Jim Randel: Commercial Real Estate Investing

Can you give us an overview of your real estate investment career?

Highlights? Difficult moments? Greatest successes?

I started as an attorney, went to law school and practiced law but, even as a lawyer, I was looking to do deals, I read every book I could find. I had no money, I needed to be very creative. I bought a small house and fixed it up. I was a house flipper before house flipping was popular. I had twelve houses at one point, just wanted to do cosmetic, then I did the same with a small office building and later on a small office plaza.

I do value-add investing.

How did you transition?

When you flip a house, the principle is that usually the buyer of the house can’t see what it could be. I had the vision. Same with the office building: maybe the bathrooms needed to be redone, maybe the landscaping needed to be redone. It was a natural transition from doing it for a house to doing it for an office building.

Why commercial real estate?

There are bigger opportunities, less emotions. When dealing with houses you deal with people and their emotions. When dealing with commercial, it is more economic, more business and less emotional and the opportunities are bigger.

Where do you invest?

Generally I would buy in my state, I figured I could learn a discrete market, within an hour's drive of my office.

What do you say to people who say

• You get less LTV when financing commercial

That’s not true: if you know how to approach the banks, there is plenty of leverage. You explain what you will do and how you will add value and how it will help you lease it, that you have no issue with your borrowing.

• And that a vacancy can be insurmountable?

Most commercial properties have multiple tenants and one vacancy won’t kill you.

You wrote a book that is now a reference for commercial real estate investors as well as entrepreneurs

What motivated you?

I wanted early on to be an advocate of adding value to property and I had a good run at it: multifamily, retail, even distribution centres and I wanted to share about that path and spread the word. I believe in entrepreneurism and that one of the things that makes US and Canada great: giving people an opportunity to better their lives with an idea, hard work. I wanted to write that book.

What were the benefits of writing such a book?

I received many speaking engagements, some of which I pursued, I met people all over the US, I was invited to Abu Dhabi, lectured at Harvard and NYU business schools, I get calls and emails and letters now saying that my book is the reason people got into real estate and became successful.

There is a big buzz around syndication these days with the Real Estate Guys, Michael Blank, Joe Fairless, what is your take on it? What do you think of multifamily?

Syndication has been around for 50 years, it means the developer takes passive investors and pays himself. If you are dedicated to your investors, the word will spread. The syndicator needs to be dedicated to his investors.

I like multifamily, it is a good sector right now since lots of young people decide to rent rather than to buy. But you need a critical mass: 100, 200 and 300 units you can put a management team in place. I stayed away from it for the last 20 years.

In the last 20 years, I focused on retail and office mainly, the two sectors I am most comfortable with, I know the market the best, I have done historically very well.

What do you think of Amazon and e-commerce?

The type of buildings I do are not hurt: I focus on services such as restaurants, doctors offices, dentists, fitness centres, churches, supermarkets, car rentals, physical therapy places...

What are your favourite commercial type of deals or properties?

Retail because there are opportunities there now because a lot of businesses have gone out of business. There are opportunities to buy right now, you can find a building with vacancies and do what you need to do to bring new tenants.

Do you have a favourite strategy?

Add value, don’t buy something fully leased at a low cap rate, buy something that has some hair on it, needs some life and add value to i.

What is your portfolio like these days?

Mostly retail, within 1 hour of my office but also in Miami.

What would you recommend someone with a little bit of experience who wants to start in commercial real estate? Do you think it is a good idea?

Get into a brokerage, learn the market, get into lending, learn the market, don’t risk your money quite yet, learn the market, the business, get to know the players, then do your first deal.

Here is a link to Jim Randel's book: Confessions of a Real Estate Investor

https://www.amazon.com/Confessions-Real-Estate-Entrepreneur-High-Stakes-ebook/dp/B001FWIJB4