Ep 30 - Roofs, Tenants & Crackies

Had some good old breaking & entering at Thunderbird, $3,900 worth of damage for $20 worth of copper, a tale as old as time.  Sometimes I wish I lived in China or the Philippines so the gov't would just round up these useless heaps of garbage, and just remove them from the earth.  But, probably better that I don't, SO, on to the next.  Crackie damage is up to ~$5,500 so far on Thunderbird alone, hard to fathom.  

Grand is FINALLY getting a new roof & swamp coolers, just working on the final details.  Been busy trying to lease up the empty spots.  It's been really hit or miss. It takes a lot of leads to get someone to get out there, and out of the people that make it out to the property, 80% have no business even shopping for a spot like this.  But the more hands you shake, the more deals you make!  So we're keeping on the path.  

Transcript

SPEAKER_00 0:01

Boys and girls, welcome back to another episode of the Commercial Real Estate Starting from Scratch podcast with me, your host, John Kleisch, on episode number 30. 30 episodes, guys. That's pretty crazy. That puts us about the seventh month mark. And 30, that's a lot of episodes, in my opinion. And it really makes you look at those guys. Uh, you know, Joe Rogan's on like 2,400 or something like that. That's just absolutely asinine. That's crazy. But uh 30, we did it. Very cool uh milestone podcast. We're at like almost 600 downloads, which I think is really cool. Every week we're getting better and better. Um, however, I jumped ahead of myself. If this is your first time listening to the podcast, I appreciate you tuning in. Would love to hear how how you found out about it and how you landed here. Uh, to give you an idea of what we're doing here, I am just documenting my journey from starting with zero commercial uh real estate experience and uh no commercial assets owned, and uh rocking this thing up and just following my journey. My goal is to make it raw, authentic, uh, talk about what I'm doing, how I'm doing it, tell you the good, the bad, the ugly. I don't want to really hide anything. I feel like a lot of podcasts are all fluff and everyone gets on there and talks about these big numbers and make it all sound great. And I want to do the opposite because that's not how it works, right? Do those numbers happen? Yes, of course. But a lot of times it's just you're getting your teeth kicked in time and time and time and time again. And the longer that you can get your teeth kicked in, I've realized the bigger the reward, hopefully. Because if you've been following along, you know I've gotten my teeth kicked in quite a bit over the last seven months. Obviously, there have been some small victories here and there, but in general, I feel pretty beat up, worn down, and uh yeah, pretty much sums it up. So, oh boy, oh boy, oh boy. Last week we did a lot of different updates on Thunderbird. Uh, we'll just start there because we did a whole podcast on it last week. Still waiting to hear back. My broker has a meeting with the other broker of that co-working space on Friday, which is in a couple days. They are reworking their numbers and making a new proposal after visiting the property. The instant feedback that we got was the numbers that they came up with were a little bit high on the tenant improvement side of things and the labor force, they were high. So they're uh we'll see if they change their revenue projections at all by actually seeing it. But overall, the instant feedback was wow, hey, this place is actually set up pretty well for what we want to do, so we can work out some deals on that end. So patiently waiting. Uh we haven't had anyone else really interested. And when I say really interested, we haven't had anyone interested um outside of this tenant and that one that blew us off, which is to be expected. We knew that office was gonna move a little bit slower, like I've been saying time and time again, and now I'm just saying it to make myself feel better because it keeps me up at night that we don't have a tenant. But that's pretty much it for Thunderbird. I'm trying to think if there is anything else. Not really. Nothing has poked its head up. Oh shoot, there are some updates. Gosh darn it. Um I had my AC guy go out there to do some routine maintenance, and I know you guys haven't seen the building, but it's a two-story building with a obviously it has a roof, and that roof has like a parapet wall that's like four or five feet up above the actual roof. So if you're sitting on the roof, like you can't see anything outside of these brick walls, this parapet wall that is around the spot. There is an access door that comes in from like a maintenance closet that's locked, and then you climb up a ladder up to like a chute or like a hatch, I guess you could call it. Think of like a hatch, like a tank, like an army tank, like an Abrams or something like that. Not quite like that, but you know what I'm saying. You just push push it up. Uh, it's a task to get up there that way. Uh my my AC guy gets on the roof and he calls me and is like, hey, what did you do with all this copper? And I was like, I didn't do anything. What do you mean? He's like, dude, you had copper condensate lines uh from both of these units, and these are big time commercial units, seven and a half ton trains, big, big, big baddie boys, they're cool looking. And he's like, Hey, dude, somebody ripped off some copper. Did you have uh, you know, somebody like a roofer here? I'm like, no, dude. And he's like, Oh man, somebody must have gotten on the roof, and I was like, Hey, uh, was the maintenance door locked? He goes, Yeah, it was. Uh, you know, everything was all tightened up. And he's like, dude, he probably got a ladder, a 25-foot ladder, a step ladder or something, and and got up on the roof that way, or there are also other stairwells on the outside. He could have put an extension ladder up on there, like a 15-20-footer or something like that. However, you're not paying me uh thousands of dollars to get up on that roof. If you paid me five grand and said, John, get up on this roof. Uh, I don't know, I'd have to think about it to be honest, because it's like uh risky. That guy definitely risked his life to get twenty dollars of copper, which if you've been in real estate, you've you you know these guys, they don't they don't care. They see$20 that will get them high for six hours, and they'll do whatever. So I'm surprised, however, I'm not surprised. He also like tried to steal some disconnects too, and he like broke them. Kick like I don't even know. We can't even get him lodged out on them, the handles missing, it's all they're all fucked. So just a cool$3,900 bill to get that all short up. So uh we're obviously not rented, losing money by the day, spending money on all these utilities, insurance, taxes, mortgage, interest, and then now to get this is just like kicking the teeth. But whatever, it is what it is at this point. It's not like it ruined any like my day or whatever. It's just hey, chalk it up to that. That's real estate, baby. If it was easy, everyone would be doing it. If it wasn't so crazy, then you know, it is what it is. Uh, it had plenty of cracky situations, break-ins, this and that, and blah blah blah blah blah. So you just roll with it, and we're gonna roll with with this one here. It's unfortunate, but honest to God, maybe that cracky deserves it. Maybe you know, he he got some really good drugs and had a great time, and I'm I'm happy for him because if you're willing to commit to hopping on that roof to get 20 bucks, like holy cow, good for you. That's that's excellent. So I guess that was the Thunderbird update. Um, and that's it for for that. Grand has been uh quite a bit interesting for sure. The I've been trying to uh lease up that place as uh as you guys know. If you've been following along, I have a tenant in the back that is going to be moving up to the front, uh, a big, much bigger spot. I would call it like the flagship spot on that property for sure. And honestly, maybe one of the most flagship spots on Grand Avenue because you're right there next to Sanderson Ford, San Chevrolet, and these are uh like hundred million dollar car dealerships. So you're right there, you're gonna get walk-ins, it looks good for your business with your name on the wall. He's moving up there, and we're going to replace him with somebody else. But before we talk about that, we had a deal all kind of hammered out, and then unfortunately, here in Phoenix, it's been getting really hot really early. It's April 1st, and it's usually not this hot. It's been 100 degrees already for a couple days. It's been flirting at 96, 98, and uh we had a little bit of a colder spell here where it's in the 80s and whatnot, but it's also been raining a little bit, and we have a very, very leaky roof, and we have no swamp coolers. So he was like, dude, hey, can you get this roof fixed and swamp coolers replaced before I move in? I wish I knew that because I totally would have done that, and now we're gonna be having to wait probably, I mean, at least 45 days, because he needs 30 days to move in, and we need to get the roof done and the swamp coolers done. So I found that out yesterday. So my day and uh what we were gonna do, I was gonna have my handyman Tyler take care of that roof for me because he was really interested in doing it, and then unfortunately, he just got so busy he's like, dude, I just don't have enough time. I asked him for a quote three times, wasn't able to produce one. So now that we are against the wire, every single day matters. The new rent's 7,500, his current rent's 4,500. So, in my eyes, we're losing$3,000 every single month that we are not getting ready. And that's not entirely true now that I think about it, because there is a subtenant in there that did not get evicted that's going to stay, and I will collect rent from him of$2,000. So I guess it's only$1,000 a month. However,$1,000 a month's a lot of money. So if I gotta go out there, uh, back to what I was initially saying today and yesterday was spent finding roofers, getting quotes, and uh wanting to get that hammered out. We went a couple different routes. I went to the big guys that came out the first time and quoted us. I got them to re-quote just this small section. I went with guys off Facebook Marketplace, uh, you know, basically dudes with a foam truck. And I also had some middle of the road people that are not big companies, but they're on Google and they have uh ROC insured and everything like that. So the guy that I'm probably ultimately going to go with was a roofer for 22 years for a pretty large company here in Phoenix, and he seems to know his stuff. He just branched off on his own, he doesn't even have his license yet, probably doesn't even have his LLC set up or whatever, but the quilt came back really aggressive, like really aggressive, six grand cheaper than everybody else. So to do a 3200 square foot tear-off and refoam and elastomeric, uh, what was the price like thirteen thousand five hundred dollars? I think the cheapest quote I got was nineteen thousand seven hundred and something like that. So I think I want to give that guy a shot. I talked to my partner John on it, and he was like, Man, that might be our guy. So we'll see. Uh obviously, I could just come give this guy money and he doesn't even show up. I could give him money and he does a terrible job, and then we gotta redo it all over again. However, at this point, I feel like it is worth the risk. I do want to meet him in person, see him in the eyes, look him in the eyes, and really get my sniff test out there. My first sniff test is that I liked him. He was out here hustling, he was very honest and told me right off the get that hey, bro, I'm not licensed. If you want a license guy, like bro, I'm not I'm not the guy right now. This is what I did, this is what I do. So I think that's pretty cool. I really enjoyed the conversation and obviously really enjoyed the quote. Now, if he was a few thousand, like two, three thousand dollars cheaper, would that be meh, you know, maybe I just go with the other guys, but everyone's coming in around that$19,000,$20,000 mark. I even got one quote at$21,000, which I'm pretty sure that guy was just a broker, like a wholesaler. He just does the marketing, gets a quote, and then gets it off because he was like really good. He was like super quick with it and uh came back within minutes, maybe maybe 15 minutes with a quote. And I don't know why I got that feeling. I just assumed that that's maybe what what he was doing. But either way, pretty sure I'm gonna go with that guy, get that taken care of, and then we also need to coordinate with the swamp cooler install people because they're gonna need to tear off that roof. Swamp cooler guys are gonna need to come in, maybe redo those curbs, uh, drop those units in, and then the roofers can come behind him and spray foam. So that might be a little bit of a to-do, but this guy will be able to handle it. He's hungry for the business. I put that on his plate. Um, and he was a great English speaker, I mean, uh born in America, which is which is also good because I got some people in my tenants now that do not speak any English. I have people that are checking out the spot that don't have any English, and we're just sitting there going, uh what are you what are you saying? What did you what we just get out Google Translate and it takes 20 minutes to figure out what each other's got going on, but um so that's cool. I feel like that's the guy that we're gonna go with. We're gonna get that set up, and we're just waiting for the uh we're using a private lender to fund this rehab, and they are doing it out of their IRA or something like that, their self-directed IRA, and the company is just a huge pain in the butt. My partner John has been working with them, getting all the paperwork, yada yada yada. So it's been any day now for a long time. They have everything they need. I guess they came back with some things and changes and revisions that had to get done to the paperwork. However, we're nearing the end on that, which is fine because I'm not even ready to pull that trigger today, anyways. Gotta call the swamp coolers. I'm gonna meet this roofer, get everything all lined up, and then boom, we will be ready to go on that part. Once that roof and swamp coolers are installed, that time is ticking. 10 and 2 will have 30 days to get moved in, and then we can get that ball rolling, which is also great because I have been boosting the ad on Facebook Marketplace, which is the only advertising I'm doing right now, which I think is all that I do need to do. Um, one thing that I did want to do and and thought about today was since there is a huge traffic count going down grand, was to get a big old banner, hey, 4,000 square foot shop for lease, outdoor bays for lease, call. I think that will be very good. And if it goes another week or two without finding a solid tenant, I will spend the money on that because there is no way that won't work. Uh side note, I've I I don't know if this is just me or whatnot, but I'm feeling the old school techniques now are really doing well. Everyone is getting so caught up in the AI and the automation and and all of these crazy technology things that us like a bandit sign or a lease sign, I feel is you know doing doing really well. I'm helping out um a buddy on acquisitions and they're doing handwritten postcards, and those handwritten postcards are getting lots of feedback. Uh, the even the normal direct mail pieces are doing uh pretty well right now, too. So I'm kind of seeing this resurgence of the old school stuff coming back in a world where everyone's leaning into technology. So uh maybe I won't even wait two weeks. Maybe I'll just wait a week. I can't imagine it's gonna be more than a couple hundred bucks, but then I gotta you know pay someone to get up there and attach it and then take it down. So we'll see. Maybe there's an easier way to do that, or maybe I just hang it up on the ground level. I don't know. We'll we'll see. But let's let's call it a week and we'll revisit that because I think that would do great. So Facebook Marketplace is all that I'm doing, and I'm getting a lot of traction. I've now boosted the pages. What that means is it's just Facebook is sending it out. I pay four or five bucks a day, and it's sending it out to more and more and more people. I am getting a wide range of folks that are wanting to see it now, mostly automotive, which I don't mind. However, mostly body shops, and I haven't figured out why. I would say four to one, five to one, six to one are body shop, body shop, body shop, body shop. I think it has to do with finding locations that accept body shops are pretty difficult because a lot of zoning doesn't allow it, and landlords don't like it because it is pretty messy, and the insurance is a little bit high, and you know, you're dealing with paint and dust and all this stuff. That's the only thing I could think of. Because it's like, you know, you drive around town, you don't see no freaking body shops everywhere. But I'm I swear to god, it's crazy at how many overwhelming majority of people are our body shops. So the main problem is that they're gonna want to paint, they're gonna want to prime, and I'm giving my front tenant exclusive use of our paint booth, which I am slowly starting to regret because now I am really starting to realize how valuable that paint booth is for many, many, many reasons. You can imagine it's an expensive piece of equipment. This thing is nuts. I mean, it it is absolutely a for real piece of equipment. I don't even know how much it costs. I can't imagine is less than a hundred grand. I mean, the shade structure alone is probably 20, 30 grand, it's got these huge I-beams and things like that. So I regret giving him the exclusive use of that. I wish I worked out a better deal, and and shame on me. And we haven't signed a lease yet, but I told him that. And for me, I'm just a guy that I do what I say, and it'll screw me on this one. But I want to go to bed at night knowing that I did now. If he changes his mind and wants to change something like he did, on oh, I need this roof done now, you know, that's fine, it doesn't bother me. Um now that I think about him, it kind of makes me a little bit aggravated because you could have told me that 30 days ago, but it is what it is. We'll get it taken care of, bada boom, bada bing, and uh no factor there. So potentially so the reason I brought that up is I have had two my two latest leads have been non-automotive, which is great. One lady who's this crazy cowboy lady, and I mean cowboy, not like a actual cowboy, like she's just like slings it. She has like food trucks, she has five food trucks, and she needs a place to a park the food trucks and then also cook. And I was like, cook, like I thought that's what the food trucks are for, they cook in them, but apparently she just gets all like the rice, the beans, the tortillas, and she's making these big, huge, like 30-gallon drum, like these huge commercial-sized things for the rice and the beans and everything like that, and she just has like these gas stoves, like Thanksgiving deep fried turkey type stuff, and she's just whipping all this stuff out outside. I thought that was pretty cool because she doesn't want the shop space, she wants the office and the lot. This way I could rent out the inside the the bays to uh one whole shop, or I could do lease by the bays, which leasing interior bays is way easier than leasing outdoor bays. I would say probably three times easier to lease a indoor bay than an outdoor one, and you get more money too. So there's the option. And literally, right before I hit record on this, I was talking with another gentleman on Facebook Marketplace, which I forget what his business was, but it was not automotive. Let's see what he said he. Oh, yeah, this guy has some kind of business. Uh, he's a fiber optic business, so communication, uh, and he's got a bunch of different vehicles, and he has, I guess, an enough to where they break down and he fixes them. So he wants a big storage lot for his trucks, he wants indoor shop space to work on those trucks when they break, and then office for you know his off like for normal business activities. And I'm like, oh my god, dude, this this place is perfect. So that's really exciting. Would love to get non-automotive people in here. That way I don't have any issues with cars, uh, junk, and people parking their shit everywhere. Because now there's all this open space because I'm clearing everything out, and every time I go there, these motherfuckers are putting more shit in there, more cars, more of this, more car parts, and it's like, guys, you can't use this space, and it's like hard for them to comprehend because it's just sitting there. But uh, so that is also another annoying thing with this uh renting by the bay thing. These people don't have a lot of space, and they're just jamming everything in there, and it just looks like ass. So uh it would be great to get a non auto tenant in the back. Another very, very serious group of buyers. Body shop people, surprise. I don't know. They want to like have their guys live there. They have like 20 plus cars they want to move. They're getting kicked out of their other old spot because it's zoned residential. And this just is just sounding like a whole nightmare situation all over again. Where I was excited at first because they were very interested and they sounded good. They had a good solid business. But then after meeting them and talking to them again, it's just I'm pulling more information out of it. And I the more I'm hearing, the more I'm just like, this just sounds like a nightmare. If I get another guy with 20, 30, 40 cars, I'm gonna, I'm gonna lose my mind. That's just that's just too much, uh, to be honest. So not super stoked on that. But one thing I've been thinking about overall too is waiting to get a tenant that is gonna pay a few hundred more dollars a month, maybe, maybe even if it's call it five hundred dollars more a month, right? If I gotta wait three months to find that guy, that's like thirteen and a half thousand dollars that I lost out in rent. Whereas if I found a cheaper guy and I just put him in there right away. I mean, let's do some quick math. I haven't done the math, but say it is thirteen thousand five hundred dollars in lost rent that I got, but I ended up getting five hundred more dollars. It's gonna take me twenty-seven months to recoup that money. Now getting five hundred dollars more a month, that's six thousand dollars a year divided by oh, you know, let's see, seven and a half cap. That's an eighty thousand dollar valuation. So yeah, it took twenty-seven months to break even on that, but you increase the building by eighty thousand dollars. And I'm glad I did that calculation because I was thinking just off of the cash flow purposes of hey, we're losing thirteen thousand five hundred dollars, it's gonna take us a while to make that up. But now, after seeing that valuation piece, what would you guys do? Do you think it's worth it to wait around a little bit longer and increase that value by$80,000? I do. But in the real world, having a spot that's worth$4,500 sit empty for three months is also pretty concerning as well. And back to what I was initially talking about was leasing this place is a lot of work, it's a 30-minute drive each way, that's an hour. I gotta go meet people, they don't show up, or I show them the place and they're like, wow, this is great. How about I just rent half of it for a thousand bucks a month? And it's like, dude, are you kidding me? You wasted three hours of my day, and you want to rent a portion of the shop for a tenth of the price? Get the fuck out of here. So that's been happening quite a bit too. So, what I've been doing is I gauge their interest, and if they're communicating with me uh back and forth, I ask a handful of questions. If they pass that sniff test, I'm like, cool, when do you want to go see it? They're like, whenever. I'm like, bro, go there from nine to five, go. You check it out, let me know. And then I give them my phone number, and then I say, hey, if you have any questions, call me. And so far, I've had I've done that to three people, and for I don't know if that's just the luck that I've had, but those three people were definitely uh very interested. They've called me and we've talked about it on the phone. So I like that a lot because that way they can just go there. It saves me that preliminary thing, and I tell them, hey, listen, go look at the shop because it is kind of unique. Go there, look at it, let me know if you like it. I will meet you there and we will talk about it. So that's my plan moving forward. We got the ads boosted, we're getting more traffic in there. My goal is to get this roof done as quickly as possible, get the swamp coolers installed, continue to lease up ten and two, find a tenant for tenant two, and then see what's going on on these outdoor bays. I have still had some interest in that, but not as much as I had hoped. So we'll lower the price on those and see if we can get some stuff jamming on that end. But guys, this is a long episode. I had literally planned on maybe making this a 10 to 15 minute episode, and here we are. JK gets yapping 27 minutes deep into the episode. Go figure. But I feel like that's a pretty good spot to stop right now. I pretty much shored up everything that I've been doing this week and what is on my to-do list. Other than that, boys and girls, really appreciate you sticking around for the whole 27 minutes of this episode. Again, if this is your first time listening, thank you very much. Please, if this is your first time or 30th time, leave me a five-star review, please. Those go a long way. Like, subscribe, follow me on Instagram, John.cleisch. I'll put everything in my links in the show notes below. Send me a message, guys. Uh, DSB shout out, Danny. You are the second person to send me a message, guys. Out of my 600 listeners, I only got two people to send me a message. Do me a favor, send me a message, even if it's just high. So uh do all of those things, appreciate that very much, guys. I appreciate the love and the support. Episode 30. I can't believe that we made it this far when I got started on this. I kind of knew that I was gonna dedicate myself and actually continue on. But 30 episodes, I don't think that's anything to sneeze at. I feel like a lot of people probably stop uh earlier than than this because I get it. It's a lot, it's a it's a lot to do. There's a lot to think about, it's a lot to sit here and talk and and do all of that. So I enjoy it and I love seeing all of the new listeners coming in every week. That really, really amps me up and gets me excited about the podcast. Every time I do a show, I log into all my stats and I see what's been going on for the week. We are on an upward trajectory every single week. So that's very, very, very exciting. I love to hear it. I know we're out in this big, huge, massive space, so I'll never have this huge following, but uh I love that I'm getting more and more people on here every week. That truly makes me excited, and I I very much so look forward to doing these podcasts um every Wednesday night. And again, idiot idiot idiot. I just yammered for 90 seconds more than I had to. On that note, boys and girls, thank you very much. We're out of here, and take her easy.