge, whatever you put whatever environment you put yourself in. So when you're an environment in the car on your way to work and you're listening to commercial real estate podcast and you're reading a book about commercial real estate, you're talking to your buddies about commercial real estate, you find a guy on instagram who buys cool commercial real estate deals and he's not douche, you follow that guy and you start to absorb some information and pretty soon you've got enough to be dangerous, right? Like you said, you've got enough to ask some better questions, but I think it starts in the footing of all of this is knowledge, right? And it with google out there, I mean google plus effort, we say it all the time, google plus effort equals knowledge and it's true, get out there, google some podcasts, google some books, google some mentors and um start soaking it up, Okay, so so well I was just gonna say, okay, so for the beginner, okay, so that's goal, number one, let's let's go buy some books, learn knowledge, okay, what else?

No two, I would, I would set a goal to have lunch or coffee with an industry professional every single week. How do you find that guy? Um Well you can use google, you know, tell us the real estate broker, but also you can, you may see their sign uh there may be a property management company sign in front of a retail and you see you see it all over town, right there, there may be uh an apartment owner that has a sign out in front of their apartment complex, multi family owner. And real quick these are, I mean, I think people get intimidated already by this. You see a sign, you call them and here's, here's your script. Hey, my name is Brandon, they're gonna say their name, I'm going into way too much detail here and you're gonna say, I saw you have a sign in front of this property, it looks like you managed it, is that correct? They're gonna say, yeah, we we do manage that property, we were in charge of all that, you're gonna say I'm interested in buying properties like that. Would you be able to manage them for me, Can we have a conversation, can we sit down and discuss how I may be able to use you to get what I need, let's just do it now. They're excited because they have some, they have some potential business and then you sit down and you could say, hey, tell me about your management approach.

What what makes you different from other property managers? Uh for multi family or retail Now. They're walking you through industry keys. Maybe some, some tips they have. Can I see a monthly report that you give your owners? Just a sample? Maybe mark out the name so I can see a monthly financial statement of that that center. I mean now you've got some real good info from a professional in the industry on a monthly expenses, monthly income, things like that. How do you have any trouble renting these spaces? What are these spaces rent for? 12 $12 for the year? $20 for a year now. Is that below market? Is that above market? Uh You know, what about this location over here that I'm looking at, What do you think those would rent for now? You're getting all this good industry knowledge by making a phone call? Yeah. And pretty soon they're gonna look at you and they're gonna say, hey, you know, what are you looking for? You looking for? Something like this property that you saw and you're gonna say, yeah, you know that would be perfect. Not sure where to start. Not sure how much it is. And they're gonna say, well, yeah, I know somebody over here that's looking to sell this center and they're looking for a buyer?

Can I, can I send it your way all the all the time. All the time. Right? We just bought a property in Wichita. The first thing I did is call a bunch of people in Wichita and say, hey, we're new buyers in the market. Here's what we bought. I would love to buy more of this if you find a comparable product that looks like my shopping center, I'd love to take a look at it. Because we're in this market, we've got the relationships were soaking up the knowledge going from one center to two centers in the same city is way easier than that first center in the city. And it's pretty, pretty soon. I mean, it just starts to build on top of itself really quick. Well on the other side of that, we've had people call us, they see the podcast or they've heard about us and they call us and invite us to coffee and they kind of pick our brain right there. They're just getting started and they want to, they want to be intimidating. Uh and so if you're listening to this, you, you might say, well, what if they what if they sense that I don't know what I'm doing. I had that thought and I sometimes I still have that when I'm talking to people, I'm like, man, I don't know much about this area or this property. And, and so maybe they'll think that I don't know what I'm doing? But you can't worry about that. That's why you start with the books. Uh, first as you gain enough knowledge to talk about the subject that you want to learn about, but you can't worry about that.

I've, I've never blown someone off. That's, that said, hey, I want to learn about The property or I have some questions. I may not meet them every week at at 9:00 AM on a Monday, but I will both have a conversation with them and point them in the direction of some additional knowledge. Okay, anything else for any other goals For beginner? We talked about knowledge um, talking to industry industry professionals, I would get involved in a couple of real estate groups in your area. There's, there's going to be um, like commercially, there may be a C C. I. M. Chapter there may uh, boma, it's not great but uh, for investors, but building owners and managers. Um, what's another one? Um, nao uh, what is typically each National Association of Office Industrial Properties, but it also includes multi family as well. Yeah, you've got each state typically as a real estate chapter you can get in each municipality, like the Greater Tulsa Association of Realtors is one you can be in if you're local to here, there's so many and you can leverage those and just go in, they want to bring you in there probably collecting some sort of membership fee or some lunch fees.

So it's, it's a win win for them and there, you're going to sit at a, at a bunch of table or at a table with a bunch of people and you're just gonna start asking people, hey, what do you do? But pretty soon you're gonna have a role geez, you're gonna have an iphone contact list full of contacts and commercial real estate. You're gonna know five leasing brokers, you're gonna know 500 roofers. I promise you that The biggest thing you're going to get out of these organizations is 500 roofing contacts. You're gonna know property management companies, you're gonna know lenders, you're gonna know anybody. You need to and that kind of brings us to. The next point is, you need to find a partner, right? Because even if you're like, nobody does a deal by themselves, they typically have a lender, right? Not by themselves, they're not buying in cash by themselves. I promise you, people do not do deals by themselves. They have a manager, they have a leasing team, they have an attorney, they have an accountant, they have a lender, they may have a team of investors, they're putting together the dream team, right? So you need to find a group of people, a lender investors are are big ones. All the other ones are equally as important in their own way, but you need to find a team that can help you achieve what you need to and you need to being at these lunches, being in the events surrounding yourself, helps you get that team built and then pretty soon you're you're capable right?

You you base yourself and knowledge, you're you're dangerous enough to ask better questions, You're asking better questions, you're around more people. Pretty soon. You've got a ton of deals around you. You need to be underwriting these deals right? You've got to be underwriting these deals. Yes, I would say that's the next step is you've gotten some knowledge and you've talked to people and now you're starting to see opportunities and deals is you need to set a goal to look at 50 properties a week let's say. And how you gonna find those properties on on there's some lists or something uh websites. C dot com being on the broker's list. You know, whoever the brokers are in your in your area, you know, hey I saw your sign, I saw your advertisement, I need to get on your list. I'm looking to buy. And so they'll add you to the list. But you need to have deals showing up in your inbox every day. And then you need to be looking at probably, I mean fifties a lot in a week. But I'm not saying you have to spend more than 10 minutes looking at them. But you need to know what what is available, what is for sale in my market and If you if you just get on Craxi, you're gonna get you're gonna get 50 emails a day.

That's hard it's hard to look through, you know what I mean? Most McDonald's ship 50 acres and nowhere, you know, apartment complex is never going to sell ever. You can you can weed it out pretty quick. Yeah But at least you're starting to get deals in and then out of those 50 that you're going to underwrite set a goal or sorry, you're gonna look at set a goal to underwrite five deals, let's say a week at first that's a deal. And you may say well how do I underwrite a deal? Well uh you need to you know maybe watch a podcast if we've done one on it, you can google uh that there's books on how to underwrite commercial real estate deals but let's save that for another another podcast. And and so you want to say, okay every once a day I want to take the financials of a of a deal that I got sent my email box and I want to underwrite it or evaluate it and see how much money is it gonna take to buy it and how much what the loan is going to be and and how much cash on cash can I make and what my R. R. Is for the whole period. Okay. And you don't have to do anything with that information. But now you know okay that property makes 14% cash on cash and a 20% ir are at this given purchase price.

Okay, great. The next day, this one makes 8% cash on cash and 12 only a 12% ir are over the whole period. Okay. And the thing is, if you force yourself to do the work, then over time, when you see a deal come in your inbox, you're gonna know you're not going to have to spend all that time, you're gonna be okay. I know kind of what that deal does. Okay. Yeah. I would also say that some of those heels, your underwriting, you know, maybe your top few a week, you call the broker, you call the listing broker is selling it and just ask some questions, hey, where do you think this is gonna trade? Why what's the story on this? Do you know? Why is he, why the why is the seller selling? How long has he owned it? Looking for clues that might be providing you an opportunity, then you're you're gonna be saving all of these anything. You underwrite your saving. And some old I call it the old deal pipeline and just shove all of the old deals I ever looked at in that pipeline, just in case it comes back around or it's in my market and I want to have the information for later, I have it saved. So you're saving all that. And then after that property sells, right, you're gonna pick a few, you're not going to do this on everyone, You're gonna call the broker back.

You're gonna say, hey, I saw that property sold. If you remember I called you, I was interested in this. What did that end up in trade for? What did that end up in self or where was the buyer from? What was the, what was the value that they saw on this property? And then you can compare that against your underwriting. Maybe it sold for way less than it was listed for. And the return would have been better. You know, you're, you're learning as you're going through this, right? Well, I'm going back to the topic of setting goals. What we're trying to impress on you is if you don't, in the beginning at least set daily and weekly and monthly goals of actions, then you're going to get busy with the business of life and you're not going to do it Well. And plus you can't just set a big goal. One big goal that says, Okay, I'm gonna, I'm gonna offer or I'm gonna buy 20 million this year. That's too, that's too big. You need these steps along the way, right? So we can kind of graduate now that we've gone through what we suggest you do. If you're wanting to get in the game, let's say you're in the game now. Uh, what kind of goals should you be setting, You need to be shooting, you know, 100 free throws a day or whatever it is, you need to be underwriting, you need to be offering on deals.

You need to be trying to get deals, you need to be out in the market and you need to set a big lofty goal. You know, if you're out there, if you know how to do this, if you've got your investment criteria and I or dialed down on to be in these markets, I don't have this much yield. I want to have this type of shopping center. I don't want any, tended to be more than this. I don't, I'm focused on multi family. Once you've got that the deals are out there that fit in your criteria. You're just not aware of them yet. You haven't found them. You haven't put enough work to find those deals because they're out there exist. Yeah. So middle, middle now we're getting to two, you're in the game, but you're still not buying a bunch of deals, I would say the next goal needs to be to make offers. You need to be submitting low. Ella es on deals that you've underwritten maybe three a week, let's say. And you're ready to perform on them. Well, I I don't know, I don't want to say they have to be absolutely ready to perform. Maybe they are, maybe they aren't, but but you've got to start putting those Elouise out just to get comfortable and most of them are are not gonna, they're not, the sellers aren't gonna take your offer.

But if you do and the deal is good enough, you can, you know, maybe put the team together. Another thing I think you're, you should do is we should still be doing this is getting a new lender onboard. Uh you know, in your back pocket maybe maybe once every week or two you should be talking to talking to the lender. What kind of deals do they like to see? What kind of term sheet are they going to issue? Do they have all your financials? Have they underwritten you are they ready to go? Because that process takes some time. Uh And And also every time we get a new lender on, sometimes the lender will do 80% where the last one was 75, some will do 85%. Sometimes one lender will be at 3.5 or another one's at 4.5. So you need a bunch of these lenders ready to go. Uh And so I don't want to have three lenders in my, in my back pocket ready to ship a deal to once I get an otherwise uh, you know accepted, I want to have eight or 10. Um Another thing you should be doing once you get in the game is you should be trying to meet a new investor every single week, maybe more.

I mean I'm saying one, but maybe it's two or three potential investors, hey, I'm in commercial real estate now. I've just got my first deal or I'm about to buy my first deal, I'd like to talk with you and see if you have interest in maybe partnering with me on it. Okay, Sit down and have the conversation and then set up the next meeting and set up the next meeting. So you're adding to your list now, uh, you know, if you'll do one or two or three a week after a year, that's 100 people on your list. And most people, once again, we've talked about this, but they're not going to say, don't add me to your list. I don't want to see any deals that might make me money. You know, they're gonna say, sure, put me on the list, I'll, you know, I'll let you know if I'm interested and they may not be. But the more you get on that list now, you have a contact list, they're gonna start seeing your stuff. Well, that's a good idea because if you wait until you get that first deal before, oh gosh, now I gotta go raise a million bucks. You're you're behind the eight ball then, because you've got a lot of other stuff you've got to do once that L. O Y. Is accepted, you've got all your due diligence and everything else. So if you if you wait until then to start raising money or or make contact with investors. You're you're a little late. So I like that idea of, of doing that, you know beforehand.

Yeah, I think, I think if you've got the property under L. O. I. And you don't have the team assembled or you don't have a few people, you're way behind the eight ball. You got to have this whole team like we've talked about on a lot of our podcast. Yeah. And that it's important. So once, once you find the deal, most of it should be, you know, on pause on standby, just over the side ready to go. I mean our our team is on standby ready to go at any moment. I'll send out an offer and copy you copy the account and copy the attorney, copy the broker and then everyone knows the role, everyone knows what to do. Okay, I write these documents this way. Okay. We're getting this loan because that's what they asked for and the the loan. I know we harp on this a lot. But everything you do, you need to be getting a market rate. And if you don't know how to find a market rate like you, you need to be calling 3456, 10 on 10 people and getting different opinions on everything, especially in the beginning when you don't know if you're getting taken advantage of, You're dealing with a potential lot of, a lot of money, a lot of zeros.

A lot of ignorance paid maybe perhaps and you need to, you need to be getting bids. We still get bids on everything. We do. We go get property condition reports and in markets that were not in and haven't operated in yet. We get multiple bids. We get environmental reports, we get surveys, we get, we get all of these things, management companies. If you're saying yes to the first time anybody is offering something like, hey, I'm gonna go do this. It's 7%. Yeah, sure. Like what, what if they would have taken four and they just didn't know you was this random number? You sounded like an idiot. So they charged you double and you didn't ask. There's some effort to be had here for sure. Okay. So we've, we've talked a little bit about the middle game. Now let's talk about how to use goals to really challenge ourselves. Because what I would say is if you don't have any uncomfortable goals, then you're not, you're not setting them big enough. You know, you should have. I mean, these are some of these things, we've been talking about our daily goals. Maybe weekly goals, but what are you giving yourself conscious to go to work on?

Uh, what kind of questions are you asking? You know, uh, one of mine I've talked about was I set a goal to how do I make a million dollars on one deal another. Another goal that I gave myself was everyone was talking about. I want to be a millionaire. You know, I want to be a millionaire. Well, I know a million they have a million dollars when they were 65 You know, $1 million 65 has to last you till you're 90. That that's not really in my head what a millionaire was. And so I came up with this idea that I want to be able to spend $1 million dollars in a year every year. You know, can you spend a million dollars in a year? Can you spend a million every year? Then? I would feel like a millionaire because to spend a million dollars every you're gonna have to be buying stuff, you're gonna have to be going on vacations and your lifestyle is going to be such that it will be that that picture in your mind that you have from lifestyles of the rich and famous and then being a millionaire or whatever. Uh So, so, so maybe that's a goal. I don't, I don't know if that's your goal, maybe it's, you know, to be in the caribbean on a boat. Uh you know, uh you quit your day job, maybe that's that's a goal for you, but, but something that that really lights your ships on fire.

Uh and but also it's it's so big that it makes it uncomfortable day today. Hey man, how am I gonna, how am I going to do that? Because what you're doing is you're challenging your subconscious to go to work to find that solution every day. And it, and it's working behind the scenes, Not magic, but just uh it knows, you know where you're going in life. I want to find a way to retire, you know, at 35 or 45, I want to find a way to spend $1 million dollars a year or two, you know, to have the house or whatever and so you want to put that in place and then let your subconscious go to work. I like that. I think that's, I think that's really good stuff. You gotta, you gotta a big, you know, I would say break down into a small enough piece that it, it feels, you know, a little uncomfortable, but at the end of the day may be achievable and then tack on, you know, 2030 40 50% and you're gonna look at this thing and it's gonna be huge. You know, you can multiply over the course of five years and it's going to be even bigger, but you're, you're gonna like, even if even if you got like half of it, dude, if it's a big enough goal, half of it's gonna be freaking amazing and I want to and we'll wrap it up with this, but I want to end with this is that I, I felt like I said some really big goals and today we're doing stuff that I never thought I would do even after setting those big goals and achieving those goals the deals were doing today.

The profit we're making today far exceeded even what I tried to set for myself. So I wanna encourage you guys. Let your, let your mind go free, decide what you want and set those big goals and then use what we did at the beginning of the show and break it down into daily steps. And you'll be surprised where you are five years from now. 10 years from now. Alrighty. Well, thanks for joining us on this episode of how to invest in commercial real estate. As always, if you have a topic, suggestion for the next idea, feel free to comment or message us. Um and we will catch you next week on how to invest in commercial real estate. Mm hmm.