Ep 32 - YYYYEEAAAHH BUDDDDDDY!!!

BOYS AND GIRLS!  We're making moves baby!!!!  Roof started to get done today, swamp cooler guys going out there tomorrow to scope it out, things are shaking!

About to sign a lease for Tenant 2 spot and a portion of lot 3!  Overly stoked on the tenants, looks like it will be a great fit for everyone.  

My pool business is  closing here pretty soon, I hope, maybe it might go through or just take longer?!?!  We'll see!

I really thought this episode was going to be longer, but it didn't!  Oh well, see you guys next week!

Transcript

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Boys and girls, welcome back to the commercial real estate starting from scratch podcast with me, your host John Kleisch, on episode number 32. If this is your first time tuning in, really appreciate you doing so. Would love to hear how you found the podcast. Uh, if you're wondering what we're doing here, it is a front row seat of me learning how to operate and buy and sell and rent out commercial buildings. Um, you're gonna see me do everything so far. We've done pretty much everything on here, so it's just watching me do this, and hopefully it's entertaining to you some way, shape, or form. And if not, that that sucks really badly for me. But uh, either way, guys, a lot to talk about. Oh my gosh, there's so many things and updates that are getting very, very exciting. Uh, all good news, all great, great, great, great, great, great news. So let's start with this. Um, if you're watching, I'm wearing my kilo aquatics gear. Hey, John, why are you wearing your kilo aquatics gear when it's 7 22 p.m. at night? Well, that was because I was cleaning a pool at like 7.08 p.m. And hopefully, not doing that much longer because finally, maybe almost certainly close to selling the the pool business. The buyer called me last week on Friday and said, Hey, I'm ready to go. Uh, let's meet up next weekend, meaning in four or five days from now, and said, I got the money for you. Let's let's do the dang thing. So, what does that mean? Uh, I hope it means that I'm not gonna have a pool route by the uh beginning of May 1st. That'd be cool. Uh could it change? Yeah, for sure. Am I counting on it closing on May 1st? No, not really, but you never know. Maybe next week we'll have a major update. But uh that's out of the way. Done with that. Uh, it would be great to get that off of my plate. Next up on the list, let's do this. Roof on grand is getting done right now. I got videos of the roof getting torn off, and it's about halfway torn off so far. I'll be stopping by tomorrow morning to check on the guys, get some cool pictures, and um let's see, uh, the swamp coolers are all getting done with uh at that at the same time, too. I just put those two contractors together and said, Hey, you guys figure it out, keep me out of it, just make sure that we're not having to redo any roofing to install these swamp coolers later on. They say they got it handled, and that makes my life awesome. So, what else is next here? Uh let's do grand. Cool. Why am I going back there outside of the roof? So, checking on the roofers, obviously, just talked about that. And next up on the list, I met two very qualified individuals that wanted to lease the big back spot on Grand, which is awesome because it was kind of, you know, not getting many leads. It was kind of petering out, and that was a little disappointing. Um, I was never worried about that place. I knew that it was going to be a perfect middle-of-the-road shop for a lot of different people. So it was just like, I want to get going, I want to get a move on on everything. Got two people lined up to go out there this morning, met one and showed him around. I liked him, I would have rented to him, and then uh had another guy come right behind him. They showed up just as the other people were leaving. I absolutely love when that happens because it is uh no bullshit. They see you showing the place to people, and it definitely creates that little bit of want. Uh once he he asked me, he goes, Hey, were were you showing the place to those guys? And I said, Yes, yes, I was. And uh you could definitely tell his tune changed on that, which was great. So love doing that, love when that works out, especially when they they see it happening. That's money in the bank. Do I think that was made them want to rent the place? No, but it definitely helps, definitely helps. And what I love about this gentleman and his business partner, they have they're not mechanics, which is awesome. They have a big time construction business that they do light poles, cell phone towers, they install big electric charging station commercial hubs. Uh, they do crazy weird stuff like that. Big time, big time construction. And they need a yard to have all of these big long poles, trailers, trucks, and they want to be able to work on all their trucks. So, and this spot is safe and secure. It's behind a hundred million dollar dealership, shares the back wall, so it's very safe for all of their expensive equipment, and it is gonna work out perfectly, so much so that they not only wanted the back spot, they wanted to lease a portion of my back lot as well, which is great for both of us because they're gonna take up that space. I don't have to rent it out to a single bay tenant paying a thousand bucks, fifteen hundred bucks a month, which are a huge headache. So they're taking a good portion of that lot. And it even works out better because I still get to keep three extra outdoor bays that I could rent out to future tenants or uh the guy there wants to expand as well. So that's like a triple banger. And on top of it all, once this lease gets signed, which is probably happening tomorrow, by the way. I'm going back there to meet him up at the property, talk about final stuff, and I'm bringing the lease with me. And uh he's on board. He was actually going to rent out a spot here that day. He had the paperwork in his email to sign. He saw this place on Facebook Marketplace and hit me up right away. So pretty cool how that works out. And I was asking him some questions about the shop that he was going to lease. He showed me some pictures, pretty nice spot, gave me an idea on where they wanted to land price-wise, and then plus the major plus side to our area was that we had that huge lot, and I know that was a huge benefit. It's like 10,000 square feet. Where else are you gonna get a big, huge private lot like that with a 4,000 square foot shop? Crazy. So uh great, uh, great setup for them, and I still uh will have a big huge portion to rent, which which is awesome. So let's do let's do some math real quick here. We're gonna be revenuing fifteen thousand one hundred dollars the second this dude signs this lease. That's insane. That's a lot. Our expenses on this building are about ten grand, is what it's gonna run us, maybe a little bit more, but not much, not much more than that. That might even be a stretch, actually. So that's not bad. And then there's probably conservatively another two to three grand that I could rent out on those bays, which is something I'm probably gonna hold off on for a little bit because these guys are like really high and tight, and I don't want to have them walk into like a lot of different commotion. So I'm definitely would be interested in letting the current tenant there take on some more space for cheap, for really cheap, actually, because I just don't want to have a lot of riffraff here. I want to get these guys settled in, make them at home because the in the very beginning it's pretty nervy for a tenant to get in because this place it does need a lot of work, it's definitely rough around the edges. If you follow me on Instagram, you have seen the pictures. Uh, it wasn't like rotten, but it's just been you well used for the last you know 20-30 years without much much done to the place. So they're gonna walk into a spot that does need a lot of work, they're gonna be spending a lot of money. The good thing is they're very capable because they are construction, so they can blow out walls, they can pull power, they can put lights up. Uh, they're even gonna this is what I love too, is they're gonna clean up the parking lot, which is just formerly asphalt that has just been ground down into dust and rocks and dirt and potholes everywhere. It's really bad. Uh, they're gonna take care of that, they're gonna clean it up. They got these like brush hog brushes things, they're gonna come through, clean it all up, and have their boy come through and do some oil spray. I never heard of that before, but it like basically it's not like laying asphalt, but I guess it's just like the liquid part where it kind of just sets everything in place and it kind of just stiffens everything up, like a big glue type of deal, is what I think of that, uh, or how it was described to me. So if they're gonna do that, man, that's that's amazing. You know, they're gonna improve the place, and probably with these guys, it's they've been in business 25 years, so it's not like they're going anywhere, right? And there's room for them to expand. Like if they want to get more space on those bays, they can get that whole back lot. And then eventually, if they want to consume even more, and I they they consume or cannibalize everybody else, and it's just two tenants, that's a dream. Because then you're cash flowing, like you're having multi-tenants, and you only have two to worry about. And both of these guys, I think they're gonna get along great. They just want to stay out of each other's hair, they don't want vehicles blocking their way when they're coming in and out, they don't want to have riffraff, and they're gonna be great. They're gonna they they both have a vested interest in in this building in this area, so I think that's gonna be absolutely fantastic. So, how about it, guys? I think I said a couple podcasts ago that I said I would get to $18,000 in revenue or something like that in six months. Dude, whoo, I know we're not gonna be at 18, but we're gonna be dang close. I'll tell you what, 15.1 by May 1st. That that sounds uh really good. Uh, how quickly things can turn. I mean, if you go back four or five episodes, it was pretty doom and gloom. That's some we were dealing with the eviction and all this guy's junk and everything, and it was just like a nightmare to to have, and you're not making money anymore. That was a lot, and then now, you know, we're two months past eviction, not even we're six weeks past eviction, and now we're a week away from cash flowing fifteen thousand one hundred dollars or revenuing fifteen thousand one hundred dollars. That's awesome. I mean, that's gonna pay for that roof in three months, and then we can go on and do the next portion of the roof, uh, boom, with that cash flow and just think think, and then we're pretty much done after that. So, I mean, that would be just an incredible situation, and it looks like it's panning out. So, hopefully, next week, guys, I have a fantastic update and I can flash that lease and uh we can celebrate some way, shape, or form. But that is pretty much wow. I thought this podcast was gonna be a long one. We're only 10 minutes deep. Um, there must be some other things that I am forgetting to uh to talk about here because I thought this was gonna be a long, long podcast. But uh yeah, no, that's I guess that's really pretty pretty much it. Wow, that's a real quick one here. But maybe maybe we're due for a quick one. It's late and I'm tired anyways. But that's a wrap, huge, huge week on that front. Uh getting everything wrapped up. Thunderbird, we're moving closer. Oh, I guess we do a little Thunderbird update. Yeah, we're still very much so entertaining the co-working space uh deal that is becoming more and more attractive the longer that we look at it. Uh, my partner John went and did a big deep dive on the numbers and looked at it, and from that perspective, it looks really good. Our broker is in constant communication with their broker on uh they're basically revising their offer still, and they're kind of just uh feeding it to us in pieces, which I'm assuming is just because they're like a huge company, they have a lot going on, and those guys aren't known to move really fast. Because now I think we've been in talks with them for about a month, and um, I'm not like itching for them to get that information out super fast, especially because we would have to get financing lined up first before that option even becomes really entertainable. So that's why I'm not like overly concerned about the the time frame there. But overall, they're revising their offer, the terms are getting better, getting a lot more easy to swallow. They're uh seems to me like they're very interested in getting into this building, which makes sense because I think it works perfectly for that business model and in an area that they're trying to expand, which makes me very happy. And I know I feel like the more stuff that they're willing to give up shows you their interest in the deal, too, which also makes me feel a little bit more comfortable because that's probably the biggest risk in that deal is the counterparty risk, is having that corporation uh operate that entire building with us being 100% hands off, which is also good too, right? Because if they do pull it off, that's gonna be the building of the century, it's gonna cash flow uh double what we thought potentially more, potentially, potentially more. And that's just insane if it does work out, even with how the structure works out. The cash flow is just astronomical, which then increases the value of that building up to golly, who knows, a lot more than we thought, probably to the tune of a million dollars more, maybe eight hundred thousand dollars more than we thought, would be my guess. But we're getting ahead of ourselves. It's easy to keep your head in the clouds and get get lost in all that humdrum stuff here. When if they presented that offer today, we probably couldn't even take it. Uh, but I know I think I did mention this on the last podcast that John is actively working, some very interested people who are well capable of uh coming on as partners on that deal. So right now, everything kind of hinges on that one individual, but he also has more people in the pipeline that he's been talking to. He's been really working on that capital piece because, as you know, that's the most, I guess, the most important piece of the deal, which I would say for sure. Everyone says that's a third, a third, a third. Yeah, there's no way because there are people that you just put in money. If you're just an investor on a deal and you find a good solid operator, you're getting half of that deal. And if you're getting half of that deal and you're doing zero work, you're just supplying the money. I think that pretty much shows who controls the deal, right? The deal's great, but if you can't get it funded, that that doesn't really matter. And I know I've heard a lot of people in real estate talking about, oh, if you get a good enough deal, the money will find you. And I don't disagree with that one bit. That's totally true. But the these deals here were, I would say that we did have trouble getting funding on them, uh, grand specifically. And look how good that deal's turning out. I mean, holy cow, that's that's crazy. If you told me in six months you were gonna be positive cash flowing five thousand one hundred dollars a month, I would have I mean, that would have been a dream. That would have been a freaking dream. So uh to to see that deal, hey, that's just proven the pudding. And I've done, dude, me and Danny did a a couple deals where we tried to get funding, tried to sell it, and nobody wanted it. We just took it down ourselves. And uh, dude, we made over well over hundreds, a couple hundred thousand dollars off of deals that people didn't want to touch. So that's why I don't really buy that. And the money definitely controls the deals, and that's why John's working on that piece because it is probably the hardest to do. I would say that's definitely the hardest piece in real estate is raising capital. Probably why you don't hear a lot of people that a large group of people that are doing it. There's definitely a lot of people that are doing it for sure. And if you have that skill, the world is your oyster. Because if there are plenty, plenty, plenty of people looking for looking for um, or that have deals looking for money. That's a huge conversation piece that I always talk about with all my real estate guys. Money, money, money, money, money. So get that money, control the deal. Wow, how did we get off on this tangent? Gee whiz. That must be time to for me to sign off. Well, that's a wrap, boys and girls. Really appreciate you tuning in. Thank you for listening this far. Uh, if you liked the episode or didn't like the episode, uh like subscribe. There's a button that you can hit that does something cool. Find that button and hit it for me. Leave me a review, five stars review. If even if you hated it, leave me a five-star review and tell me why you hated it. That'd be cool. And if also, if you know a friend or a colleague or somebody that you know would enjoy a podcast like this, do me a favor, send it to them. Uh, that's how these things grow. Uh, this is all happening organically. I'm just literally recording and then hitting publish, and they're going out on the wild and it's kind of just feeding itself, um, which I think is pretty cool too. But if you know someone that likes it, please share it. That would be fantastic. It would mean a lot to me. Follow me on Instagram, guys, john.cleich. I'll should be in the show notes. If not, yeah, whatever. I wouldn't, you know, ain't gonna happen then, I guess. But on that note, boys and girls, thank you very much. Take your easy.