August 27, 2023 • 46 mins
Massively Increase Your Net Operating Income™ with The TCO Method™
Andy welcomes commercial net lease broker Dan Lewkowicz to the program for our second Saturday Special interview episode!
Read the transcript Watch the episode on YouTube They discuss the current market and Dan breaks down making money and adding value in net lease real estate, what risks to watch for and what to avoid when doing commercial real estate deals.
Dan is a seasoned real estate veteran with over 15 years of experience across multiple facets of the real estate industry.
Starting his career by “House Hacking”, he quickly moved on to flipping houses in and around metro Detroit and eventually created Renaissance Real Estate Ventures which specializes in the acquisition, financing, renovation and resale of single family residential properties in Detroit, Michigan.
A former business development executive at Amazon and Senior Advisor at Fortis Net Lease specializing in commercial real estate investment sales, he is currently a Senior Director at Encore Real Estate Investment Services and specializes in shopping centers, medical office, pharmacy, quick service restaurants, auto repair and parts stores and resorts.
Dan currently resides in Birmingham Michigan with his wife, Brady and their has five lovely children. He enjoys running, boxing, lifting weights, yoga, and playing acoustic guitar.
Learn more and connect with Dan: Connect with him on LinkedIn His day job – Encore Real Estate Investment Services
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
He made a three or four hundred thousand dollar mistake right there and you know unfortunately
(00:05):
I've seen it happen all the time.
[Music]
(00:31):
Welcome to the TCO method.
The only show focused on helping you massively increase your net operating income.
I am Andy McQuade and in this Saturday special I have a special guest with me to talk about
everything commercial real estate Dan Lewkowicz.
He is a seasoned real estate veteran with over 15 years experience in all facets of the real
(00:55):
estate industry starting his career house hacking.
He moved on to house flipping around Metro Detroit created a company called Renaissance
Real Estate Ventures that specializes in acquisition, financing, renovation and resale of large
single family residential properties in the city of Detroit.
Before joining on core real estate investment services as senior director Dan was a senior advisor
(01:17):
at Fortis Metlease specializing in commercial real estate investment sales.
He's a former business development exec for Amazon and Detroit and currently
senior director of real estate investment services and special specializes in shopping centers,
medical office, pharmacy, quick service restaurants and auto repair and parts stores as well as
(01:39):
resorts. Dan has five amazing children resides in Birmingham, Michigan with his wife Brady and enjoys
running boxing, lifting weights yoga and playing acoustic guitar.
I had no idea you did guitar like we've talked before.
I'm not a musician, my family is full of them, had no clue.
(02:00):
That's awesome.
Yeah.
That's awesome.
Well, thank you so much for joining me.
This is exciting.
You are my second guest on the podcast.
First one was Yona.
Aw, twice.
So you are you are number two.
I do a lot of talking at the camera and then I do I'm trying to do two of these interview
episodes a month to kind of broaden everybody's horizons and teach them stuff that I'm not an expert in.
(02:24):
You want to talk building materials, construction, Renault, value add,
NLI increases.
Awesome.
Multifamily.
I'm good.
Anything outside of that?
I'm a noob.
So I'm here to learn too.
And it's a crazy market right now, Dan.
What are you seeing?
What are you feeling?
What's on your radar?
How are you treating the current downturn?
(02:47):
There's a lot of negativity on Twitter.
I'm linked in.
The news is doom and gloom and the world is ending.
The sky is falling.
What do you see?
Yeah, great question.
Well, first of all, thanks for having me on.
I've enjoyed getting to know you over the years and conversing about all the different types of
things, real estate and education related.
So it's nice to sit down and be able to do this.
(03:07):
The question you ask me is something I get a lot.
And it's not just, you know, you think, oh wow, everyone's asking about the market today.
Well, they ask about the market every day.
They've been asking about the market for years and they're not going to stop.
So, you know, what are my thoughts?
What are my takes on the market today?
What am I seeing?
You know, I definitely like to be well-read, be educated, know what's going on in the world.
(03:30):
But I spend the majority of my day with my head down focusing on, you know,
what I know is tried and true for me to be successful as a broker and an investor.
So none of that's changed.
You know, just like I did during COVID, put both feet on the gas because I see a lot of people.
Whenever I see a lot of people saying that things are bad and maybe we should just,
you know, right off the next month or a year, that's when, you know, my eyes laid up and I just,
(03:54):
you know, double down and, you know, focus on what I know work.
So I'm seeing, you know, in terms of the market, yeah, there's definitely a, like, a dislocation
between buyers and sellers still.
It's getting a lot better because this has been going on for about a year, a year and a half.
But there had been a very large dislocation where sellers were thinking, "Well, hey,
prices are still where they were during the heyday."
(04:15):
And buyers were thinking, "Well, hey, prices are going to be, are where they're going to be in,
you know, year or two years." And it was very hard to help, you know, them meet in the middle,
which is, in essence, a large part of my job as a broker.
That's definitely getting better. I will say we haven't seen a whole lot of price movement.
I mean, I think that we are in a period of price discovery where people were trying to figure out
what was going to happen with commercial real estate market. We in the net lease side of things have
(04:38):
not seen a tremendous amount of movement. And I feel that prices are stabilizing with recent interest
rate hike declines, so to speak. And the belief for the sentiment amongst many that these
increases are going to slow down if not stop very soon. I think we're seeing the market start to
react to that in a very positive way. You know, I myself personally as a broker have focused a little
(05:03):
bit more on distressed assets, vacant assets, short-term assets, just situations where sellers are
going to be motivated to sell as opposed to more of like the bread and butter, you know, five cap
star bucks or four cap chic flay deals that that, you know, a lot of the market in terms of who would
be an ideal purchaser. You know, I've kind of fallen out since financing is not a creative in situations
(05:27):
like that. Right. And speaking of financing, I've seen a lot of static and I've actually dealt with
some of my clients who have gotten the crunch from their lenders, whether it be, you know, one of the
bigger banks or private money, people are really taking a hard look at underwriting. They're really
taking a hard look at even non-performing assets to justify the expense. They're looking at track
(05:50):
records and other stuff too, but there's a lot of people putting the brakes on. I had a client who had a
re-fi done in April when they were at 82% occupancy. They got up to 95. They were supposed to be another
re-fi coming up in September and the lender basically said, yeah, we're not giving any more. You got
what you got and you still need to be at 95% by the way. So what are you seeing? Like what's going on with
(06:14):
lending? Again, it's been doom and gloom and nightmares in the marketplace, but I think there's
a lot more of that coming from the less experienced, less seasoned operators than from the really
established relationship builders. So where are you on that? Yeah, so I mean, I kind of enjoy hating on
multi-family, but I think a lot of that is on the multi-family side. I mean, I'm not joking, honestly,
(06:41):
because I look at what I do in the net-least space. We don't have pro-formers. We have numbers. We have
real expenses, real income. We have leases that tell you exactly what the rent is going to be. We know
who's responsible for what. Whereas in multi-family, I think over the years, a lot of as you alluded to Andy,
inexperienced operators came in and they started really pumping up the numbers and factoring in
(07:06):
incredible increases in rent and no increases in material costs or labor costs and things like that.
And because it's a pro-former, it's subject to interpretation and it's subject to being manipulated
a little bit. So I think that's one of the reasons why we're seeing a lot of crunching going on in
the lending world for multi-family. As it pertains to my world to net-least, my contacts, my lenders,
(07:30):
my loan brokers, they're eager to loan. I mean, I've got a couple deals going on right now,
you know, shopping centers in great markets. Barbers were successful in obtaining 75%
loan to value and 25% amortization. Another thing I've noticed, which is interesting, this could be
a whole dialogue in and of itself, is that, you know, obviously, if you have a deal that's, let's just
(07:51):
take a six-cap deal. When rates were 3%, that deal cash flowed, right? When rates are six in
three-quarter percent, right? Which is roughly where they are today. That deal is not going to cash flow.
So what I've seen lenders do, and it always concerns me a little bit when lenders get more creative
than brokers, right? So I've seen the lenders get creative and they take a deal that used to be a
(08:15):
deal they would finance at a 20-year amortization. And today, they're financing going to the 25-year
amortization. That's interesting. Yeah, they're finding ways to make the deal work by lowering,
you know, the debt, the essentially their debt service payments, what the old blows would be by pulling
out the amortization. Now, I don't necessarily like that because you're still having the same five,
(08:36):
seven, or ten-year term. So you're just burning off, you know, less of your money is going to your
principle, if any, at all. That's interesting. I hadn't heard that yet, but I don't play out in the
net-least space. So that's, that's, it's, it's, it's, do you think they're exposing themselves to more
risk? Or are they just hoping that they're going to be able to refy this thing when rates come back down
(08:58):
and then all things will be hunky-dory? You know, in general, like I said, I think that the lenders
are eager to lend them good product. I am scratching my head a little bit on deals like that, wondering,
you know, what is the banks, you know, philosophy? I've got some very, very experienced friends
in this indication and investment space that I talked to on a regular basis. I just had a
(09:19):
conversation with one of them yesterday and, you know, one of his statements to me when we were talking
about a deal that I was looking into was, oh, well, listen, you've got three years to refy this deal if
you buy today. Yeah, and you'll still have decent lease term luck. And I bet that within the next three
years rates are going to come down. So when I, when I start hearing things like that, I get a little
(09:39):
concerned because it's anyone's guess what's going to happen. And I think that if a lender is today
saying, okay, we'll take this high risk deal that doesn't work for the borrower and we'll make it work
by stretching out the amortization because, yeah, in three to five years, we're going to be able to
refy an amp's this deal at a better rate and it'll make sense. I think that's very risky, especially
(10:00):
today. No one really knows, you know, what's going to go on. It's very possible that, you know,
I hate this phrase, but very possible that this is the new normal, right? It's very possible that
five to seven and a half percent interest rates are the new normal and that asset prices will
adjust further. It's also possible. I mean, I think the greater, the more likely outcome here, Andy,
is that we'll see one more rate increase this year and then 2024 things are going to really start
(10:24):
to level off and maybe we'll start seeing some decreases towards the end of 24, which I think would
really, really, you know, put some gasoline on to this, this fire. I really believe that commercial
real estate is still very strong and it's just kind of like, it's like, these smoldering embers that
wouldn't know about like that happens. It's going to throw some gasoline on the fire and wake things up.
Yeah. Yeah. I tend to agree with you on one more increase and then next year towards the end,
(10:49):
maybe we'll see them start to pull back a little bit. I think it's still, you know, the market overall
is so fragmented. Like, you know, tertiary markets haven't caught up to primary markets and declines
and leveling. It's just, it's all over the place and there's no apparent rhyme or reason to it
outside of, you know, population inflow and outflow from, you know, blue states to sunbelt to whatever.
(11:12):
So, you know, as far as I'm, I'm seeing it on my side, the government just took their fingers and
went like this and swirled the pot and who the heck knows where everything's going to settle. Like,
I stopped making predictions about a year ago as soon as they were like, oh, we're just going to create
this 40-year mortgage for all these homeowners to pay for these more expensive homes that are
caused from inflation. I was like, I don't know what to do anymore because that just changed the game.
(11:33):
Again, I don't know what this is. Like, I've never lived through that before. Like, I remember 2007,
2008, I was selling lumber to home builders. Like, that was my thing. So, I was ready for that when it
came because I saw it from a mile away in the industry on the supply side. Right now, I have no idea.
Like, that's a whole new game. Construction is still strong. Interstrates are through the roof.
(11:56):
I don't know where it's going to go, but people are paying $325 a square foot for new construction.
I don't know how they're going to pay for it. Like, 40-year, I mean, to your point, stretching
the amortization out on the 40-year mortgage, if you look at the table, they're at less than 7%
equity after paying a mortgage for 10 years. Are you kidding me? I know. I know. I know. We're
(12:18):
going to hold posts about it. The residential space is a different animal. You've got an
incredible supply constraint there. So, I just, I mean, one would have thought that if the fed
goes from a federal fund rate of effectively zero to 5.5%, that they would have taken the housing
market to a screeching halt and that prices would have tumbled. And they really didn't. They really
(12:41):
didn't know. Fact, what's interesting is that in addition to the supply constraint that you have
in general, you just have an underbuilding of homes for so long, you also now have an underwilling
this, so to speak, of sellers to sell because I'm not selling. I love my home, but I would seriously
consider selling right now, but I'm moving somewhere else, but I'm not doing it because my mortgage is
(13:02):
2.77% and to buy the same exact house next door, my payment is going to be an incredibly
large amount more. It makes it worth it for guys like me. I live out in the sticks in upstate New York.
My mortgage is cheap. My taxes are ridiculous, but the attractiveness of going somewhere else for
(13:25):
whatever reason and just keeping this and renting it or keeping it and doing like STRs or whatever,
because I'm by the lake, it's huge. But that's really not what we're here to talk about. I really
want to pick your brain on what's going on on the commercial side from what you're seeing. Now,
there's a big push currently on the retweet space and on LinkedIn towards exactly what you do,
(13:52):
because it is performing better. I don't really want to talk about office, and I know that's not really
your wheelhouse, but there's all the doomers that are like office will never recover, and now there's
all these layoffs and all the other stuff. What direction, if somebody's getting into doing bigger
commercial stuff, they're looking to transition over from multifamily or single-family inflips and
(14:17):
that kind of stuff and to get into your space. Where do you see the most opportunity for them?
Where do you see them being able to mitigate or minimize their risk and cash flow on stuff?
Then after that, I want to ask you about some ways that you and your team really help people develop
(14:40):
that. I guess industry knowledge, because I know that you've done a bunch of stuff to teach people
and train people and bring them in and mentor them into this space. Yeah, great questions. I would
see it right now. There's probably three main spaces that I think are the most attractive and
lucrative for someone who wants to, you know, these are not by the way strategies for someone
(15:05):
who is just watching a YouTube video and is like, oh, I want to jump into commercial real estate.
These are for someone who has experience and knowledge. Okay, they're definitely something
that you can learn even if you don't have experience, but not something I'd recommend jumping into.
So they are as follows. I guess I'll just name them and then we can go through each one.
So the first one I would call the Blend and Extend, which is something we'll talk about in a minute.
(15:27):
The second one would be like a retail repurposing play. And the third one would be Value Add Shopping
Centers. So in that order, the blending extend is a very interesting strategy that people ask me
about a lot. So if you look at a commercial real estate deal and net lease deal, your price is
(15:47):
going to be a function of many things. Okay, so your price is going to be a function of lease term,
right? The longer the lease term, the more valuable the property, because the less risk, tenant,
so the stronger the tenant, the better the asset, right? Obviously, there's other things like Red
Bumps, you know, a deal that has 2% rental escalations annually is better than one that has, let's say,
(16:08):
10% every five years or one and a half percent every every year.
And then obviously you've got things like your, you know, your market and your demographics and
your traffic counts and your visibility. But for our purposes, like a lot of those things, you can't change,
right? Like you can't change the market, you can't change the traffic counts, you can't change
the visibility, the ingress, the progress. But what you can change is you can change the lease
(16:33):
terms, okay? So I'll give you a perfect example of a deal that I had with the client and how I advise
them. So this client had a well-located wall green that was an out-parcel to a shopping center that
they also own. So they built the shopping center and then when I say out-parcel, that's essentially
like former parking lot that was built to house, you know, a property. So they built this property 20,
(16:57):
almost 20 years ago, side of 20 year lease with wall greens. There was about 12 or 14 months left on
the lease. So very short-term, very high risk because wall greens could vacate. Wall greens traditionally
pays very high rent. At this site, they were paying $290,000 annually, not terribly high for wall greens,
but high for, you know, net lease in general. And, you know, they had, like I said, about 12 or 14
(17:22):
months left on the lease. So at that point, I'm going to just get out my calculator. I like to rely on
that as opposed to my brain. But so at that point, then this was, this was a couple of years ago,
so the deal was cash flowing $290,000 annually, but it had about 12 or 14 months left on the lease.
So that was like probably a nine-cap deal at the time. So if you do the math, that property was worth
(17:44):
about 3,222,000. So we'll remember that number, 3,222,000. So what I advised was that they would do
what's called a blend and extend. And in this example, the owner did the blend and extend, but in, in,
in, for our purposes, you could come in and purchase this building and then do the blend and extend.
So let me just define a term because I've said it 15 times and haven't, have it really defined it.
(18:06):
A blend and extend is where you take a certain aspect or aspects of the lease, right? And in
exchange for a change that benefits the tenant, you extend the lease. So you blend the lease and
you extend the lease. So this deal that had $290,000, but only about a year left worth about 3,22 million,
right? What I advise them to do is to go back to Walgreens and say, I want to brand new 10-year lease,
(18:31):
right? So they did that and Walgreens says that's totally fine, no problem. We'll do it, but we're
going to drop the rent from 290, right? To 225. So what is that? A 65,000-hour decrease. So the first
thing people think is exactly the look that was on your face and be like, oh, last thing I want is to
lower my rent. Why would I do that? That's my lifeblood. That's my value. And the answer is it is your
(18:53):
lifeblood, it is your value, but it isn't. Really your value is a function of the rent and the cap rate.
Now, 12-month deal, we said was like a nine cap, but a 10-year deal at the time would have traded
at about a 585 cap. So watch this. The 65,000-hour decrease in rent brings you down from 290 to 225.
(19:16):
225 at a 585 cap is 3,846,000. You just by the stroke of the pen increased your equity in your property
by 624,000 dollars in change, okay? You didn't, and I'm a former flipper, right? I'm a recovering
house flipper, right? So you didn't go in there and manage contractors. You didn't put a new roof on,
(19:41):
you didn't rip out walls and change layouts. You didn't do any of that. In fact, the only thing you did
was you rehab the lease. So for me, a guy who loves value add and loves this whole like here's a
before, here's an after. It's incredible because the before and after look exactly the same. It's the same
exact one. That's crazy. That's classified a million times, not no, but the lease is different and the
(20:01):
value is different. That is strategy number one that I would recommend today for value add and you
can find it all over the place because you've got a lot of tenants that would love a rent reduction
exchange for a longer term lease. So that was the blend and extend. The next one that I mentioned was
I believe retail repurposing. Retail repurposing. I mean, the middle of one right now was some clients.
(20:23):
Former Burger King also an out-parcel to a shopping center, right? Now this Burger King was operated by
a company called Tom's Kings. Tom's Kings was a relatively large Burger King operator. They had 91
locations and in March, they kind of surprised the industry by filing for bankruptcy. So they filed for
bankruptcy and this particular site, they completely walked away from. They turned over the keys,
(20:48):
they boarded it up, they left, they said goodbye. So I was brought in to sell the property. I had the
property under contract to be sold to a client of mine. And at this point, the new owner is buying
a vacant property. Now the real estate has inherent value, right? The real estate is not what failed.
(21:08):
The business in the real estate failed. And I think there's going to be tremendous opportunities
moving forward for this because you've got a lot of great real estate that's occupied by businesses
that are failing. So in this case, what he did was he purchased, he's purchasing this property,
at a relatively, we'll call it a fair market value. And he's now working with a major national
(21:30):
tenant whose name I can't say is in the middle of it, but probably one of the best single tenant,
not least tenants that there is. And he's contracting with them, he's going to give them a certain
amount of money for what's called tenant improvement allowance. So that tenant will actually do some
renovations to the property. When they're finished, he'll then reimburse them. They will also spend
their own money renovating the inside of the property. And when he's done with it, he's going to have
(21:54):
a brand new 10-year lease with a national tenant in a great piece of real estate. So that's another example
of opportunity for today in commercial real estate. And the third example is I saw a lot of shopping
centers. So with shopping centers, there's a lot of ways you can add value. Number one, you can
like multifamily, you can either increase occupancy and or increase rents, right? Those are really
(22:17):
your main drivers of value because just like in single tenant deals like we talked about in multi-tenant,
the value of the property is a function of the net operating income and the cap rate.
You can benefit your cap rate by having better tenants and by putting some capital expenditure
into your center. And you can better your N-O-I by decreasing expenses and or increasing
(22:38):
your rents or increasing adding occupancy to the center. So there's a lot of ways to do that. A lot of
these mom and pop, I call them mom and pop shopping centers. They're great shopping centers, but over
the years, the owner is essentially said, you know what? I'm happy with these tenants. Everything's fine.
Let's not raise the rents. Let's keep it the same. So there's opportunity as those tenants roll over
(23:01):
or as their options expire for you to then bring them up to market rent and you'd be surprised how
much of value you can add to the shopping center just by employing that strategy.
That's awesome. Now is that any shopping center specific strip malls or stuff with anchor tenants or
is it applicable pretty much anywhere? Tertiary, major market, the whole nine yards.
(23:24):
Yeah, it's applicable anywhere. I mean, there's certain things you're going to want to look for.
You're going to want to be close to the main retail harbor in it. You're going to want to have high
tri-trap accounts. The road that the center sits on, you're going to want to have minimum,
let's say 20,000 vehicles per day, preferably 30,000 vehicles or more, high population density,
things like that, good, solid, necessary services, tenants, things that you think will be there for a
(23:50):
while, but it can be done in really any type of shopping center anywhere in the country.
That's awesome. That's awesome. That's huge. So,
what do you see for, let's call it, the coming wave of layoffs that are hitting right now as far
(24:10):
as impact to your client base or who would be leasing properties from your client base for
disposable income-based stuff? Whatever that may be. Is there been any type of blip even on the radar
yet because I keep seeing all this stuff about consumer spending is up and credit card debt is through
(24:31):
the roof and all these vehicle sales are defaulting, all the loans are coming and they're doing all
these repossessions. It sounds terrible, but I haven't seen a lot of boarded up anything anywhere yet.
So, I mean, if it's all this doom and gloom and all this stuff is coming, where is it?
Yeah. I mean, it's very interesting. I feel the same way. I think that
(24:56):
I've always shied away from office with the exception of shopping centers that have retail and
a little bit of an office component or medical office, which is a whole different animal for a lot of
reasons. But I think that the office in general is going to take the brunt of what you're
subscribed with these layoffs from companies. And what's going to happen is that the tenants are
really going to be in the driver seat because the landlords are going to be faced with foreclosure
(25:20):
and in default and all these terrible things. And there's just going to be a lot of work out between
landlords and tenants. And tenants can say, listen, you know, 50% of your office building is vacant.
I represent the other another 20%. You want me to leave or you're going to reduce my rent. And the
landlord is going to reduce the rent. So that's just kind of an aside, retail spending is through
the root. The economy to me from what I want to I hone in on looks pretty darn healthy, despite
(25:46):
the fact that we have really tried our best to make something break. It really, you know, with
the exception of some failing banks, the economy is really I think turning along at a good clip. You
know, retail occupancy is at its highest in 18 years, right? We have record low retail vacancy,
4.8% nationwide. It's absolutely incredible. So yeah, I mean, listen, I think that if you look at
(26:11):
consumer spending being up and occupancy being at all time highs, that's just another argument
to purchase retail assets, right? Right. So yeah, absolutely. I mean, that's my perspective. I think
that retail is strong. Retail is alive and well. And the fundamental nature of us as a society
is a consumeristic society. And, you know, so long as guys like you and me have a dollar in our pocket,
(26:32):
retail is going to be alive and well. Oh, yeah, absolutely. So what do you see from an underwriting
standpoint when people are looking at these deals? And they're trying to weigh the pros and cons.
Where's the risk management come in? Where's the cost of avoidance come in? What's a smart move right
now when they're actually looking at a deal for whatever? Pick a flavor that you specialize in.
(27:00):
And tell us, where should they be looking to mitigate, minimize, or otherwise address risk in
their investment? You know, I like, I like it to, you know, a buffet, right? There's a lot of
food at the buffet and not every person is going to like every food, right? So especially today,
not every investor is looking for every type of product. So I really, I can't answer that question
(27:25):
on a really global, generalistic, you know, perspective. But what I can tell you is that's really a case
by case example. I mean, I'll give you a great example. I've got a Wendy's property right now that has,
you know, some some challenges that it's faced. I've actually sold this property before.
A few years ago, and now I'm selling it again. And you know, sales at this location are not not the greatest.
(27:49):
But it's a very solid guarantee from a large operator for a long time. So, you know, inherently,
there's some risk in this deal and that risk is is is is adjusted where I should say is accounted for
by a higher cap rate. Okay. So like I've been, you know, I'm counseling buyers who come to me
want to purchase the property. You know, we're saying, well, you know, there's a type of buyer who says,
(28:12):
you know, I'm concerned. I don't care how big the guarantee is. Who knows? Maybe that guarantee will
file for bankruptcy. Now we'll be left with a building, right? So maybe this deal is not for that buyer.
But then there are other buyers are saying, well, hey, listen, I'm getting a good entrance cap, right?
I've got a solid guarantee. There's a long term lease in place. I'm going to collect, you know,
enough money during the next X number of years that are on the lease term that I'm in a I'm
(28:37):
essentially paying myself back when I'm spending and then I'm getting a building and and land
afterwards. So yeah, this is a deal that's for me. So again, like that first person that I mentioned,
not cut out for this deal is now what they're looking for. They're better off going and finding a
deal that maybe is a hundred or 150 basis points lower with less risk. So they can sleep a night.
But the other guy or girl, they're looking for this deal. They want that slightly higher cap rate
(29:01):
in exchange for a higher risk. So I always tell people like, you know, you have to be realistic
and understand that you're, you know, you're really not unless you're buying something off market,
you're not going to beat the market. You're just going to want to choose the asset that checks
all the boxes that you're looking for or as many as possible. Right. People's buy box, you hear it all
(29:22):
the time now. Bigger pockets is like the long down to that term and everybody's talking about the
buy box and blah, blah, blah. But really it comes down to your risk profile. What what appetite do you
have and can you find an exit from this, right? So I do a lot of work with family offices and there's
always like the second or third thing we talk about is what's the exit strategy? You know, do I have
multiple different directions I can go with this to get out of it if things go sideways because
(29:47):
that's always the concern is the preservation of capital, the preservation of value and, and, you know,
having the asset do what they intended for it to do when they purchased it. So for them, that's
totally makes sense. And I think that comes down to what you said, it's super regional and there's
no like blanket term, but it comes down to each individual person or entities risk profile, right?
(30:10):
What they're comfortable with accepting. So what else do you see going on that, you know, specifically
you're you're in it, right? And the listeners this show they're really into learning about not just
real estate, but how they can max out their N O I how they can max out their ROI like where
(30:34):
where are the secrets right now in triple net or in, you know, just in general net lease that
people aren't paying attention to or aren't really looking at in the right light because
you know as well as I do when you when you start talking about cap rates from the residential buyer
(30:55):
to commercial, the math changes completely because they're they're the same thing but they work in
very different inverse ways with interest rates. So that's something that a lot of people don't
get until they're in it for long enough, but where else are you seeing, you know, these opportunities
to to to max out and really I want to say pull the equity out of a property, but how are you going
(31:23):
to make more on your investment or what is being done by really good operators that isn't being
done by your average Joe? So first and foremost, net lease is a preservation of capital, it's
generational wealth, it's stability, it's security, I mean granted you have a lot of benefits as you do
(31:46):
in many forms of real estate with depreciation and you know in other tax advantages. So in general,
you know net lease is not a value add you know avenue of real estate investing, it's more of a
preservation of capital and stability and security obviously there's going to be appreciation, but
(32:07):
you know the three techniques that I mentioned being you know blended extend retail value add
repurposing I should say and then you know multi multi tenant shopping center value add those are
going to be ways to to create a whole lot of capital very quickly and I'm talking I mean I gave
the example before what I think it was what 620 or 630 thousand dollars in equity build up with
(32:32):
the stroke of a pen, which is amazing. Yeah, so you know in general, I just want to I want to
present it for what it is, you know typically people are investing in net lease because they want
that security they don't they want to be able to sleep at night, they don't want a pro forma,
they don't want to gas at expenses, they don't want that income to change right, they want that coupon
(32:52):
clipper and again these deals the majority of them are absolute triple net deals meaning, you know,
you own the property, the tenant pays you rent and that rent is not to you, they pay for the taxes
on your property, they pay for the insurance on your property, they pay for all the maintenance,
the management everything, if that property means a new roof, if it gets vandalized, if it has a flood
(33:13):
everything is on them. So, you know essentially especially when you look at the blue ribbon tenants,
you know the Chipotle, the Starbucks, the Walgreens, the CBS's, you know of the world, the whole foods,
those types of tenants, I mean these deals are really bonds that are wrapped up in sticks and bricks
(33:35):
and they should be viewed as such, you know, their phenomenal investments for preservation of wealth
and for stability and security. So, I guess the question I've got is, are you seeing anything or have
you seen anything that let's say less experienced owners, less experienced brokers are missing in
(33:58):
their leases and their agreements with potential tenants that could come back to bite them in the
butt? Like is there is there something that has happened that you've seen where people are just like
to dumb for their own good and they get burnt, right? Is there a stupid tax?
Yeah, I mean, yeah, of course and that's why you need a good broker to look over your lease and
(34:20):
make sure that you're, you're not missing anything, you know what is what we call wrinkles in the lease,
you know, like something where the paper is folded over and you missed it. I'm out, give you a great
example. I had a pet smart deal maybe five years ago that the owner had purchased and was interested
in reselling and I was evaluating it for him and I looked over his lease and first of all, a lot of
(34:40):
brokers will give you an evaluation without looking at your lease. I 99 times out of 100 will insist
on seeing the lease before giving an evaluation and it's specifically for situations like this.
So I was looking through the lease Andy and I saw what's called a co-tenancy clause. So this deal,
if I'm not mistaken, there was a lows in the essentially in the shopping center and the pet smart
(35:04):
was part of the center. So it was a big, you know, big box national tenant, great, great center,
but there was a co-tenancy clause that said that if lows ever vacated, pet smart could immediately
reduce their rent by 50% or terminate their lease. Right, yeah, exactly. So this guy, this poor guy
had no idea. The broker sold it to him didn't make mention, he bought the deal and I told him,
(35:29):
I said, listen, I'm not going to lie to you. This is the value of the center. This is the value of the
pet smart. Where this co-tenancy clause not to be in there, the value would be X. But that's a great
example of this guy didn't realize and he made a three or four hundred thousand dollar mistake
right there. And unfortunately, I've seen it happen all the time. Another example, this is more like
(35:54):
upon lease origination. So let's say you're buying a brand new building or you're doing a build
to suit where you actually have the ability to negotiate the lease terms. Like for example,
the deal I mentioned earlier about that former Burger King, well, they're in the lease negotiation
stage. So my client has the opportunity to negotiate with this national tenant. So this national tenant
(36:17):
is notorious for termination clauses, allowing them to terminate, you know, let's say after five
years, they can terminate the lease. So that's something I'm telling them, hey man, make sure you
negotiate that out of there. You don't want that, right? That's one thing. Another example in deal in
QSR deals, quick service restaurant deals, you know, Taco Bells, Wendy's, you know, Chick-fil-A's,
(36:37):
things like that. You're going to want to know to the best of your abilities how the site is performing.
And the way to do that is to obtain unit level financials, you know, to see how is that site,
you know, doing what are their sales like? So a lot of leases don't call for sales reporting. I
always tell my clients if you have a choice by the deal that calls for sales reporting so that you
(36:59):
know. And also if you're doing a negotiation with your tenant and they're asking for something,
always ask for something in return. If they want a reduction in rent, say, okay, fine, but I need,
you know, financial reporting every year, something like that so that you know what's going on. So
those are, you know, examples of things that are important to look out for. I mean, I have,
(37:21):
it's funny because you would think driving down the highway that every Wendy's is the same, but
I remember during the pandemic, I had one Wendy's I was, I was listing that said that in the lease,
it had a cloud under no circumstances where will there ever be rent debatement? Will the rent
ever change or go down or any of that? And I had another lease that said, and this list was written
20 years ago in the event of a government shutdown, the tenant will pay 40% of their rent, right?
(37:46):
Same exact Wendy's. One of them is paying 40% of their rent during the pandemic and the other one is
paying 100% of their rent. So you want to look at things like that. And that's why it's important
to have a good attorney and a good broker looking over your lease, making sure that there aren't any
wrinkles. That's what I was going to say is you would think that the attorneys would really be
on top of big gaps like that. And again, not all brokers are created equal, not all attorneys
(38:10):
are created equal, but when you're doing your due diligence and you're trying to find a partner as,
you know, a broker partner, an attorney partner, whatever, what kind of conversation do you have to
vet them? Like how do you know if these people actually are good or if they just suck? Because I've
(38:30):
seen everything from horror stories where I just saw one that hit Twitter the other day where there
was a $16 million loan and this law firm in New York City dinged $180,000 onto the closing
at the last minute with no notice, no transparency. And they just ended up paying it because it was
there. I mean, that should have been a $50,000 bill. It shouldn't have been a $180 grand, but it was
(38:51):
like a last minute thing. And now they just burned a whole bunch of bridges because no one will use them
for, you know, in that world again. But when you're vetting these people, I mean, other than just word
of mouth, what is there? So I guess if you're talking about from my perspective as the broker who's,
yeah, you know, working with other professionals, you know, I have my close circle of referrals that
(39:13):
I'll make, you know, when somebody, for example, I got a shopping center in West Michigan right now,
the buyer is is is out of, you know, he lives in Hawaii. So I referred a, an attorney that I worked
with a number of times. And that transactions proceeding very smoothly, right? I've got another deal
just last night, um, 10 o'clock at night. I was writing an email back because we have an accepted
(39:34):
L.O.I. that I drafted, right? Oh, no. The buyer and the seller. I drafted it. I know it like the back of
my hand and we accepted it. We mean, the seller accepted it for a lot of reasons. But one of them was
that there was a $100,000 non-refundable earned this money deposit. So when I hear that, I get excited
because that's a deal that's in the close and that's the type of buyer I want for my seller. Well,
(39:55):
I got the, you know, the attorneys are going back and forth with the purchase agreement, which should
be a mirror, right? With some additions, but a mirror of the letter of intent. And the seller's
attorney sent it back to the buyer's attorney and in there it said $100,000 refundable deposit.
The due diligence was longer. The purchase price was different and it's not like this was just
submitted to the seller's attorney. So I was attorney sent it back with other changes and not that.
(40:19):
I said, you know what? I said, this is not my job. But these are my clients and I have to stand up.
So I, I had 10 o'clock at night last night. I wrote a long email, you know, very carefully. I'll do
respect, you know, and ultimately I want to make it very clear that the decision for this contract
rested with the sellers and their attorney. But as their agent, I have a duty to protect them.
(40:42):
And these are the seven or 10 things. And I went line by line that purchase agreement calling them out
saying like, hey, this is something that in the alloy, it says this and the purchase agreement says
this. It's got to go this way. So, you know, I think that that for me, I don't have control over
that attorney, but I have control in myself. And I have to make sure that my client is, is being
is being service properly. And I have to, I'm not even doing the client into the deal to get it done.
(41:06):
So I guess what I'm saying to you is that not at, not at all times, do I have the control over those
vendors, right? But I have to step in when necessary to make sure that things are done properly. Now,
on the other side of things, if you're in the actual investor, right? And you're looking for a broker,
for example, get on the phone with that broker, Google that broker. If you Google me, you will see
(41:28):
about 300 podcasts of appearances. You'll see a course, just all kinds of things. You can get to know
me in five minutes on the internet, but also as at the end of the show, I'll give out my number.
Give me a call myself and talk to me. Get to know me. See if I'm an either type of person.
Again, it's a buffet, right? Not every broker is for every client. So am I am either the type of
(41:48):
broker that you're looking for? And I would hope the answer would be yes. But, you know, what you're
going to want to look for is you want someone in his throw. You want that guy that on a Wednesday night
is going to stay up at 10 o'clock at night and go over that contract. Even though it's not his job,
even though the deal will probably get done, right? You want that person that's looking out for you
that wants, you know, that has that standard of excellence and is going to be thorough and meticulous.
(42:12):
And you want an expert, right? I can't tell you how many times I've dealt with people who hired a
residential broker. I'll do respect residential brokers. You guys are great at selling houses, right?
But they hire residential broker to sell their McDonald's, right? No, it's apples and oranges. You can't do it.
Yeah, this is all I do. I only do that. At least if you want that lease, I'm your man. If you want
multi-family, I am not taking the listing. I will gladly refer you to a great colleague who will take
(42:36):
care of you. But this is what I do. This is what I specialize in and this is where, you know, I want to
stay. That's awesome. So for everybody listening or watching on YouTube, the lesson is team up with a good
broker. That's what you got to do and make sure that it's their wheelhouse. You're just like when you're
doing residential, we've talked about it before on the show. If you're dealing with your cousin,
(42:58):
Ted, that part times it and is selling residences to homeowners, you don't use them for your investment
properties because you're not going to get a good result from that relationship. You need somebody who
full times it and understands the market. So that being said, Dan, what markets are you in? What do you
specialize in? And what types of properties and stuff should people reach out to you for specifically?
(43:24):
Yeah. So nationwide, I sell property in every single state in the country, but I specialize in
net lease. So I specialize in single tenant net lease, for example, Starbucks and Walgreens and CVS
and Chick-fil-A, Aspen, Dental, Dollar General, Family Dollar, these types of properties,
multi-tenant properties, right? I also do medical office. I said discount retailers, auto-automotive
(43:51):
part stores, some resorts. I sold 50 million dollars worth of resorts last year. And anything in the
net lease space specifically. If you want to talk about anything commercial real estate, pick up the
phone. I'm glad to talk. And if you need to refer, I'm glad to make one. But as a broker, I would be
more than happy to assist in anything related to the net lease space. If you have property and you
(44:16):
want to know what it's worth, please reach out to me. Or if you just want to set up another set of
eyes on a deal, even if it's not my deal, I don't care. Let's go through it together, make sure you
do the right thing. And anything I can do to provide value, I'm happy to help.
Awesome. So how do people get in touch with you? Sure. So first of all, I'm very active on LinkedIn,
so you can check me out there. First name is Dan, last name, Luke Owitz, L-E-W-K-O-W-I-C-Z,
(44:41):
again, L-E-W-K-O-W-I-C-Z. Google me, all my informational pop-up that way as well.
But I'm happy to give out my direct line, my cell phone number, if anybody wants to reach out directly,
my number is 248-943-2838. Again, 248-943-2838. Please reach out. If there's anything I can do to help,
(45:02):
it would be my pleasure. That's awesome. Dan, thank you so much. It's been good catching up. I appreciate
you coming on the program. This has been great. I hope the listeners got some knowledge out of it.
I honestly hope that they have more questions so they can reach out to you and build that relationship
and start working with a good broker who can handle whatever it is they're looking to do.
(45:22):
And even discuss the benefits of NetLease over multi-family if that's the what they want to do.
Preservation of capital and asset value versus forced appreciation. Different business models,
same goal, generational wealth. Please, if you are on YouTube watching this right now,
(45:47):
hit that bell and subscribe. If you're listening on Apple Podcasts, Spotify,
iHeartRadio, Google Podcasts, wherever podcasts are found, please subscribe, like, comment,
leave me three or four stars, five stars, send me a message. Let me know what you think,
(46:08):
podcast@tcomethod.com. Thanks Dan. Appreciate you.
Yeah.
[MUSIC]
[MUSIC]
He made a three or four hundred thousand dollar mistake right there and you know unfortunately
(00:05):
I've seen it happen all the time.
[Music]
(00:31):
Welcome to the TCO method.
The only show focused on helping you massively increase your net operating income.
I am Andy McQuade and in this Saturday special I have a special guest with me to talk about
everything commercial real estate Dan Lewkowicz.
He is a seasoned real estate veteran with over 15 years experience in all facets of the real
(00:55):
estate industry starting his career house hacking.
He moved on to house flipping around Metro Detroit created a company called Renaissance
Real Estate Ventures that specializes in acquisition, financing, renovation and resale of large
single family residential properties in the city of Detroit.
Before joining on core real estate investment services as senior director Dan was a senior advisor
(01:17):
at Fortis Metlease specializing in commercial real estate investment sales.
He's a former business development exec for Amazon and Detroit and currently
senior director of real estate investment services and special specializes in shopping centers,
medical office, pharmacy, quick service restaurants and auto repair and parts stores as well as
(01:39):
resorts. Dan has five amazing children resides in Birmingham, Michigan with his wife Brady and enjoys
running boxing, lifting weights yoga and playing acoustic guitar.
I had no idea you did guitar like we've talked before.
I'm not a musician, my family is full of them, had no clue.
(02:00):
That's awesome.
Yeah.
That's awesome.
Well, thank you so much for joining me.
This is exciting.
You are my second guest on the podcast.
First one was Yona.
Aw, twice.
So you are you are number two.
I do a lot of talking at the camera and then I do I'm trying to do two of these interview
episodes a month to kind of broaden everybody's horizons and teach them stuff that I'm not an expert in.
(02:24):
You want to talk building materials, construction, Renault, value add,
NLI increases.
Awesome.
Multifamily.
I'm good.
Anything outside of that?
I'm a noob.
So I'm here to learn too.
And it's a crazy market right now, Dan.
What are you seeing?
What are you feeling?
What's on your radar?
How are you treating the current downturn?
(02:47):
There's a lot of negativity on Twitter.
I'm linked in.
The news is doom and gloom and the world is ending.
The sky is falling.
What do you see?
Yeah, great question.
Well, first of all, thanks for having me on.
I've enjoyed getting to know you over the years and conversing about all the different types of
things, real estate and education related.
So it's nice to sit down and be able to do this.
(03:07):
The question you ask me is something I get a lot.
And it's not just, you know, you think, oh wow, everyone's asking about the market today.
Well, they ask about the market every day.
They've been asking about the market for years and they're not going to stop.
So, you know, what are my thoughts?
What are my takes on the market today?
What am I seeing?
You know, I definitely like to be well-read, be educated, know what's going on in the world.
(03:30):
But I spend the majority of my day with my head down focusing on, you know,
what I know is tried and true for me to be successful as a broker and an investor.
So none of that's changed.
You know, just like I did during COVID, put both feet on the gas because I see a lot of people.
Whenever I see a lot of people saying that things are bad and maybe we should just,
you know, right off the next month or a year, that's when, you know, my eyes laid up and I just,
(03:54):
you know, double down and, you know, focus on what I know work.
So I'm seeing, you know, in terms of the market, yeah, there's definitely a, like, a dislocation
between buyers and sellers still.
It's getting a lot better because this has been going on for about a year, a year and a half.
But there had been a very large dislocation where sellers were thinking, "Well, hey,
prices are still where they were during the heyday."
(04:15):
And buyers were thinking, "Well, hey, prices are going to be, are where they're going to be in,
you know, year or two years." And it was very hard to help, you know, them meet in the middle,
which is, in essence, a large part of my job as a broker.
That's definitely getting better. I will say we haven't seen a whole lot of price movement.
I mean, I think that we are in a period of price discovery where people were trying to figure out
what was going to happen with commercial real estate market. We in the net lease side of things have
(04:38):
not seen a tremendous amount of movement. And I feel that prices are stabilizing with recent interest
rate hike declines, so to speak. And the belief for the sentiment amongst many that these
increases are going to slow down if not stop very soon. I think we're seeing the market start to
react to that in a very positive way. You know, I myself personally as a broker have focused a little
(05:03):
bit more on distressed assets, vacant assets, short-term assets, just situations where sellers are
going to be motivated to sell as opposed to more of like the bread and butter, you know, five cap
star bucks or four cap chic flay deals that that, you know, a lot of the market in terms of who would
be an ideal purchaser. You know, I've kind of fallen out since financing is not a creative in situations
(05:27):
like that. Right. And speaking of financing, I've seen a lot of static and I've actually dealt with
some of my clients who have gotten the crunch from their lenders, whether it be, you know, one of the
bigger banks or private money, people are really taking a hard look at underwriting. They're really
taking a hard look at even non-performing assets to justify the expense. They're looking at track
(05:50):
records and other stuff too, but there's a lot of people putting the brakes on. I had a client who had a
re-fi done in April when they were at 82% occupancy. They got up to 95. They were supposed to be another
re-fi coming up in September and the lender basically said, yeah, we're not giving any more. You got
what you got and you still need to be at 95% by the way. So what are you seeing? Like what's going on with
(06:14):
lending? Again, it's been doom and gloom and nightmares in the marketplace, but I think there's
a lot more of that coming from the less experienced, less seasoned operators than from the really
established relationship builders. So where are you on that? Yeah, so I mean, I kind of enjoy hating on
multi-family, but I think a lot of that is on the multi-family side. I mean, I'm not joking, honestly,
(06:41):
because I look at what I do in the net-least space. We don't have pro-formers. We have numbers. We have
real expenses, real income. We have leases that tell you exactly what the rent is going to be. We know
who's responsible for what. Whereas in multi-family, I think over the years, a lot of as you alluded to Andy,
inexperienced operators came in and they started really pumping up the numbers and factoring in
(07:06):
incredible increases in rent and no increases in material costs or labor costs and things like that.
And because it's a pro-former, it's subject to interpretation and it's subject to being manipulated
a little bit. So I think that's one of the reasons why we're seeing a lot of crunching going on in
the lending world for multi-family. As it pertains to my world to net-least, my contacts, my lenders,
(07:30):
my loan brokers, they're eager to loan. I mean, I've got a couple deals going on right now,
you know, shopping centers in great markets. Barbers were successful in obtaining 75%
loan to value and 25% amortization. Another thing I've noticed, which is interesting, this could be
a whole dialogue in and of itself, is that, you know, obviously, if you have a deal that's, let's just
(07:51):
take a six-cap deal. When rates were 3%, that deal cash flowed, right? When rates are six in
three-quarter percent, right? Which is roughly where they are today. That deal is not going to cash flow.
So what I've seen lenders do, and it always concerns me a little bit when lenders get more creative
than brokers, right? So I've seen the lenders get creative and they take a deal that used to be a
(08:15):
deal they would finance at a 20-year amortization. And today, they're financing going to the 25-year
amortization. That's interesting. Yeah, they're finding ways to make the deal work by lowering,
you know, the debt, the essentially their debt service payments, what the old blows would be by pulling
out the amortization. Now, I don't necessarily like that because you're still having the same five,
(08:36):
seven, or ten-year term. So you're just burning off, you know, less of your money is going to your
principle, if any, at all. That's interesting. I hadn't heard that yet, but I don't play out in the
net-least space. So that's, that's, it's, it's, it's, do you think they're exposing themselves to more
risk? Or are they just hoping that they're going to be able to refy this thing when rates come back down
(08:58):
and then all things will be hunky-dory? You know, in general, like I said, I think that the lenders
are eager to lend them good product. I am scratching my head a little bit on deals like that, wondering,
you know, what is the banks, you know, philosophy? I've got some very, very experienced friends
in this indication and investment space that I talked to on a regular basis. I just had a
(09:19):
conversation with one of them yesterday and, you know, one of his statements to me when we were talking
about a deal that I was looking into was, oh, well, listen, you've got three years to refy this deal if
you buy today. Yeah, and you'll still have decent lease term luck. And I bet that within the next three
years rates are going to come down. So when I, when I start hearing things like that, I get a little
(09:39):
concerned because it's anyone's guess what's going to happen. And I think that if a lender is today
saying, okay, we'll take this high risk deal that doesn't work for the borrower and we'll make it work
by stretching out the amortization because, yeah, in three to five years, we're going to be able to
refy an amp's this deal at a better rate and it'll make sense. I think that's very risky, especially
(10:00):
today. No one really knows, you know, what's going to go on. It's very possible that, you know,
I hate this phrase, but very possible that this is the new normal, right? It's very possible that
five to seven and a half percent interest rates are the new normal and that asset prices will
adjust further. It's also possible. I mean, I think the greater, the more likely outcome here, Andy,
is that we'll see one more rate increase this year and then 2024 things are going to really start
(10:24):
to level off and maybe we'll start seeing some decreases towards the end of 24, which I think would
really, really, you know, put some gasoline on to this, this fire. I really believe that commercial
real estate is still very strong and it's just kind of like, it's like, these smoldering embers that
wouldn't know about like that happens. It's going to throw some gasoline on the fire and wake things up.
Yeah. Yeah. I tend to agree with you on one more increase and then next year towards the end,
(10:49):
maybe we'll see them start to pull back a little bit. I think it's still, you know, the market overall
is so fragmented. Like, you know, tertiary markets haven't caught up to primary markets and declines
and leveling. It's just, it's all over the place and there's no apparent rhyme or reason to it
outside of, you know, population inflow and outflow from, you know, blue states to sunbelt to whatever.
(11:12):
So, you know, as far as I'm, I'm seeing it on my side, the government just took their fingers and
went like this and swirled the pot and who the heck knows where everything's going to settle. Like,
I stopped making predictions about a year ago as soon as they were like, oh, we're just going to create
this 40-year mortgage for all these homeowners to pay for these more expensive homes that are
caused from inflation. I was like, I don't know what to do anymore because that just changed the game.
(11:33):
Again, I don't know what this is. Like, I've never lived through that before. Like, I remember 2007,
2008, I was selling lumber to home builders. Like, that was my thing. So, I was ready for that when it
came because I saw it from a mile away in the industry on the supply side. Right now, I have no idea.
Like, that's a whole new game. Construction is still strong. Interstrates are through the roof.
(11:56):
I don't know where it's going to go, but people are paying $325 a square foot for new construction.
I don't know how they're going to pay for it. Like, 40-year, I mean, to your point, stretching
the amortization out on the 40-year mortgage, if you look at the table, they're at less than 7%
equity after paying a mortgage for 10 years. Are you kidding me? I know. I know. I know. We're
(12:18):
going to hold posts about it. The residential space is a different animal. You've got an
incredible supply constraint there. So, I just, I mean, one would have thought that if the fed
goes from a federal fund rate of effectively zero to 5.5%, that they would have taken the housing
market to a screeching halt and that prices would have tumbled. And they really didn't. They really
(12:41):
didn't know. Fact, what's interesting is that in addition to the supply constraint that you have
in general, you just have an underbuilding of homes for so long, you also now have an underwilling
this, so to speak, of sellers to sell because I'm not selling. I love my home, but I would seriously
consider selling right now, but I'm moving somewhere else, but I'm not doing it because my mortgage is
(13:02):
2.77% and to buy the same exact house next door, my payment is going to be an incredibly
large amount more. It makes it worth it for guys like me. I live out in the sticks in upstate New York.
My mortgage is cheap. My taxes are ridiculous, but the attractiveness of going somewhere else for
(13:25):
whatever reason and just keeping this and renting it or keeping it and doing like STRs or whatever,
because I'm by the lake, it's huge. But that's really not what we're here to talk about. I really
want to pick your brain on what's going on on the commercial side from what you're seeing. Now,
there's a big push currently on the retweet space and on LinkedIn towards exactly what you do,
(13:52):
because it is performing better. I don't really want to talk about office, and I know that's not really
your wheelhouse, but there's all the doomers that are like office will never recover, and now there's
all these layoffs and all the other stuff. What direction, if somebody's getting into doing bigger
commercial stuff, they're looking to transition over from multifamily or single-family inflips and
(14:17):
that kind of stuff and to get into your space. Where do you see the most opportunity for them?
Where do you see them being able to mitigate or minimize their risk and cash flow on stuff?
Then after that, I want to ask you about some ways that you and your team really help people develop
(14:40):
that. I guess industry knowledge, because I know that you've done a bunch of stuff to teach people
and train people and bring them in and mentor them into this space. Yeah, great questions. I would
see it right now. There's probably three main spaces that I think are the most attractive and
lucrative for someone who wants to, you know, these are not by the way strategies for someone
(15:05):
who is just watching a YouTube video and is like, oh, I want to jump into commercial real estate.
These are for someone who has experience and knowledge. Okay, they're definitely something
that you can learn even if you don't have experience, but not something I'd recommend jumping into.
So they are as follows. I guess I'll just name them and then we can go through each one.
So the first one I would call the Blend and Extend, which is something we'll talk about in a minute.
(15:27):
The second one would be like a retail repurposing play. And the third one would be Value Add Shopping
Centers. So in that order, the blending extend is a very interesting strategy that people ask me
about a lot. So if you look at a commercial real estate deal and net lease deal, your price is
(15:47):
going to be a function of many things. Okay, so your price is going to be a function of lease term,
right? The longer the lease term, the more valuable the property, because the less risk, tenant,
so the stronger the tenant, the better the asset, right? Obviously, there's other things like Red
Bumps, you know, a deal that has 2% rental escalations annually is better than one that has, let's say,
(16:08):
10% every five years or one and a half percent every every year.
And then obviously you've got things like your, you know, your market and your demographics and
your traffic counts and your visibility. But for our purposes, like a lot of those things, you can't change,
right? Like you can't change the market, you can't change the traffic counts, you can't change
the visibility, the ingress, the progress. But what you can change is you can change the lease
(16:33):
terms, okay? So I'll give you a perfect example of a deal that I had with the client and how I advise
them. So this client had a well-located wall green that was an out-parcel to a shopping center that
they also own. So they built the shopping center and then when I say out-parcel, that's essentially
like former parking lot that was built to house, you know, a property. So they built this property 20,
(16:57):
almost 20 years ago, side of 20 year lease with wall greens. There was about 12 or 14 months left on
the lease. So very short-term, very high risk because wall greens could vacate. Wall greens traditionally
pays very high rent. At this site, they were paying $290,000 annually, not terribly high for wall greens,
but high for, you know, net lease in general. And, you know, they had, like I said, about 12 or 14
(17:22):
months left on the lease. So at that point, I'm going to just get out my calculator. I like to rely on
that as opposed to my brain. But so at that point, then this was, this was a couple of years ago,
so the deal was cash flowing $290,000 annually, but it had about 12 or 14 months left on the lease.
So that was like probably a nine-cap deal at the time. So if you do the math, that property was worth
(17:44):
about 3,222,000. So we'll remember that number, 3,222,000. So what I advised was that they would do
what's called a blend and extend. And in this example, the owner did the blend and extend, but in, in,
in, for our purposes, you could come in and purchase this building and then do the blend and extend.
So let me just define a term because I've said it 15 times and haven't, have it really defined it.
(18:06):
A blend and extend is where you take a certain aspect or aspects of the lease, right? And in
exchange for a change that benefits the tenant, you extend the lease. So you blend the lease and
you extend the lease. So this deal that had $290,000, but only about a year left worth about 3,22 million,
right? What I advise them to do is to go back to Walgreens and say, I want to brand new 10-year lease,
(18:31):
right? So they did that and Walgreens says that's totally fine, no problem. We'll do it, but we're
going to drop the rent from 290, right? To 225. So what is that? A 65,000-hour decrease. So the first
thing people think is exactly the look that was on your face and be like, oh, last thing I want is to
lower my rent. Why would I do that? That's my lifeblood. That's my value. And the answer is it is your
(18:53):
lifeblood, it is your value, but it isn't. Really your value is a function of the rent and the cap rate.
Now, 12-month deal, we said was like a nine cap, but a 10-year deal at the time would have traded
at about a 585 cap. So watch this. The 65,000-hour decrease in rent brings you down from 290 to 225.
(19:16):
225 at a 585 cap is 3,846,000. You just by the stroke of the pen increased your equity in your property
by 624,000 dollars in change, okay? You didn't, and I'm a former flipper, right? I'm a recovering
house flipper, right? So you didn't go in there and manage contractors. You didn't put a new roof on,
(19:41):
you didn't rip out walls and change layouts. You didn't do any of that. In fact, the only thing you did
was you rehab the lease. So for me, a guy who loves value add and loves this whole like here's a
before, here's an after. It's incredible because the before and after look exactly the same. It's the same
exact one. That's crazy. That's classified a million times, not no, but the lease is different and the
(20:01):
value is different. That is strategy number one that I would recommend today for value add and you
can find it all over the place because you've got a lot of tenants that would love a rent reduction
exchange for a longer term lease. So that was the blend and extend. The next one that I mentioned was
I believe retail repurposing. Retail repurposing. I mean, the middle of one right now was some clients.
(20:23):
Former Burger King also an out-parcel to a shopping center, right? Now this Burger King was operated by
a company called Tom's Kings. Tom's Kings was a relatively large Burger King operator. They had 91
locations and in March, they kind of surprised the industry by filing for bankruptcy. So they filed for
bankruptcy and this particular site, they completely walked away from. They turned over the keys,
(20:48):
they boarded it up, they left, they said goodbye. So I was brought in to sell the property. I had the
property under contract to be sold to a client of mine. And at this point, the new owner is buying
a vacant property. Now the real estate has inherent value, right? The real estate is not what failed.
(21:08):
The business in the real estate failed. And I think there's going to be tremendous opportunities
moving forward for this because you've got a lot of great real estate that's occupied by businesses
that are failing. So in this case, what he did was he purchased, he's purchasing this property,
at a relatively, we'll call it a fair market value. And he's now working with a major national
(21:30):
tenant whose name I can't say is in the middle of it, but probably one of the best single tenant,
not least tenants that there is. And he's contracting with them, he's going to give them a certain
amount of money for what's called tenant improvement allowance. So that tenant will actually do some
renovations to the property. When they're finished, he'll then reimburse them. They will also spend
their own money renovating the inside of the property. And when he's done with it, he's going to have
(21:54):
a brand new 10-year lease with a national tenant in a great piece of real estate. So that's another example
of opportunity for today in commercial real estate. And the third example is I saw a lot of shopping
centers. So with shopping centers, there's a lot of ways you can add value. Number one, you can
like multifamily, you can either increase occupancy and or increase rents, right? Those are really
(22:17):
your main drivers of value because just like in single tenant deals like we talked about in multi-tenant,
the value of the property is a function of the net operating income and the cap rate.
You can benefit your cap rate by having better tenants and by putting some capital expenditure
into your center. And you can better your N-O-I by decreasing expenses and or increasing
(22:38):
your rents or increasing adding occupancy to the center. So there's a lot of ways to do that. A lot of
these mom and pop, I call them mom and pop shopping centers. They're great shopping centers, but over
the years, the owner is essentially said, you know what? I'm happy with these tenants. Everything's fine.
Let's not raise the rents. Let's keep it the same. So there's opportunity as those tenants roll over
(23:01):
or as their options expire for you to then bring them up to market rent and you'd be surprised how
much of value you can add to the shopping center just by employing that strategy.
That's awesome. Now is that any shopping center specific strip malls or stuff with anchor tenants or
is it applicable pretty much anywhere? Tertiary, major market, the whole nine yards.
(23:24):
Yeah, it's applicable anywhere. I mean, there's certain things you're going to want to look for.
You're going to want to be close to the main retail harbor in it. You're going to want to have high
tri-trap accounts. The road that the center sits on, you're going to want to have minimum,
let's say 20,000 vehicles per day, preferably 30,000 vehicles or more, high population density,
things like that, good, solid, necessary services, tenants, things that you think will be there for a
(23:50):
while, but it can be done in really any type of shopping center anywhere in the country.
That's awesome. That's awesome. That's huge. So,
what do you see for, let's call it, the coming wave of layoffs that are hitting right now as far
(24:10):
as impact to your client base or who would be leasing properties from your client base for
disposable income-based stuff? Whatever that may be. Is there been any type of blip even on the radar
yet because I keep seeing all this stuff about consumer spending is up and credit card debt is through
(24:31):
the roof and all these vehicle sales are defaulting, all the loans are coming and they're doing all
these repossessions. It sounds terrible, but I haven't seen a lot of boarded up anything anywhere yet.
So, I mean, if it's all this doom and gloom and all this stuff is coming, where is it?
Yeah. I mean, it's very interesting. I feel the same way. I think that
(24:56):
I've always shied away from office with the exception of shopping centers that have retail and
a little bit of an office component or medical office, which is a whole different animal for a lot of
reasons. But I think that the office in general is going to take the brunt of what you're
subscribed with these layoffs from companies. And what's going to happen is that the tenants are
really going to be in the driver seat because the landlords are going to be faced with foreclosure
(25:20):
and in default and all these terrible things. And there's just going to be a lot of work out between
landlords and tenants. And tenants can say, listen, you know, 50% of your office building is vacant.
I represent the other another 20%. You want me to leave or you're going to reduce my rent. And the
landlord is going to reduce the rent. So that's just kind of an aside, retail spending is through
the root. The economy to me from what I want to I hone in on looks pretty darn healthy, despite
(25:46):
the fact that we have really tried our best to make something break. It really, you know, with
the exception of some failing banks, the economy is really I think turning along at a good clip. You
know, retail occupancy is at its highest in 18 years, right? We have record low retail vacancy,
4.8% nationwide. It's absolutely incredible. So yeah, I mean, listen, I think that if you look at
(26:11):
consumer spending being up and occupancy being at all time highs, that's just another argument
to purchase retail assets, right? Right. So yeah, absolutely. I mean, that's my perspective. I think
that retail is strong. Retail is alive and well. And the fundamental nature of us as a society
is a consumeristic society. And, you know, so long as guys like you and me have a dollar in our pocket,
(26:32):
retail is going to be alive and well. Oh, yeah, absolutely. So what do you see from an underwriting
standpoint when people are looking at these deals? And they're trying to weigh the pros and cons.
Where's the risk management come in? Where's the cost of avoidance come in? What's a smart move right
now when they're actually looking at a deal for whatever? Pick a flavor that you specialize in.
(27:00):
And tell us, where should they be looking to mitigate, minimize, or otherwise address risk in
their investment? You know, I like, I like it to, you know, a buffet, right? There's a lot of
food at the buffet and not every person is going to like every food, right? So especially today,
not every investor is looking for every type of product. So I really, I can't answer that question
(27:25):
on a really global, generalistic, you know, perspective. But what I can tell you is that's really a case
by case example. I mean, I'll give you a great example. I've got a Wendy's property right now that has,
you know, some some challenges that it's faced. I've actually sold this property before.
A few years ago, and now I'm selling it again. And you know, sales at this location are not not the greatest.
(27:49):
But it's a very solid guarantee from a large operator for a long time. So, you know, inherently,
there's some risk in this deal and that risk is is is is adjusted where I should say is accounted for
by a higher cap rate. Okay. So like I've been, you know, I'm counseling buyers who come to me
want to purchase the property. You know, we're saying, well, you know, there's a type of buyer who says,
(28:12):
you know, I'm concerned. I don't care how big the guarantee is. Who knows? Maybe that guarantee will
file for bankruptcy. Now we'll be left with a building, right? So maybe this deal is not for that buyer.
But then there are other buyers are saying, well, hey, listen, I'm getting a good entrance cap, right?
I've got a solid guarantee. There's a long term lease in place. I'm going to collect, you know,
enough money during the next X number of years that are on the lease term that I'm in a I'm
(28:37):
essentially paying myself back when I'm spending and then I'm getting a building and and land
afterwards. So yeah, this is a deal that's for me. So again, like that first person that I mentioned,
not cut out for this deal is now what they're looking for. They're better off going and finding a
deal that maybe is a hundred or 150 basis points lower with less risk. So they can sleep a night.
But the other guy or girl, they're looking for this deal. They want that slightly higher cap rate
(29:01):
in exchange for a higher risk. So I always tell people like, you know, you have to be realistic
and understand that you're, you know, you're really not unless you're buying something off market,
you're not going to beat the market. You're just going to want to choose the asset that checks
all the boxes that you're looking for or as many as possible. Right. People's buy box, you hear it all
(29:22):
the time now. Bigger pockets is like the long down to that term and everybody's talking about the
buy box and blah, blah, blah. But really it comes down to your risk profile. What what appetite do you
have and can you find an exit from this, right? So I do a lot of work with family offices and there's
always like the second or third thing we talk about is what's the exit strategy? You know, do I have
multiple different directions I can go with this to get out of it if things go sideways because
(29:47):
that's always the concern is the preservation of capital, the preservation of value and, and, you know,
having the asset do what they intended for it to do when they purchased it. So for them, that's
totally makes sense. And I think that comes down to what you said, it's super regional and there's
no like blanket term, but it comes down to each individual person or entities risk profile, right?
(30:10):
What they're comfortable with accepting. So what else do you see going on that, you know, specifically
you're you're in it, right? And the listeners this show they're really into learning about not just
real estate, but how they can max out their N O I how they can max out their ROI like where
(30:34):
where are the secrets right now in triple net or in, you know, just in general net lease that
people aren't paying attention to or aren't really looking at in the right light because
you know as well as I do when you when you start talking about cap rates from the residential buyer
(30:55):
to commercial, the math changes completely because they're they're the same thing but they work in
very different inverse ways with interest rates. So that's something that a lot of people don't
get until they're in it for long enough, but where else are you seeing, you know, these opportunities
to to to max out and really I want to say pull the equity out of a property, but how are you going
(31:23):
to make more on your investment or what is being done by really good operators that isn't being
done by your average Joe? So first and foremost, net lease is a preservation of capital, it's
generational wealth, it's stability, it's security, I mean granted you have a lot of benefits as you do
(31:46):
in many forms of real estate with depreciation and you know in other tax advantages. So in general,
you know net lease is not a value add you know avenue of real estate investing, it's more of a
preservation of capital and stability and security obviously there's going to be appreciation, but
(32:07):
you know the three techniques that I mentioned being you know blended extend retail value add
repurposing I should say and then you know multi multi tenant shopping center value add those are
going to be ways to to create a whole lot of capital very quickly and I'm talking I mean I gave
the example before what I think it was what 620 or 630 thousand dollars in equity build up with
(32:32):
the stroke of a pen, which is amazing. Yeah, so you know in general, I just want to I want to
present it for what it is, you know typically people are investing in net lease because they want
that security they don't they want to be able to sleep at night, they don't want a pro forma,
they don't want to gas at expenses, they don't want that income to change right, they want that coupon
(32:52):
clipper and again these deals the majority of them are absolute triple net deals meaning, you know,
you own the property, the tenant pays you rent and that rent is not to you, they pay for the taxes
on your property, they pay for the insurance on your property, they pay for all the maintenance,
the management everything, if that property means a new roof, if it gets vandalized, if it has a flood
(33:13):
everything is on them. So, you know essentially especially when you look at the blue ribbon tenants,
you know the Chipotle, the Starbucks, the Walgreens, the CBS's, you know of the world, the whole foods,
those types of tenants, I mean these deals are really bonds that are wrapped up in sticks and bricks
(33:35):
and they should be viewed as such, you know, their phenomenal investments for preservation of wealth
and for stability and security. So, I guess the question I've got is, are you seeing anything or have
you seen anything that let's say less experienced owners, less experienced brokers are missing in
(33:58):
their leases and their agreements with potential tenants that could come back to bite them in the
butt? Like is there is there something that has happened that you've seen where people are just like
to dumb for their own good and they get burnt, right? Is there a stupid tax?
Yeah, I mean, yeah, of course and that's why you need a good broker to look over your lease and
(34:20):
make sure that you're, you're not missing anything, you know what is what we call wrinkles in the lease,
you know, like something where the paper is folded over and you missed it. I'm out, give you a great
example. I had a pet smart deal maybe five years ago that the owner had purchased and was interested
in reselling and I was evaluating it for him and I looked over his lease and first of all, a lot of
(34:40):
brokers will give you an evaluation without looking at your lease. I 99 times out of 100 will insist
on seeing the lease before giving an evaluation and it's specifically for situations like this.
So I was looking through the lease Andy and I saw what's called a co-tenancy clause. So this deal,
if I'm not mistaken, there was a lows in the essentially in the shopping center and the pet smart
(35:04):
was part of the center. So it was a big, you know, big box national tenant, great, great center,
but there was a co-tenancy clause that said that if lows ever vacated, pet smart could immediately
reduce their rent by 50% or terminate their lease. Right, yeah, exactly. So this guy, this poor guy
had no idea. The broker sold it to him didn't make mention, he bought the deal and I told him,
(35:29):
I said, listen, I'm not going to lie to you. This is the value of the center. This is the value of the
pet smart. Where this co-tenancy clause not to be in there, the value would be X. But that's a great
example of this guy didn't realize and he made a three or four hundred thousand dollar mistake
right there. And unfortunately, I've seen it happen all the time. Another example, this is more like
(35:54):
upon lease origination. So let's say you're buying a brand new building or you're doing a build
to suit where you actually have the ability to negotiate the lease terms. Like for example,
the deal I mentioned earlier about that former Burger King, well, they're in the lease negotiation
stage. So my client has the opportunity to negotiate with this national tenant. So this national tenant
(36:17):
is notorious for termination clauses, allowing them to terminate, you know, let's say after five
years, they can terminate the lease. So that's something I'm telling them, hey man, make sure you
negotiate that out of there. You don't want that, right? That's one thing. Another example in deal in
QSR deals, quick service restaurant deals, you know, Taco Bells, Wendy's, you know, Chick-fil-A's,
(36:37):
things like that. You're going to want to know to the best of your abilities how the site is performing.
And the way to do that is to obtain unit level financials, you know, to see how is that site,
you know, doing what are their sales like? So a lot of leases don't call for sales reporting. I
always tell my clients if you have a choice by the deal that calls for sales reporting so that you
(36:59):
know. And also if you're doing a negotiation with your tenant and they're asking for something,
always ask for something in return. If they want a reduction in rent, say, okay, fine, but I need,
you know, financial reporting every year, something like that so that you know what's going on. So
those are, you know, examples of things that are important to look out for. I mean, I have,
(37:21):
it's funny because you would think driving down the highway that every Wendy's is the same, but
I remember during the pandemic, I had one Wendy's I was, I was listing that said that in the lease,
it had a cloud under no circumstances where will there ever be rent debatement? Will the rent
ever change or go down or any of that? And I had another lease that said, and this list was written
20 years ago in the event of a government shutdown, the tenant will pay 40% of their rent, right?
(37:46):
Same exact Wendy's. One of them is paying 40% of their rent during the pandemic and the other one is
paying 100% of their rent. So you want to look at things like that. And that's why it's important
to have a good attorney and a good broker looking over your lease, making sure that there aren't any
wrinkles. That's what I was going to say is you would think that the attorneys would really be
on top of big gaps like that. And again, not all brokers are created equal, not all attorneys
(38:10):
are created equal, but when you're doing your due diligence and you're trying to find a partner as,
you know, a broker partner, an attorney partner, whatever, what kind of conversation do you have to
vet them? Like how do you know if these people actually are good or if they just suck? Because I've
(38:30):
seen everything from horror stories where I just saw one that hit Twitter the other day where there
was a $16 million loan and this law firm in New York City dinged $180,000 onto the closing
at the last minute with no notice, no transparency. And they just ended up paying it because it was
there. I mean, that should have been a $50,000 bill. It shouldn't have been a $180 grand, but it was
(38:51):
like a last minute thing. And now they just burned a whole bunch of bridges because no one will use them
for, you know, in that world again. But when you're vetting these people, I mean, other than just word
of mouth, what is there? So I guess if you're talking about from my perspective as the broker who's,
yeah, you know, working with other professionals, you know, I have my close circle of referrals that
(39:13):
I'll make, you know, when somebody, for example, I got a shopping center in West Michigan right now,
the buyer is is is out of, you know, he lives in Hawaii. So I referred a, an attorney that I worked
with a number of times. And that transactions proceeding very smoothly, right? I've got another deal
just last night, um, 10 o'clock at night. I was writing an email back because we have an accepted
(39:34):
L.O.I. that I drafted, right? Oh, no. The buyer and the seller. I drafted it. I know it like the back of
my hand and we accepted it. We mean, the seller accepted it for a lot of reasons. But one of them was
that there was a $100,000 non-refundable earned this money deposit. So when I hear that, I get excited
because that's a deal that's in the close and that's the type of buyer I want for my seller. Well,
(39:55):
I got the, you know, the attorneys are going back and forth with the purchase agreement, which should
be a mirror, right? With some additions, but a mirror of the letter of intent. And the seller's
attorney sent it back to the buyer's attorney and in there it said $100,000 refundable deposit.
The due diligence was longer. The purchase price was different and it's not like this was just
submitted to the seller's attorney. So I was attorney sent it back with other changes and not that.
(40:19):
I said, you know what? I said, this is not my job. But these are my clients and I have to stand up.
So I, I had 10 o'clock at night last night. I wrote a long email, you know, very carefully. I'll do
respect, you know, and ultimately I want to make it very clear that the decision for this contract
rested with the sellers and their attorney. But as their agent, I have a duty to protect them.
(40:42):
And these are the seven or 10 things. And I went line by line that purchase agreement calling them out
saying like, hey, this is something that in the alloy, it says this and the purchase agreement says
this. It's got to go this way. So, you know, I think that that for me, I don't have control over
that attorney, but I have control in myself. And I have to make sure that my client is, is being
is being service properly. And I have to, I'm not even doing the client into the deal to get it done.
(41:06):
So I guess what I'm saying to you is that not at, not at all times, do I have the control over those
vendors, right? But I have to step in when necessary to make sure that things are done properly. Now,
on the other side of things, if you're in the actual investor, right? And you're looking for a broker,
for example, get on the phone with that broker, Google that broker. If you Google me, you will see
(41:28):
about 300 podcasts of appearances. You'll see a course, just all kinds of things. You can get to know
me in five minutes on the internet, but also as at the end of the show, I'll give out my number.
Give me a call myself and talk to me. Get to know me. See if I'm an either type of person.
Again, it's a buffet, right? Not every broker is for every client. So am I am either the type of
(41:48):
broker that you're looking for? And I would hope the answer would be yes. But, you know, what you're
going to want to look for is you want someone in his throw. You want that guy that on a Wednesday night
is going to stay up at 10 o'clock at night and go over that contract. Even though it's not his job,
even though the deal will probably get done, right? You want that person that's looking out for you
that wants, you know, that has that standard of excellence and is going to be thorough and meticulous.
(42:12):
And you want an expert, right? I can't tell you how many times I've dealt with people who hired a
residential broker. I'll do respect residential brokers. You guys are great at selling houses, right?
But they hire residential broker to sell their McDonald's, right? No, it's apples and oranges. You can't do it.
Yeah, this is all I do. I only do that. At least if you want that lease, I'm your man. If you want
multi-family, I am not taking the listing. I will gladly refer you to a great colleague who will take
(42:36):
care of you. But this is what I do. This is what I specialize in and this is where, you know, I want to
stay. That's awesome. So for everybody listening or watching on YouTube, the lesson is team up with a good
broker. That's what you got to do and make sure that it's their wheelhouse. You're just like when you're
doing residential, we've talked about it before on the show. If you're dealing with your cousin,
(42:58):
Ted, that part times it and is selling residences to homeowners, you don't use them for your investment
properties because you're not going to get a good result from that relationship. You need somebody who
full times it and understands the market. So that being said, Dan, what markets are you in? What do you
specialize in? And what types of properties and stuff should people reach out to you for specifically?
(43:24):
Yeah. So nationwide, I sell property in every single state in the country, but I specialize in
net lease. So I specialize in single tenant net lease, for example, Starbucks and Walgreens and CVS
and Chick-fil-A, Aspen, Dental, Dollar General, Family Dollar, these types of properties,
multi-tenant properties, right? I also do medical office. I said discount retailers, auto-automotive
(43:51):
part stores, some resorts. I sold 50 million dollars worth of resorts last year. And anything in the
net lease space specifically. If you want to talk about anything commercial real estate, pick up the
phone. I'm glad to talk. And if you need to refer, I'm glad to make one. But as a broker, I would be
more than happy to assist in anything related to the net lease space. If you have property and you
(44:16):
want to know what it's worth, please reach out to me. Or if you just want to set up another set of
eyes on a deal, even if it's not my deal, I don't care. Let's go through it together, make sure you
do the right thing. And anything I can do to provide value, I'm happy to help.
Awesome. So how do people get in touch with you? Sure. So first of all, I'm very active on LinkedIn,
so you can check me out there. First name is Dan, last name, Luke Owitz, L-E-W-K-O-W-I-C-Z,
(44:41):
again, L-E-W-K-O-W-I-C-Z. Google me, all my informational pop-up that way as well.
But I'm happy to give out my direct line, my cell phone number, if anybody wants to reach out directly,
my number is 248-943-2838. Again, 248-943-2838. Please reach out. If there's anything I can do to help,
(45:02):
it would be my pleasure. That's awesome. Dan, thank you so much. It's been good catching up. I appreciate
you coming on the program. This has been great. I hope the listeners got some knowledge out of it.
I honestly hope that they have more questions so they can reach out to you and build that relationship
and start working with a good broker who can handle whatever it is they're looking to do.
(45:22):
And even discuss the benefits of NetLease over multi-family if that's the what they want to do.
Preservation of capital and asset value versus forced appreciation. Different business models,
same goal, generational wealth. Please, if you are on YouTube watching this right now,
(45:47):
hit that bell and subscribe. If you're listening on Apple Podcasts, Spotify,
iHeartRadio, Google Podcasts, wherever podcasts are found, please subscribe, like, comment,
leave me three or four stars, five stars, send me a message. Let me know what you think,
(46:08):
podcast@tcomethod.com. Thanks Dan. Appreciate you.
Yeah.
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