I'm going to be covering a topic request from one of our listeners "What happened when I landed in this country at 18 and how did I get to where I am today, 21 years later?" 

As you may know, I am originally from Brazil, and was very blessed to come here at 18. I landed in Silicon Valley and I still remember the first outing with my mom, she was explaining to me what the sign "Now Hiring" meant in Portuguese. I remember being so excited, because I saw "Now Hiring" everywhere that I went. In Brazil, we don't get these many opportunities. I got my first job at Mervyn's, and also worked at Blockbuster and Wells Fargo while going to college. After buying a music player with my first paycheck, I was pretty frugal and decided to start saving up. At Blockbuster, they absolutely loved me, I got promoted within one month of being there going from $7.25 an hour to $7.50 an hour. I got promoted to assistant store manager. And the reason that they loved me was that I was just working.

Sign up for our newsletter at www.montecarlorei.com 

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Join our 2022 goals calls here! Email us at [email protected] / Venmo @steffbold / or www.paypal.me/regoals

What are some things you need to keep in mind when leasing your property? Why should you put your prospective tenant's hat on? What are vacancy rates looking like today? Raphael Collazo, a retail real estate agent, shares his insights.

You can read this entire interview here: https://bit.ly/3fhLRv1

Investors and commercial leasing brokers have to put a hat on of our potential tenants, why don't we go into each step of your book and dive into some areas of it?

First we talk about why you need commercial space in the first place. I've had a lot of conversations with people who like the fact of having a commercial space, it's a validation of them having made it, but in reality, they may not even need a commercial space. If you're a web designer, why do you need a commercial space, it's more of just fluff for you. On top of that, it may not be in your budget, your business may not be able to support you having a commercial space yet. Having that conversation early on is important so that you understand that maybe it's not the right time. And that's okay, it's actually better to know that now versus you getting into a commercial lease for three to five years, and then having that financial commitment for another three to five years. 

Then we review what you need to prepare before you get a commercial space, a lot of it is providing financials, if you're a newer business, or you haven't been around as much as some of these more established businesses, put the investor hat on, why would the landlord want to lease space to a potential business that doesn't have a track record of success, that's very risky for an investor. If there's a 2,000 square foot space, going for $2,000 a month, and you have $40,000 in reserves, your business is producing this, we can support this type of payment, it's getting ammo in the cartridge, so that as you go out and look for commercial space, you become a more attractive tenant to investors.

Then we go through the process of narrowing down your list of criteria: how do you negotiate commercial leases, some of the provisions you need to keep in mind as you're looking at commercial spaces. And then at the end, we talk a little bit about once you get to the point of getting the lease signed, what are some of the build outs involved if you need a build out, and then we share some marketing strategies, and at the end, we have a call to action saying Now take the action, do it.

And when they go ahead and do it, what are some of the things that they should be aware of with regards to negotiating that lease?

As a landlord you want to pass along some of the main responsibilities over to the tenant, because you don't want to have to deal with getting calls for toilets and whatever else. That's part of the reason why you're investing in commercial real estate versus multifamily real estate. They want to be able to be a little bit more passive. Along with that, as a business owner, they don't consider the big ticket items, the landlord could pass along the responsibility for the furnace, the AC, if there's an elevator involved, maybe they're also passing along that responsibility. And you don't know that unless you read the lease.

If you're in a multi tenant center, a lot of times you have to consider what's the competition in that center, because you don't want to be a liquor store, move into a multi tenant center, and then all of a sudden, next door, they allow another liquor store to move in. Have some form of exclusivity, and a sublease clause just in case.

Raphael Collazo

www.raphaelcollazo.com

www.linkedin.com/in/raphaelcollazo

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Join our 2022 goals calls here! Email us at [email protected] / Venmo @steffbold / or www.paypal.me/regoals

What questions should you ask a General Contractor (GC) when looking to hire one to build a property for you, renovate or expand it? How to even find general contractors for your projects? How should you pay them? Jeff Walston from Premise Construction will share his experience with us.

You can read this entire interview here: https://bit.ly/3pZoZXv

What are some of the major things that people should be aware of before hiring a general contractor?

You need to know the right questions to ask. If you're in search for a general contractor, you can go to either your Better Business Bureau or your city commerce centers, they will know a great contractor because they've dealt with them in the past and know that they have a good track record, first and foremost. As far as questions to ask prior to starting the commercial projects:

1. Making sure that they're fully licensed, fully insured, which is general liability, and workman's comp. Regardless if they are even going to be on the job site, you have to have that to protect everyone involved, it's very important.

2. Their experience. If, for instance, you're hiring a contractor, and you want to do a restaurant build out, if they don't have any experience in the restaurant sector of commercial construction, maybe they have just been doing office buildings, you might have a few hiccups going through that whole process, because it's going to be a learning process for them. You need someone to know what they're doing in that specific sector.

3. Once you figure out if they've done those projects, ask to see them, see if he can get references, ask around about their particular companies and do your research on them. It doesn't hurt to Google their company and Google their employees as well, I'd highly recommend that.

What are some questions that people should be asking them to make a decision on which one to pick?

If it's not down to price, if they're close in pricing, and you're just trying to figure out, who am I comfortable with, it's different for every circumstance, it's how you feel about the person that's representing the company. Some questions to consider are:

- What expectations do you want them to have?

- Can they meet your communication expectations?

- Do you want daily updates? Do you want weekly updates? Do you want monthly updates?

- Do you have project managers that are going to be managing our project daily?

- Do you guys still perform work? Or do you subcontract everything out? And if so, how do you manage those subcontractors?

- If they do have subcontractors that they're utilizing, you can ask them, How strong are your subcontractors? Do they show up on time? Are they managed well within their company? Get a feel of what they say about their subcontractors.

- Is every subcontractor fully licensed and insured on your property?

- You also want to see, from a liability standpoint, if they have any safety protocols, and if they do, what are those safety protocols, and maybe even see if you can get their safety protocol to see if everyone's following it. With any commercial property, the public safety for anyone involved in the project is vital for the people working there and the people utilizing the building later.

- When problems arise, how do you handle it? Can you give me an example of the most recent one?

Jeff Walston

Premise Construction

www.linkedin.com/in/jeff-walston

[email protected]

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Is location, location, location important in the metaverse? How can we develop properties in that world? What makes real estate valuable in the metaverse? How can you monetize it?

You can read this entire interview here: https://bit.ly/33IcF5a

Let's say Facebook decides to create their own universe, how are these pieces of land going to merge together? Or not? How will that work? What if one planet becomes more popular than another planet?

That is the trillion dollar question. Are these going to be interoperable with each other? Is one going to dominate? That remains to be seen. We're still so early with this new world that nobody knows. Personally, I've bought virtual real estate in the Sandbox, Decentraland and Netvrk. And I'm looking to invest in virtual estate in up and coming metaverse projects as well. There's a saying, Spray and pray, I've kind of adopted that strategy, but not quite. I'm doing a lot of research into these projects, and I'm exploring them, but I am looking to get a lot of exposure to it. Some people compare it to being able to go back in time and buy a city block in Manhattan 100 years ago, what would that cost today? What would the return on that be worth today? It would be absolutely astronomical and, and incomprehensible. I think it's very possible that we're looking at a similar opportunity now, where in a decade or two decades, we look back, and we could have acquired a land plot in the Sandbox or in Decentraland for only $15k-20k. And now it's, millions of dollars. You can also purchase in game assets in the Sandbox and Decentraland. You can also create them, I believe. Roblox allows you to do something similar. I haven’t played it myself, but it might be something that some of your listeners are more familiar with, especially if they have young children that play Roblox. They provide you with tools to create your own anything in game assets, it could be a sword, a speedboat, a palm tree, a desk, a bed, pretty much anything that we have in the real world you could create it in the metaverse and you can sell it.

Why is location important when you can literally click a button and be transported to the other side of the planet over there? Are people “walking” in these universes and is that why they will be able to see Snoop Dogg’s neighbor?

Yes. There are various ways to move through these Metaverse projects, there are portals in some of them where you can teleport your avatar from one location to another. However, those are in specific locations only. So there are going to be large stretches of land between portals, where you’re going to have to find alternate means of moving around. The obvious and most common one would be walking or running. There are also roads, you can buy cars. I’m guessing you could move around the metaverse faster by purchasing a virtual car.

Is there anything else that we haven’t covered that you think is important for our audience to know right now?

I would just encourage everyone to start looking into this, do your research. It’s very easy to set up an account on the Sandbox and in Decentraland, create your own avatar, start exploring and start walking around. Look at their marketplaces. See what’s for sale, how much it costs, download a digital wallet, get a MetaMask, or Coinbase wallet, or a number of other wallets. But MetaMask is the most popular one. Start getting familiar with it, because this is the future. The opportunities are massive. We’re still super early in the space. And I think virtual real estate will be in very high demand over time. I personally think that it’ll be worth more than real world real estate at some point in the future.

Paul’s Signal Group: https://bit.ly/3q0DRUh

Youtube: https://bit.ly/3ytekHf

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What is the metaverse? Should you buy real estate in the metaverse? What does that even mean? What are some ways to monetize your property? Our metaverse expert will be enlightening us on what this is all about, and why it is important to at least start learning about it, and why it could be the next big thing in real estate.

You can read this entire episode here: https://bit.ly/3E1p4xJ

What does that mean to own land that doesn’t exist, in a magical world?

The ownership is via what’s called an NFT, which stands for non fungible token. It’s basically something that is digital, has scarcity, and is verifiably authentic on the blockchain. In addition to that, it’s also a way to verify ownership of a digital asset. Virtual land plots or parcels exist as entities on the blockchain, so your ownership is verifiable. That’s how it’s represented to the world. And the blockchain is a transparent public ledger. So everyone has visibility into it.

But I’m still not understanding why I should buy a piece of land that doesn’t exist.

There’s the appreciation component, because it exists as an NFT, you can also easily flip it on the blockchain. You can list it for sale on different entity marketplaces, the most popular and the largest being Opensea, kind of like the eBay of NFT’s.

In addition to the appreciation, the fact that it’s easily transferable, or sellable, other reasons to purchase an own virtual real estate are that you can do much more with it in the metaverse than you can in the real world. For instance, you can advertise on it. You can advertise your own company, unlike the physical world, anyone in the world that has an internet connection is able to put eyes on those advertisements as they explore the metaverse and they happen upon your property and your billboards. The exposure opportunity is much higher. You can also rent out your property to, let’s say, people that want to host events on it. You can design and build any space, any environment that you can imagine. Unlike the real world where there are constraints.

There are highly influential figures, celebrities, musicians that have bought up a lot of land in some of these Metaverse projects. Snoop Dogg is one example. He owns a massive section of land in the Sandbox. He has created what’s called the Snoop Verse. It’s basically a metaverse within the metaverse specific to Snoop Dogg, where he hosts live concerts where you can watch them as your avatar with other avatars and get access to other exclusive opportunities like NFT drops, play in the Snoop Dogg casino, check out his 200 car virtual car collection, get higher staking rewards on your tokens. Parcels adjacent to Snoop’s property, I think there is a string of three adjacent land parcels, if you take the minimum price $13,000 times three, you’d get $39,000. But those sold for $450,000, more than 10x the minimum price for land parcel in the Sandbox because of the proximity to this highly influential celebrity.

Why is it worth 10x the price of minimum real estate values? Because Snoop is going to attract so much traffic to his land area, you are therefore going to get a lot more traffic to your plot of land, and so you’re going to get more eyes on it. Therefore, the advertising potential is higher, or the number of interactions you can expect on your property are much higher. You can also create games, you can rent it out, you can advertise on it. There’s no overhead costs, no insurance, no decay, no management. You don't need to clean the sheets. You don't need to vacuum it.

Paul’s Signal Group: https://bit.ly/3q0DRUh

Youtube: https://bit.ly/3ytekHf

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What are some asset classes that I think could potentially be very successful in the next decade with regards to real estate investing?

You can read this entire episode here: https://bit.ly/3Ibdpj2

I have recently been pondering about all of the missed opportunities that came right in front of my face a decade ago. Things like investing in Google and Facebook, I actually met the founder of Coinbase nine years ago, who told me that he thought that there was a huge opportunity in Bitcoin. Bitcoin was worth $13.30 then, if I had put $10,000 into it, it would have been worth $45 million today. I told my friends to buy Amazon stock when it was $250 a share. I test drove the very first Tesla Roadster 11 years ago, and never thought of investing in Tesla.

As a fully grown responsible adult that has some money to invest today, I was pondering recently, what is right now right before my eyes today, that could be huge tomorrow, just like all of these companies that I just mentioned. These things can be controversial, and you might not like it, and you may think is the stupidest thing ever, or you may simply disagree with it. But it's just what it is. And you can either learn about it, or you can try to fight it.

Cannabis

The first thing that I think could be a great investment is in the cannabis space. Whether you rent an industrial building to a cannabis manufacturer or deliverer or whatever their business may be, today, cannabis is only legally allowed in a handful of states. Trends, whether you like them or not, start on the coasts. Cannabis has been legalized in a few states on the coasts, eventually it will be legalized on a federal level. And those who are ahead of the curve will benefit from it, and that is happening sooner than you think. Cannabis tenants tend to pay significantly more for renting the property because of many factors that are related to it not being federally legal. Once it becomes federally legalized, and you end up having a cap rate of, say, 7% when these industrial buildings with these cannabis tenants that are paying you top dollars, you automatically add value to your property.

Metaverse

In the metaverse you are basically buying a "piece of real estate" in this fake world. I am looking at interviewing people that are experts in this topic, so we can all be enlightened and really learn what it means to invest in the metaverse with regards to real estate. What I learned so far is that there are companies already buying land in this 3D world that they will be able to build whatever they want. It can be a hotel, a golf course, an art gallery, a comedy show place, a sports stadium, a music stadium, and it can also be a game. It can basically be anything that the person that bought it would like to create in that world. They can charge people for admission, or a membership fee for example. And that's one of the ways to monetize it.

Environmental

The last example in this series is coming back to the physical world, the more realistic world. As we all know by now, the government creates tax incentives in order to incentivize a certain behavior that they want you to act upon. Like we have mentioned before they have tax incentives for real estate investors because the government does not want to build and maintain buildings. That is why real estate investors have these tax incentives. Today's incentives are in the environmental space. They are in wind farming, carbon capturing, clean energy, and a few other things that you might want to learn about.

What do you think could be the next huge opportunity in real estate investing? Let me know below:

linkedin.com/in/steffbold

www.montecarlorei.com

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Today we will review a real property example from a real potential buyer who wants to get into commercial real estate investing and prefers a NNN leased property. Are these investments worth it at a 5% Cap rate? Let's find out.

Tell us a little bit about you.

I'm in the Dallas Fort Worth metroplex area in Texas, it's a very rapidly growing area in the suburbs and since there aren't many opportunities within the metroplex, they're rare to come by. I'm a nurse practitioner, I work full time, and am looking to get into commercial real estate investing, specifically NNN leases, since it's a little bit more passive opportunity and I don't have to worry about, as they say, termites, toilets and taxes. So that helps me out in that sense. I've been doing a little bit of research and came across a potentially good opportunity in the Metroplex area, and has a very well regarded corporate tenant.

Unfortunately, the cap rate is between 4.5 to 5% and this will be my very first investment. I'm looking to certainly grow my portfolio, and this is a true NNN, where everything is taken care of. I feel like it's great for me to learn from it, and not get too overwhelmed, just starting off. But my hesitancy with this is, since the return is a little bit lower, I'm concerned about what interest rate I would get from the banks, and if I'd be breaking even. I wanted to reach out to and see if you have any guidance, and what you would recommend for someone in my position who is a novice and strictly coming in with a foot in the door.

I can totally understand how you are torn because, from what I understand, you're very busy with work and family, so there isn't a ton of time to manage properties and deal with leases and all of that. But at the same time, the cap rate is pretty low. I'm going to ask you a few questions, and if you don't know the answer we'll just go ask the broker at some point and take it from there. What is the downpayment looking like right now?

It'll be at least 20%, the price is a little over $900k, and the lease doesn't expire for another 7-8 years. There are three, five year option renewals after that lease is up in about eight years.

Are these five year options?

Correct. Each option is five years.

So you have potentially another 15 years on top of the eight years, correct? Are there yearly rent increases, or is the rent increasing every five years?

The lease commencement was in August of 2009, in the years one through five there was no increase, but then after that, they've had a 6% increase. And then after that, it's going to be 8% increase every time there's a renewal.

About 1.5% a year, increase, give and take. When does that 8% kick in?

It doesn't kick in until after this 7-8 years is up.

So you're going to have that 5% cap for the next seven years. And then at that point, they can either leave or renew at an 8% increase. And this is the one that is a true NNN lease, you're not taking care of anything.

Correct. It's mailbox money, as they call it.

If there is any money left.

That's a good point. Exactly.

One of the super critical things to take a look at in the lease is, I don't know about Texas, but in California the taxes can be very low if they have owned the property for X number of years. And then once you purchase it at this new price, the taxes will go up significantly. I don't know how it is in Texas, but I would definitely make sure that in the lease, if it's the case for Texas, they are okay with any new tax increase, regardless. A lot of times these major tenants will negotiate a maximum tax increase of X percent. So that's something that is your number one priority to check there.

Join our newsletter here: www.montecarlorei.com

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

After working in the industry for 30 years, and managing 5M square feet of assets worth $1.5B, what are the best pieces of advice out there? Chris Rising, co-founder of Rising Realty Partners, will share his extensive list of lessons learned.

You can read this entire interview here: https://bit.ly/3qs9CY8

What are some of the scariest things besides COVID that you have dealt with? And how did you get out of them?

I do have a couple of stories but one that sticks out, it still makes me want to throw up. We were buying an asset in Pasadena, it was in office, it was after the GFC, and I got introduced to a tech celebrity who was a wonderful person, I like him a lot. He made a ton of money twice but had never been in real estate. He had hired someone to do his real estate because he wanted to diversify. We found his project that we were buying, it was a bit distressed, we were bringing in at the time a competitor to We Work, so we were going to have some leasing and the whole deal made a lot of sense. I talked to him on the phone and I said, Look, we've been underwriting this, our money goes non refundable on Friday, but if you're not there, we're not going to go non refundable. And he said, Yeah, we're going to, I think, yes. It was mumbling "yes" and I said, okay, good. I remember calling the broker and saying, let's let the money go non refundable. It was a million dollar deposit. Literally about an hour after I called the broker and the escrow, I get a call from one of this guy's representative saying, We're not 100% sold, we're going to want to look at this deal longer. I said, no, no, no, that's not how real estate works, I just relied on a commitment from your boss, and I just put a million dollars at risk. He said, Oh, what are you talking about? You can't do that on that. I had a good 24 hours before the principal called me and said, Chris, I apologize, I didn't realize that, of course I'll honor what I'm going to do.

What are the top three biggest lessons learned in your career?

1. The smartest person in the world is asking the most questions. And those questions sometimes come across as dumb questions. When I was young, I thought asking questions was annoying, and I shouldn't have a place for that, I should just be there and take my notes. What I realized is that people that aren't asking questions are not engaged, and probably not someone I want to do business with.

2. You don't have to be a jerk in business. However, you also have to understand that business isn't personal. That took me a long time. We're a family company, I want everything to be great. But as long as you treat people with respect, and you're ethical, and honest, that can happen in business and it's not personal, deals can blow up. I'm always amazed how people don't realize that a Pro Forma is just a guess. We don't have crystal balls. We try to make it as educated as possible, but recognizing that it's not personal allows you to sleep at night a little bit better

3. No matter how important all your business seems, and all that stuff, it's all very fleeting. If you're not enjoying your family, your life, it's a hard road to get to your 50s and realize that you don't have a great family, and you don't have a great thing. My father is 80 years old now, he pretty much moved on from the business. And I think of things that were so important 15 years ago, and they're just not now. The people that were important aren't in the business anymore.

Chris Rising

The Real Market With Chris Rising

twitter.com/chrisrising

#retwit

www.chrisrising.com

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How to manage a huge economic hit on your main asset class? How to buy and add value to properties today? Christopher Rising, co-founder of Rising Realty Partners, shares his expertise with us.

You can read this entire interview here: https://bit.ly/3GMTaaF

How did you deal with 1.5 yrs of lockdown (so far) when your main asset class is office in the Los Angeles area?

What did we do from day one was, we did try to work with our tenants. When someone came to us or someone chose not to pay the rent, the first thing we would say was, give us your financials, let’s be a partner here, and let us see. You kind of smoke some people out when you do that, because I can’t tell you how many law firms felt like a lease was a one sided obligation, and they didn’t have to pay if they didn’t want to. But that’s not true. We’d start with the, Hey, show us the books. Then we went to have you applied for a PPP loan, because those were specifically designed to pay salaries and to pay rent. And then if they didn’t do that, we said, have you gone to business insurance, but we knew that they weren’t fronting any of this. But if someone worked and tried to solve a problem, we worked with them. And in fact, I would say that every one of our retail tenants, our office building, I think to a tee, we are working out deals with them now, because most of them haven’t paid rent in two years, so that we can keep them, but they also need to do things like extend their term or something. We’re not trying to be punitive, and say, you owe us late rent. We’re just trying to almost close our eyes and pretend the last two years didn’t happen. We got through it. We paid our mortgages and all that. But in return, you have to give us a little more term on your leases. But it still hasn’t been figured out. 

I think that on the multifamily side, there are a lot of problems that are hidden right now. Because you can’t evict people, all you can do is served with a notice to pay. And I think when all of this gets lifted, you’re going to see a lot of residential tenants whose credit gets really destroyed.

I would love to hear about your last acquisition, how did you analyze it find value add, and why did you end up purchasing it?

I’ll talk about the last one, which was in Las Vegas, we’ve taken our industrial strategy and really focused on something called multi-tenant light industrial. I think when people talk about industrial today, they sometimes forget, there’s different forms of industrial real estate, the one that is trading at unbelievably low cap rates are the big box, logistics based industrial buildings. You think of a big Amazon center or distribution center, or just anybody who’s moving product, those are trading at very low cap rates are very hard to buy, because you have to buy them in scale. You’re not really selling one offs, it’s usually portfolios. But people are really buying the cash flow stream and the quality of that credit. So that is not an area we have participated in, even though my father when he was in development, that’s what they did. We’ve taken a different approach and focused on this multi-tenant light industrial product that really isn’t getting built much anymore, especially in major CBDs. It’s not getting built, because it’s hard to get entitled, if you’re going to build something in industrial, you’d prefer to build the big box industrial, it costs less, you get more for your money.

The Real Market With Chris Rising

twitter.com/chrisrising

www.chrisrising.com

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How should you raise capital for your first real estate deal? What is the lifetime value of your investors? Should you get investment commitments or a deal first? Dave Dubeau has been investing in real estate since 2003 and shares his insights.

You can read this entire episode here: https://bit.ly/3jKirbM

Let's say we're ready to do a first raise. I have a list I have relationships, people know what I have been doing. What is the first thing that I should do?

The first step is, in my opinion, to create a target group of prospective investors that you're going to really focus in on. If you don't have a track record with raising capital yet, who is going to invest with you? A big mistake I see a lot of people making is they go out to the general public, anybody with a pulse and a checkbook, they think could be a good prospective investor. For somebody to start investing with you, they need to know you, like you, trust you with their money. If you're going out to strangers, they don't know you, don't like you, they certainly do not trust you with their money. That's a very difficult hurdle to overcome off the get go.

Should people ask how much they would be interested in investing before or after getting a property under contract?

The chicken in the egg question. My personal opinion is, let's get some soft commitments from prospective investors first. Let's get our investor ducks in a row and then let's go looking for properties. Because when you have a deal on the go, yes, that's a good motivator, but the challenge is, you're desperate. You need the cash for this deal, and that desperation, whether you want it or not is going to ooze out of every pore in your body. I far prefer to have these capital conversations first, and get people to even sign off on an expression of interest. That's very powerful. It's not a legally binding document, it just says something like, I am willing and able to invest the sum up to $100,000 with Steff, in one of her upcoming real estate deals anytime within the next six months. Sign off on that, put the date on it, it's still not a guarantee, but that person is much more likely to invest with you when you've a deal than if they just said, Yes, I'm interested.

You talk about the lifetime value of an investor, can you elaborate on that? A lot of people don't think about that, and it's very important to know.

Let's pretend we're looking at one of your self storage facilities. The purchase price is $1.5M, you need to raise $500,000 and let's say you raise it in five $100,000 chunks. If I come into that deal with $150,000, and that gets me a quarter of the investor pool, then the question would be, how much is that asset going to be worth to Steff over the length of time that you're going to hold? Let's use a 10 year time frame just to have a book end. Over 10 years, what do you think the total gross profit on that property is going to be, the increased value in the property, the cash flow over that time, the mortgage pay down, all of these things? Let's say $2 million and let's say they get half and you get half. That means that deal is worth $1 million to Steff over that 10 year timeframe.

You divide that by the number of investors, five, so that's $200,000. That's what that investor is worth to you for that deal. Now, are they only going to invest in one deal with you? Let's say they invest in four deals, if the average profit that they're worth to you is $200,000 and now they invest in four deals. That's $800,000. Now, let's say they're happy with the investments they're doing with you, they will refer other investors to you, and that person would be worth something similar. That's the math that everybody should be thinking about.

---

Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support