$50M Portfolio | How Jake Built His Industrial Real Estate Fortune

Jake Stein has accumulated a $50 million real estate portfolio. He's got 400,000 ft² of building space and 30 acres of industrial outdoor storage. And I think the most shocking part of all that, Jake, is that you did it all with minimal partners. Where did all this come from? >> The first year of college. Was it 18? >> You were 18. >> Yeah. >> You were 18 when you started selling. >> Wow. >> You know, when I

was first starting, the biggest thing that I had going against me was my age. And this guy's not going to be able to close cuz he's young. And so I was just kind of on a hamster wheel with the wholesaling and I was always dependent on the next deal. So my goal became I wanted to figure out a way to not have to flip things anymore and to where I could just really focus my time, attention,

efforts on building my industrial portfolio >> business park that you just purchased. What was the opportunity that you found? What was the seller's pain point? >> That deal is the most difficult deal that I've ever structured. >> Today I had the pleasure to interview one of my good friends, Jake Stein. Jake Stein has a $50 million real estate portfolio, most of it being comprised from industrial warehouse space. We spoke about how he has over 400,000 square

ft of building spaces and 30 acres of industrial outdoor space. I think the most astonishing part of all of this is that he was able to do it with minimal partners by doing creative financing with the homeowners. We spoke about his journey of him starting off when he was 18, going and wholesaling land when he was still in college and then transitioning into doing owner financing with real estate transactions. After that, he started buying his first

deal was a 4,000 square foot warehouse space. And he was able to leverage that into buying his first 100,000 square foot industrial business park here in Houston, Texas. I think everyone that listens to this is going to get a ton of value. And I would say that Jake Stein is definitely a leader in the industrial warehouse space. If you've ever wanted to learn about industrial warehouses, about uh the due diligence regarding these uh business parks and

industrial outdoor space, you're going to get a ton of value out of this. We spoke about, you know, creating doing environmental studies, uh, doing cost segregation, uh, depreciating the assets, 1031 exchanges, and overall how he was able to scale from only doing land to now owning a $50 million portfolio. I think it's an astonishing story that he has to offer and I think everyone's going to get a ton of value from this. Thank you for watching.

>> Welcome to another episode of Pick Up the Phone Podcast. My name is So Janas. Uh, I help business owner with people, software, and artificial intelligence. Today's guest is Jake Stein. Uh, Jake Stein has accumulated a $50 million real estate portfolio. He's got 400,000 square ft of building space and 30 acres of industrial outdoor storage. Uh, and I think the most shocking part of all that, Jake, is that you did it all with minimal partners um

by structuring creative finance. So, welcome. >> Thank you. Thanks for having me, >> dude. I'm excited, bro. I'm excited. Um, I've been knowing Jake for a long time, huh? >> Yeah. I think we started, what was it, 5 years ago or so? Four or five years ago. >> It might have been longer than that. >> Yeah. With cold calling and Vancom and >> Yeah. >> I've worked with you guys ever since. And we started with deal

sourcing and then that turned into, you know, finding tenants for the business parks and >> Yeah. >> whole host of things. >> Yeah. the well the first the very fir our very first interaction I think was in uh do you remember Enid? >> Yeah. >> Yeah. Yeah. Enid. >> Residential wholesaling. >> Residential wholesaling. Yeah. So that was quite a bit back. I'm not exactly sure. >> Um but we did wholesaling for a while and uh and

I was pretty good at disoing. You were pretty good in acquiring. So >> finding the deals and then >> Yeah. Yeah. You found the deals, I sold them. >> Correct. >> Yeah. Yeah. Yeah. That was good, man. That was We had a pretty good run there. And then um and then you found the mecca. You found uh industrial warehousing, huh? >> Right. >> Yeah. So, we'll talk about all that. Um I actually want to talk about

your story, man. How'd you get started? I think like you know, like not it's not just anyone that builds number one a pretty sizable real estate portfolio uh with minimal partners. And I think it's also more important to like know how you got to that point. What got you started? like where where did all this come from? >> Sure. Yeah. So, um I think more than anything it's kind of been, you know, a scavenger hunt, if

you will. It's uh I don't think I've, you know, it's been kind of going from one step and then someone directs me a different path. And that's really how I learned u most of, you know, kind of what I've done so far. Um started in 2015 or so when I was in college. Um, one of my good friends, his dad, you know, kind of gave me the blueprint to wholesaling. Yeah. >> Um, and he still manages

and owns industrial properties and, um, so I really got started with wholesaling land >> really. >> Um, yeah. And so, you know, to me it was a lot easier than houses because there's so many, you know, variables with houses and, you know, trying to figure out condition and things of that nature. So, Um, really I was just doing, you know, land in Sunnyside and South Union and flipping vacant lots to town home developers and, uh, so

that's what I was doing in college. Um, essentially. >> What college did you go to? >> I went to UT. Yeah. Studied finance there. >> And you were doing wholesaling over here in Houston, >> correct? Yeah. So I >> So you were doing um, you were doing virtual wholesaling then? >> I would I was doing I wouldn't call it virtual wholesaling because I I was coming back to Houston. Mhm. >> I was going in landlide and

driving for vacant lots. So I would essentially drive through >> um you know these areas and take screenshots of every vacant lot I could and then you know go back to college, go on white pages, cold call all these people, you know, lock up deals, flip them. So um that's what I got started doing. Yeah. >> And then I I started >> How old were you at the time? >> So first year of college. Was it

18? Somewhere around there. >> You were 18. >> Yeah. You were 18 when you started wholesaling. >> Great. >> That's I think you know for anyone that's listening you know a lot of people are like oh you need to have money you need to have resources. You need to have all these things. Everything that you just mentioned Langlad is $10 a month right >> the white pages are what? Free basically. Yeah. >> Uh there's like a

premium subscription but it's minimal. Uh and so for anyone that's listening you don't have to be older or have a whole lot of resources or money for that fact because I'm pretty sure you're broke college good. So what I did initially was flipping residential land and then I started buying some of those residential pieces of land. Those were the first assets that I bought. >> Yeah. >> Um so I was buying residential land. Then I started

uh my friend's dad that kind of taught us about you know um you know wholesaling and what to do on that front started telling me you know direct my same efforts towards warehouses. Yeah. And that's really when I started looking for industrial deals. Um, at the at the time it was single tenanted sites that were, you know, 2 to 3,000 foot warehouses. Um, I found my first one in I think it's 2017 or 2018. Uh, 4,000T

warehouse. Um, I bought it for $100,000. >> Wow. >> And so I got it under contract. I a good friend of mine who's a realtor, she knew a hard money lender >> and so she connected me with the hard money lender. >> Um I bought it for $100,000 and like you know 10% interest. >> I stayed in that for almost a I think it was over a year because I couldn't qualify for a bank loan. >>

Yeah. And I went to a mortgage broker essentially to, you know, help me start, you know, figuring out how to refinance some of these deals. And he said, you know, all you own is land >> and that's not what any bank wants to see, right? >> So like the first thing you got to do is like start selling this land and start figuring out how to buy, you know, income producing vehicles. And that's really uh, you

know, what kind of guided me away from just, you know, land and towards focusing my efforts on warehouses. So you know, my strategy became finding industrial deals for me to buy and then simultaneously flipping land as a means of income, >> right? >> Um, >> so your flipping land was you making money, >> correct? >> And then you started buying the warehouses as a means to hold assets. Correct. >> Got it. Got it. >> Using, you

know, essentially hard money loans to purchase the warehouses. Um, the hard money loans to purchase the warehouses, that wasn't uh it wasn't ingenuity on my end at all. it was just the only way that I could finance the deals at the time because I wasn't a bankable client, >> right? >> Um and so, you know, s started selling the land um at a good time just given the market conditions and that wasn't, you know, timed on

my end either. That was just because a banker told me to, >> you know, a broker told me I shouldn't own that land and >> started moving that way. Um and I also was doing so I was doing you know initially single family lots residential lots is what I was flipping >> and then that trans that transitioned to commercial flips. So I started, you know, I realized I could spend just as much time, you know, trying

to find a 5 10 acre piece of raw land as I, you know, did a vacant, you know, 5,000 foot lot, right? >> So I started, you know, moving towards bigger pieces of land to flip and then I stopped doing assignments and I started doing double closes instead of assignments, >> right? What what was the what was the reasoning be that? The reason being that people could see what I was making on the assignments. >> And

I realized that regardless how of how good at least with the, you know, single with the, you know, 5,000 foot lots, I had, you know, the same buyers that I would go to and I'd always end up making the same exact amount regardless of how good the deal was. Like, you know, these guys just think I'm worth a certain amount per deal, >> right? and they were using, you know, the price, you know, I kind of

had the mindset that they should be f, you know, they should be focused on their acquisition price >> as instead of how much I'm making. >> And so I realized I didn't have any negotiating leverage, >> right? >> Um, and started learning about how to structure double closes. >> Um, you know, that being, you know, two separate purchase of sale agreements where, uh, you know, neither party can see what I'm making, >> right? Um, and you

know, the biggest legal nuance to that was in the event that, you know, the contract that I was closing on, if the seller backed out of that, I would be liable for specific performance, you know, with the person buying it from me, >> right? >> So, you know, figured out how to just, you know, put in a clause in the special provisions that, you know, it's contracts, you know, contingent on the first one closing. So figured

out some of those nuances and then, you know, really had a good run with the double closes and um, you know, but at the end of that year, I kind of I realized that I didn't even have the money to pay the taxes that I'd made on those, you know, double closes and flips because, you know, short-term capital gains. I thought I was making really good money, right? >> I was really paying a ton in taxes.

>> The more I made, the more I wanted to spend on marketing. And so I was just kind of on a hamster wheel with the wholesaling. And I was always dependent on the next deal, >> right? >> And I had very little control over there constantly being a new next deal. And there was nothing that was reoccurring. It was all, you know, very much, you know, having to find the next thing to keep the hamster wheel

going. Mhm. >> Um, so my goal became, you know, I wanted to figure out a way to not have to flip things anymore >> and to where I could just really focus my time, attention, efforts on building my industrial portfolio, >> right? >> And so what I started to research is the idea of, you know, seller financing residential houses. Mhm. >> Um, and so what I started doing was buying houses, fixing them up, seller financing them,

and then doing note receivable loans. >> Were you buying them with hard money or >> So I was buying them with hard money. >> Okay. >> I was fixing them up with hard money. >> I'd then line up the note receivable loan. So essentially at closing at the time that I would, you know, I'd buy the house, I'd fix it up. At the time that I was selling the house, >> you were ref >> I had

the note receivable loan there. So it would pay off the hard money lender. >> So for example, >> what's a note receivable loan? >> So if I'm uh for example, if I'm if I bought a house for $40,000 >> and I put 20,000 into it, >> you know, so I'm all in $60,000, >> right? If I'm selling it for a h 100,000 you know I'm creating a note and then essentially borrowing against that note which is

an asset you know I have a you know note re so then I'm taking a note receivable loan so I'm essentially borrowing against the asset that I'm creating and using >> the asset being the note receable >> the note receivable yeah so therefore I'm using that bank loan note receivable loan to pay off the hard money lender >> I see >> so then I'm just pay taking the spread between, you know, the equity that I created

in the house as well as the interest spread between that and what I'm paying the bank. >> And so that gave me, you know, those are 30-year notes, too. So that gave me the reoccurring cash flow. >> So I did 12 13 of those, which I still have now. >> Real quick, real quick, and let's pause because you you covered a whole lot. And so for a lot of people that are listening to this, they may

not may have very little knowledge of of real estate or how it all works. >> So we're going to break down a couple of things because I I think it'll be important for them to understand all of this. Uh, an assignment contract is basically when you get into a contract with a homeowner or just someone that owns a piece of land, whatever asset it is, that you get under contract and then an assignment contract is you

sign another contract where you sell your interest in that first contract to the end buyer. And when you sell that interest in that contract, you basically that's where the buyer can see that assignment fee that you have, right? So that's what you uh spoke about earlier, >> right? >> Then you you transitioned into double closes where you create one purchase agreement between yourself and the seller and then another purchase agreement between yourself and the buyer, right?

And so on the day of closing, you close on the first transaction between you and the seller and then immediately right after within 2 minutes, you sign another piece of a whole set of closing documents between you and the buyer and now you have two different sets of purchase agreements. Right. Correct. Um, cool. The uh the only other thing that I uh wanted to talk about is the creative loan. Is that considered a DSCR loan? >>

Are you talking about on the warehouses or single family? >> Single family. When you were creating the the uh note receivable loan. So >> So the note receivable loan. No, it's it's a Are you saying the the basis? So I I use community banks like uh Third Coast Bank for example. And um >> so so yeah the basis loan between you and the to pay off the hard money loan. >> It's a so they do 65%

of the appraisal. It's kind of more or less how they >> Okay. And so it's not considered a DSCR loan at all? No. >> So is it more like a commercial loan? >> Yes. Exactly. >> Okay. Got it. And that's something that you developed because you had a relationship then at that time with a banker? >> With the bank. Yeah. So, I started out initially I was doing note receivable loans as hard money loans, if that

makes sense. So, >> um I had a a different I had two different lenders and we don't need to get too nuanced with it, but I basically had one lender that was doing the acquisition and the improvements to the house and then another that was doing a note receivable loan and paying that first lender off. basically like re basically refinancing your asset now into a 30-year product versus an acquisition product. >> Correct. So, it's a note

receivable loan. It allowed me to kind of demonstrate proof of concept. And then I started using Community Bank to kind of >> Oh, I see. Got it. Okay. Cool. Cool. Yeah. And I think it's important for a lot of people to understand this, right? So that they can understand how these deals are structured because there's so many ways to structure real estate deals, right? And so you you had uh you had a relationship with a hard

money loan to buy the assets and then you had another relationship with another lender that gave you the long-term financing uh to be able to have the basis loan and then create that >> that receivable. >> Right. And and the other component to this is it's neither the community banks nor the private lender that I was using would do a 30-year note. So they'll do fiveyear term. So you essentially have to refinance it every 5 years.

>> I see. >> But on the other hand, your borrower is paying down the principal every year, right? So it works out to where you know your returns are still in place and you know you just refinance whether it's with a a community bank or whether you sell the notes and >> Got it. Got it. Okay. Cool. Uh that's awesome, man. That's great. I think what's also important to to backtrack a little bit is you were

doing all of this stuff while you were still in college also, by the way. Right. Correct. >> So, you're in college, you're you're flipping land. And by the way, Sunnyside and and Southeast, these are all these are areas in Houston that are uh uh pretty let's call them transitional. >> Transitional. Yeah. >> Yeah. They're uh they're up and coming areas. They're they're pretty rough back in the day, right? uh and uh and you must have identified

some sort of progress that was happening in this area. Maybe some development that was happening and this is why you what's what's the reason that you decided to >> Yeah. I mean it was really I wish I could say it was my idea was not my idea. One of my you know my good friend's dad you know very much directed me over there and >> yeah, >> you know saw that I was >> I really wanted

to get involved in real estate. I had a lot of energy and passion and um I've always been very entrepreneurial. When I was younger, I wanted to be an inventor and >> I'd always come up with inventions and found out they were patented and then so about it for a day or two. But so I always had a lot of energy that I wanted to put into a business. >> So, you know, with a little bit

of advice and guidance, you know, I was able to just channel all of that energy. Mhm. >> And you know, with finding pieces of land, I would cold call, you know, like crazy. Um, my roommates in college, you know, make fun of me for it. I always I'd close my door and I'd just be cold calling and and I'd be watching football or something. >> Well, I think you got the last laugh now. >> No, I

mean, I I think uh there's probably a healthy medium there. I think, you know, but it's uh >> Well, I I think, you know, it goes to show like what your goals are. you know, for some people, uh, some people don't have the goal to a massive massive, you know, real estate portfolio, but, you know, you obviously did, but for anyone that's watching this, I'm assuming that they probably have a similar goal of of having some

sort of financial freedom through real estate, right? So, this is something that that you did that other people can do also. Hey, listen. If you're in college, you know, shut yourself off and do what Jake is doing and start, you know, wholesaling land, for example, or anything else, you know, in today's current market to be able to achieve your goals that that you have. >> Um, so it goes to show a lot too that if you

have a goal, all you have to find is probably the right mentor, right? It kind of sounds like >> you were blessed to have to be around someone that that was able to guide you. And I think for anyone that's out there that's listening, you know, seek and you shall find, right? And you find if you find the men, if you're looking for a mentor, the mentor will appear. And I think that's what happened to you,

right? >> Yeah. And you know what's interesting is it's kind of like I mentioned with the scavenger hunt. Um the mentor that helped me kind of in my first stage was very much just for you know involved in kind of guiding me towards industrial as an asset class. Um, the next level of mentorship came from someone that I didn't know previously. >> Um, and the way that I actually connected with him is I was cold calling.

>> Um, and in fact, the first big warehouse deal that I did, >> it's a 53,000 foot building. >> Mhm. >> And the guy that lent the entirety of the purchase price was someone that I met cold calling. really. >> And so that was my first big hard money lender. Um he gave me favorable terms. I knew if something happened, he'd be there to help me out. >> Yeah. >> Yeah. And so that was a guy

I met cold calling. >> Yeah. >> And this the second I mean he was a good resource from a financing standpoint, >> right? >> But um one of the most influential people that I met is through cold calling again, >> right? I was calling on a site that was far bigger than anything I was capable of taking down at the time truthfully. But >> he was nice enough to go for coffee with me, build a relationship.

>> And he said after, you know, kind of hearing me pitch enough things at him, he said, "Well, why don't you just come take a space in my office?" >> Mhm. >> And I don't know exactly how we're going to work together, but just take a space here and let's organically see what happens. Yeah. >> And I was the only one in the whole company. I was I should I should say I was the only one

in the whole office that didn't work for the company. >> Wow. >> And I was like this like mystery man. Like people would, you know, wave to me and say hi to me, but then no one knew what I did or who I was. >> Yeah. >> And um anyways, he's the one that guided me towards business parks. >> Mh. And you know I was looking at previously I was buying you know 4,000 square foot warehouses

smaller warehouses smaller businesses dealing you know dealing with smaller businesses and he guided me towards business parks which are you know essentially 100,000 square foot facilities that house you know 1500 square foot businesses on average and you have you know an office a warehouse um you know each one being its own meter. So that's what I started focusing on, you know, very much because of this mentor. >> Wow. >> Uh and that's what kind of transitioned

my career and gave me a little bit more scale um in the ability to do less deals but bigger deals and grow my portfolio in a meaningful way. >> Wow. It's incredible. I think success is a mixture of opportunity and hard work, right? And I think you you definitely embodied that, right? because it things don't just happen for people, you make them happen, right? But you kept on knocking on those doors, you kept on knocking on

those cold calls and through your hard work and your effort, you were able to meet this person that set you on track to be the person that you are today, right? So, I think there's a lot to say about both, you know, hard work and opportunity. And I think opportunity is created through your the hard work and the effort that you do. And uh I mean, you definitely were doing that even at a very young age,

right? So, I mean, how old are you now? >> 28. you're 28. So, I mean, you start 10 years ago, right? And now you've amassed this portfolio. Uh, success does not happen overnight either. You know, it takes a long time for all of these things to kind of snowball into effect. So, um, kudos to you to do that, man. And I think I think it it goes uh >> it shows a lot of it shows a

clear pathway for anyone that's out there listening to this to want to if they want to create something of themselves. I mean, we live in the land of opportunity, right? All you have to do is out go out there and knock on doors and the doors will open. So, um, so let's talk about this, man. How did you transition then from you're wholesaling land, then you're creating the, uh, creative finance and everything at this point in

time. You're probably making a little bit more money, right? You probably have, you know, you did 13, so you probably have a good amount of income now. >> Yeah. So, so that was, and that's another mentor that actually I met from from you. Yeah. >> Um, Craig Couch. Yeah. And that's how I got started with um even the you know seller financing on the houses just through Craig who you know I met at your event. >>

Yeah. Yeah. >> And then that gave me kind of the ability to start you know focusing on what it is that you know I wanted to you know focus on the in in the industrial world. And in fact when I moved into >> um my mentor's office essentially I was doing um seller financing. Mhm. >> So, I was seller financing houses and I was in his office and he knew I wanted to be doing industrial um

but you know at the time I was trying to you know figure out my reoccurring revenue before I could channel all my energy there and >> right >> um so the first business park that I bought was in uh May of 2023. >> Okay. >> Um and I own industrial up until that point but that was the first sizable business park. Yeah. >> Um I bought it from a guy who'd owned it for, you know, 40

years and the in place revenue was 20 26,000 25 or 26,000 May of 2023. >> Mhm. >> It's about 113,000 a month right now. So >> So you grew it from 20 from 26 >> 26,000 a month to Yeah. >> to to what? >> It's 114 115 range. Yeah. >> So close to 100,000 in in income that you increased. Correct. Is this yearly income? Yeah. No, this is monthly >> monthly income. >> Yeah. From that business

park. >> Okay. So, your first business park was generating 26,000. You grew it >> a month. 26 >> 26,000 a month and you grew it to 113,000. So, that's if if you know commercial real estate, you know, cap rates, you know, that you increased a heck of amount of equity on this deal, >> right? >> Yeah. >> So, you know, that deal um I wasn't expecting it for it to create as much of a cash flow

situation as it did. I was focused more on kind of how I, you know, looked at my previous deals as, you know, building my equity and building long-term. uh this deal. In fact, I I'm so when I was buying it, um I was negotiating with the seller and he he was going back and forth and he essentially told me, you know, I'd be open to selling at some point, but only if something were to happen to

my staff who've been there for 40 years, >> right? He said, "Right now, I'm not a seller, but if something happens to them, then I could become a seller." >> Right. >> And I was really bummed about the situation. This is when I was purchasing it. >> Yeah. >> Um and you know, I was on a walk the next day and I thought about it and I said, "Well, why don't I just make him an offer

and just throw it out there?" So, I typed up an offer and I said, "By the way, by the way, if something were to happen to your staff or you know, I would be I'll keep them for a year essentially." So, um I said, "I'd be open to keeping your staff for a year." >> Mhm. >> And you know, that was enough for him to respond to me and say, you know, let's meet tomorrow. And that's

what got me a quick response. >> Wow. And what I realized from that situation is the money was not the drive the he wanted to get a fair amount in his mind based on what he bought it for 40 years ago, >> right? >> But the differentiator with me as opposed to a lot of the other suitors and people who had reached out to him in the past is I identified his main problem, >> right? >>

Which is the people, >> right? >> And so me keeping them on staff for a year, that's what got me the deal. Wow. >> And I mean, the property manager was 83 years old, and I don't think she did a single thing for me the whole year she worked there. Yeah. >> And that was all right by me. >> Yeah. >> The maintenance guy, same thing. >> Yeah. >> I just I added their salaries to the

purchase price. I I took the L the day I did it. I wasn't expecting much, you know. So, >> um >> anyways, I wouldn't hire those people, you know, electively, but in given the circumstances, you know, it made sense. but you got the deal because of it, right? So, understanding the the seller's pain point, right? Or his driving factor for for being motivated to sell and then giving them a an offer that meets their criteria is

what got you the deal. >> And he financed almost the entirety of the of the deal really at 4% interest only. >> Wow. >> So, that became a cash cow. >> Wow. Um, and that, you know, very much just kind of gave me, you know, horsepower to go into the future deals. It gave me the conviction, the confidence to grow, >> right? >> And and this was the business park. >> Yeah, this is the hobby business

park. >> Okay. I see you're wearing a hat, right? >> Yeah. Hobby >> hobby business park. Yeah. Um, but yeah, I mean it was a it was a a situation where understanding the person >> was a lot more important than any real estate component, if that makes sense. So, I think like the biggest thing that I've learned in real estate thus far is >> it's a people's business and at the end of the day like you

know whether you're doing you know residential and you want to move to industrial or you're doing moving to you know apartments multif family you know I mean there will be like funds that you deal with and they're you know IRR driven and you know you probably won't get a good deal from them >> but by and large when you're dealing with you mom and pop sellers or people that are voting, you know, these facilities, regardless of

what kind of facility or place it is, like most of the time they're driven by, you know, do you like do they like you? Do they feel like they can trust you? And do they feel like you can actually close and perform, >> right? >> Um, and I found that, you know, when I was first starting, the biggest thing that I had going against me was my age, >> right? and looking young and you know people

kind of saying I you know I I like you kind of thing but I don't really trust that you can actually perform. >> Right. >> Um I even had one situation where I basically had to put down 15,000 non-refundable money because I looked younger than the other guy. >> Mhm. >> I was buying a warehouse or I was about to be under contract to buy a warehouse. He had a broker friend who he had, you know,

engaged the last second to join, you know, and facilitate. And his broker friend met me there and basically, you know, was, you know, saying, "This guy's not going to be able to close because he's young." >> Yeah. >> And he knew of a buyer who he felt more comfortable could close the deal, >> right? >> And so I had to put down $15,000 non-refundable that day. >> Right. I I'd been I knew the property. I'd already

done my due diligence on it prior to that. >> Is this a hobby business part? >> No, this is a a smaller deal. But I guess my point being I had to overcome a lot of that >> and it was difficult on the front end. >> Yeah. >> But once I had a little bit of a track record and could leverage other deals, then it became um you know, one of the biggest differentiators to my profile.

and being able to meet a seller. You know, they they like that, you know, you're young. They like that you're like, you know, doing something different than what most people your age are doing and they >> they want to help by and large as long as they feel like you can close. >> Right. Right. I mean, there there's a lot to say to that, right? Because a lot of people use this as an excuse or as

a limiting belief that, hey, maybe because I'm too young, I'm not going to be able to go and make these large acquisitions. But if you just figure out a way to still overcome that barrier and maybe like you did, create a track record or create like a creative uh financing for yourself, then you can still overcome those uh objections that a seller's going to have. So, um >> or if you know partnering with someone, um I

mean I could say like you know what I would personally like help with um I mean for anyone that's listening is deal sourcing >> and you know I'm happy to come into the deal as ear you know earlier on during negotiations um you know to leverage you know my track record to leverage the deals that I'm doing. I mean, if someone even wants to say they're, you know, a partner early on to, you know, create that

sense of conviction. >> Yeah. >> Um, you know, I think that's where, you know, having having the track record can just help solidify the deal. >> Yeah, absolutely. Um, and I mean, in this regard, I mean, now you have a a pretty sizable track record. Now you have, you know, possibly the the portfolio to to now come into the picture on a deal and say, "Hey, listen. I have this, this, and this that I've done. I

own these parks. I'm partnered in on this deal. So, let's, you know, anyone that's listening could definitely even partner up with you and you can figure out some sort of equity spread where you bring in your you could be, you know, like a GP, so to speak, and uh and provide, you know, your your portfolio to to get the deal done >> or just, you know, whether it's an assignment fee or double close. To me, I

mean, having been through kind of the wholesaling experience and having done that to start off, like I'm I'm very sensitive to people that are sourcing deals. I know how difficult it is to, you know, to find those opportunities. >> Yeah. >> And I'm focused on, you know, what I'm paying, >> not what someone else is making, >> right? >> So, you know, if someone wanted to double close the deal to me, sign the deal, it's, you

know, I'm open to >> to doing something like that. you know, people making money essentially. >> So, let's back up real quick because for a lot of people, you know, we've mentioned business parks, right? What is a business park? >> So, a business park is essentially um a facility where you have a bunch of small businesses operating, you know, right next to each other. It's each so each unit in a business park is about 1,500 square

ft, at least the facilities that I have. Um so you have an office, a small warehouse and a restroom in each unit. Um each unit has its own electric meter. So it's it's very much um like having your own warehouse space essentially. So some of the common tenants are, you know, AC companies, um, e-commerce groups, plumbers, painters, carpenters, you know, really all kinds of small businesses that have a need to have some level of space to

store inventory, an office to do whatever they need to administratively throughout the day. um you know and have the it's it's the least expensive uh way to you know essentially store your inventory and run your business. And you know my logic there is um you know we're only moving more and more towards an e-commerce based >> Yeah. It's and and so like having a retail storefront versus having a warehouse space with an online presence, >> right?

It's, you know, you're better in in not all s instances, but in a lot of instances, you're better off using the extra money that you would have spent on a retail frontage >> towards online marketing and then having your inventory and office in a, you know, less expensive, you know, warehouse space. >> Yeah, I know that makes sense. >> So, uh, so you that so that's what the business park is, right? Now, let's talk about how

you grew that amount from 26,000 a month to over 113,000. >> It was all Vancom. >> How did we make that happen, Jake? >> So, I I guess I'll talk about the problems because a lot of it was just fixing the issues that were there. Um, previous ownership didn't have any online marketing. All they had was a a sign, you know, in the front and it's not even on a main road. So, you're just really getting

the whatever traffic drove down the street that day, >> right? >> They weren't doing any makeies. So, they were leasing units asis, you know, with mold and all kinds of stuff that just needed basic housekeeping, cleaning and paint, just, you know, really the basics. Um, so I think, you know, one of the biggest things as well was just security, >> right? Um, and I was able to see, you know, the best investment that I found in

business parks is a gate. >> Mh. >> And you know, just very basic gate cameras. And you know, people are looking at these facilities not as, you know, they're not expecting it to be a beautiful place for people to come. They want to know that their stuff is going to be safe, that they're going to be safe or whatever personnel they have there, right? and that their inventory is secure. Um, and so as long as the

location's good, as long as it checks the boxes, then people are happy. So like understanding what the clients are looking for >> and building something that accommodates their needs >> and then having online marketing um, and really creative marketing. I mean, truthfully, Vancom and cold calling and, um, you know, Facebook Marketplace, >> Co-Star, Loopnet. Um just really having being like an octopus with a bunch of marketing tentacles, >> right? >> Um and then you know delivering

a good product. >> What what was the initial price per square foot going in and then what did you increase it to >> um on the rental side? >> Yeah, on the rental side to your tenants. >> So, you know, one thing to note to make this more complicated is um I converted everything from gross to triple net. So >> can you explain that for everyone that's listening? So gross means that it's basically all bills paid

for by you know the landlord >> the owner >> the owner um and then triple net is where the tenants essentially responsible for everything um except usually the roof and the structural >> but for example the taxes are you know prorata so you know if you take a th000 square feet and it's a 100,000 foot business park, you know, you're paying 1% of whatever the total taxes are and whatever the total insurance is. Um, anything that

takes place within your unit in terms of repairs, you're signing a lease day one that's saying, you know, you've inspected everything and whatever happens in there, if it's not roof or structural, it's, you know, your responsibility. So it allows for, you know, a lot more predictable cash flow as well because I mean you could say your gross rent is, you know, one thing, but you have to factor in all the miscellaneous expenses that can occur throughout

the year. So you know, if I had to look at it on a net basis, it was probably $3 a foot net. >> Um, and now it's 11 or 12 net. >> Wow. That's a that's a pretty big jump there. Yeah. >> Yeah. So by creating the security, by making the facility nice and welcoming, and then by doing triple net lease, you were able to raise the rents from 3 to 11. >> Yeah. I mean, one

of the biggest things, and a lot of the majority of the tenants that were there before left. >> Mhm. >> Um, a lot of them weren't even legitimate businesses. It was just so inexpensive that they were able to justify using it as storage. >> Right. Um, and the thing that I've realized is, you know, if you're if you're begging someone for their last dollar, it's a much more difficult proposition >> versus providing a product that is

suitable for businesses that have, you know, the capital to pay, you know, for a space and to pay for what it is they need. >> Um, and so it's that's kind of that that was a big part of it, just bringing in a different caliber of tenant profile. >> Got it. Got it. So now you have all these new tenants that are in there, all these new actual business owners that see the facility as a way

for them to make more money because they have a nice cozy environment that's predictable for them too, right? Because they have the security, they have a nice facility. >> Yeah. And you know, one other crucial component is uh on the leasing front, doing the leasing in house um as opposed to with a broker, >> right? And you know, I mean, nothing against commercial brokers, but you know, these units, when you're talking really small units and really

small commissions and, you know, tenants that a lot of times don't show up to the day that you're coming to do a tour, you know, it doesn't if a broker has the ability to lease, you know, 30,000 square foot building, you know, that's a single tenant deal versus going driving across town to lease 1,000 square feet. Mhm. >> A lot of times you don't get the attention that that you want. >> Right. Right. So then by

you giving them the attention now you have a little bit more control >> by doing it in house. Yeah. Because you know then you have someone who's dedicated to it. Um and that's also I'm looking to hire more leasing people in house. So if there's anyone that's listening that you know is looking to do that. >> Yeah. And I think it'd be a great opportunity for anyone that's listening to this to come learn from you, right?

and work directly with you, help you lease out your units, and then uh and then also learn from you, right, and see everything that you've been doing. >> So, um man, that's that's pretty amazing. So, that that's just this business park, right? Right. >> Yeah. Uh is this where you kind of got the itch from like to get more into industrial after you saw the all the value and all? >> Well, I wouldn't even say the

value. I think I'd see I I would say more it's like a need, right? because I feel like there's maybe not a lot of investors out there that are looking at mom and pop shops to go and purchase them. Um, I'd say maybe, you know, like larger funds or larger acquisition companies are probably looking at maybe a large a much larger asset versus, you know, smaller assets like this where there's in the in between. >> Right.

Right. >> Yeah. I mean, I think this deal uh that deal transitioned my mindset from, you know, I thought about, you know, how many deals would it take for me to make the same amount of money that I did on that, you know, create the same amount of equity that I did on that one deal. Mhm. >> And you know there comes a you know time where like I think you think about it and you're you

know you only have so much time in a day >> and you only have so many days in a year >> and so finding opportunities to create true scale >> um and return on effort >> became something that I paid much more attention to after that deal. >> Right. Um, and so, you know, it's if I was looking for a 4,000 foot warehouse before, you know, I had to find a seller, find put the deal together,

do the environmental, do all the due dilig, you know, it's like versus a 100,000 foot deal. It's the same environmental guy call. It's, you know, it's a lot of the same patterns except one, you're able to achieve so much more scale and growth versus a smaller deal, >> right? But there is something to say though about getting that 4,000 that initial 4,000T warehouse that set you up to getting a much larger facility. >> The first 4,000T

warehouse was a lot harder. >> Yeah. >> And a lot more important. >> And a lot more important because it taught you the game. It taught you the process. It taught you everything. all of the nuances of putting the deal together. Right. Right. That by the time that you got to how how many square feet was the business work? >> 100,000 square feet. >> So 100,000 square feet. Now you you've been able to see the process.

Now >> the only thing or the only mental barrier that you have to face at that point is okay, it's just going to be a lot more money, right? So it's a lot more risk, but at that point you already have the confidence of actually getting the deal done, right? So there there is still something to be said about doing those small deals initially to get the process going and then being able to transition to something

larger. Right. Right. So uh I I think you know in life everything there's stepping stones to everything. Right. And it's okay to start small. It's okay to start with a 5,000 foot land in Sunnyside, right? Because that can initially transition into a 100,000 business park in hobby, right? So, um, you know, I it's all it's all just levels to the game and the levels get bigger and bigger as you gain confidence, as you gain more money,

and, uh, as you build more relationships with people. Right. >> Right. So, uh, that's that's a wonderful journey. >> Awesome. Uh, now let's talk about um, uh, let's talk about industrial outdoor storage, right? Because that's that's something that you've also been doing. Yeah. >> Uh, what is industrial outdoor storage? So, industrial outdoor storage, which I'm obsessed with at this point. I mean, like I spend too much time, you know, researching and learning about it. I'll say,

you know, the business parks, which I just uh took down another one recently and >> uh in March, another 100,000 square feet. >> Yeah. >> So, that's in the midst of stabilization right now. Mhm. >> And the business parks are great and I could talk about them all day as well, but they're very management intensive and >> in what sense? >> Uh, you know, everything on the stabilization front, you've got a lot of tenants, you know,

so across the business parks have 200 plus tenants right now. >> Um, and they're small businesses. So inevitably, you know, some go out of business. Some, you know, when you have, you know, that many small units, you know, you're bound to have problems that arise. They're not CVS or Walgreens. You know, they're small businesses, so they're triple net, but there's still management hurdles that accompany them. >> What are the what are the common uh pain points

or common issues that you see with these small tenants? Um, I mean everything from going out of business to, you know, I'm responsible for the the roof, but if the roof leaks, you know, now they now you've got, you know, water inside the unit. So now you got someone working inside the unit. You kind of broken that barrier of the triple net ordeal. So, you know, I do my best to keep that triple net item in

line. But every once in a while, you know, you do end up doing maintenance kind of work. So, >> um I say that, you know, just because for comparison, um I guess my my point with the second, you know, business park that's, you know, in the middle of transition now is um you know, I wouldn't want I wouldn't want 100,000 square feet today business park-wise, just cuz I'm in the midst of stabilizing the other one. Um

>> so it takes a lot of energy to >> Yeah, it takes a lot of energy, bandwidth, horsepower. Whereas industrial outdoor storage, these are single tenant sites. >> Okay. >> Uh single tenant being, you know, one tenant occupying each site. >> And you're dealing with really big companies. >> Mhm. >> So, for example, um I mean, I have one one site that's leased to uh PCI, which is a big contracting company. They do $3 billion a

year. >> National company. I mean, you buy deals like that and you don't ever think about them again. you know, it's like you think about them that when you're structuring them on the front end, uh, but then they're really hands-free. >> Um, but >> because it's all just outdoor >> because it's because you're dealing with such big tenants and because they're truly triple net leases. They're responsible for everything. But, uh, to take a step back, industrial

outdoor storage is really >> there sites that have 20% or so less coverage. So, that meaning 20% or less of the site is improved. M >> so for example on a 100,000 foot site that would mean you know 20,000 square ft of building or less. >> Okay. >> Um and so the focal point of these sites is you know the land that's out you know outdoor for storage. >> Okay. >> Um it's stabilized land with you

know crushed gravel, crushed limestone. um where you know you could you have equipment rental companies, fleet services, uh you know bulk material yards um you know for listeners I guess thinking about it you know things like uh United Rentals when you see those on like the high side of the highway and you they have all those you know all that equipment outside you know that's those are you know industrial outdoor storage sites. >> Um and you

know what >> so have you already done some deals like this? Yeah. So, this year I've done uh four of them. >> Nice. >> And on the fifth right now. >> Very nice. >> And you know, >> so you only have five total so far. I >> have five total. Right. >> So, let's talk about one of these deals. What Let's talk about like numbers like uh what was the acquisition price? What was kind of like

the negotiating factor to getting these deals done? >> Yeah. So, um well, I could I mean I can go through a few. Each one has its own story of course, but the first one uh the first one that I did >> was essentially the guys that were selling it to me >> used to work for the company and they had they'd worked there 40 years and they had some type of agreement with them where they were

allowed to, you know, lease to the company as a kind of grandfathered ordeal. >> Um and so it was the only piece of commercial real estate that they owned. Um, and they'd retired for the company and just kind of owned that piece of real estate that was leased to PCI's company. >> Yeah. >> Um, and you know, they were PCI was paying 8,000 or I should say they still are. They're paying 8,250 a month and market

rent over there is about double that. M >> and you know it's just kind of there's a when you're dealing with a company this large their goal is to maintain operations >> right >> so you know unless my unless I was overcharging them or unless there was a very big need for them to leave >> it's super expensive for them to get their stuff and move >> right >> so you got a lot of leverage in

that regard and as long as you're charging a fair rent a renttomarket opportunity can be you know really powerful in the situation. So, like for that example, u you know, they've got 11 months left on the lease. Uh I did a seller finance deal. You know, the sellers I bought it for 1.4 million. >> The sellers, you know, based their valuation, you know, off of the in place income. So, I bought it for an in place

seven cap, which is market >> from a cap rate standpoint. Mhm. >> Cap rate being, you know, essentially, you know, the return on cash that an investor would the return that an investor would get if they had bought it in cash, right? Cap rate. So, um, basically by being able to double the income, essentially double the value. Um, and so, you know, I bought it with 11 months left on the lease, the sellers financed it, and

you know, I told them, well, I need the financing. I need to be making money at 8250. So the financing was 6% interest only. So I'd have a margin at 8250, but they didn't know that the rate was about half the market. >> I see. >> So that's a classic rent tomarket opportunity. You don't want to have too long left on those leases. So really ideally under 18 months, right, on a renttomarket deal. >> Yeah. So,

on the rent to market deal, when you were doing your due diligence, did you have a conversation with the tenants with the the large corporation to have those rents be increased at the end of the lease? >> No. No, you haven't. >> No, they So, I mean, the way that I and that's kind of a tricky subject because you first of all, you have to have the conviction when you're buying it that if the tenant were

to leave, >> you need to know your numbers and know that, you know, know what the rates actually are, >> right? Um because if you're dependent on that tenant to stay, you're not going to have that assurityity, >> right? >> Um so what I did was, you know, I knew the market. I had good comps. I knew what I could get there with or without the tenant staying. >> Mhm. >> Um and you don't want to

give them too much time because then you're kind of you're ringing the firebell and, you know, giving them a year to go look for something that's a better deal. So you want to give like you do want to be like, you know, conscientious about it. So I I did like six months uh give notice, give them time to like >> so at the six month mark whenever they have only six month mark left at least. >>

Give them some time so they don't feel like they're getting their back against the wall. But so it's also not like too early. >> Yeah. Yeah. Yeah. >> Um >> if you gave them a year then they'll give them time to kind of consider their options and maybe >> Right. Right. And I think what's you know I think for anyone that's listening that's looking to trans you know transition into industrial outdoor storage is the best place.

It's really straightforward. You're dealing with one tenant. The most unique part about it is the seller profile. So, business parks, you're dealing with investors and strictly investors, you know, because they own it for investment purposes. They're leased to a bunch of small tenants. >> Yeah. >> With these outdoor storage facilities, a lot of times you're dealing with owner users and you're dealing with people that have owned the property for their business. >> Mhm. and it's been

just kind of a byproduct of their business. So, you know, they're they've been focused on their company, they're selling their company or whatever the situation might be, but the real estate is just something that they have >> rather than something that they're used to using as a, you know, as an investment mechanism, >> right? >> Um, and so, you know, you're dealing with a lot of times mom and pop sellers where they're not viewing it on

a cap rate lens. They're just viewing it as a place that they store their equipment so they could operate their business, >> right? >> And now you're kind of repositioning it. >> So, the first example was a little bit different just because it, you know, they didn't own the company, but it was similar in the sense of like they're not real estate people. It's the only commercial property they owned. Um, you know, there was a tie

to the company that was there. So, and I I've seen those kind of opportunities quite a bit. In fact, in outdoor storage, there's right now it's about 60% owned by owner users. Okay. And 40% by investors. And you know, I see that uh changing pretty quickly. >> Where do you get these figures from? >> So, I I go to I mean, I stay pretty in tune with uh outdoor storage. I was actually um at an event

two weeks ago in Dallas. >> Yeah. >> Uh that was strictly outdoor storage convention. >> Nice. >> So, it's just a bunch of people, you know. Um, one thing about, you know, sharing comps and people that are in the in the space, a lot of people keep the comps very close to their chest. I mean, there are only a handful of brokers that are super active in this niche. And so, it's difficult to figure out what

things are actually leasing for, >> unless you have a broker who has that information, who has that data. Um, you know, you go on, if you're dealing with apartments, you go online and you could see what things are leasing for and it's pretty easy to gather what rental rates are and what you know things are going for. With outdoor storage, it's difficult unless you know the right people, you have the right data. Um, and ultimately it's

the rent that drives the valuation, >> right? >> So, if you don't have those figures, you have no way of knowing how to value these things, which makes it difficult to break into, >> right? if you don't have any resources in it, but it also creates a lot of opportunity because there's a lack of, you know, knowledge and information on that front. >> So, what has been the best resource then for knowing the market rents and

the cap rates for these outdoor storage space? >> It's really been, and I've seen this as kind of a reoccurring theme through like a lot of real estate, just knowing the right people. Yeah. you know, knowing who to ask what questions to, >> because there are a lot of people that, you know, they want to give you an answer to everything, right? >> But they're not qualified to give you an answer to everything, right? >> So,

being able to know, you know, this is a guy that I know I can ask for lease rates, and I know he's on point, and I know he does this day in and day out, and I know the data he's giving me is stuff that I can count on, >> right? Um, so developing those relationships, developing conviction in those people, and then I've seen that, you know, good people usually introduce you to other good people, right?

And that kind of starts the cycle there. >> I love that. Yeah, real estate is very much a people business, right? So, it's all about finding the right people, getting around them, and then like you said, it'll just open up doors to more people, more resources that have the knowledge that you need to make decisions, right? >> Yeah. So, uh, so that was your first deal. Let's talk maybe about another deal. >> Yeah. So, um, most

recently, I guess this will be my best deal. I'm not going to knock the wood. Um, I So, I bought a deal that's, uh, right off of 288. And I guess one one other thing, there's there's got to be a driver as for why an outdoor storage site is good. >> Um, >> what's the driver? So, you know, some of some of the common drivers are, you know, being close to a port, being close to, you

know, rail, being close to an airport, being close to a highway. You know, you got to think that a lot of these companies are they're logistics related businesses. >> I see. >> So, you know, they're thinking from an operational lens. And when you're thinking about buying a site, like you want to put yourself in the tenant's shoes and think about what is their GM who's going to look at this site. What's he going to be looking

for? >> GM being the general manager. >> General manager. Yeah. What is he going to be looking for? >> The decision. >> What are his pain points going to be? >> Because if you have a site that has everything going against it except a good price, it's the wrong site. M >> um and so you know finding quality locations um like this one that I I just bought um the deal there is the guy who sold

it to me um ran his business there for 30 years. >> Mhm. >> So he bought it for you know next to nothing 30 years ago unwinding his business and actually downsizing not not completely selling it but downsizing. and you know he bought it super inexpensively. Um I built a good relationship with him and he wanted time. He's got all of his equipment there, you know, all of his and even, you know, staff is in the

office currently. That that property is it's 20,000 ft of building on 11.2 acres. >> Okay. >> Um and so basically, you know, going into it, >> what what did the owner do for business? >> Trucking company. trucking company. So, he has like a like an office space. >> So, he has in the warehouse there's about 2,000 ft of office in the front, you know, with parking for the employees and then, you know, warehouse space for, you

know, servicing the trailers and things of that sort. >> Okay. >> Um, but one of the most difficult things when you're going to get financing on these assets is, you know, is there a tenant in place, >> right? >> Or is it speculative? And so, you know, in this situation, what I was able to arrange for is I bought it for 2.3 million. >> Um, the seller I got the seller to pay essentially 17,000 a month

net um on a 12 month lease >> because previously he probably wasn't paying for rent if he building. >> That's right. Right. So, >> you had to create a lease basically. >> Create. So, it's sale lease back. Um, but then, you know, I was putting that together and I thought, well, I'd like to start marketing it right away. And if I find a tenant, well, then I need to have like the flexibility to get him out.

>> So, I got him to agree to a 12-month lease back. So, it's kind of a one-way deal where he >> he signed he he couldn't back out of his agreement with me, >> right? >> But I could give him 90 days notice at any point to terminate it. >> So, sign that. Sounds like a great great agreement here. >> It's a good a good deal. Yeah. So he signed that. I mean really nice. He's a

going guy >> and I So started marketing it for lease, did renderings. U the site has u it was previously used as like a steel yard. Mhm. >> So, I don't know if you know, you've seen those where it's, you know, kind of uh grassy portions in between with uh roads that kind of make like figure8s and then they lay steel on the grass. >> Yeah. >> And so, u basically the improvements that I'm doing there

is I'm I'm stabilizing it. Stabilizing bringing in crush gravel. U you know, so it's usually uh you have like a slurry base on the bottom and then you bring in crush gravel. It's usually like 10 in to go above that and have that, you know, all contiguous >> so that it's, you know, one big yard essentially. >> Yeah. All uniform basically outdoor space. >> Correct. So the way the way I started marketing it is because it's

two different addresses technically. >> Mhm. >> I had two different options. One being the building on five acres and then another being the building on the, you know, the entirety of the property. um >> another five acres. >> Yeah, I do have to put in I lose a little over an acre to detention because putting in the gravel impervious coverage you need to put in detention, >> right? >> And so I have to, you know, allocate

a portion of that. >> So for everyone that's listening, what's detention? >> So detention is, you know, for flooding regulations and requirements. It's a a cubic it's a cubic measure that the engineers put together to, you know, kind of fit the uh water detention rate. So that's where you know it's it's a flood measure, >> right? >> Um for the city, >> right? So the city's the one that makes these implications. They're they're the ones that

impose these restrictions. >> That's right. Right. >> So you >> So you need to have all of this knowledge going into a deal to know how to put it all together. Right. >> So that's good architect, good engineer. Um started market marketing the property, you know, essentially pre-leasasing it. Um because I want to have it leased before I gave him 90 days notice. So leased it right away. And when I say it, at least uh three

acres um right away to a collateral recovery, it's a repo company and I don't they're paying a good rate and then um the other portion should be leased to United Rentals. Um so finalizing that now, >> but we're pretty far into the legal process. So that'll be u my best deal so far. >> Love it. Love it. So let's talk about the numbers. What were you able to increase in terms of valuation? >> So bought it

for >> 2.4 >> and that's so I had the wrong number in my brain for some reason. It's 2.8 was the purchase price. >> Okay. >> Um and then spending about 1.1 on capex and then going to spend about 200,000. And >> what's a what's a 1.1 on? >> So that's stabilization. I mean it's a lot. I mean you're talking 5.8 acres of gravel to to you know to fill everything out. It's a ton of gravel.

>> It's a lot of gravel. Um, so, you know, give or take, it's be like 4.1 or 4 4.2 million all in. >> Mhm. >> Um, and that's with, you know, brokerage fees and everything, right? >> And it'll be 7.5 to $8 million valuation. >> Nice. Nice. And that's >> a lot of that's, you know, based on tenant quality. >> Um, you know, I didn't expect for, you know, United Rentals to be the tenant there, >>

right? >> Um, and that's a >> How were you able to find them? >> It's a 15-year deal. That's my broker. >> Your broker found him? >> Yeah. >> Oh, beautiful. >> And he they didn't even call him. That was a relationship based deal. So, he knew he had a connection in Chicago who knew the guy who was looking here and introduced them together. Um, so that that's a good example of like knowing the right people,

knowing people that are plugged into the business. Um, specifically, you know, iOS because it's its own animal. And >> iOS, what's iOS? >> Industrial outdoor storage. Yeah. Um, and you know, just an industrial broker, >> yeah, >> is very agnostic. Like iOS is like a super small niche within that realm. >> Right. Right. Right. Right. So the rents that you have with the tenant right now or with the owner that owns it, you created that lease

back was 17,000. >> 17,000. >> What were you able to increase it to? >> It'll be at around 43,000. >> That's a huge huge jump. Yeah. Yeah. Yeah. And so all of this happened because you had the right relationships. Again, going back to people, business, >> the right relationships, the right the right location, and I mean, that's the it doesn't relationships will get you so far. >> Yeah. >> But then if you don't have the right

asset, >> right, >> it can't get you all the way there. >> No. No. >> So, you need the two things together. >> Yeah. Yeah. Yeah. And then finding that that huge tenant that was able to pay probably maybe is are they paying market rents or are they paying over? >> They're paying market. >> Market. Okay. Nice. >> Yeah. They're paying like right about uh Yeah, I mean right about market. >> The recoil company is also

paying market. Nice. >> So, I do see a pretty large uh a pretty large barrier of entry here, right? But I think it it can be over overcome by having again the right relationships. And I think you might be probably the best resource out there for anyone that's listening to this. Uh you're already plugged into the community. So, if anyone needs some sort of help with maybe they're underwriting a deal or maybe they have an opportunity,

they can come to you and ask you all the right questions or maybe even say, "Hey, Jake, I have this deal, but I don't even know what questions to ask, right? >> Can you help me ask the right questions to put this deal together for you?" >> Right? And I and I will say um you know in terms of the type of seller if you're coming from the residential world and looking to transition, you're dealing with

for the most part really easygoing relationshipbased people. >> Yeah. >> Um and so I think where I can hopefully come in to help as needed is, you know, like you mentioned on the valuation front, figuring out, you know, it's great you have a good relationship with them. It's good that you've got that's the hardest part building the relationship >> getting to a point of making an offer, >> right? >> But, you know, being able to facilitate

>> in, you know, gathering comps and creating the valuation and kind of putting that together. >> Yeah. Because if if if I was to like if I was to come across maybe be a an outdoor storage facility, I wouldn't even know where to start with valuation. I wouldn't know where to start. I wouldn't even know how to put an offer together, right? So then I would just come to you and say, "Hey, listen. I have this

great relationship. I've talked to this guy. He likes me. He wants to do business, but now can you help me put together an offer?" Right. >> Right. And I think that's where you could definitely come in. >> Yeah. And you know the my goal being would be to share enough resource, you know, comps to where you know you wouldn't need me to put together an offer for each deal. Yeah. >> And like I mentioned before, my

goal is not to see exactly what your numbers are and what you're buying it for. My goal is to create as many opportunities selfishly for myself that I can, you know, have and then also so I can help as needed. So it's not, you know, it's not one of these things where I'm, you know, looking to be a part of every offer so that I I can see what you're making on the deal. I mean, I'm

fine giving comps to say, okay, this is kind of how you value a site. This is how I'm looking at it personally. This is what my number is and why and this is why this is what my number is, you know, for a site. >> Yeah. uh just to facilitate in you know better understanding because it's got to be a win-win for both parties you know when doing that kind of situation. >> Yeah. Yeah. Yeah. I

would also say that you do need um maybe some knowledge I mean because the knowledge to put together to ask the seller to create a lease back right on this deal for example >> where does that knowledge come from? How can someone get educated on on figure like how do you even know where to start to know, oh, I need to put together a lease back with this tenant so that it can be bankable so that

I can actually do a double close. Right. >> Right. >> How like how would someone go and get that knowledge? >> I mean, so a lot of this comes from just like we mentioned before like trial and error, >> like going to a bank with a speculative deal and realizing they don't like it. Yeah. >> You know, it's like, okay, well then how do I make it something you like? Well, if you had a tenant in

there, then we'd like it. Okay. Well, you know, how much what does the coverage need to be? >> Yeah. >> You know, for you to feel comfortable going into this deal, >> you know, just getting that feedback because I think, you know, back to what we touched on before, like nobody comes out of the womb just knowing all this information and there's not really a textbook that you go to to memorize it all either, right? >>

You know, it's one of those things where you just have to talk to a lot of people. You have to put yourself in positions that are, you know, where you don't, you know, you might feel like you look like an idiot for a second asking a question, whether it's to a banker on how to structure a deal or whether it's to a, you know, another person you know in the business just to find those answers because,

you know, you ask a question once, you get an understanding and then from there you can really just move on it. >> Yeah. So, what you're saying basically is become resourceful, right? >> For anyone that's listening, become resourceful. Don't be scared to maybe look like an idiot a couple of times and because like you said, you know, we we we we're not going to know all of the knowledge. We're not going to have all of the

answers. And so ask questions, you know, don't be scared to ask questions. Don't be scared to go and ask for help from people, maybe the people that are within your sphere >> to kind of guide you at least in in the right direction to where you have enough information to be able to make a decision and make an offer on these deals. Yeah. So that's beautiful. That's amazing. That's a whole lot. That's a whole lot uh

a whole lot to unpack here. Um let's talk about this pre this next uh the business park that you just purchased. What are what was the opportunity that you found? What was the seller's pain point? How did you find it? >> So that's this is a that deal is is the most difficult deal that I've ever structured. >> Okay. >> So this is going to be a good conversation then. >> Yeah. This it's a long conversation,

but hopefully a good one. So, the way I structured this deal and I wouldn't recommend doing this um this so this situation and technically I don't own this one yet. >> Okay. >> So, it gets a little This one's a little nuanced. >> Yeah. So the way this worked is basically the there's a woman who manages a a business park near Minet Hobby. Okay. >> Who I became close with >> and I noticed that there's a

that there's a facility that the same owner guy owns a a park near the one at Hobby and then he owns another one on the north freeway on the north side of town. >> Yeah. And so I noticed the one on the north side of town was having some troubles and difficulties and you know just from my conversations with her and there was there's a lot going on a lot of moving pieces I should say you

know just to keep things >> simple. Um >> but the seller I mean everyone had tried to get this guy to sell >> and he just wasn't a seller and lives in you know Florida. Uh, everyone was like, you know, it's like the fish in the marina, like the everyone's casting lurad and it's not just she's seen every lure there is and bait there is and isn't biting anything. And so I asked her to introduce me

to him when he came in town. >> Mhm. >> I met with him and he still got the same thing. I mean, I I met with him, but I wasn't get I didn't feel like I was getting anywhere. >> Yeah. >> And I made him an offer. >> I made him an offer a year before I met him, I should say. Okay. >> Before I made the introduction. Yeah. Before I received the introduction, I made an

offer. He sent me an email basically uh saying he wouldn't take at the time I'd offered um I mean I don't want to get into numbers on this one actually, but I offered about 65% of what he wanted. >> Okay. >> And he said absolutely not. >> Right. >> And so this is a year later. I get the introduction. I didn't even know if he knew it was me. Associated me with the name and the email.

>> Yeah. Um, so I actually only emailed him from a different email address after that. >> Yeah. >> Because I was like, I don't want him to have like the two emails and like >> Yeah. Yeah. Yeah. >> Um, but anyways, I I met with him, then I flew to Florida, met with him again. >> I did all of my due diligence on this property. I should say before I went to Florida. >> Okay. >> Because

I was close with the property manager, >> right? >> So, I paid for a full inspection on all the units. Full PCR. >> What's a PCR? uh property condition report, >> okay? >> Uh which is not cheap. Paid for a full full PCR, paid for a full environmental report, did a title search, did everything >> everything >> without even discussing price with the seller. >> Wow. >> And my only correspondence with the seller was him tell

like turning down my offer a year before. >> Yeah. >> So, I don't know. I felt like a little bit of like an intuitive nudge. I don't really I mean, I don't know what it was or why I felt that way. I also didn't really have any deals going on at that specific time. So, I was like, there's a little like deal junkie inside of me that's got to stay stay moving. Yeah. >> Um, so I

flew to Florida prepared to make a non-refundable earnest money offer >> because I'd done all my due diligence and knew what I was dealing with and knew my price was good. So, I made my offer with the non-refundable earnest money. >> Did you make this offer in person? >> I did. >> Okay. >> And he shot it down in person. It's kind of awkward cuz I was in Florida just getting the deal shot down. >> Yeah.

>> But he told me if he was to find a replacement property to do a 1031. >> Mhm. >> Then he would do it. And a 1031 for you know people that are listening is when you can essentially defer your taxes by selling a property and having all those funds go into another property >> taxree. >> Taxree. The issue is it's a tight timeline. >> What's the timeline? >> I think it's 45 days. Don't quote me

on that. 45 days or so to identify three replacement properties. >> And then you have I for I think it's maybe 125 days or something close to that to locate a replacement property. >> Okay. >> Um don't quote me on those times. I think it's about that. But you know so it's a it's a short time frame you know to make that big of a decision, >> right? >> So what he wanted to do is find

something first and then make the decision. M >> but I didn't want to wait around for him to hopefully find something. I mean, he's owned it for 40 plus years and he hasn't done anything. So, you I didn't want to just wait around with, you know, other people trying to get the deal as well. So, um what I came up with after considering his concerns and his problems and thinking of my own was, you know, the

site needs to be turned around. Um it needs there's a lot of stuff going out on there that needed to be cleaned up. um you know needed it needed a lot of love. >> Yeah. >> To say the least. >> Yeah. >> Um >> I've seen it. Yeah. >> Yeah. So what I offered was a master lease agreement and a purchase of sale agreement simultaneously. >> Okay. >> So basically what I said is um here's a

purchase of sale agreement. I'll put down $150,000 non-refundable. >> Mhm. >> Day one. >> Mhm. We signed that and then we signed a master lease agreement simultaneously. >> Okay. >> So, the way I structured it was I looked and I said, "Okay, he's not making much money off this facility right now. If I can get him the same amount of money that he's making right now without having it to do any management or even think about

this property and give him time to locate a 1031 replacement, then that's a win-win for both parties, >> right? So, I created a purchase of sale agreement, put the 150,000 non-refundable down. He signed that. We signed a master lease agreement which came out to my monthly payments. It's basically the same thing as if I would have gotten an interestonly >> seller finance deal >> at 4% interest only for the entirety. >> So, the only money that

I had to put in to get in this deal is 150,000. >> Wow. >> And so, >> what about all the repairs that are you doing to the property? So the repairs and everything I'm using the cash flow from the property. I'm bringing some additional capital but not not anything extra. I mean I'm doing it very like peacemail using the property's cash flow to because I I created a good cash flow situation with you know master

lease dynamic. >> Yeah. >> Um that being said it's an 18month purchase agreement >> and I I paid for you know attorneys to do it correctly and make sure everything's dotted and crossed. But um essentially he has 18 months to trigger the close and he get he has to give me 90 days notice to close. If he doesn't do it by month 18 then month 18 automatically triggers it. So the latest it can close is month

21. Got it. >> And I have to be ready. If I can't close in 90 days I lose the deal. >> Yeah. >> Um but the good thing >> how do you stay ready on this deal? >> So I mean I have backup plans in place. I have um my hobby business park deal for example. I've I have really low debt balance on that. I know exactly what I can refinance it at and get liquidity there

and bring it to close. So I have backup plans in place. What I think will happen, you know, every month that goes by, I'm stabilizing it further and further, >> right? >> Increasing the valuation every month. >> So what I'll do once it's time to close, hopefully like close to month 18, I'll close it with, you know, an acquisition loan just for like semantics. >> Mhm. and then, you know, two, three months later refinance it off

off of value, right? >> And not have, you know, because that's a very clear value, you know, that the equity's there. Deal's there, right? >> And it's stabilized at that point, too. So, I'm basically getting to stabilize it under the master lease timeline. He gets the 1031 ability and I get in it with very little money. >> Wow. >> So, >> wow. >> That's a 100,000 foot deal with a billboard. >> With a billboard. Yeah. Mhm.

>> I think uh I think all this goes to show the ability to be creative in real estate, right? And understanding again the motivation of the seller, right? And putting together something creative that makes sense for you and makes sense for him. >> Yeah. And you know if you think about it logically it's you know someone who's at a later stage in life who for example has owned it for a long period of time they have

a low cost basis they've depreciated it down you know to pretty much zero I mean the way that works you know every year you're depreciating structure >> and so eventually you know you've depreciated all which means you got a huge capital gains tax bill if you were to sell. So a lot of times they don't want liquidity and you don't have liquidity, right? >> So it's you work it out. It's a win-win. You don't have you

don't have liquidity. I mean it's not you don't want to you know you can get in a lot of deals without having to use your own cash because >> they don't want your cash a lot of times right away. >> Right. Right. What they want is to defer those capital gains. Right. >> So whether it's seller financing, whether it's something more creative like a 1031 where they don't want to just cash out, you know. >> Yeah.

Yeah. Um le let's talk about like let's talk about deferred you know you mentioned or depreciation right what does depreciation mean >> so depreciation I mean that's kind of per the tax code you're able to u you know essentially depreciate an asset every year >> right >> um and I do what I've started doing is uh bonus depreciation like accelerated depreciation >> where you're able to essentially you know do a a uh you a study on

the property and forward the depreciation to the first couple years. >> Are you doing cost segregation? >> Cost segregation, right? Where you're getting the majority of it the first couple years. I mean, you're still you're not avoiding taxes. You're essentially just frontloading it. So, you're it's time value money deal. >> Got it. And the co can you explain the cost segregation study that's cost segregation study? uh they basically break down all the different elements of the

structures and like the depreciable life on you know all the different components and they come out and they do like a detailed report of everything and then they give you kind of what you're you know what you can depreciate on an annual basis >> right >> um I'm not smart enough to put one of those together but I could tell you what you can depreciate annually >> yeah yeah I mean but you know the actual cost

segregation study what they do is that they look at like every component of the building correct correct >> and they break you know they got all the different, you know, com all the different compartments have like different depreciable lives that you >> so like doors for example, the the structure, the windows, maybe everything that's in the building, the roof. >> So they're they're able to break create a whole study of the entire building and then tell

you, okay, this is how much you're able to depreciate on a yearly basis so that you don't have to pay any taxes up front. Correct. >> You paid on the back end of the building. >> Exactly. Well, or you just do 1031. So you depreciate it, you frontload it, you depreciate as much as possible, and then if you want to sell it, you just do a 1031. >> Beautiful. And this is one of the biggest, I

think, kind of cheat codes for in real estate, I think, that exists, right? Is is it's all about buying assets, depreciating so you don't pay taxes, and then selling it, and then basically you're not you're not not paying taxes, you're just pushing those taxes aside, >> right? >> It kind of seems like a cycle that keeps on going and going. When does how do you get out of this cycle, eventually? So, I mean, I think there's

there are a ton of different strategies in real estate, and I don't think anyone is right or wrong. I think it's just a matter of timing. >> Um, so I think there's a time and place that, you know, maybe you do cash out of one, and you have enough depreciation on the other ones to offset the gains that you're making on that one sale, for example. >> The other thing you can do is just cash out

refi. That's the method I like I've been using that I like, you know, more because my goal is to just build a really long-term portfolio, >> right? >> So, not necessarily doing 1031s on your end. It's more so just doing cash out refies. >> Correct. >> But but don't get me wrong, like I mean I don't I think like the idea that like never sell anything for no for, you know, any reason whatsoever. Like I don't

really subscribe to that. Like I think there's a time and place that if it makes sense to sell something. >> Mhm. >> But unless I have a reason to, I don't. >> Yeah. Yeah. Yeah. So you keep the assets until maybe you get a good enough offer for it to make sense to sell it. >> I mean the other thing is at least and this is all stuff that I've learned pretty recently. I mean in terms

of like the outdoor storage assets um your your refinance and debt terms become significantly better and you get a lot more options the bigger your deal size becomes. >> Right. So, my plan with the outdoor storage sites, um, I should have, you know, close to 20 $25 million of outdoor storage, uh, by like February 2026. >> Mhm. >> So, I plan on doing a portfolio refi >> on all those sites, and that's how I'll get, you

know, the most attractive debt terms. >> Yeah. What kind of debt terms are you going to >> So, I mean, it depends clearly on where the market's at there, right? Um, I mean I guess just for uh, you know, some reference points like today I'd be probably looking at like six and a quarter plus three%. >> And that's a on a 30-year loan or >> 25 year am >> 24 year. Now do you have to do

refinance every 5 years also on those? >> So yeah I mean it'll be five year I mean it depends on the terms that there are a lot of different options that you can do. I mean there's CNBS lending there's life codes there a lot of different >> what are those? What does that mean? So, I mean, life insurance companies are are one option that offer, you know, lower rates and they're more flexible in terms. >> Yeah.

>> Um, CNBS loans are, you know, commercial mortgage back security and so that's sold essentially to the bond market, >> right? >> And so the rules, you know, they're a lot more strict. Like you have a lot less flexibility. um you can you know if you're not careful with those like there's no mercy on the other end. So >> um you just got to be careful and make sure you know what you're signing up for with

those kind of deals. >> Where do you get the knowledge to make sure that you make the right decision on the right loan to choose at that point. So, I mean, I think a lot of it is um talking to people. >> Yeah. >> Who have more experience than you, >> like other owners or maybe attorneys or >> Well, I mean, I think an attorney is always good to, you know, read legal jargon that you're unfamiliar

with, but more so like the strategical element for me was talking to people who were more experienced in real estate than me, who I'd look up to and have relationships with. Yeah. >> And asking their thoughts on what I should do or what I shouldn't do. >> Yeah. Um, just because I mean I think um I think some things are just it's a matter of experience and like once once you make the wrong decisions it's easy

to tell someone else what not to do. Yeah. >> And it's better to hear it from someone else than have to make the wrong decisions yourself. >> Right. >> No, I agree. I agree. Well, man, I think uh I think now, you know, from the beginning of this podcast to now, I think I have a lot more knowledge as far as like your your experience and what like how you've actually gotten to this point, right? Like

it's it has it doesn't sound like it's be it's it's came easy to you. >> Yeah. And I and I still like I still make the wrong decisions. I mean, I still like there's one deal in particular that I have that I've had for lease for over six months now. The deal is it's like it's not a it's not a terrible deal from a >> a purchase price standpoint, >> but it hasn't gone according to plan

by any means. It sat vacant and it's the only deal I have right now that's that's like that, but it's a thorn in the side and they happen. >> Yeah. >> And it's a batting average and not everyone's going to be perfect and there going to be, you know, frustrating things that happen along the way. >> Right. Right. and and understanding that going in is probably what gives you the or maybe gives you the fortitude to

keep it keep going, right? Because you know that you're going to have some good properties, some great properties, right? Some grand slams and you know, maybe some some thorn in the sides like you said. So, as long as it it averages out to make you be in the green, I think that's all that matters when it comes to real estate. So, >> man, that's amazing. Let's talk about deal sourcing, you know, because I feel like it

hasn't it hasn't been something that came by chance now at this point. What is your competitive advantage when it comes to deal sourcing? >> Yeah. So, I think the the biggest competitive edge that I've had is just being able to apply the same work ethic that I did to wholesaling >> to the commercial side, right? And I think that a lot of the commercial world is um it's it's been handled the same way for a really

long time. >> Yeah. >> Um in terms of how brokers interact, how they find deals, who they give their deals to. And there hasn't really been a lot of people from the residential wholesale community entering into that arena, right? And I think like the unconventional ways of just going direct to seller for example and not having a broker interact with the seller and then bring the investor or the institution the deal. >> It's you know being

able to go directly to the seller apply the same you know the same tactics that you do in residential the same stuff that's standard in residential becomes creative and unique in like the industrial world >> right >> which I mean if anything you would think it's becomes easier. You have less people to compete against that are doing your strategy, >> right? >> You know, so um really it's like it's being like an octopus thinking like there's

not going to be there's not one secret sauce. The same way anyone that does wholesaling houses like there's not one thing that you just do that just like you know generates a lead automatically. You might get one from door knockocking. You might get another from cold calling. You might get another from email blasting. You might get another from sending direct mail. And all of those strategies that I just mentioned are the ones that work with outdoor

storage as well, >> right? >> Um, you know, whether it's going in person and going to a site and just figuring out who's who and trying to talk to a GM and maybe he introduced you to the owner. Um, and sometimes people just curse you out and you can get in your car and you go to the next one, you know? So like >> sometimes like door knocking and just meeting people in person can be really

effective. >> Cold calling, sending direct mail and then like I think there's always an element even on top of that to just keep adding to the creativity. >> Uh handwritten letters. >> I mean I even sent uh I even sent chocolates. >> Oh yeah. >> In the summer is not a good idea. >> I thought about it after the fact. I was like yeah I don't I hope they got it quickly. Um but I didn't get

any responses to that. Yeah. Yeah. So like sometimes you try things and you're like it's uh trial and error. >> Yeah. >> Yeah. Yeah. So there's not one strategy per se probably. You just got to try a bunch of things and then even you know reaching out to residential realtors for example. You know if you're a realtor or if you're a wholesaler and if you're plugged into the residential community you know describing what it is that

you're looking for. You're looking for single tenant sites. You're looking for and just like really, you know, deal criteria, you know, 10 to 30,000 square feet of warehouse and 2 to 10 acres of land, >> right? >> With the majority being stabilized with, you know, crushed gravel or asphalt or whatever it may be. Um, and describing that to residential realtors and say, "Hey, if you come across this, like, let me know." >> Yeah. not to commercial

brokers because they're already going to have like someone to give everything to and but you know there's opportunity in because I've seen even on H residential realtors list an outdoor storage site >> really >> just looking at it you know as land not not really knowing what to do with it you know maybe it's their friend maybe it's their neighbor >> right >> you know maybe it's their relative who's selling it they don't know where to

put it it's not on loopnet it's not on co-star it's just on H >> wow >> so even scanning for those kind of opportunities and telling other realtors in advance like you're the person to bring those to, >> right? So, basically, like you said, very much having an octopus, right? Having different marketing sources out there always consistently finding you leads and opportunities to to get into these outdoor storage spaces. >> Yeah. And consistently trying to add

tentacles to the to the layer because I mean, if you get if you have, you know, eight tentacles and you're getting one lead from each every month, you know, like >> that's still eight leads, >> right? So, um, yeah, I think it's having just a as many prongs and as many tentacles in the water as possible. >> Do you have any sort of KPIs in terms of like how many leads it takes to get a deal?

>> You know, I am so unorganized. >> Yeah. >> That if anyone followed those kind of metrics like you do. >> Yeah. >> I mean, I think they knocked me out of the park. >> Yeah. >> Cuz I I mean, that's my Achilles heel is like organization. I'm very much like a hunter on the deal front. >> Yeah. So, I'm just out there wanting to like find deals all the time and like and I don't like

to go back and like keep track of like all my data even though I should. I have you go to my office, I just have a million notes all over the table and >> yeah, >> sometimes I just try to put them together and you know get kind of organized but I definitely could use something of that nature. But the short answer is no. >> Yeah. >> Even though I know I should. >> Yeah. Yeah. No,

and that's something that I think that I obsess over is very much understanding the data and understanding the metrics on on how to track success because when you have success >> and you go back to the data and you look at it, then you can replicate it, right? Then you can >> create a much more scalable outcome that you can say, okay, if I make this if I make this amount of effort on this front, then

I can get x amount of results. Yeah. >> Right. I think that's important when it comes to business, right? Um, but yeah, that's something that we can definitely talk about later. Yeah. Um, that's cool, man. That's awesome. >> So, for anyone that's listening to this, how can they start doing this deal sourcing and start finding these opportunities? Just everything that you just mentioned, obviously. >> Yeah. I mean, I think it's especially if you're already in, you

know, if you're a residential realtor or if you're a wholesaler, you know, you don't have to really change anything about your personality or, you know, wear it, you know, more, you know, you don't have to do anything. you can just be yourself and approach these sellers the same way you would anyone else, right? >> And the only thing is like you don't need you shouldn't have an offer the first day, >> right? >> I will say

that's a that's a big difference. You're not dealing with people most of the time that need to sell today, >> right? >> You're dealing with people who you build a relationship with and it takes a little bit of time. you know, maybe instead of a deal that closes in a week, it takes a month, two months, three months, but you build that relationship and then the offer should come, you know, later once the relationship is more

established, right? >> So, the first phase is just, you know, trying to find a time to meet them, getting the walk to to walk the property, getting to know them, and then coming to them with an offer. But you don't need to be prepared at all with a number the first day that you go to meet them. Yeah. >> Or the first time you call. And I'm really glad you said that because I feel like for

anyone that's listening to this, it could be possibly overwhelming, right? >> Yeah. >> I mean, even if you know, for example, if you got a hold of someone, built a little bit of a relationship with them, scheduled a time to walk the property, you know, hypothetically, if you wanted me to join with and like walk the, you know, just to kind of add to the experience level and talk as needed, maybe even on just the first

tour that you go on. >> Yeah. Um, you know, I'm happy to just to be as involved or as uninvolved as, you know, anyone would like me to be. >> I love that. That's that's a ton of value that you're offering there for anyone that's listening to this. Um, are what are your target markets right now? Is it just in Houston that you're looking for? Are you thinking about maybe expanding to other markets here in Texas?

>> So, I mean, right now I'm looking at Houston, Austin, Dallas. I mean, really I35, 45 between, you know, Houston and Austin, Houston and Dallas. What about San Antonio? >> I mean around San Antonio too. I I personally haven't started looking too much over there, but I'm definitely open to that area. >> Yeah. >> Um and you know soon enough I'd like to just be in you know the top MSAs. >> Yeah, for sure. >> Um

just with a very you know the focus is very much you know that sweet spot of 2 to 10 acres. Um stabilized buildings of 10 to 30,000 square feet. So just staying in that kind of clear buy box. >> What about business parks? You're looking to buy more business parks also? >> Not today, but in a month or, you know, two months or so, once I get a little further along here, then yes. >> Yeah. Okay,

cool. In the same markets, too. Would you be open to look at it? >> Yeah, in the same markets. And, you know, from a deal sourcing standpoint, like now's the time to plant the seeds. So, just cuz it's not time to close today doesn't mean that now is not the time to start, >> you know, building those relationships because those deals take a while, >> right? >> Um, and they're, you know, the business parks are you're

dealing with investors. So, I'll say that that is like the nuance there. You know, you're not dealing with a mom and pop owner user. You know, mom and pop owner user is more similar to a residential homeowner, >> right? >> As opposed to an apartment owner, >> right? >> You know, a homeowner, they're not looking at the house from an income standpoint. They're just looking at it as a place they've lived for a while. >> Yeah.

>> And >> and it goes the same for the outdoor >> outdoor storage owner user. Yeah. It's the same thing. You both are dealing with people that have real estate as a byproduct of some other element of their life. >> Yeah. >> You know, the house is a byproduct of place they've been living. >> Outdoor storage is just a place they've had their business, but neither have it for a income use. >> Yeah. But from that

standpoint, from an owner user standpoint, it might be easier to start the conversation with someone that has an outdoor storage space versus someone that has the business park basically. >> Absolutely. >> Got it. Got it. And when it comes to business parks, I think something also to to maybe talk about is the different kinds of business parks out there. I I think you've mentioned something like low bay, low bay. >> Yeah. Yeah. So there's they're referred

to as shallow bay, small bay. >> What are the difference between or can you >> Yeah. Yeah. So, I mean, there's there the term business park. Um, you know, you can have business parks that have, you know, 50,000 square foot units or 20,000 square foot units or 5,000 square foot units. Um, the ones that I look at primarily are, you know, like around 1,500 square foot units. >> So, small units. >> Small units. I mean, the

tradeoffs are the really small units are the easiest to lease because you have the most businesses that, you know, naturally can afford to pay those rents, >> right? >> Um, but you're dealing with smaller companies, so they're more management intensive. >> There's more nuances that go on with the management, with the leasing, more tenants. Um, >> can you normally can you normally lease a smaller unit for more price per square foot on on the rents? >>

Yes. So you get significantly more >> of a, you know, there's a higher price per foot on the rent. >> Um, there's also a higher replacement cost. Replacement cost, you know, being the cost for someone to replicate that same structure. >> And that's really the barrier that you have protecting the value and protecting the rents. Yeah. >> Is can someone come across the street and, you know, compete against me essentially, >> right? Um, and you know,

each unit in a business park, I mean, it sounds just trivial, but it's really important is each unit has its own meter. >> Yeah. >> Each unit has its own restroom, its own office built out. So, these are, you know, instead of having, you know, 100,000 foot facility, let's say you have, you know, 4 25,000t tenants. >> Mhm. >> You know, that's four office buildouts, four restrooms, four uh meters. If you have, you know, >> 70

tenants, for example, >> 70 m. >> Yeah. >> 70. >> 70 offices. 70. Yeah. So, it's it's harder to build. I mean, it's more expensive to build out. So, you have a higher replacement cost. You have a higher price per foot. >> You can, you know, facility can make more. >> Yeah. >> Uh but there's more management that comes along with it. And >> if you're taking a facility that's, you know, been neglected for a while,

you've got 70 tenants that, you know, let's say it's 60 tenants that got to go, you got to fix all 60. It's similar to a multifamily, a big multif family, you know, repositioning. >> Right. Right. Right. So basically the uh the capex the capital expenditures that you need to put into uh 70 tenants business parks is going to be a lot higher than let's say for example maybe just like a four tenant 100,000 facility. >> Correct.

And the leasing front you know getting out you know essentially problematic tenants and all the things that accompany that. >> Yeah. Wow. >> Well that sounds all very interesting man. I think uh I think we've covered a lot. I think this is definitely something to unpack for someone that's listening. Um what else can you share about all of your experiences when it comes to this space that you're in right now? >> Um I'd say that you

know I think the industrial world for a lot of people is like is daunting and confusing and there are a lot of terms and intricacies that you know they might not understand and um nobody does when they're first starting. >> Yeah. And I think that, you know, I think the biggest thing I've learned in real estate as a whole is, you know, you just have to keep moving and as long as you keep pushing forward. Um,

even if you're hitting roadblocks or you're bouncing off walls or you're meeting different people, like you will get to the destination. >> Yeah. You know. >> Yeah. I love that. I think that's an such an important thing to consider to keep in mind is as long as you don't give up when it comes to real estate, you can be very and extremely successful, right? It's all about just managing where you're at, handling those objections, handling those

roadblocks, pushing through them, and then just getting to the next phase of your career. Right. >> And I mean, I think one of the things about commercial, you know, different than res residential, you need you need volume, especially if you're wholesaling. right? >> You know, you have high marketing costs and you have to you have to flip a lot of houses and you got to wholesale a lot of houses. >> With commercial, you can be a

lot more focused and you you never know what tomorrow is going to bring, >> right? >> And it can be a deal that, you know, changes everything. >> Yeah. Yeah. Yeah. So, you just never know what's right around the corner, >> right? >> Just keep on going, right? >> I love that. I love that. >> Well, Jake, how can someone find more about you if they want if they have a deal or if they have maybe

uh someone that they're talking to? uh you know a potential lead that they need help to either evaluate to maybe go and walk the property. How can they contact you? >> Yeah. So I don't if I don't know if you can post like a phone number with the episode, but >> it's 713 >> 8787093. >> Okay. >> And you can go to alumaholdings.com. That's a l o m a >> h o l d i n gs.com.

>> alumaholdings.com. Got it. Got it. And what does aluma mean again? It's a beam of light in Hebrew. >> A beam of light in Hebrew. Yeah. >> Shin shining on all the deals. >> Yeah. Lighting up the industrial world for for everyone out there. Yeah. So >> cool, man. Well, I think this episode's been uh very enlightening for uh to shed, you know, a lot of light in the industrial space. I think there's not a lot

of people that are that's doing that. Most people are either in residential or in multif family or just like in kind of regular commercial. Some people do uh venture a little bit into industrial parks, but uh not to the level or to the degree that you're in where you're just hyperfocused on it. So, I think you found a great niche in the real estate world. And I think um I I would definitely consider you as someone

um a leader in the space, right? And someone that someone can can come to for knowledge, advice, um or or just to have a conversation on things. So, appreciate that. >> Yeah. Yeah. So, I think anyone that's listening to this uh will definitely get a lot of value and uh and hopefully, you know, you might be able to do some deals with some of the listeners here. So, >> awesome. >> Yeah, man. Well, thanks. >> Thanks

so much for uh being here. I appreciate all your time, brother. >> Thanks for having me. >> Yeah. All right. Cool.