All Forum Posts by: Joel Owens

Lived in GA my whole life almost 50 years now. Woodstock one of the safest cities in all of GA. Nothing here is cheap. Hard to find anything below 350k here now. All those other areas you mentioned are expensive as well. You are mentioning highly sought after parts of GA.

I do commercial real estate over 20 years now specializing in NNN properties.

Don't expect monster cash flow here for residential. It will likely be more rent growth and property appreciation over time.

When I sold my starter house here in Canton next to Woodstock it sold for all cash in 3 days. New York buyer moving here with a family. To them 500k is cheap. Growing up my mom and dad built a new house in the 1970's for about 39,000.   

If national investment credit tenant even if sales not disclosed in lease often in their corporate website stock disclosures you can find data average store sales overall and then sometimes per store.

If no credit you need sales disclosures as tenant strength is weaker. Without sales I can't measure how they are performing with rent to sales ratio.

I won't rent to no credit tenants that will not disclose sales. You will have to ask for it anyways if they have trouble and ask for reduction in rent etc. If they disclose quarterly you get tailwind in advance there is trouble and try to get them back on track or know way in advance they won't make it so can start early to line up another tenant. 

If they are truly broke it's a waste of time. If they are not responding they might not know how to dig out of a perceived hole with the landlord.

If their business is no longer viable then maybe trying to get a payment for settlement in full.

When tenants mom and pop try to go out in retail centers the goal is to try to collect enough to cover attorney fees for an (offer in compromise).

If it was flex space they likely had little money. Most of these small business owners live hand to mouth and are not worth chasing. You could do a letter or something not much time and cost to see if they bite. If they have to be pursued constantly sucking away time and money then usually best to let them go.

To me time is money about 3,000 an hour. I rarely have any tenant defaults these days on commercial side as credit is super strong and I am picky on deals I buy. I like looking at the lake in my backyard too much to want to eat time chasing default business owners who owe money.

Is this tenant first location concept? Is it franchised or mom and pop.

Your lease is meaningless if they go dark quickly. You will then be out attorneys fees, TI, and leasing commissions. You also do not have to accept whatever language they have for assigning. You could still keep them guaranteeing the lease even if they sell the business.

You do not want them selling to joe blow that runs it in the ground and goes dark. You want them on the hook with double guarantee until new owner demonstrates strength as an owner operator tenant. This is especially true when whoever they are selling the business to is weaker or the same strength of guarantee.

If it's someone much stronger then obviously do not need both. Check if their liquidity and net worth is a cash position or mostly retiree funds you can't touch. If they go dark do not plan on getting paid fully for the lease if smaller tenant. Usually best to settle or they file BK and landlord gets very little to nothing.

Have in lease they have do disclose sales quarterly. There are 100 plus other things that go into it. Good luck   

So as a general example 2 funds aren't doing well and you go open a 3rd fund? Sounds like the government the current programs aren't working so lets open up new programs under new names and forget about those other ones.

Ok I have been in commercial real estate for 20 years. I have been at this site from very early on and watched it change over the decades.

I would not say a BP convention has no value. It just has different values to different people based on the point in their investing careers.

People that already have high wealth for many it's not the best use of their time. It's more for the starters making the first million or two. Back in the old days on here we learned on the forums and put into practice there were no conventions. The cost of a convention folks to put one on is very high. To sell tickets often conventions pack as many speakers as possible to prove value.

I used to go speak at conventions ( not BP ). They were investors doing side BP conventions before it was an official thing and when you have 30 to 45 minutes to speak it's just not a very long time. I like to vacation with family. I don't like to mix business but that is just me and my values. To others it's a 2 for 1 kind of thing. I would not go to Mexico for free with all that crime and gangs.

I found I can be interviewed on 10 different podcasts shows from the comfort of my house and they do all the editing and promoting the episode to their followers. I have maybe 14 hours into the 10 shows of time.

I do think these conventions ARE GOOD for newer people wanting total immersion on a bunch of different topics to see what peaks their interest and to make connections with others. Some people need a bunch of connection for motivation and others are self-starters needing very little to get going. Both are fine just different in approaches. Just like investments there are tons of ways to exist and do business.

Time can change people. As you age money becomes less of a number one spot motivation to experiences and memories. Working long hours tends to lose it's luster.

Being in the NNN space for commercial for passive wealth I have talked with thousands of millionaires over the decades on the phone and built lasting relationships. You get to talk to all age groups and walks of life. You hear their life stories and learn so much more about life than another dollar.

I get the hunger to escape the rate race wanting more. That was me 20 years ago with not 2 pennies to rub together. That was also similar to Josh starting this site trying to get ahead. Everyone wants a better life for themselves and their families. It's human nature. 

The first million is the hardest. The next couple million tend to get easier. The reason is you have knowledge and experience and tend to mess up less and make more informed decisions. You tend to have breathing room to cover living expenses and more time to think on next investments to scale and grow the portfolio.

That's very hard to do when trying to scratch and claw to get a start wondering where money is coming from to eat and pay the bills to survive another day. Money means nothing without your health, time, and family to enjoy. I have seen wealth at all different levels. At the core when you strip the money away people are the same. They did research with poor to middle class people and the wealthy.

About 85% said the same thing they valued memories and happy experiences with friends and family. They wanted people to think well of them being a good person. That is what fulfilled them regardless of net worth levels. People want a purpose and to be happy day to day. Becoming wealthy doesn't change their core it can just help them live their ideal life on a daily basis. I am living proof of that.

So if you see value in the convention then go for it. Have a great time and make connections.

I might eventually do a convention solely on NNN I put on but it will be in GA.

Bigger Pockets is more global now. It's not worse or better just different how it has evolved over the decades. 

Typically higher exit splits are given to investors who throw in lots of their capital with class A shares.

We usually have 70/30. 70 to LP and 30 to GP. If someone is investing many millions to tens of millions and up then can have a different conversation.

Some syndicators starting out might give away the farm to just get going but if they start showing success their cost of capital usually goes way down.

So their are some LP's worth 50 or 100 million that know how to evaluate deals and might take a cheap flyer like 50k or 100k into these newer GP's if they feel deal on its own strong and the new GP just got lucky to find great property at great price. They get high equity upside split that way. To them the LP it's often fun money. They might double the 50k or better or lose it all but can just get tax write off and then make it back in one month or less. They might put a few million each year into higher risk investments just to gamble.

It's all about the level of the LP and their sophistication with portfolio and investment strategy.

On the broker side for NNN as an example I had clients use 7 to 10 year fixed debt low in the 3's to 4's and sometimes assumable even when possible to build in with the lender.

I like longer fixed debt to give extra time to refi or sell the asset when best in cycle. You use 3 year to 5 year debt you can be asking for trouble. Over history if real estate is good it almost always goes up in value long term. Where the problem happens often is using short term or floating debt and paying a premium and when upcycle stops and the dip starts the property owners are toast. It's playing a game of musical chairs speculating you can exit and cash out big on the upcycle before things change. Long term fixed debt generally the net worth and liquid of the investor who owns the property and the property itself tends to outlast economic cycle shifts. Those who often chase the quick money often lose it as fast as they make it.

Cycles are like a mountain. You go to one peak and look down at the next valley which is lower then the peak but still higher than where you started from. Your money and your assets just have to survive the cycle shift in years before the next upturn. Going through cycles gives experience for long term planning and positioning of velocity buying with portfolios grown over time. You can always buy just less available for deals at the peak. I am not a stock person but know people with 8 to 9 figures worth of stock. They always buy a minimum amount no matter what is happening. When there is fear sell off or dips in value they buy a bunch more. Lot of stock owners have net worth of 100k and when stock dips they freak out and take 70k back and pay penalty. It's irrational but why people stay poor a lot. Real estate is same in your asset specialty you are buying with cycles and increasing velocity based on cycle timing and deal flow opportunity. There are some that jump to the asset class of the moment which is different from their core competency because various real estate can cycle at different times within a macro economic national cycle.

I personally believe in you do one thing, do it world class level, and forget the rest.   

I think if you look at cycles and history the syndicators could not have predicted a doubling of interest rates so fast in their models when they did their raises and purchases.

So for many it is probably a learning process of navigating waters they have likely never been in before,

I personally do not believe in massaging debt to make a pref look good to investors to entice investment. On one hand it is scaling fast, raising less capital, feeding the machine, and placing more cards on the table hoping their aren't more busts than winners.

I am talking about in generalities and not Ashcroft. I have heard on the street from others that syndicate multifamily there is a blood bath coming and in process. Think about if a seasoned syndicator of multifamily is having challenges than what about all the newly trained up syndicators at these workshops that bought marginal properties massaging debt to get investment so they can make money?

They are going to get hammered with little experience or capital to turn around the ship and help the LP's try to be made whole.

LP's should focus on the GP first, the strength of the deal second ( finance, location, all cash, etc.), then look at the initial pref almost last. In that way you are training your mind to set up a solid foundation for investment.

I syndicate NNN but do not have to. If I like 1 deal a year we buy one. If I see 10 I like I try for 10. It's not about scaling for me. It's about quality of investment. As a GP I do not want a lot of headaches either. I want consistent income I can depend on from a strong tenant and location. Nothing is absolute or fool proof and there is risk in any investment but the GP should take their time to try and analyze the risk as best as possible so it is minimized. You can never know all variables it's just not possible. Even billionaires do not win all the time but they put odds in their favor heavily by the way they go about making investments. If you win more than you lose and when you lose you lose small and then when you win you win big generally you come out really well on top. I really do not like using a lot of debt to purchase a deal. I would rather take down all cash and have the most options when to sell or refi if ever. Some assets could hold for decades. Look at your syndicate companies. Do they have to scale a lot and go fast to make payroll? Is the GP okay not doing a deal for 1 year IF they do not love a deal? You really need to understand what the GP stands for and their ideal way of making investments and why. Then you can decide if they are a possible fit for any of your capital as an accredited investor.

Do you think syndicators  maybe take money from non-accredited investors because they are easier to manipulate into investing in anything? Not all of them are but likely a higher percentage than accredited investors who are already multi-millionaires. You do not want a syndicator building models on having to take in a bunch of non-accredited investors to make deals work. That should be a major read flag that other LP accredited investors are passing and the syndicator is having to work hard with non-accredited investors to complete the raise.   

You pay cash and offer a high pref. Tenant in place with long term lease on NNN. No payments to stop if high quality tenant and strong location.

All these rosy pro-forma's folks you all are in investing in where all the debt and rental growth and all that are called VARIABLES to an investment. The more you have of those the more you have a chance of things not going as predicted. That is why land development as an example for multi-family carries extreme risk. The project takes many, many years to even get to a point where they are starting to lease up units. The longer a development play goes in an investment cycle the longer risk can increase in many cases unless project started on upward cycle so when project comes online for lease up market is mid to up cycle and gets full before the downturn.

There are all kinds of LP investments.

As example:

1. Raw land purchase and flip

2. Land entitlement ( getting zoning and all approvals and selling to a developer)

3. Land develop ( taking a project and finishing it out until stabilization )

4. Existing property full stabilized being sold off by the developer or 2nd or 3rd generation owner.

5. A property that was stabilized but now is disrepair and aging. Work to get existing use performing again fully.

6. A property to be torn down or re-adapt the use to something else

7. Then there are deals that are debt based LP investments and equity based.

There are all kind of so called returns and timelines. You have to decide what is right for YOU and the risk tolerance to your capital.