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The Storage Investor Show
Discover the SURPRISING Truth About Investing in Class B Industrial Real Estate with Hunt Rose
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DESCRIPTION
Ready to break free from the saturated self-storage market? Hunt Rose, Investments Director and Partner at TrueCore, reveals why Class B industrial properties are creating incredible opportunities for savvy investors right now.
The secret lies in the fundamentals: while developers are flooding markets with new self-storage facilities (one market Hunt discusses has over 400,000 square feet under construction!), Class B industrial buildings face virtually zero new competition. These older, infill properties serve essential business needs with flexible configurations, creating a supply-demand imbalance that's driving steady rent growth and appreciation.
ABOUT OUR GUEST
As Director of Investments and a co-founding TruCore partner, Hunt oversees investments, financial underwriting, due diligence, and assists in origination of new investment opportunities and strategic company direction.
Trucore website: https://trucoreinvestments.com/
Connect with Hunt on LinkedIn: https://www.linkedin.com/in/hunt-rose-9229694b/
BOOK A CACTUS DEMO
Cactus will save you hours per deal with clean comps, rent data, and intuitive analysis tools—all in one sleek platform.
Book a free demo using my link and see why top investors are switching to Cactus: https://www.trycactus.com/
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Hey everybody, welcome to the Storage Investor Show. My guest today is Hunt Rose. He's the Investments Director and Partner at TrueCore. He handles the underwriting, due diligence and sourcing deals for their company. Check them out. I'll have a link in the description for this episode. They're always looking for more deals, so send them your deals if you got them. Truecore is focused on Class B industrial acquisitions, distribution centers, manufacturing, industrial outdoor storage. Ios that's become much more popular I've seen recently. Maybe some of you guys have too, so this is a little bit different. But this is great. Actually, it's a change from the self-storage space. I know a lot of you guys who are listening to the show. You guys want to get into small bay or industrial type properties, so that's why I wanted to have Hunt on the show. So, hunt, welcome to the show.
Speaker 2:Thank you. Thank you for having me and excited to talk a little industrial here today.
Speaker 1:Absolutely, man. So let's jump right into that. Well, first, before we do that sorry guys, before we do that, give us a quick 30 seconds on your background and how you guys founded TrueCore.
Speaker 2:Yeah, yeah, yeah. Real quick Background was in the accounting route got a CPA and did the accounting thing for a few years and then went over to a company called Stan Johnson Company investment sales brokerage company that focused exclusively or mainly on single tenant net lease properties properties. So the company was based in Tulsa, oklahoma, but had about 100 brokers, 15 offices across the country, and it was really an opportunity for us to, within the net lease space, work on deals all across the country, no matter where our office was. We were working on deals all across the country and we had a unique niche within the market where we were kind of a bridge between private and institutional capital and connecting buyers and sellers there. So spent almost 10 years at Stan Johnson Company working on a team that was the highest producing team in the company and focused mainly on net lease industrial. Over the years when we were there we had a little bit of an informal investment arm within Stan Johnson Company. The core day-to-day was the investment sales brokerage business, but we had some opportunities with really good developer clients as well as just some acquisition opportunities. That morphed into me spending more and more of my time on the investment side, whether it was we put together 60 plus joint venture partnerships for Build-A-Suits with net lease developers, merchant developers, as well as just buying net lease industrial properties all across the country for the own internal investment arm of the company and Stan Johnson, who founded Stan Johnson Company. He actually, a couple of years ago, sold the brokerage business to Northmark out of Minneapolis Northmark out of Minneapolis and in that sale it was really an opportunity for us, for a couple of us. A handful of partners at Stan Johnson Company are our partners today, stan included, and then Zach Harris and myself were both at Stan Johnson Company around the time of the sale, sparing some of the details, but around the time of the sale we elected to really play some more offense on the investment side of what we were doing. So we formed TrueCore Investments in 2021 and have been off to the races.
Speaker 2:At the time, we did a little bit of everything when we were informally at the investment arm. We did a little bit of everything in terms of different asset classes. We had the most experience in industrial and we felt like we had a competitive advantage because of a combination of our knowledge base as well as broker relationships across the country, to be able to go into and as part of our investment criteria and investment strategy is to focus on top 150 markets. We're acquiring in some call it tier two, tier three markets that maybe some of the more institutional big boys are not focused on, because we for some of the fundamentals we can talk about in more detail, but we've got relationships, given our, our background in brokerage, we've got relationships in all those markets we're very heavily focused on, on the broker network nationwide for deal sourcing and deal origination.
Speaker 2:Um and so yeah, we've um, zach and I came over. We've been exclusively focused on Class B industrial, the value-add strategy. Over the past four years we've done, coming up on 30 acquisitions a little over $150 million in terms of volume, 150 million in terms of uh in terms of volume.
Speaker 1:That's excellent man. Can you uh real quick explain to us what is class B industrial?
Speaker 2:Yeah, great question. There's a variety of of different um definitions but but typically um it's a little bit of an older vintage product. It's built in the 10, 15, sometimes 30 to 40 years ago, so an older vintage. But the unique characteristics is when it was built. Maybe it was built further on the outskirts of town close to some logistical networks.
Speaker 2:Now, as populations and rooftops have grown, a lot of these assets are much more infill in nature, so older legacy product. There are some outdated features to these product types but the location and proximity to population bases is really unique and the flexibility of these assets, despite maybe having some lower clear heights and some other features, as long as there's a minimum baseline of a few property characteristics that don't make a property so functionally obsolete that your pool of potential users is limited. There's really a wide range of of uses, from distribution and warehousing to manufacturing and and even you know R and D and and some even you know anything with with low coverage that has excess outdoor storage for construction uses and contractors and equipment rental uses. So really broad base of tenants, a little bit older vintage and opportunity to create some value because it's been a very fragmented ownership base that maybe has not invested significant dollars into these properties. Come in, you know, do a facelift, maybe potentially reposition some of these properties and grow NOI with bringing current in-place lease rates to market.
Speaker 1:Yeah, when you guys are looking at so on your website you have your criteria, the deals you look for. In the acquisition section you look for a deal size of roughly two to $15 million, single or multi-tenant, but up to five it looks like the max. You prefer deals that roughly a hundred percent occupancy is preferred, but you know less than that's okay. And then lease terms of five years or less. And another thing you just mentioned a second ago was the clear height. Talk to us about that criteria. Maybe we go through those like one by one real quick. So first start with the clear height. Why is that? What do you mean by that exactly and why is that important?
Speaker 2:Yeah, so the clear height to the bottom of the roof within, or the bottom of the ceiling or the beams within the industrial space, the new logistics and bulk distribution facilities that are 500 to a million square feet and even smaller, but the class A new bulk distribution spaces Like the Amazon warehouses, you know they're 32, 36, sometimes even higher for clear height because they're using racking systems, because they want to maximize the amount of of product that they can storage, it store in these warehouses and they're consistently distributing through through, you know, their, their logistics network out of these properties.
Speaker 2:In some of the more infill properties, these class B properties, they do serve as the distribution network but they're more of that. Last I know, last mile has been kind of a buzzword but they're more of that last mile network and a lot of these users aren't necessarily targeting these facilities for their racking and for absolutely maximizing the storage space. And you go into a lot of these buildings and we go into a lot of them. Some of these tenants aren't using any racking systems at all manufacturing or assembly uses, don't use much of the clear height or they have a subsection of the building where they have some racking systems in place. So we typically look at it as a minimum. We really try to target 20 feet and above. We've acquired properties, given unique situations or a manufacturing use potentially, that go down to an 18 foot clear, but anything below that we feel like your pool because we're always underwriting Number one. What we're looking at is having a functional asset, even if we're buying with an in-place tenant, we're underwriting that downside of potentially losing that tenant someday, and so we want a building that is as functional as it can possibly be so, in the event that you lose the tenant and get the building back vacant, you're able to hopefully find a replacement tenant on a much quicker basis as well as be able to at least replace or hopefully improve or mark to market that in-place rent stream, to be able to at least replace or hopefully improve or mark to market those, uh that that in-place rent stream, to be able to to create some value. So, um, we're we, we won't look at anything typically that's under under 18 foot clear.
Speaker 2:We also look at truck courts. Um, you know, again, a lot of these uh new buildings have 130 plus foot foot truck courts 190 even. And again, a lot of these new buildings have 130 plus foot truck courts 190 even. And you know, as long as there's 100 feet 90 to 100 feet plus where a truck can come in and maneuver fairly easily you know they're much more skilled than I am but fairly easily can maneuver. You know you start getting into a 50-foot truck court and you can't get certain trucks in that facility and so that again it just limits that user base. So you look at truck courts, clear heights, dock doors, drive-in doors, you look at sprinklers, you look at all some features like that, the amount of office space. Um, we look at a lot of those different features to determine what is the most functional building and try to get something right within that strike zone that that's just applicable to the to the most, the broadest, broadest pool of potential users.
Speaker 1:Is there a particular uh office to what everyone called office to warehouse ratio that you guys want to see? Is there a back of the envelope way to to look at that?
Speaker 2:yeah, I'd say a good rule of thumb is 10. It it varies though. You know, if you look at, we're not buying huge buildings, so we're most of what we buy is under 150 000000 feet. We bought a building a couple of weeks ago. That's a 30,000 foot building, 10% on 30,000 feet. 3,000 feet is typically enough space, but if you're a little bit higher, on a smaller building, I'd say that's more acceptable than for us. At least, if you've got 25,000 feet on a 150,000 foot building, that 25,000 feet of office is a lot of space. So it varies a little bit, but typically I'd say a good rule of thumb is 10.
Speaker 1:Okay, got it. And then on the tenants, you'll look at single tenant, you'll look at multi-tenant, but only up to five. So in self-storage you could have a hundred units at a small property. That costs you a million to $2 million. It's not that expensive. You get a hundred units. You're going to turn over a certain number of folks every month, maybe five, 10% of your rent roll. Unless you don't ever push rents, then you might have them stay there for a long time, uh, which is fine. But a lot of times folks don't want you know they they uh storage multifamily.
Speaker 1:You have a lot of tenants and so the story in those assets is hey, if you have 10 people that move out, it's not a big deal. But this is what you guys do, a little bit the opposite of that. And obviously you have a long-term lease in place where it's storaged. It's month to month. It's like Netflix, right. So it's a little bit different, a little bit different risks there. But why is the max five? Or why do you prefer the single tenant, knowing that their lease? You know, what do the lease terms look like for those guys and do you guys try to? There's a lot of questions here, but the point is why do you prefer single tenants and maximum of five? And then how do you structure the leases so that you feel comfortable with those tenants?
Speaker 2:It's an excellent question and there's a lot of nuance here. And there's a lot of nuance here and there's a lot of folks that like this, what you call small bay or shallow bay or mid bay industrial space, that there's varying opinions, even within the space that some really prefer, prefer the single tenant nature, and there's a lot of overlap. I know we were talking earlier. There's a lot of overlap between the CapEx need for a storage or a Class B industrial property as compared to a multi-tenant office building is just night and day and a lot of those things that we like. As part of why we like the space is you can underwrite a lot of those CapEx, ride a lot of those CapEx. You know the TIs are growing, it feels like, but but you know nothing compared to the TIs that you encounter in in in office or retail space. So, um, I would say we view we're a pretty small shop, um, and we we're really lean and try to operate on an efficient basis, and our background for decades, our partners included, is in the single tenant space. So that's a space we feel like we know and know really well and would like to think that we have a competitive advantage in terms of not only understanding the space but understanding what the exit is and who that potential future buyer is. Whenever we acquire that property and we're looking at our investment thesis, knowing who that buyer is. We feel like in the single tenant net lease space we've got a really good hold on what that looks like. The multi-tenant focus I think can be really attractive because single one you know, single tenant is so binary you either a hundred percent occupied or you're 0% occupied, where I think the benefit of the multi-tenant and as similar to to self-storage, you can lose some percentage of your of your tenant base and you're, you're still okay, you're, you're cash flowing, you're servicing the debt if there's a note in place.
Speaker 2:But I would say the operational side, even though you have some longer term leases, typically you're not getting 10, 15 year leases in this class B small bay space, but maybe you're getting three to five year leases, but much longer than a month to month situation. Three to five year leases but much longer than a month to month situation. You start getting into a really small bay property. You know a hundred thousand feet with 47 tenants and each one is 500 to 2000 feet. The credit profile of each tenant there is so much smaller than the credit profile that we're typically working with.
Speaker 2:So we'd like to have a stronger credit tenant, not just a local contractor that maybe this is their only location and it's I don't know, a countertop guy that's got three employees and those tenants can be great, but we've found that a lot of times they're more work. You have this high number of tenants, a small credit, this is a single location and this is their full livelihood, maybe more price sensitive, and it's just a lot of work. You, just you. You, at that point it feels like you're more of an operation operating company and I know that that's you know. A lot of times in in in a self storage and you can speak to this better than I do I'm sure you feel like more of an operating company than a, than a real estate company at certain times because you are um, you know you're managing um the operations on a day basis. I think that's that's where you get to on a in a multi-tenant property and it just takes a lot more more time and energy uh and have to staff up for uh potentially accordingly.
Speaker 1:That's funny what you said, uh, where, um, where the credit tenant is a bit different and you might have more turnover or whatever. It's funny because, like you just said, also in the storage space, a lot of folks sometimes feel like operators versus actually just real estate investors or holders of real estate, and so to go from 400 units to 20 and have them only be a thousand, 1500, whatever know, whatever square, if that sounds kind of good, you know like. So it's all like the perspective of where you come from, I think, and what your experience has been. But the key, I think, to what you just said is interesting that the credit, the tenant base, the credit, the credit strong credit tenants, uh, are going to be a bit different and so it's okay. You feel more comfortable having either single or you know five, uh, multi-tenants, but they're, you know, max of roughly a five, because, uh, the, that one or those five are going to have a much better credit profile and less risk than the 20 bay property. That's flex space and you have again, like you said, a local gym, a CrossFit gyms in there and some other stuff which sometimes those do pretty well, but you just never know how it goes. You know from there. So, okay, absolutely, I never thought about that way. That's really interesting.
Speaker 1:How do you guys?
Speaker 1:You mentioned briefly in there the underwriting and I found, as I'm looking at deals within this space small bay industrial sometimes that's hard. The hardest part usually is to figure out the underwriting. Usually in a broker package on storage, you'll have some financials in there, there'll be a 10-year cashflow statement and whatever else not the actual financial documents, I'm talking about just the OM or the email blast that goes out. You'll at least be able to get some sort of feel on how the broker and the seller are underwriting the deal to be sold. I found that in this space that's not always the case, that it's maybe 10% of the deals listed out there that you get from a broker is going to have some sort of like cashflow one pager that you can actually take a look at, and so it makes it a bit difficult when you're trying to understand this asset class coming from storage or whatever it is a person's coming from. How do you guys I know it's a bit easier You're doing, you know, I assume, triple net leases and so you don't have as many expenses.
Speaker 2:But how do you guys this is a broad question but how do you guys underwrite deals? How do you get comfortable with a deal, especially if you have a single tenant? You have a three-year lease maybe there's a little bit of term left on that. When you close, how do you account for the things that go into finding a new tenant from there? Great question.
Speaker 2:And one thing I thought about is this interesting because we like to acquire off-market I mean, everybody does. But there's this interesting you know the amount of work to underwrite an off-market opportunity because the competition is not quite there and maybe the potential pool of competitive bidders is not there. But you're also having to do a lot more work on the front end. You're not getting a nice pretty offering memorandum with everything the broker's already put together. You're kind of getting everything piecemealed and having to parse through and understand what is and what are operating expenses and how does a potential sale affect that. So it's really I'd say there's opportunity there in being able to roll up your sleeves and dig into what the operating expenses are. I don't know that there's any secret sauce other than I mentioned brokers in terms of deal sourcing and deal origination as being a critical piece for us. They're also very important for us to help us understand the market and to be able to understand not only what are similar properties, lease rates, but also operating expenses. And how do these operating expenses compare to other properties and what can we expect for different uses. So, similar to storage I to storage. I'm sure you know you can get a hold of the operating expenses and get a pretty good understanding of it by looking at comparable properties in the market. It's sometimes hard to find that information and we have to do some digging.
Speaker 2:But for us, as you said, we're mostly buying net lease properties and there is some even if it is a multi-tenant property. The nice thing here is a lot of these leases and this is an opportunity to create value for an investor. Historically, a lot of these leases were gross leases or modified gross leases, where landlords are paying for some types of the operating expenses. There's been a gradual trend through reimbursements to make even shallow bay, small bay leases more of net leases. So, whether that's tenants paying directly or tenants reimbursing landlords taxes, insurance, operating expenses, utilities, things like that If we go in and there's any sort of a gross lease in place.
Speaker 2:That's one of the first things we target to try to convert over to more of a net lease to allow a future buyer to really be able to understand, going in, what's my net operating income? Because here's my bottom line. If there's some minor fluctuations in real estate taxes or insurance, insurance is a big one today because we've seen it explode recently. There's still some, you know it does affect the tenant's bottom line and how much they can pay on an overall rent number, but there's not in the near term. If there's a five-year lease in place, fluctuations in insurance aren't going to eat away and there's not going to be slippage in your NOI because of some changes in the operating expenses. So I think that's a big area where investors can create value, not only bringing a property that's below market rent to market, but also converting those leases more to a net lease structure to give a future buyer assurances around what that NOI is.
Speaker 1:That's interesting. I'm curious on the. So you talked about the underwriting obviously you talked about. You know it's great to find stuff off market the same thing I've done some, you know, kind of wild off market deals within the storage space, getting financials from the owner where they took a picture, they drew the unit mix and took a picture and sent it to me.
Speaker 1:So right, so like, yeah, it gets pretty mom and poppy uh, in the storage space and and another, you know multifamily and all that kind of stuff. But it's interesting to hear that on the uh class B industrial side, do you find that a lot of the owners of this type of property, uh, talking about value add here, do you do you find that owners of this type of property tend to own just a few locations? They aren't quite institutional? Is that another thing that you can do within the space is aggregate that portfolio of properties and roll it up or sell it off to a larger institutional group?
Speaker 2:to this space but any sort of an institutional group. They just have so much capital to deploy and it's a big part of why we've targeted sub-15, really sub-$10 million properties is because they just don't have the time to be able to go out and aggregate a portfolio of $6 million properties. So if you can go in and buy 25 or 50 or whatever the number is, you can get up to a critical mass of these Class B industrial assets. I absolutely think that that is an exit strategy. But also, to your point, the current ownership base is a lot more fragmented. Because of just that, it's more of a bite-sized deal.
Speaker 2:Historically, a lot of these owners are owner-occupants that have just in. Any portfolios that we've seen were almost by accident. Oleos that we've seen were almost by accident. We looked at one that's top of mind that was a demolition company and he was growing his company and doing really well and would buy properties for his own use and as he outgrew it he would just hold onto that and buy a new one and any one time he was operating six or seven properties and consistently moving and then he retires and sells his business and he's got 20 plus properties that have exploded in terms of value, and it was you know that that that real estate ended up being worth way more than the business. And that was just. I have a an afterthought to what he was doing day to day, but I think there's a real opportunity.
Speaker 2:Because of that fragmented ownership base and because it's a lot of local and regional owners that own these properties, there's been a massive increase in the value of these properties.
Speaker 2:But you can still find some of these off market through broker networks or just direct outreach, where for a long time, this basis in these properties, where they may not be in the real estate space day to day and know truly what that basis, if properly marketed and a lease is, is a nice lease.
Speaker 2:An institutional quality lease is in place with a good credit tenant or multiple tenants, what that could truly be worth. So we've been able to come in and really pay a value that's very attractive to this legacy owner because their basis has improved so much. But still there's plenty of meat left on the bone and runway to create value. Whether it's shifting to net leases, getting an institutional quality lease in place, doing some CapEx and improving the functionality or just cosmetic appearance of the building, all of those things can be done to really take it that next step. But I think there's opportunity here because of the run-up in valuations, these owners that have had these properties for even five years, but 10 or 15 years, their basis is extremely low and they can still make a lot of money and leave meat on the bone for someone in the future.
Speaker 1:Yeah, that's a great way to put everything. I never saw it that way and obviously because you're in the business, you see it, you understand it. That's a great way to put everything. I never saw it that way and obviously cause you're in the business, you see it, you understand it. There's a similar story within self storage. I think it's going away a little bit more and more as time goes on, but it's it's. It's still a viable opportunity.
Speaker 1:You just have to be willing to go in storage. You just have to be willing to go a little bit smaller. In some instances, there's always you smaller. In some instances, Um, there's always, you know, there's always like a merchant developer who will build a facility because they heard it's a good idea, you know, and they're willing to sell it. There's that, there is that that happens, uh, but I think the smaller stuff within storage, um, is where the opportunity is still, in the mom and pop space. So it's interesting that you bring that up. Would you say that a um mom and pop, I mean, is 25,000 square feet to 100,000 square feet? Is that going to be kind of the sweet spot, I guess, for these kinds of deals, or is it smaller, up to a hundred thousand, or is it? You know what's that range roughly.
Speaker 2:Yeah. Yeah, I'd say it depends a little bit on what you know, the, the. If yeah, I hesitate because it kind of depends on who you want to be. There's no doubt that the pool of potential users is much deeper at 10,000 feet than it is at 80,000 feet. From what you see in the industrial market today, there's really a very stark difference between sub 100,000 feet and the vacancy rates there and anything above 100,000 feet.
Speaker 2:There's growing vacancies in some of these really large bomber industrial buildings. That is what has primarily been built the last few years. That is what has primarily been built the last few years. But you know, you start going sub 25,000 square feet of space and it's really really tight in terms of. Again back to the adaptability and flexibility of these assets.
Speaker 2:I can name a list of all these different industrial uses that utilize and need these spaces. But I know we've all seen it. My son had a birthday party last weekend and he goes to a gymnastics facility. It's in a class B industrial building. I mean, there's all these different retail uses that are now taking these buildings because of their locations, the infill nature of these locations. So it's not necessarily that we would want a handball use or a pickleball use or a gymnastic, but those types of uses are eating up space and just constraining that vacancy and availability. So much.
Speaker 2:So I think there's in a lot of markets we hear, if you have something with 10 to 25,000 feet and it has an acre of yard, that's extremely hard to find. I think in a lot of markets too, you can go up to 75,000 feet and there's a real need there and there's maybe even an opportunity to find a single 75,000 foot user. And there's maybe even an opportunity to find a single 75,000 foot user. Or in a lot of these tier two markets that we're operating in, the sweet spot is like 30 to 40,000 feet, so you can find it gives you optionality there to find a single user. Maybe you add a demising wall to make it a two tenant building.
Speaker 2:But I think it all goes back down to with this smaller asset size. It goes down to the difficulty to replace these assets because of not only location but where construction costs are. Today, a lot of these new buildings they're being built and really maximizing the site coverage and maximizing the square footage because it's so costly to build and you're trying to get some economies of scale and get that cost per foot down. You look at a lot of these markets and say, gosh, if you had a 30,000 foot building, you could fill that up all day long. Well, to go buy the land to build it new, to do $14 a foot on rent where rents have grown but maybe they've grown from $5 a foot to $7 a foot there's still a huge delta between what you would need to charge for a new construction building and where class B industrial rents are today and we think our thesis is that that's some additional runway for growth in the existing properties because, at scale, no one's going to build these buildings until the delta between those two is much smaller.
Speaker 1:Absolutely yeah. It's funny you mentioned that because I was looking at a report for Charlotte. I'm in Charlotte, north Carolina, looking at a report from Collier's here industrial report and they talk they segment the market into different size locations and the Flex Warehouse is one of them that they highlight there and out of the 13 um areas that they break charlotte up into. So if you looked on, if you ask google what are the 13 areas of charlotte, they wouldn't tell you this is colliers. You know how they broke it down based upon area whatever. But out of the 13 there's only one that has any flex, industrial, flex space under development. The rest of the 13 have zero and so that is the complete opposite of self-storage. A buddy of mine asked me to look at a location the other day, so I did. There was a million, almost a million square feet existing and another 400,000 square feet under construction in that five mile trade area from this one location that he was looking at, building storage, and I said, bro, I don't think it's a good idea to build here.
Speaker 1:So, uh, we're you know. So, yeah, you're right. I think the story there is it's cost prohibitive, it doesn't make quite, it doesn't make sense and nobody's. You know, it's hard to build, obviously, and so that means that means that the existing product is that much more valuable, um, and will be probably for some time, especially right now as of this recording. We have tariffs and a bit of uncertainty in the market and materials and all that kind of stuff. So there's a lot going on as we start to kind of land the plane here, uh and uh, wrap up the episode. You've been a great guest, uh, sharing all of your information and insights and all that Um, you mentioned, you know, sourcing deals from brokers or looking for them, you know, possibly off market. I know that, looking at your website, looking at all the properties that you guys have done whether you sold them, kept them or whatever you've done a couple of deals with I don't know how to pronounce it, but like Ahern or Ahern rentals.
Speaker 1:Yeah, do you guys typically like? Do you kind of just know what they're looking for and do that with a couple of companies and know hey, if I, if I have a deal in Charlotte, for example, or wherever their footprint is, if I have a deal in that market, they're likely going to be a really good potential tenant of ours. Is that kind of part of the strategy as well?
Speaker 2:Yeah for sure, and tenant relationships can be a very mutually beneficial situation because a lot of these larger national tenants they're not in, they're in the they're in the Ahern, example, equipment rental properties, they're in the business of operating their day-to-day, they're not in the real estate business. So, whether it's a relocation we've done this for a number of different building supply companies and equipment rental companies if they're in a certain location and want to relocate within the market and stay within that market where they already have a footprint, or expand into a net new market. Oftentimes, especially in today's world, it's hard to find space and any space you can find is typically not perfect, um, so it needs some reconfiguration to make it work. So, um, having a tenant relationship where you're able to, you know they can say, hey, we really want to, we love this market, but you know we're we're busting out the seams in our current building. We need to take this 25,000 footer to a 50,000 footer and, hey, could you help us do that?
Speaker 2:So it's really just kind of being a friendly landlord. You've got a lease form that they know and you feel like you've built up a good working relationship where we've had an ability to go find a building, buy a building, provide them a full TI package and really get that building to their exact specifications so that they can it's kind of a turnkey and they just worry about the logistics of moving and then sometimes, or a lot of times, we'll continue to retain that former facility that they're in and because, again, we feel pretty comfortable about the fundamentals of those buildings and release it to another user. So I think that's an opportunity where tenant relationships can be really beneficial where they're expanding in a market or looking for space to help solve that need. A lot of these tenants the larger tenants, have broker representations. So working with their tenant rep brokers to identify that and try to provide some type of a turnkey solution for them.
Speaker 1:That makes a ton of sense. That's another way, I assume, as you build up your credibility as a person builds their credibility within the space, they can then develop that relationship, something that you would never have unless you got started. So that's my last question here before we get to the final four, is if you were advising someone. Maybe they come in from multifamily storage or whatever the heck and they want, they like this kind of product and they want to get into it. Maybe they're pretty local, they're in a decent market. How would you advise them on getting started, looking for deals and putting it all together?
Speaker 2:It's a great question. I think I'm a big information guy. So I think getting the most information you possibly can about, if you're focused on one specific market, to know that market. And then, when you know that market, I'd say step number one is connect with brokers in your market. That are doing this every day and maybe some are more receptive than others. But I'm pretty confident that if you reach out to and sit down with a couple brokers in your market and let them know what you're looking for, there will be some receptiveness there. I would also say one of the strategies we've employed we've offered incentives, and still do, to brokers. We were former brokers ourselves and again, we know the value of a broker. They're critically important to our deal flow and origination important to our deal flow and origination. So I would say connect with brokers, get as much information as you can and knowledge on your market from those brokers and offer to co-invest.
Speaker 2:A lot of brokers and industrial brokers, especially in tier two, tier three markets, are investing themselves personally. So maybe there's an opportunity to you know, once you do your due diligence and trust the broker, et cetera, et cetera. Potentially you could invest with them, kind of learn how that process goes learn not only what your specific market needs and where there's supply constraints, but also what the demand is and, once you get with those brokers, maybe even reaching out to some users in the space to understand, just like we were going through earlier on in the conversation. You know, mr 10,000 foot user, this is what do you look for in space and what do you need and what are your hot buttons and what are your absolute red flags, that you can't figure out a way around to better understand not only the fundamentals of a building but also that local market there is is complexity and nuance in the industrial space. I think you know you spend some time, um, you spend some time learning it and I think that there's some great resources um out on, you know, uh, social media and YouTube and some books. I would just talk to to Chad Griffiths the other day. He's a he's a great uh resource to to find a lot of information out about the industrial space.
Speaker 2:But knowing where the major pitfalls are buying a building without a sprinkler to have a certain level of knowledge, you could have some great functionality, but without that, not understand, you know, without that experience may not understand how high you can stack and rack and then you hit a certain threshold where you have to put a sprinkler in. Those are extremely expensive and it can throw your whole pro forma out the window if you miss something like oh, this building doesn't have sprinklers or you know, or certain aspects of a property. So I would say local brokers would be the place to start. There's a lot of good information out there. I mean, feel free to reach out to me. I'm happy to connect with anyone and glean any knowledge as I can. I've been able to connect with a lot of smart people online and and uh, learn a lot. So, um, happy to happy to connect with anyone, and and uh, I love talking about the space. Um, so any opportunity.
Speaker 1:Yeah, man, let's get to the final uh questions here brought to you by our sponsors. Check them out in the links for the description to help keep the lights on and keep us bringing you guys some great content like this. Last couple of questions here. Claude, what is one piece of investing advice you would give to your younger self?
Speaker 2:Get started.
Speaker 2:I think that's the first thing you can whether it's volatility in a market and it's like anything, trying to time and wait for the perfect opportunity, I think you get started. Be really, um, you know there's a fine line with uh, analysis by uh, paralysis by analysis, um, but educate yourself on on a market, um and an asset type. But, but get started, because the truth is, no matter how many videos or books you read, you really learn it once you start doing it, uh, at least in my experience. So, um, I would never recommend foolishly jumping into something, but the earlier you can get started with and maybe that's getting started with a really good partner, maybe that's volunteering with someone that's that's done it for a long time and just being, you know, the, the uh, the boots on the ground guy and the guy that's willing to to roll up your sleeves and and and earn some sweat equity, um, I would say you know you can find somebody like that doing it on your own, but but get started in some capacity, because I think that's where you really learn.
Speaker 1:A hundred percent man. Great answer, actually, If you could recommend a book, podcast, whatever, it doesn't have to be related to real estate or industrial, but for those looking to grow in their business or their personal life, what would you recommend?
Speaker 2:On the industrial side, I mentioned Chad Griffiths earlier. He does a really good job. He's got a podcast. He's got a new book coming out I haven't I mean it's brand new, I haven't had a chance to read it, but I'm confident it's. It's going to be good um and there's a handful of other um industrial podcasts. I know fort capital, chris powers has um, has a good podcast where early on he was doing a lot. I mean that's where they built their business in the Class B industrial space. He's got a lot of good content, some essays and some podcast episodes about building a real estate company, specifically Class B industrial as well, specifically Class B industrial as well. So I'm sure I could think of a handful of other resources there, but on the industrial side I think those are two really good places to start, absolutely man.
Speaker 1:And lastly, hunt, how can people get in contact with you if they want to learn more? They want to invest with you guys. Actually, real quick two seconds. How do you guys raise equity? Do you raise equity or is it all in-house?
Speaker 2:Yeah, so historically good question.
Speaker 2:Historically we've been mostly internal and some friends and family as we have continued to execute on our strategy and feel like be able to prove out our thesis with um, some successful deals round, tripping some, some properties and and being able to to meet and and hopefully exceed uh the underwriting as we get more scale.
Speaker 2:We're we're starting to get to a, to a stage where we're doing more um with uh quotequote outside investors. So still a significant portion of our capital is internal. But we're kind of in the middle of raising a fund. Right now. We've had our first close and the last two properties we've acquired have been within this fund, but still closing that out, probably later, q2, q3 this year, to be able to help us really put some additional gas in the tank to acquire the property, because it's all based on seeing good deals and deal origination right. So we feel really confident in the value creation thesis that we have and the mousetrap, so to speak, that we've built to be able to see properties. So we feel like we're getting really good looks at some unique properties and want to be able to capitalize on that pipeline.
Speaker 1:That's great man, okay. So then, with that in mind, how can folks get in touch with you if they want to invest or just learn more about what you guys do?
Speaker 2:My email address. Hrose at truecoreinvestmentscom Regularly, probably more than I'd like, monitoring emails, and then my cell phone number is out there as well, all over the place, so 918-500-9312. Please feel free to reach out, call text email. I'm available.
Speaker 1:Awesome. Thank you, Hunt, for being on the show and sharing all of your knowledge. Really appreciate it.
Speaker 2:Yeah, Thank you, Chris. Really really enjoyed being on and I hope to talk soon.