Dan Lewkowicz Flipped $10K Detroit Homes - Now He Brokers $10M Deals Nationwide - EP06

What happens when a former Amazon exec puts on a bulletproof vest to chase house deals in Detroit—and ends up becoming a national leader in Triple Net real estate?

In this episode of The Wealth Clock, Steven Weinstock sits down with Dan Lewkowicz, senior director at Encore Real Estate, to break down:

• The real difference between triple net and multifamily investing
• How Dan flipped his first house for $81K and never looked back
• Insider tips on turning distressed shopping centers into cash machines
• The surprising role Amazon and Starbucks play in real estate
• Why Dan calls Triple Net "Mailbox Money with Teeth"

Whether you're a beginner or a seasoned investor, this episode is packed with no-BS insights, war stories, and real-world strategies you can use today.🎯 

Guest: Dan Lewkowicz | Encore Real Estate Investment Services
 📲 Contact: (248) 943-2838 | LinkedIn: Dan Lewkowicz🔗 Learn more about 

🎙 About Steven Weinstock
Steven Weinstock is a real estate investor and founder of WeCapital and the Goethals Capital Fund. Since 2001, he has built a diverse portfolio of residential and multifamily assets while helping investors access passive income through strategic real estate opportunities. On this podcast, he shares real-world insights on investing, capital raising, and what it really takes to build and scale in today’s market.

📩 Want to invest or get in touch?
Visit: www.WeCapitalX.com

📱 Connect with Steven:
LinkedIn: www.linkedin.com/in/stevenweinstock1

Instagram: https://www.instagram.com/wecapitalx/
YouTube: https://www.youtube.com/@TheWealthClockPodcast

Transcript

Steven M Weinstock: 0:01

Hi everyone, and welcome to the Wealth Clock with Steven Weinstock. I've been investing in real estate for over 20 years, from single family homes to multifamily properties to launching my own real estate fund. This podcast is brought to you by WE Capital and the Goethals Capital Fund, where we buy properties in cash lock in deep discounts. Eliminate the mortgage risk and refinance later in order to scale all without asking investors for more capital. But this show isn't about me, it's about operators, founders, and closers who are building results in real time. Today's guest is Dan Lewkowicz, a triple net lease expert, a senior director at Encore Real Estate Investment Services, and someone who's helped investors across the country navigate commercial deals with confidence. Let's get into it. Dan, thank you for coming on. Thank you so much for having me. I'm excited to be here today. Okay, great. Let's start with a little background. You began your career house hacking and flipping houses or flipping homes in Detroit. What drew you to real estate? How'd you get into that?

Dan Lewkowicz: 1:11

It's a great question. I really, I have pretty much one defining moment. So back in 2005, I helped to found a company called Disability Made Easy, which is a barrier free home modification company still in existence today. Essentially what we did is we modified homes to make them handicap accessible for individuals with terminal illness, disease, or disability. And I was in charge of the sales and marketing. That's always been my thing. And one day I went for a long drive with our project manager out to a property to go give a quote. And when we got there, we walked around the house. The gentleman in the house had been in an auto accident. He was in a wheelchair. I. And we walked outta the house and I said to the project manager, let's get in. Let's get in the truck. There's nothing to do here. There's nothing we can do to help this guy, he didn't say a word. He took out his graph paper with his pencil, and about 90 seconds later he sketched a brand new front elevation. I. Moving one of the windows, turning into a door and redoing the entire layout of the house. And I had this light bulb moment where I realized that you can take a property, make some changes. Sometimes they're functional, sometimes they're cosmetics, and it's both. And now you've created something that's better suited for whoever's gonna be the occupant or whoever's gonna be the new owner. So in my mind, it like really stuck there. When it became time for me to buy my first house, I had a young family living in metro Detroit. We had an offer out on a property that was move-in ready, and this was in the height of the recession. So the prices will maybe make you make you wonder, but the property, we were under contract for $175,000. This was a three bedroom, two bath, full basement, all brick ranch. Beautiful home, move in ready and as I'm deliberating going through the due diligence, trying to figure out what to do, I had heard that a couple streets over there were some bank owned properties. So I got in touch with a lender, found almost identical house, 1700 square feet, three bedrooms, two bath, full basements. One had a pool a little bit distressed. Not gonna lie. But I ended up buying that house for $81,000 cash, right? So less than half the price. And then what I did was I hired out every single trade individually, and I told them, I'm gonna pay you a little bit more. I'm gonna be the annoying fly on the wall. Who's asking you questions I wanna learn? So I learned from each trade what they were doing and how they were preparing for the next guy down the assembly line to come in. And that was really my education house flipping. And by the time I was done with that house, my friends were joking with me like, Dan, whatcha you gonna do next? We know this has been a huge part of your life, and what I did was I bought another house. I just kept rinsing and repeating and doing this. All the while, I was a development director for largest Jewish day school in Michigan. I became business development executive at Amazon. I was doing all this on the side until eventually. I went a hundred percent full steam into house flipping. And then of course eventually into brokerage. We could talk about that transition if we'd like as well.

Steven M Weinstock: 3:51

Sure. So you were buying these houses. You were the annoying fly on the wall watching it get. Renovated and then all rent ready. And you were selling these houses or you decided to rent them? So the first

Dan Lewkowicz: 4:04

one I was the fly on the wall. The first one was my own home. And that one I was watching to learn from all the different trades so that I knew what to do. The next ones I was managing all the trades. And then the majority of the properties were getting flipped either to homeowners. Or I would sell out to investors. Some of them I would just, wholesale the deal. I did a lot of deals where, bought the property, cleaned up the title, sold it or bought the property, did a little clean out, flip the property depending on what was going on at any given time.

Steven M Weinstock: 4:32

As someone who my background is, being a landlord I was offered the opportunity to flip houses when I first started, but I always personally, I stayed away from it. I always wanted to be an owner. What was your reason for selling these houses as opposed to maybe holding onto a few of them and renting them out?

Dan Lewkowicz: 4:51

Great question. For me, I tell people that house flipping or house hacking is a gateway drug, right? That's what got me into what I do now, and when I was knee deep in, in house flipping, I wanted to focus on one thing. I always believe in focusing on one thing, and that one thing was sourcing houses, purchasing houses, raising capital for houses, closing on houses, renovating houses, and selling them. I didn't wanna also be a landlord and also be in the management business. I did hold onto a property that I really liked as a rental, but in general, I wanted to focus on what I was doing so I could build capital to do the next thing. Now, granted, I eventually got into brokerage and we could talk about essentially when I was doing that, my goal was to focus on one thing and be created. That one thing. Got

Steven M Weinstock: 5:30

it. Got it. Yeah. So my gateway drug into real estate was single family homes. And after a few I really transitioned into, twos and threes and fours and stayed at that pace for a good 10 years. What was your biggest lesson you learned from those early flips that catapulted you into your next career?

Dan Lewkowicz: 5:48

Listen it wasn't all sunshine and rainbows, right? I had my bad deals and difficult days. Just like we all have, it's not, I think it's, I think we'd be remiss to not talk about those experience too.'cause that's part of reality and transparency. This is just a little aside, but one lesson I learned was, I was buying a lot in the city of Detroit. City of Detroit is like nowhere else in the world. It's lawless, it's a jungle. It can be in certain areas. And one of the lessons I learned was be very careful when you buy a property in the winter and not for the reasons that you'd think. The reasons are that in the summer when people come outta their homes, you really get a feel for what the neighborhood's like, how safe it is how inviting it is in the winter. No one's around. Everything looks great. So that's, one lesson I learned. Also, I think that at certain points I did overextend myself. I was doing too many houses at a time. I. Building too many crews, buying too much equipment, and it became difficult for me to manage. So again, for me, I think focusing on what I do best is the most important thing. I learned a huge lesson there. And then inevitably when I transitioned out of house flipping, I'll still do it occasionally, but when I transitioned into commercial brokerage back in 2018, 2019 for me at least I felt that. Rather than be that guy that's got the boots on the ground and it's getting calls in the middle of the night,'cause the property's getting broken into, and who's dealing with all the different headaches and running around and getting his hands dirty. I like the fact that I can sit in my office and I can broker deals and I can be in the thick of it, but I'm in the thick of it, making phone calls and moving paper around and talking to title companies and talking to lenders and all that stuff, which for me works a lot better. I love what I do. I really I, reminisce on the great old days of house flipping but I'm definitely at this point in my life, much more satisfied doing what I'm doing.

Steven M Weinstock: 7:25

Yeah. You mentioned Detroit. I've been to Detroit a few times. I used to go with my family to, a suburb of Detroit. It was Southfield, Michigan.. We spent a few years in a row for some of the Jewish holidays. And I remember driving around and looking at some of the real estate. So I think we were on. Near 11 Mile is the name of the street. And obviously I heard of Eight Mile from the movie, so I remember driving over and it was really like, three miles away. It was like a whole different, It was, I saw like full city blocks that were just empty, . Totally empty, totally raised and, just. Almost like a parking lot. And somebody from, Brooklyn who thought, I knew the inner city Detroit was really a really a mind boggling opening mind opening experience to see it.. What was the moment you decided to move from residential to commercial?

Dan Lewkowicz: 8:17

Yeah I, the houses that I described, my first house that was in Southfield, Michigan, not far from 11 miles. Just to tie it into what you're saying my moment, I'll never forget this. I have six kids now. I had, I think four then my old, my, my kids were asleep in the house. And I got a phone call. This is when I moved my company from the suburbs, because I was doing a lot of Southfield, Oak Park flips surrounding areas. I moved it into Detroit 'cause there were just better opportunities, higher risk. But I got a phone call at 11 o'clock from the Detroit Police Department telling me they needed me to come to a property because there was an at literally like somebody was breaking in as we speak. I don't know why they wanted me there in hindsight, but I remember just like suiting up, i, I, getting ready to go put, I literally putting on a bulletproof vest and grabbing, some firearms and getting in my car and, I just said to myself, what are you doing? You've got four kids at home, there's a house and they want you to come down 'cause they want you to ID someone or something. Who knows? But what is this? And that to me was like the moment where I just said, it isn't worth it. It isn't worth it. I don't want to be remembered as the guy that was successful house flipping. And that was literally the last thing he did before he left this world.

Steven M Weinstock: 9:22

Wow. So when I started buying also in Class C, class D areas. And when I started, I was still single. I didn't have any kids or anything. But as time went on, I also got afraid. There were times I wouldn't go. There were some houses, back then there was no collecting rental electronically. There was no Zelle, there was no Venmo or anything like that. And there were times where I would not go, I. To a tenant's house after dark. But I'd never put on a bulletproof vest. And, being from New York and collecting rent to New Jersey firearms were not something that was accessible. But you mentioned you have six kids, so most people would say, wow, Dan, you're crazy. So I have seven kids, and you got me beat. Yeah, I got you beat. But a lot of my friends or people I say this to, they say, wow, I think you and your wife should get a TV or. Get the Netflix Plus service, just to chill out. But yeah having kids definitely changes your approach to to what you do. During your nine to five. Tell us about, so you transitioned to commercial you're focusing on Triple Net. Let's I know what Triple Net is. Let's explain to the audience what triple net is.

Dan Lewkowicz: 10:30

Yeah, so I'm senior director here at Encore, and what I do is I advise buyers and sellers in the purchase and sale of net lease assets nationwide all over the country. The majority of what I do, there's some outliers, obviously I take assignments that don't fit in the box, but the majority of what I do is either single tenant net lease. So think about. Your Walgreens or your Taco Bell or your, , advanced auto parts or your, single tenant medical office building. For example discount retailers like dollar stores. I also do a lot of shopping centers, neighborhood shopping centers. Anything from normally 8,000 square feet to several hundred thousand square feet. I do a lot of multi-tenant office buildings as well. I do this is a kind of more recent thing, but I've been doing a lot of auctions for, majority vacant or 100% vacant or distressed office buildings. Sold some resorts as well on Lake Michigan. The majority of what I do falls into those buckets. And the majority of the majority is in the single tenant net lease shopping centers and medical office buildings. And for anybody who doesn't know what a triple net lease is, let's compare it to multifamily, right? I'm gonna make just a simple example. Let's say you've got a multifamily property, 10 units. Everybody's paying, let's say they're paying 12,500 a year. I'm just making up some round numbers. That's, they're paying. So total gross collected rent, right? Your top line number, 125,000. Now, let's say down the road you've got a Wendy's property. Wendy's is paying, same thing, $125,000. Okay? Now the difference is that in the multi-tenant deal, you've got, that's your top line number, your gross collected rents, but you have all these expenses, right? Property management, taxes, insurance, capital expenditures. You gotta fix the roof, you gotta pay the parking lot, you gotta do landscaping, you gotta cut the grass, you gotta plow the snow, right? All of these expenses, typically could amount to 50% of your gross collected rent. So you might be left over with 60,$70,000 of net operating income. It's highly variable, right? If the cost of gasoline or salt goes up, guess what? The cost of plow your your your drive and your parking lot goes up. So it's highly variable. There's vacancy factors and you're gonna have expenses year to year. Now, if you flip back over to the Wendy's property, $125,000 gross collected rent. However, that's a triple net lease. What that means is that the tenant pays for your taxes. The tenant pays for your insurance. The tenant pays for any common area maintenance or management, any. Capital expenditures, your net operating income is fixed. It's $125,000 annually. In addition, things like built-in rental escalations are very common. You might have 2% every year, 3% a year, seven and a half or 10% every five years, for example. So it's predictable, it's stable, and the credit is very good typically. So with the multi family. The credit is only as good as, John Smith or Sheila Jackson or whoever's leasing there, right? If they can't pay their rent, it's gonna be difficult to collect. If this is like Wendy's corporate store and they can't, they decide that location isn't working for them, they're gonna still pay rent 'cause they're on the hook with a corporate guarantee in many cases. In a nutshell, that's what triple net is, and it's very stab, stable, very secure, predictable, strong guarantee. And you really, you know what you're getting, typically very well located real

Steven M Weinstock: 13:37

estate as well. So I, I'm thinking on the investor side. I understand why an investor would want a triple net lease. My question is Wendy's or McDonald's, why do they decide, why do they agree to the triple net lease model? Meaning they wanna flip burgers, they wanna sell whatever it is they sell. And obviously they could afford whatever the rent is for the most part. Even though you're dealing with, franchisees, sometimes you're dealing with the actual corporate depending on the tenant, when the roof breaks, why is it that they are willing to call their roofer or their plumber or whoever it is to fix it, as opposed to calling the landlord and getting it done? Meaning why do these companies wanna deal with the maintenance on their end?

Dan Lewkowicz: 14:21

Yeah, great question. So McDonald's probably not the best example 'cause they own a lot of their real estate. But if you look at the other tenants across the board, if I had to pinpoint, I don't know the answer, but where, what was the genus of this? What was the, the place that this actually originated? I would say that when the developers were building the deals, back 20 years ago when the leases were signed, they wanted to be able to sell the property for the lowest cap rate possible. Because a developer has fixed cost to build a building and then they really can only. There's only two levers to pull, and one of them can't pull much, but one lever is the rent. They wanna get as much rent as possible. And the other lever is the cap rate. Cap rate is gonna be relatively fixed based on the market. However, let's say they were to say, oh, it's a gross lease. The landlord is responsible for everything. Now the cap rate's gonna go up. So in order to get the most dollars out of the development I believe that's where this originated. They wanted to create these triple net leases that would give them the lowest cap rate possible. So I think it's just become the industry standard in terms of why the tenants don't own their own real estate, with the exception of some like McDonald's, I think that they're focused, like I was saying before, they're focused on flipping burgers and being great at that. They don't want to be managing real estate. They don't want that overhead. They don't want. That, those type of expenses. I, I don't know where it originated. My guess would be that when the dev original deals were being developed, when Quick Service Restaurant first started being developed, the developers really wanted to maximize the dollars that they could sell the property for. And getting a triple net lease was one of the ways to do that.

Steven M Weinstock: 15:42

You mentioned office space earlier. Do you have office space and office tenants that are also on a triple net lease?

Dan Lewkowicz: 15:49

It's very uncommon., There are exceptions. So the single tenant deals that I sell, like the hospital backed credit deals, those are almost always triple net leases. Those are again, corporations, with good, strong credit. Those are triple net leases. When you look more at the office buildings like the standard multi-tenant, I've got a deal closing tomorrow. Eight, nine tenants, roughly. I'd say half of them are on triple net leases. Again, me, this is a medical office deal. Medical office is a little different. A lot of times the large there's hospital tenants in there. They're on triple net leases, more mom and pop tenants in there. They're on gross leases. When you look at your more traditional office building, you take out the medical component. Just a traditional office building. It is much more common to have gross leases.

Steven M Weinstock: 16:30

So if you have a multi-office a multi-office building, and you have half the tenants who are on triple net and let's say the other half are not, and then the roof goes, who I understand the tenants that are on triple net, they paid pro, prorated their, whatever it would cost to fix, who's actually handling the logistics of fixing that roof.

Dan Lewkowicz: 16:50

Good question. In that example and again, it really, it depends on how the lease is worded. I don't know if the roof is a great example 'cause I've seen leases that say that the roof is not part of the cam. The common area maintenance charges that are charged to the tenant, as you said, on a pro rata share per square foot. And so other leases, they are, let's go with, let's go with a different example. I don't know, the elevator breaks or there's an issue with, I don't know, let's come up with something else. The landscaping needs to be done or the snowplow, depending on the lease. I can't make a broad generalization, but assuming that the lease says that this is a tenant responsibility, I. On a pro rata basis, the landlord is gonna be responsible for orchestrating and paying for those services, and then they will bill the tenant back. Typically what happens is the CAM charges, the Commonary maintenance charges are set on a price per square foot basis. And this all depends on the lease. But in general, this is what happens. So let's say the tenant is paying $15 a foot rent.$5 a foot cam. However, there's a clause in the lease that at the end of the year, the landlord is able to reconcile. And what that means is they look at all their charges through the year and they say, oh, wait a minute. It wasn't $5 a square foot, it was actually $6 and 32 cents. We're able to now raise those cam charges and sometimes the, there's a cap on the cam being able to be raised and sometimes there isn't, right. So things like that, it's gonna be orchestrated by the landlord and then build back to the tenant on a reta

Steven M Weinstock: 18:12

basis. Got it. So you have triple net and you have, I guess double net. I've seen double net would typically mean what's missing from the triple net

Dan Lewkowicz: 18:20

when you double net would mean that roof structure and sometimes parking lot are gonna be the landlord responsibility. Okay. And it sometimes goes further. I just sold a Starbucks deal. It was roof. Structure parking sidewalk and drainage not included.

Steven M Weinstock: 18:35

That's because the landlord the tenant requested that, or is that just the way they worked everything out, or,

Dan Lewkowicz: 18:40

Starbucks leases, typically, the vast majority are double net deals. They sometimes will sign a triple net lease. A lot of it depends, honestly, on the negotiation. I've seen it firsthand, the negotiation between the developer. A landlord and the tenant now, like for example, a lot of dollar stores, standard leases, double net, right? Roof and structure are landlord responsibilities. So you know where, again, where that came from, why certain tenants were able to make that the gold standard for them and others not, I can't tell you. But that's just the way that it is in our industry right now.

Steven M Weinstock: 19:12

You see a difference in in tenants when it comes to franchisees and the actual corporate back like Starbucks is not franchised. From, I

Dan Lewkowicz: 19:21

understand right. Starbucks is all corporate credit. Yeah. There's definitely a difference. The corporate guarantee is a much stronger guarantee. I've seen, I've seen 90, a hundred, 110 last two years ago there was 172 unit Burger King operators go bankrupt and stop paying rent and being in bankruptcy court and having. A judge cancel a lease, right? I've sold deals that were vacant because that happened and my clients were like, Dan, I bought this deal 'cause it had a 90 unit guarantee and I said, 90 units. That's a big guarantee. It had 172 units. That's a big guarantee. It's not as big as Starbucks, right? It's not 20,000 stores in corporate credit. So listen. Is it important? Yes, the credit is important, and corporate credit, if it's good, credit is better, right? A large franchisee is better than a small franchisee. However, we don't wanna leave aside the unit level fundamentals. So what I mean by that is if you're looking at credit, you're looking at the system, you're saying, okay, they've got 300 units. If they go dark at this location, granted it's not gonna be great for me because it's gonna be harder to sell. I'm gonna still get paid. Versus a five or a four or a three or a 10 unit operator, the chances of them filing for bankruptcy are much greater. And keep in mind, you might think you've got great credit because of the name on the sign, but really it's all about who signed the lease. Even some large companies have sub entities that have, your credit, your guarantee is only that sub entity. That's one thing if you look at the corporate credit. That's a lot better if you have a good credit from a corporation. Now, I'm not gonna sugarcoat things. Look at Walgreens. They had great credit. They were investment credit. Now they're junk credit. So things do change. It's important when I say to look at the unit level fundamentals, what I mean is not just the big system. That actual store. What's the visibility like? What's the ingress and egress, like, how easy is it to get in and out? How much traffic is on that? The roads, right? Is it at a signaled intersection? What's the population like? Is the population declining or is it increasing additionally, wherever possible, I wanna look at store sales. I wanna know how much volume is this tenant doing at this location, because that's gonna tell me what the likelihood of them leaving is. And I wanna look at specific ratios like a rent to sales ratio, how much are they paying in rent versus what are their sales? That's a good, generally a good metric to determine if they're gonna be able to stay at the site long term.

Steven M Weinstock: 21:33

So you mentioned just to pivot back, you mentioned you have. Tenants for instance, let's say a Walgreens. But sometimes and did I get this correct? Sometimes they, even though they have 3000 stores, but they'll have sub entities that will, sign a lease. Let's say they'll have CVS New York City, LLC. Yes. So therefore it's that it's not the corporate the public entity that's signing the lease. It's instead some sort of sub entity that happens to have 200 stores.

Dan Lewkowicz: 22:03

Exactly, that's a hundred percent right. And it happens, even with franchisees, you might have a franchisee that has 300, burger Kings and Sonics and Wendy's. But for all the sonics that are in Arkansas, the LLC is, Sonic of Arkansas, LLC, and they only have 13 stores. So it's really important. That's why having good brokers is so important. It's important to understand who really is guaranteeing your lease.

Steven M Weinstock: 22:25

So if I'm a landlord and I'm signing a lease with let's say a sonic, is that my mistake, that I'm only having Sonic of Arkansas sign it instead of sonic? With 300 stores.

Dan Lewkowicz: 22:37

It could be that the operators say, I'm sorry Steven, we are only signing with Sonic of Arkansas. Take it or leave it. And you might say, I don't want Sonic of Arkansas with 13 stores. I want to go for somebody else that's gonna be up to you. There are definitely cases where the landlord could have pushed back and didn't, and they were stuck with a subpar entity guaranteeing the lease.

Steven M Weinstock: 22:56

Got it. Lemme ask you a question. So I have let's say a Burger King and for whatever reason they do not renew or. The franchisee goes bankrupt and it's sitting vacant for six months a year, and now I'm getting a new tenant to take it over another triple net lease. Who's typically going to handle the renovations on

Dan Lewkowicz: 23:18

that property? Yeah. Good question. So I've been in this knee deep with clients many times. And it can go a lot of ways, right? If you're the owner tenant vacates now you want to do something with it. A lot of times a new investor will come in and say, I wanna buy that vacant site and I want to be the one that signs a lease.'cause if I buy the vacant Burger King for a million bucks. I sign a lease with Starbucks, I put 800 grand in. It might be worth 3 million. So a lot of opportunity there, especially right now, a lot of opportunity. But to focus on your question, it's really deal dependent. So a lot of times what'll happen, like for example, with the Starbucks, is that they will ask you to do, let's say $800,000. Of the renovations to the exterior of the property, reconfiguring it, changing the drive through. Whatever you have to do, they will then do the interior build out. That's one way that I've seen it. I did a deal recently with a different Starbucks where the developer, and that was an existing Burger King that was being transformed. This is now, the second story I'm telling you is a ground up Starbucks. There was nothing there, and the developer was responsible for everything on the entire shell of the property, most of the landscaping, the paving, the curb cutting, the drainage, et cetera. They delivered a shell to Starbucks that was finished and sometimes it's finished up to the insulation, sometimes meaning from the outside in, up to the insulation. Sometimes it's finished from the outside in, up to the drywall. And then Starbucks does the rest. Now what's not uncommon is in addition to the developer having to pay for the expenses to build that shell, they then will give a tenant improvement allowance of usually around $125,000 to Starbucks at the end to contribute to Starbucks build

Steven M Weinstock: 24:54

out. Got it. Got it. And I guess depending on the tenant, depending on how strong the tenant is, it's a matter of the landlord doing what they have to do. Tell me, if you're looking at a distressed asset, what factors do you use to spot a distressed asset that still has upside, specifically in your niche of, triple net?

Dan Lewkowicz: 25:15

Yeah, so you're gonna look at the underlying fundamentals because a lot of times it's not the real, sometimes it is the real estate that killed the deal. Sometimes it's external factors. I have a I sold to Wendy's property a number of years ago for a client, and one of the reasons he sold it was because the city I. Went and put, I don't, it's, they're becoming more common around here. I don't know if we have, if you have'em by you, but instead of having pedestrians have to cross all the way across traffic where there's no light, they put like a safe haven in the center of the road where the pedestrian goes to that little safe haven and then they move over a little bit. Wait, and then they cross. So they only have to cross one direction of traffic at a time. The city put that thing right adjacent to the drive-thru entrance, so people couldn't get into the drive-thru. They had to like. Go and do a u-turn and all this. And especially when people are getting fast food, they want convenience. So that site had, it wasn't really a location specific issue. It became now a technical issue that caused it to be a poor performing site. That's just a side note. But in general, you have locations that close because of the real estate fundamentals are poor visibility. The example I just gave access, ingress, egress, right? Not a lot of traffic declining market competition in the market, et cetera, et cetera. But sometimes you just have a tenant that didn't perform right, the tenant filed for bankruptcy, but great location, right? So in the example of a tenant filing for bankruptcy or going dark with great location, you look for the same things that you look for in any triple net deal, right? So again, you look at ingress egress, you look at. Visibility, right? Does a city setback have tons of trees so you can't see the sign, or is it completely clear? And you can see the sign, right? You look at things like traffic counts. Very important. How many vehicles per day go in front of that site? Right? I. Look at things like increasing population. You look at average household income and different tenants thrive in different environments of average household income, right? For example early education tenants like learning experience and Montessori groups and cadence academies. They like average household incomes above a certain number because if it's below a certain number, most people can't afford to spend that kind of money on education, right? So that, that's really important. Another thing that I think is very important. Is the proximity to other major national tenants, right? If you've got a Chick-fil-A and a Starbucks and a Target and a Walmart in close proximity, all of those companies have real estate departments and all of them determine that was a great location to put their, themselves as a company. That means there's a high likelihood that your location is a good location as well. So all those factors are gonna tell us if this is, a good opportunity. And then another important factor is. Is gonna be, the fungibility of the box. What I mean by that is the actual property itself, is it fungible? Can it be easily transferred to another usage? If you look at something like pharmacies, there's tons of pharmacies on the market. We're going through an epidemic of pharmacy closures all across the country. Those boxes are not that fungible because they're. 11, 12, 15,000 square feet, and they're faced in the wrong direction and they're squares difficult to repurpose versus maybe a Burger King, very similar size to a Starbucks, not as difficult to repurpose. All those factors are important when looking for a deal in repurposing, in a net lease real estate.

Steven M Weinstock: 28:21

When I'm looking at multifamily properties on the pitch deck, you always see like a map and it'll show, a Starbucks right here and a Walmart right there. And like you said, it tells it tells me or it tells the investor that. If Starbucks is investing their time and effort in this area, they're doing the hard work you could rely on them. You mentioned before that you worked at Amazon. I'm curious to know what'd you do? Were you involved in, preparing the wedding for Jeff Bezos,

Dan Lewkowicz: 28:47

I was involved in the space launch, of course. No, I'm just kidding. I was a business development executive. My job, this was when Amazon business was really taking off. So Amazon has, in addition to their consumer facing marketplace that you and I shop on, I. They've got an almost identical looking one called Amazon Business that's designed for government entities, small businesses, large businesses educational institutions to do their procurement. So my job was to reach out to businesses and get them to sell their products on Amazon. I.

Steven M Weinstock: 29:15

Got it. So I think I know what you're talking about because in my synagogue, I see these small boxes of tissues on every table that say, I think it says Amazon business on it.

Dan Lewkowicz: 29:23

Oh yeah.

Steven M Weinstock: 29:23

I guess they I guess they're getting the discount. There you go. What is a common misconception about real estate that you wish more people understood?

Dan Lewkowicz: 29:35

One of 'em is like the, is I just feel like a lot of people don't understand that you need to jump in whatever you're gonna do. You gotta do something. For me it was house hacking, right? Pretty easy. I'm doing it anyway. I'm buying a house. Let me learn how to renovate it. And then my first house I bought, granted it was in the, my second house, meaning my first non-primary residence that I bought. I think I spent. 12, $15,000 on it. Granted it was in Redford, Michigan, outside of Detroit, and it was during the recession, but still there's opportunity to jump in, right? So that's number one is just jump in analysis. Paralysis is not your friend. I think nu number two is that you have to go it alone of any community I've ever been a part of. The real estate community in the commercial real estate community is so supportive. There's so much knowledge. There's so many great mentors. Like I get calls probably twice a week from people reaching out. They just want to talk about their life situation and what they're doing and how they can get where they want to get. And I'm glad to do it because other people did it for me. So that misconception that you have to go to loan, big misconception. And then I think there, there's a misconception that you need a tremendous amount of money, right? I invest in my step IRA in debt funds in commercial real estate deals. And you can do that with as little as 25 or $50,000, right? And I'm sure there's deals where you can invest even less. The misconception that you have to have millions of dollars to, to invest in real estate or even commercial real estate it's not correct. And in residential it's even less. I think that it's just really important to keep those things in mind because there's a lot of opportunity and you shouldn't let things hold you back.

Steven M Weinstock: 30:57

Yeah. Yeah, I definitely agree. Sometimes you just have to jump right in. Especially if you're young, I think, just, just get in, figure it out. If you lose your shirt, so to speak it's probably cheaper than a Harvard education. And you definitely learn a lot. The hope is that on your first deal you make no mistakes. So it doesn't, keep you outta the game.

Dan Lewkowicz: 31:17

It's okay. Listen. I've lost my shirt before. And you know what you do when you lose your shirt? You go get another one. Not a big deal.

Steven M Weinstock: 31:24

Yeah. If someone had, I don't know,$200,000 and wanted to get started in commercial real estate, what do you suggest they would do first I.

Dan Lewkowicz: 31:32

It really depends on their goals. I would say one of two avenues. I really like the passive debt fund deals. You can find great operators who are putting together deals. Typically just tell

Steven M Weinstock: 31:42

just tell the audience what a debt fund is.

Dan Lewkowicz: 31:45

So that would be like, so for example, the ones that I'm currently invested in, it's basically four or five deals. They're all short term bridge loans. So the fund that put this together, they source these deals and they're lending at an aggregate of probably around 16 to 18%. And they're paying investors 14%. And they're keeping two to 4%. I like that. It's passive, it's easy. The money compounds. It's in my IRA anyway. It's not today money. It's money for my retirement. That's one avenue that's really hands off. That's really easy. I'll give you three avenues that, that's one. Another avenue I really like. I love the, multi-tenant retail shopping center reposition play where you buy a shopping center that has some vacancy, it has some deferred maintenance. It has a lot of gross leases, and you'll see why that's important. And you buy the property, you a, you deploy some capital expenditure, you paint it, you make it look nice. All those good things. You get rid of the poor performing tenants or those that are in default, you sign some new tenants. Now you convert the gross leases to triple net leases. Okay? Why is that important? And you do that when the leases are rolling over, meaning when? When there's no more options remaining and they wanna resign a new lease or when you have a new tenant. Reason that's important is twofold. I. Threefold, really, number one. Now, you've you've controlled your expenses. You've taken it from a multifamily property, in a sense, to a Wendy's property, right? Because now you know that if your expenses go up, the tenant's expenses go up, but it's passed on through, right? Number two. The property is more desirable to investors, okay? Because now it's trip. You've got triple net leases. So the cap rate goes down and the price goes up. So as you're increasing occupancy, you're increasing net operating income. As you're switching over from gross leases to triple net leases, you're decreasing expenses you're fixing expenses, you're upping the NOI, and you're lowering the cap rate. And when you can pull those two levers at once, you can create tremendous value. That will really skyrocket the, the sale price of your property. The third thing, and this is a lot more sophisticated, I wouldn't recommend this to a new person, but would be to do one of these development deals, right? To buy a vacant property. You might need to get some additional capital from another source or from a bank. Banks are very eager to lend on deals like this and then sign a lease with a new tenant and now either cash flow it or flip it. I think that's, a great opportunity as well. So those are the three things that I would investigate.

Steven M Weinstock: 33:59

Before you mentioned losing your shirt tell us about a deal that maybe didn't go as planned and what it taught you other than shopping for a new shirt.

Dan Lewkowicz: 34:08

So there was a street in Detroit in the morass, meringue neighborhood. Real rough neighborhood. I had bought a bunch of properties there because I was like, dude I was literally buying entire houses that were in decent shape for five or $10,000. And I thought I couldn't go wrong. I bought this beautiful 1500 square foot, tudor style home all brick. It was gorgeous. If you would've moved this home 10 miles north, it would be worth half a million bucks. But unfortunately that's not where it was. And I bought it from Chase Bank for 10 grand. It had foundation issues. I didn't know about fixed those, but I. Unfortunately, there were gangs in the area. Every Wednesday was a raid. There'd literally be, swat coming in every single Wednesday. I couldn't believe it. I hate to bring this up, but there was a kid that was working for me. I thought I was doing a good thing by giving him a job. His mom even wrote me a note about how happy she was. I was teaching him responsibility. Unfortunately, she was murdered on the street, across the street from this house while we were there. It was just, it was terrible. It was a gut wrenching, emotional experience. And I'll never forget being in that house and just, I wanted to do good job. I wanted to finish it. I wanted to make it nice and I knew I could sell it, but I was into it for more than it was gonna sell for. So it was so hard to put. Another dollar and another dollar in knowing that I wasn't gonna get my total money's worth. But, I eventually I sold the property. I, I, I lost money. And this was as I was transitioning into brokerage full time. I remember I had a few houses left. One of the houses, they were all vacant, right? When I bought 'em, one of the houses was on a road called State Fair, seven and a half Mile. And squatters moved in. They had, the house was boarded up, but they. Created some mechanism where they could move the board and put it back. And they were dealing drugs. Like it was a like it was a drive-through, right? Like people were literally walking up, , they would do the transaction. And so at the time the laws had changed. And if you had a deed, you were able to just call the police and they would kick the squatters out. It was amazing, right? You didn't have to go through the eviction process. So I was like, all right, perfect. I'm calling the police. I'm not dealing with this. Call the police. These squatters had somehow found out that I owned the property and they had created a fraudulent deed, and they showed it to the police, and the police were like, we're not gonna get involved. This is a title dispute at this point. So at that point, it was unbelievable. I was starting to rock and roll in commercial real estate. I had maybe two or three properties left. In the city, and they were toxic inventory. I wasn't gonna renovate 'em. I had situations where people, it was like the McDonald's of drug dealing. And I just said to myself, you gotta get out, you gotta cut your losses. So I sold that one at a loss. There were two more. I was working with an agent who had a buyer, and she basically was like, she gave me a price and I was like, you know what, I'm gonna lose a little bit of money for two properties. And I said to her, I said to her, that price is for both. She goes no that's for each. So I was super excited 'cause I was expecting to sell 'em for two for that price, but I got, each of 'em for that price Anyway, I cut my losses, I lost money, and then I was able to just keep my head down and focus a hundred percent on commercial brokerage. Never look back. And it was probably one of the best decisions I've ever made.

Steven M Weinstock: 37:11

Got it. Outside of real estate, outside of raising six kids what do you do for fun? Did I see on LinkedIn that you play an instrument? Did I see that? You mentioned rock and roll just in your little analogy earlier, but

Dan Lewkowicz: 37:24

yeah. I I play guitar. I've been playing guitar since I was I think seven years old. Are you part of a band? I'm not, I was in college, but I'm not, I don't play nearly as much as I used to. One of the things I'm I live in metro Detroit obviously, so I love cars. I love cruising. I love driving. I just posted a video this weekend. I was at the Extreme Experience. I was driving a I. Ferrari 2 2 96, GTB and A a Porsche nine 11 GT three on the track. I love tracking cars. That's one of my favorite things to do. Anything car related. On the weekends, I'm taking at least one of my kids to, a cars and coffee, so that's really a passion of mine. What kind of music did you play? I just I love like the jam band type stuff. Like my favorite band is a band called OAR of A revolution. I don't know, they're not that common, but, or they're not that, that, that well known. But yeah, like more like grassroots stuff. I like a little country, i'm not afraid to admit that. No country

Steven M Weinstock: 38:17

country is very popular these days, so yeah, it is it's for definitely be afraid to admit that. Not anymore, that's for sure. Yeah. You've once said, I think I saw this online that. Mailbox Money with teeth is what you call triple net. Was that, did I read that about you? Was that your mailbox money with teeth you said? Yeah. Did you say that ever or am I reading that? I like it.

Dan Lewkowicz: 38:35

I don't think I ever said it, but I definitely like it.

Steven M Weinstock: 38:37

Okay. Let's talk about , what you're doing now. You're doing, you're working in investment sales, right? Yeah. With Encore. How's that going? Is that focused you mentioned it's a national, you're dealing nationally. Yeah. Not just Detroit. Tell us about that. How's that going? What do you see happening? What kind of investors are you dealing with? Are you dealing with large corporate entities as far as investors? Are you dealing sometimes with a mom and pop investor?

Dan Lewkowicz: 39:02

Yeah we're in an interesting time. I think that interest rates have stayed higher longer than most people had hoped. And I think that, there the market has started to really take its inventory and buyers and sellers have started to come more towards a point of understanding, which they were not at for a long time. I personally, for me, things have been incredible. I'm super busy. This has been a phenomenal year and I think that we're gonna have to see what happens. I it just, it almost feels like as soon as things start to calm down and even out, something happens, right? Interest rates stay elevated, tariffs war with Iran, whatever it is, it just seems like there's always something that's really rocking the boat and all those things are preventing the fed from feeling comfortable with lowering rates. I expect that the market and the situation to remain the same for a while. I've been saying this for years, ever since we had el elevated interest rates, until we get two or three consecutive rate cuts and there's a stable trajectory downward I think that's where we're gonna see the market take off. I think the market is pretty healthy. The fact that we have, the volume that we have, even despite all of these other signals, tells me overall that there is, good underlying market fundamentals and health. And I do think there's a, this is a time of opportunity. With all these major corporations filing for bankruptcy and vacating incredibly well located real estate all across the country. For those people who are able to find the ways to repurpose those boxes, that's a great opportunity right now that I don't think should be overlooked.

Steven M Weinstock: 40:27

What sector in real estate do you feel is most recession resistant right now?

Dan Lewkowicz: 40:34

I love medical. I think medical office is great because medical tenants are very sticky. If I were to go to anyone's typical doctor office or specialty, physician office and tell them, Hey, listen, I have this great property for you. It's 75 miles away and it has everything you need, they're gonna laugh at me because there's no way they're moving 75 miles because. Probably 95% of the population lives within five miles of the office, right? So that's huge in terms of stickiness. In addition to that, a lot of times the tenants will invest heavily in equipment that isn't easily transportable. So I love a tenant that doesn't wanna leave, and I think that medical office really presents that

Steven M Weinstock: 41:14

name a book or a mentor or a quote that has had a lasting impact on you.

Dan Lewkowicz: 41:21

We'll do all three. So a book would be, think and Grow Rich by Napoleon Hill. I know it's a classic. Everyone's heard of it. If you've read it once, you haven't really read it, you have to read it a few times. Just the ideas in there of setting your intentions and of mindset and mentality. I firmly believe that the stories we tell ourselves about ourselves, about other people, and about the world define our reality. We can really create our destiny and define our reality. I love that book. Mentor, I had a mentor when I was a lot younger and. I asked him for advice when I first met him, and he told me, he said find yourself the best mentor you can and make yourself dumb in front of him. Meaning don't try to show off and show them what you know. Just learn that. I immediately said, okay, great. Can you be my mentor? And that was one of my first mentors. In terms of piece of advice I dunno if you can see it, but this is something that I. Live by might be backwards. That's it. But this is from our course Provide value and everything else follows. I really believe in that. Thankfully I'm in a point in my career where, I'm not desperate to do deals, so I lead with providing value, and I find that things just follow. I've got a call here in 45 minutes with some clients that, we did some deals together. I have a deal under a contract for them. I listed property for them in the past that didn't sell, and I've just provided as much value as possible and have never sold them on using me. And now they called me because there's another site that they need me to sell. So I really believe in providing value. I think it's a simple quote, but it's so powerful. If you can provide value, you've got nothing else to worry about.

Steven M Weinstock: 42:49

Yeah. Providing value is probably the best sales technique you could do. As far as the book I'll tell you which book had the biggest impact on me, and this is without even reading it. It was obviously this is a real classic that everyone says, the Rich Dad Poor Dad book. But when I was a kid I didn't have cable TV at home and we used to have these,

after I dunno, 1: 43:08

00 AM there were these infomercials on tv and I guess this was when the Rich Dad Poor Dad book came out and maybe this is like in the mid nineties, late nineties, and used to have these 45 minute infomercials. So you had a rich Dad, poor Dad infomercial for 45 minutes really discussing what the book was about. Kiyosaki would be on the, would be on the commercial and. They had different commercial meaning, one night would be 1 45 minute commercial and the next night would be a Retweaked 45 minute commercial for his book. And I used to watch these over and over again and it really changed the way I look at money, the way I look at employment versus investments. Passive income versus employment income, and. It's one of the reasons I got into real estate or one of the reasons I wanted to buy real estate. And ironically, I didn't read the book until, I didn't actually physically read the book until I owned, seven or eight properties. But the infomercials from that book were powerful. It had such a it really taught me a lot. It really, just changed the game. It changed the way I look at money and it was so powerful. Dan, any parting words before we let you go?

Dan Lewkowicz: 44:21

Mean, just listen. Whatever I can do to add value to anybody watching this, please reach out. You can find me on LinkedIn. Dan is my first name. Lewkowicz is my last name. L-E-W-K-O-W-I-C-Z. Again, L-E-W-K-O-W-I-C-Z. If you own property, you wanna know what it's worth, you might wanna sell it. You're not sure if you've got a deal, even if it's not mine and you just want an extra set of eyes on it, please reach out if there's anything I can do to help. If you're new in real estate, I always love talking to people. Also give out my direct phone number. This is my cell phone. It's (248) 943-2838. Again, 2 4 8 9 4 3 2 8 3 8. If there's anything I can do to add value, it would be my absolute pleasure.

Steven M Weinstock: 44:57

Okay, Dan, we're gonna put all that in the show notes as well, so everyone sees that. Okay. That's a wrap on today's episode of The Wealth Clock with Steven Weinstock. A big thanks to Dan Lewkowicz for sharing his insights on commercial real estate triple net deals. And what it really takes to create passive income with less risk especially when it comes to triple net deals. If you found value in today's conversation, make sure to follow or subscribe on your favorite platform so you don't miss future episodes. And if you're an accredited investor looking to put capital to work in real estate without taking on heavy risks, check out what we're doing with. Goethals Capital Fund. Like I said, we buy it in cash. We refinance later on and we keep the investor capital working the whole time. You could always connect with me on LinkedIn. I'm Steven Weinstock. Thank you all for listening, and I'll see you on the next time on the Wealth Block. Thank you so much, Dan.

Dan Lewkowicz: 45:54

My pleasure.