Day 49-60 Day Quick Start Challenge…August 18, 2017

Friday, should be any easy day…right!

I started out with a 10 am to go over a new underwriting product. When you need to model a property, especially a larger property you need some type of financial modeling software. For years the Behemoth was ARGUS. Argus is great, you can model anything and figure the cash flows, value, partnership distributions, all kinds of really cool stuff. The problem is that Argus is $6,000 to buy outright or you can subscribe for $500/ mos.

What happens when you only need to that type of modeling once or twice a year? You can’t just borrow your neighbors and only the big boys have it in the office. Argus also takes two weeks just to learn how to contact customer support to tell them you don’t know how to do something you learned in the class. So, I am exploring an exciting and very inexpensive alternative that is actually user friendly…more about this later.

Off I go to meet with a commercial lender. Since something on the order of 90-95% of all commercial transaction require some form of financing it would be in your best interest to get to know a few people in the business. Here are a couple of tips one meet the bankers before you need them…and I’ll tell you why. First, not all banks are created equal…big banks like big deals. If you need $250,000 you’ll never get a loan at Bank of America…if you need a billion you stand a chance. Bank’s don’t have an appetite for the same product type. This is one of the reasons you need to be a student of your product type…some banks love multi-family but hate retail. Some banks love industrial but can’t get their arms around apartments.

Second, when bank specialize they know the problems that come up in a transaction and how to handle them. Banks have different lending limits some can lend $3,000,000 some can lend $30,000,000. Some banks have local underwriting and loan approval some have to send it off to Charlotte North Carolina underwriting capital of the world. If lending decision are made somewhere other than where the property is get ready for a wait in fact automatically add at least one month to the closing date.

I met with a lender that can-do loans to $7,000,000 he is local, he underwrites the deals himself and gets it approved by the CEO right here in beautiful, sunny, South Florida…lunch wasn’t bad either.
I met with a convenience store seller who wants $750,000 for a $600,000 asset a package. A building that needs a roof, a business in decline, and an owner that is out of time, energy, and most importantly money. Pretty much a losing proposition…but he is convinced that someone will pay him for the upside. Why would anyone do that unless the upside we so enormous that the risk was worth the out sized gamble.

Think about would you pay $90,000 for a business that makes $80,000 a year net and if your correct and get everything right you could make $140,000 next year? What you just did was bought yourself a job…who is going to manage your new investment? Who is going to work your new investment to increase profits and lower expenses…you! And if you’re correct you will be able to pay your debt and take home $80,000.
Don’t invest based on the greater fool theory!

Last but not least I met with my client for the 30,000 square foot entertainment center and he brought along a proposed new investment partner. Did you ever meet one of those guys from New York with the moussed hair, shirt open to his navel, and wearing about half a gallon of cologne? You know the kind of “turd” when shake hands your first reaction is to wipe your palm on your pants leg and then rush home to take a shower. Now, I am sure I am overreacting, I’m sure he is a fine gentleman and sound business person. OH, that’s right the Prospect called to apologize and say he had no idea this guy was coming and that they had nothing to do with him. What a world class turd!

Anyhow, we showed the space and our tenant likes it he is doing the budget now and baking the $30/sq. ft. rent into his pro-forma. You have to do a lot of entertaining to pay $50,000 in base rent plus another $8,000 in CAM charges. The good news is this guy has been in the business 30+ years and has 9 operating centers across the South East.

So, as you can see my Friday coast into the weekend…didn’t exactly coast!

Day 48-60 Day Quick Start Challenge…August 17, 2017

Thursday…and not any Thursday the Third Thursday of the month! You know what that means…Coldcallpalooza…!

You know what I did? Research! I spent my entire day using CoStar trying to find comparables for two industrial buildings, one small office, a parking lot, a duplex, and a set or retails stores.

I have managed to stumble into two tenant representation assignments for two different clients looking for similar spaces in similar markets with vastly different sizes. How’s this for completely out of left field I have two clients that are in the family entertainment business. One is brand new and needs 9,000+/- square feet and one that has about 9 locations and needs 30,000 square feet.

I have a Landlord/Owner that us the single biggest impediment to getting a deal done on his space. He talks himself into a deal, out of a deal, and then out of consideration. Let me talk about ‘Reality” for a moment.

Reality isn’t the way we think things should be…it isn’t the way we would hope they would be…it isn’t even the way we wish they would be…reality is the way things are.!
Reality is the way things ARE!

We have a client that is a startup day care center. They have a limited budget and are relying on an investor to help them get started. They want to be in an upscale area but they only want to pay rent at half the market rate. Their reasoning is that the landlord should be glad to have them after all they don’t make a mess, they don’t cause problems as tenants and they don’t use a ton or parking.

Here’s the reality the market they are looking in is leasing at $30/sq. ft. all day long. They are a startup and have no operational history, they don’t even have a license yet. They have an investor who will help them and they have access to $250,000 cash. Kindercare founded in 1969 has 1,700 locations and was valued at over $1.6 Billion is the Landlord next choice?

We have a client that wants to sell a convenience store with the building for about $850,000. The property needs a roof, doesn’t have prepared foods or gasoline and has rats big enough to saddle and ride. The business shows three years of continuous declines in income year over year and the owner is out of cash.

He is convinced that someone is going to come along and pay him over $700,000 in cash for something that legitimately might be worth $600,000…his reasoning is that they will see the “vision”. I’m thinking the only vision they will be seeing is if they eat mushrooms before they buy the place.
Here’s the worst part I can go on…and on…and on…not with stories from my career but with stories from this week!

I recently saw a book titled…”The Universe Doesn’t Give and Flying @#$% About You” in all fairness I haven’t read it yet but I can guess what the author might be saying.

Here’s the take away…REALITY is what it is…not what we hope, or wish, or dream, it just is…period.
You can’t lease class “A” space for class “C” prices. Landlords like daycare centers…but not enough to take money out of their own pockets to get one in their property. If you make a mistake…there is not always a “greater fool” to come in and buy you out your mess. People with money didn’t get it by being stupid.

Day 47-60 Day Quick Start Challenge…August 16, 2017

I’m buried…!

I have about 8 proposals to complete! And they all have to be done this week…by my own estimation.
Let’s talk about “expectation management” I tend to put pressure on myself when it comes to performance. I want to get it done…now! I want to get it done…now…right now! And…I want to get it done correctly…now! No exceptions and no excuses.

As I get a little more mature what I am finding is that sometimes I want it done and it doesn’t need to be done…now. In fact, sometimes tomorrow is just fine. Sometimes even the day after tomorrow is still just fine. Case in point I have been trying to get this blog written on a daily basis but guess what? Sometimes my plans get knocked sideways.

So here I sit playing catch up trying to get six blog entries done in one evening.
Here is the reality I started off by putting my new industrial listing in LoopNet and getting out the Sales managers thank you letter from the “Listing Retention Letters” checklist.

If you haven’t seen them yet the letter is part of the “8 Secrets to Satisfy Sellers, Maintain More Listings, and Cash More Commission Checks” seminar. I think we’re up to about 42 total letters and two complete checklists. Without getting too far into it here one of the biggest complaints sellers have is the broker took their listing and they never heard from them again.

As for the listing, I’ll share it with you here… LISTING

Hop on over and check it out. This listing started as a “SWL” then a “Cold Call” a “Proposal” and a listing. That’s the process, I try to break it down to the simplest components and systematize it so that anyone can do it.

I am writing this Monday night and we have had a serious inquiry already and we haven’t even started the marketing process in earnest…stay tuned!

Day 46-60 Day Quick Start Challenge…August 15, 2017

Cha…ching…another listing!

Check it out, today I made a bunch of calls probably 20 in total had about 10 substantive conversations where I turned up two buyers for an off-market warehouses I have up my sleeve for about $6,000,000 total. I also found a buyer for a shopping center that I am in the middle of proposing and one of my mentees has a buyer as well. Trying to get an offer to get the seller off the sidelines.

We finished a Brokers Opinion of Value and billed the second half of $1,500 and got paid on the spot. The deal that was to have closed on Friday did and the check and closing statement arrived today. One of my mentees had a closing at 11:00 this morning and it too closed. We’re scheduled to close one next week as well.

I have a proposal going on two convenience stores, and office building, and two warehouses and three of those came from SWL’s guess it does work.

I have a tone of research done and ready for pictures this weekend and a boat load of calls to make. So, as you can see I don’t lack for anything to do. At this point the hardest part is to prioritize and stay focused because it’s easy to get caught up in all that you must do and get “overwhelmed”.

How do you eat an elephant? One bite at a time! You can easily break any of these seemingly insurmountable tasks into bite sized pieces the key is to just get started on the basic. The other thing I will tell you that helps me is to have a system. I use the “Sample Deal Folder” as a guide to getting started. It always seems that once I have gathered all the bits and pieces I need getting them to go together just seems that much easier.

Speaking of which I have a bunch of pieces to gather and a “TON” of stuff to get done…I will report in tomorrow…finally tally for the day 2 closings, 1 BOV, 1 Listings, and 4 Buyers not bad.

Day 45-60 Day Quick Start Challenge…August 14, 2017

Monday, Monday, can´t trust that day
Monday, Monday, sometimes it just turns out that way

The Mama’s and Papa’s

It’s true…first off Monday’s get here all too soon. Secondly all manner of weird stuff makes an appearance on Monday…I guess weird gets a chance to simmer over the weekend.

But there is good news…The transaction that was scheduled to close on Friday actually did so we closed another condo in the conversion I wrote about on Friday. We helped complete the conversion, helped refinance the property, helped get a mortgage with a release clause allowing the sale of individual units, and sold two of the units.

Not a bad start to a Monday.

Now back to the weird. We have a listing for lease that is also being sold…by another broker. Yeah, do the math on that one. We have, despite the best efforts of the Landlord/Seller managed to lease one of the 6 bays available. We have a tenant that wants to rent a bay in the building. The tenant has completed the application to lease and has indicated which space they want.

There is a tenant in the space. The tenants lease expires in September. The tenant is never in the space and uses it basically for storage. The tenant also has the peculiar habit of not paying the rent except for every six months or so when they land a new research study. The tenant doesn’t want to move, doesn’t want to vacate, doesn’t want to pay more rent even though they haven’t had an increase in years.
The Landlord doesn’t want to pressure her into moving if he doesn’t have a tenant to go into the space. The tenant we have provided doesn’t want to sign a lease since the tenant might not vacate when confronted with a new lease and terms. Further, the new tenant wants to open for business in that location buy October or November at the latest. The Landlord in the interim has set up an appointment to meet the current tenant who is out of the country to negotiate a new lease.

Why do you think I keep saying “who is the worst person to negotiate for your?” …It’s you of course, because you become emotionally involved…or deranged.

I have seen both Landlords and Tenants lose deals they should have done because they tried to out maneuver, outwit, or out fox the other party. In the end they both lose and they don’t even know it…they lost time at the very least if not money.

Now, you know why I say “you can’t overcome ignorance or insanity”!

Day 44-60 Day Quick Start Challenge…August 13, 2017

It’s Sunday and I guess I got a little introspective today. I started my day by reading my emails…and one thing led to another and I got into an ad hoc goal setting affirmation-fest.

I spend the entire day reviewing my business plan and goals and pretty much decided I needed to refine some things and refocus on my goals and plans. I know you probably have heard about goal setting, affirmations, time management and all the other blather. I bet you have even heard that…if you fail to plan…you plan to fail! BULLSH!T!

Here’s the deal…how much time do you think an airplane flying to New York from Los Angeles is actually on the flight path? According to my neighbor the airline pilot about 5-10% of the time…when it takes off…and when it lands! The rest of the time it’s of course…not a lot but just enough that it needs mid-course corrections. Think about the plane getting blown by head winds, tail winds, turbulence who knows what else might affect the flight.

Well, if you got nothing from this blog yet pay attention. I charted a course earlier this year…and I did what everyone else does…stuck my goals in a desk and forgot about them. That is until I was sitting here going “where the hell am I?”.

I pulled out my goals, blew the dust off them (that had accumulated since January) and took a good, hard, critical look at them! If you could have seen this mid-course correction…I bet I looked like one of those old pirate movies…wheel spinning frantically to get back on course.

Here’s the deal, and I’m not going to a goal setting workshop here but in addition to goals needing to be…S.M.A.R.T.

Time certain

They must be reviewed periodically to see if you’re on course, off course, or wandering aimlessly. You may find that some of your goals aren’t even relevant anymore…why do you even have it as a goal? Priorities change, roles change, so why not reset your goals.

What happens if you accomplished one of your goals how are you even going to know if you haven’t reviewed them in a while. Here is the take away of this little goal setting session of mine.
I discovered that I had goals that were no longer even important to me. I had goals that I had achieved and forgotten that they were even goals and that I had goals that I had better get my…you know what in gear to accomplish.

So, I broke out the goal setting sheets, redid my goal setting, made some adjustments buy here’s the important part I printed them and put them on 3 X 5 cards which fit neatly into my planner pad. Now I have to look at them every day…I even recorded my affirmations and made a 15 minute loop to listen to first thing in the morning. So, instead of listening to mindless drivel like the Paul Castronovo show I now get a jump start on my goals on my commute.

I also made sure that my goals included a date and action steps so that I can gauge my progress and make a mid-course correction of needed.

I guess I’m just not sophisticated or successful enough to wing it yet…I’ll trust my written goals and affirmation to keep me on track.

Day 43-60 Day Quick Start Challenge…August 12, 2017

Saturday, I have research T-ed up and ready to go but I have 4…count ‘em 4 proposals to complete.
And if that isn’t enough one of my agents is on vacation in Europe and she left me a pile of Secret Weapon Letters she sent out just before she left. I only have about 50 calls to make before she gets back.

I decided to do the “money” thing first and work on the proposals because they are further up on the “Productivity Pyramid” If you don’t remember the Productivity Pyramid look back on the first or second post/page and there it is.

Saturday had become comparables day. If you ever heard my tirade about why Residential Real estate is dead…comparables are one of the nails in that coffin. Unlike a four bedroom, three bathroom, two car garage in Fox Run you can’t just hop on Zillo, Trulia, or and figure out what a building is worth.

There are far too many factors that affect the value of a commercial property. Setting aside income, expenses, financing, debt, equity, depreciation, and capital improvements. We will only consider looking for buildings that are similar in size, style, age, utility, location, configuration.

Think about what is the likelihood that I will find a 20,000 square foot two story office building on Okeechobee Boulevard that traded in the last 12 months. Now add to that a 20,000 square foot two story office building on Okeechobee Boulevard with an additional lot for dedicated parking. But wait there’s more how about 20,000 square foot two story office building on Okeechobee Boulevard with an additional lot for dedicated parking with 20 small office tenants.

How about this…20,000 square foot two story office building on Okeechobee Boulevard with an additional lot for dedicated parking with 20 small office tenants built in 1974. But that’s not all…how about 20,000 square foot two story office building on Okeechobee Boulevard with an additional lot for dedicated parking with 20 small office tenants built in 1974 that has been recently painted, sealed, and has a new roof. One last one…how about 20,000 square foot two story office building on Okeechobee Boulevard with an additional lot for dedicated parking with 20 small office tenants built in 1974 that has been recently painted, sealed, and has a new roof and that has all short-term leases.

You can see the problem unlike a house you can’t look at the subdivision and look at all the four bedrooms that sold and look at all the three bedrooms and surmise what a bedroom is worth. I commercial real estate it’s like the more variable you consider the more variable the solution becomes.

Anyhow, back to the grind I should have these banged out by Tuesday or Wednesday and I have a ton of calls to do next week.

Day 42-60 Day Quick Start Challenge…August 11, 2017

Another day another proposal…I have got to dig myself out…holy cow I forgot just how jammed up you could get.

Today turned into proposal day part II. I think I mentioned that when you start to prospect things…weird things happen. Well check it, out I started doing a proposal on the Palm Beach county office building and from nowhere come three referrals. Two convenience stores and a duplex.

Now ordinarily I wouldn’t work on a duplex because it is not technically commercial but I am going to “steer” it through to one of my agents and keep it in the family so to speak.

I supposedly have a closing today on a $400,000+/- condo deal. I know you’re probably saying how did that happen. Well, it’s a long story but I helped a brand-new agent get a 6-unit building listed. The entire would make a book itself. Suffice it to say there were a few wrinkles in the transaction. The building was being converted to condo and was comprised of 5 residential units and one commercial unit.

The seller had gotten the building in a divorce settlement and didn’t know how to complete the process. So, I came in and helped her get it done and my agent got the listings as they became available. We successfully sold the commercial unit and got into a “pissing match” over the residential units.
The one unit is scheduled to close today at 5 pm. We shall see.

Here’s the take-away…when you are working your plan stuff just seems to appear.

Day 41-60 Day Quick Start Challenge…August 10, 2017

Today’s was proposal day part two…

I worked on a warehouse proposal in beautiful sunny Davie, Florida. Coincidentally, right around the corner from the BOV that I mentioned in yesterday’s or the day before post. Same type of building, nearly the same vintage and also a steel building.

Off the Challenge for a moment. I am a member of CENTURY 21’s global Commercial Investment Network and Commercial Advisory Board. As a member, I get to see the vision that CENTURY 21 has for commercial and the resources they are pouring into that effort. This is going to be the closest thing to a commercial I will ever do.

In that capacity, I also get to see products before the members get access and I also do a lot of training for the system. I had to marvel at the massive improvements that have been made in the various services.

Here’s what I mean. When I got started you had to drive your market area and look at the individual buildings and determine what they were. You actually had to get out of the car and count meters, mail boxes, or read the directory to determine the number of tenants. Then it was off to the county court house and the Microfiche machine to look at the documents to find out who owned the property and copy the actual property cards.

Armed with that information you sent a self-addressed stamped envelope along with $3 to Tallahassee to the division of corporations and 4-6 weeks later you got a lousy quality copy of the corporate paperwork. You then went to the cross-reference guide and looked up the owners number and 8-10 weeks after you started you get in contact with the owner…maybe!

Now, all that information is, for the most part available right on your desktop. When you did a proposal you were printing pictures, spraying them with adhesive, gluing them to a paper backer and re-inventing the wheel every time you had to do a proposal. What an enormous pain in the a$#!
Now, I take the pictures down and upload and…viola! That may be an oversimplification but you get the point. I still need to find relevant, valid comparables and make sure that the income and expenses are righteous but bottom line it is much quicker than it used to be.

One of the programs I use is now storing the comparables so they can be used repeatedly. If you’re working your market like I suggested todays proposal will become tomorrow’s comparable and so on. That is one of the reasons I tell you to specialize in a product and in a specific market you can’t be all things to all people and be effective.

Anyhow, the new release will allow me to upload all the properties in the market at one time, and access any of them at any time. Now all I must do is refine the data and it is available for a proposal at any moment.

They have even refined the investment analysis section so that it automatically produces the CAP rate, Cash on Cash Return, IRR, GIM, and GRM it’s pretty cool.

I should also mention that tomorrow I should have a new listing or two from the Secret Weapon Letters and proposals that we have out for signature.

Day 40-60 Day Quick Start Challenge…August 9, 2017

The Seller for the BOV from yesterday called at 4:30 am to cancel the 8:30 am presentation of the proposals.

I had my weekly Wednesday sales meeting. One of my associates has just listed a small office/retail building in Pompano Beach. The remarkable thing is that the transaction began as the result of a…you guessed it…Secret Weapon Letter. He targeted a small retail area on Atlantic Boulevard and got several responses.

Cha-ching a $595,000 listing and a $35,700 gross fee for a silly letter!
Another associate presented a $3,600,000 retail center he got because of a Secret Weapon Letter and I have a few visiting students that are getting ready to drop nearly 100 letters. Ladies and Gentlemen, I wouldn’t tell you about it if it didn’t work. How about this I even have a CCIM buddy who wrote me telling me he has a batch of SWL’s to go out tomorrow. And he just closed a $3.5 million-dollar warehouse deal.

With the sales meeting in the rearview I had a new 1st appointment with an owner of an office building in downtown Fort Lauderdale. I’m guessing the building is worth a cool $2-3 Million and here’s the best part. Not only did we get the proposal but he wants to buy retail shopping centers. I just happen to have a few up my sleeve “off-market” deals that if he doesn’t buy at least I’ll get another opportunity to list.

Got back to the office at around 2pm and had the financial for the building that I met on Thursday of last week so here I go with another proposal.

Looks like I’m going to be working this weekend. I still need to get new product in the pipeline so I must do some more research and get out and get my pictures.

I’ll keep you posted on the outcome…Thursday is follow up day so I should have some exciting news for you.

To your continued success…