Ep 39 - Who Got the Lease? We Got the Lease!

I went into the weekend with a signed lease!!!!  Finally, feels like I've been saying that for months.  Was great to get that monkey off my back and can focus my attention to Thunderbird.  Still have some housekeeping stuff to get Grand fully set, but the majority of my effort will not need to be on that building anymore.  Now I can finally get the benefits of owning commercial real estate and collect that cash flow with out busting my hump!!!

Thunderbird is now the focus.  I will be making a mini-series on that whole process of getting it fully leased up.  Should be fun, entertaining, and guaranteed to create some stories! 

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 39. Ooh, we almost 40. Kind of cool. If this is your first time tuning in, really appreciate you doing so to give you an idea on what this podcast is about. I am just documenting my journey from starting from scratch, go figure, of uh starting from scratch in, I guess, in commercial real estate, where I started with no experience, no buildings, and I thought it would be really neat to document my journey all the way from nothing all the way until uh this point, exactly right now in the future, which I started at zero dollars, and now I have roughly 2.5, 2.7 million dollars worth of commercial real estate in the greater Phoenix area. I wanted to make this a very real, authentic, and unfiltered version of real estate because you listen to podcasts, you see YouTube, how it is just so glorious and amazing, and how it's just the best thing ever. And I really wanted to show behind the scenes or behind the curtain, if you will, on how real estate actually works. So that is exactly what we're doing. If you wanted to start here, that's cool. You could do what you want, but I would recommend going back to the beginning and listening to these in chronological order. Um, it's been going on well for 39 episodes, and I've been doing these for every week, so you can do the math. Boys and girls, it feels so good to finally get a lease on grand. If you are watching the video, oh, perfect segue. I am doing video podcasts now. Well, in fact, I've always done a video and didn't even realize that Apple Podcasts didn't have a video format or even Spotify. Let you know, let me do it. I whatever, three like I guess my first three podcasts I uploaded and I checked them, I said, Hey, this is great, and then I never went back and looked at the others. There was no video, so I upgraded my subscription to get videos. So if you wanted to check that out and watch it on Spotify, Apple, I don't think it's on YouTube yet, but we're getting there. Either way, check it out on uh on video. If you are watching, you see this. What is in my hand, and if you're not watching, I'll tell you. It is a signed lease for tenant number two on grand. We finally did it. I'll tell you what. There was probably six weeks in a row I would say on this podcast, or to my partner that oh man, it'd be great going into the weekend with a signed lease. It would be great going into the weekend with a signed lease. It would be great going into the weekend with a signed lease. And I've been saying it and saying it, saying it, and finally last week it happened. Oh gosh, did it feel good? Got it done on Friday. We signed the agreement, we are done, collected first month's rent and security deposit. That lease starts in nine days from today, which is awesome. So figured off, start the podcast off with some great news there. Again, what a huge, huge, huge weight off my shoulders and perfect timing because Thunderbird now needs all of my love and attention. So couldn't have worked out better. Grand is almost done. My current tenant two is now moving to tenant one. However, he cannot fully move in until my swamp coolers are done. Guys, I scheduled these swamp coolers to get finished a month ago. May. Literally May. They were supposed to be done already. And this and that, and this and that, and this and that, and that got kind of out of hand. They installed half of them, had an electrical problem. I sent my electrician out there, shout out Tyler, and we got it done. And that was shoot, I don't know. Last week sometime, I forget exactly when. It's been last week. Then I hopped up on the roof, and then the other two were just like torn to pieces. And I'm like, guy, it doesn't look like much has gotten done at all. I know they had to do some work with like the adjusting the ductwork and things like that, but I was like, hey, what's what's going on here? Oh, hey no, we got it on the schedule Monday. Sweet. Okay, whatever. At this point, like new lease isn't signed until the 19th. We got some time. Monday comes along. Oh, there was an emergency. We got to get you on the schedule Tuesday. Tuesday flew by and I forgot about it completely. And I just remember today I had to text the guy and say, Hey, how did the install go? And it's been four hours, and I haven't heard back yet. So I am under the impression nothing has gotten done on that other side of Grand, which is beginning to become a problem because now we have nine days to get this taken care of before my new guy can move in and the or my old guy can move out and my new guy can get in. So fingers crossed this doesn't get drawn out, and I have to change the leases and do all this and that. That'll be just what I mean. I guess not the worst thing, but Big Daddy's got plenty of stuff going on outside of messing with BS like that. So hopefully these guys get their shit together and we can get these evap coolers taken care of because now I'm starting to get a little frustrated. I'm not a happy camper. In fact, I was not a happy camper two weeks ago when they were supposed to get done. So um, I don't know. That's that's that. We'll figure out that. Fingers crossed, it all just works out and we get done, and I don't have to make a podcast about swamp coolers because they're starting to get on my nerves. But uh overall, Grand, that's pretty much that. Still leasing it. I talked to a guy that wants to lease an outdoor spot here, potentially a welder, which is really cool. So hopefully he can get out there and we can do that. I am still going to continue to try to lease that place, but again, like I mentioned before, my focus is going to be on Thunderbird, Thunderbird, Thunderbird. It has been six months since we have been done with the remodel, and we are nowhere closer to getting a lease. If you go back, you can hear the stories on everything that happened with Thunderbird. Uh, nothing absolutely wild happened, but we were close and not close, and then we did not want to do this one particular deal. There's multiple episodes about it to go back and listen to. And now the plan is to we talked to our broker, we dropped our price dramatically on leasing the whole space to a single tenant, which would be the best case scenario, but it does not look like we're gonna get any bites on a single tenant. So, what's the game plan? We have a couple for starters. I have a contact out here that owns a bunch of commercial real estate. He has 11 offices that he does, co-working, executive suites, however you want to call it. He does a combination of all of those. He's offered to assist me and check out my spot, check out his spots, walk me through what he does, how he does everything. So that's number one. Uh number two would be to split it into three different sections. We can easily split this entire office into three separate areas uh just by building two doors. Literally, it would be probably under a thousand dollars, and we can split split this uh sixty four hundred square foot office into three twenty-one or two thousand one hundred and thirty-three square feet, something like that, and then lease uh to three companies that don't need a huge space, they need you know they'll get five offices apiece, so maybe there's three to five employees at uh this company and they need a spot to lease. And the lease rate's gonna be something like thirty eight hundred bucks a month. So I would say very reasonable four thousand dollars, very reasonable amount of rent for a company that has three to five employees. Because I imagine if you have three to five employees, you're I would hope you're doing over a million dollars a year in revenue. I I would hope you're well over a million dollars in revenue at that point. So spending four thousand dollars on rent would not be that big of a deal, about five percent of your revenue on rent seems to be pretty normal. So I feel like our pool of tenants dramatically increases probably three to four, five, tenfold, maybe even from people that can afford twelve thousand dollar rent to four thousand dollar rent. So that is one plan. And then the third plan would be just a combination of both, right? Like I have a feeling we can rent one or two of these bigger suites of five offices to one single company, and then the third unit will be left for a combination of co-working and executive suites. Um, executive suites, I guess I don't don't quote me on this, but I'm told an executive suite is you get your own private office where you have a key to the door, it's your office. It's just like you have an office in your house, right? No one touches it, no one uses it, it's yours. When you go home at night, you know no one's in it because it's yours, right? And then co-working is you just rent a desk in an area, and you may not get the same desk every day. You pack up your stuff at the end of the day and you leave, and then you come back, and then you find a new desk, you unpack your stuff and put it there, you get the drill. So that's the difference of co-working. Now, there are different levels of it, right? You can have, like, say, a space where there's like eight desks in one big giant room, like a conference room, right? And then those rent for somewhere like 300 bucks a month to getting your own private suite, which is somewhere closer to 800, is what kind of what the market seems. And so then you get a handful of those people in there, and that's that's probably the most likely scenario of of how Thunderbird is gonna work. Now, kind of like the whole theme for this podcast. This is like a the a mini theme inside the big theme. I'm gonna make like a Thunderbird, I guess, how do you call it, series, I guess, right? Of what we're doing with Thunderbird exactly. I thought that would be pretty cool because we're at the fresh stage of having a wide open space and starting from scratch, what do you know? And what how we're gonna do this, what we're gonna do for marketing, how we are going to decorate the place, how are we going to price out all of these things? How are we going to figure out the best case scenario on pushing rents and what's more popular? Is the coworking more popular? Is the executive suite model more popular? So I wouldn't call this the first episode um of that series, but I guess that this is kind of the precursor to that to that series. So next week will be the first one of that series. I don't know if I'm gonna call it something different, probably not. I just want to do it. But so far, all I have done is put two different listings on Facebook Marketplace to kind of test the waters and see where we're at, leasing it as just one five suite or five office section at that 2100 square foot space for that you know, four grand a month, 3,800 bucks. I forget exactly what it is, but I'll get back to you on that. Just to test the waters on that, and then I have a whole nother separate listing for a bunch of different co-working and executive suite offices. I believe, if I remember correctly, I more so geared that listing to executive suites versus co-working, but I'll maybe do another co-working listing to see kind of which one works out best. Now, um, as far as overall strategy, we're gonna find out exactly the best way to do it. But for now, I just wanted to put something out there to get an idea, test the waters, you know, dip my toe in that water a little bit and see what happens. I did that, I forget what day. I think it was maybe yesterday or two days ago, probably two days ago on Monday, today's Wednesday, and I haven't gotten anything yet. Um, I was hoping I would get a little something, something, you know, because when you first drop a listing on Facebook Marketplace, you're at the very top. And usually every time I would do that for grand, I would get a reasonable amount of leads from the first couple days. I have gotten nothing, so it makes me a little nervous. However, the type of tenant that we're after is wildly different than the tenants I was getting at Grand. Grand, if you don't know, is auto mechanic, body shop, welders, uh, storage lot, like very rough and tumble. Think of an industrial type. So the tenant is very much so a blue-collar, blue-collar-focused person. And if you have a company and you're looking for five offices and you have three to four employees, uh, that's a wildly different person than somebody that is you know fixing cars for a living. So I gotta figure out kind of how that person thinks, how they operate, and more importantly, are they even on Facebook Marketplace looking for looking for listings? I don't know. I would imagine so. I think that's not the problem. Um, my listing probably sucks. Um, whereas on the industrial side, I could just throw out pictures, write some stuff, and everyone's like, ah, cool, looks good. So for this one, I need to get a little bit more tweaked, would be my guess. So hopefully my friend can help me out with some marketing pieces and figure out how to get that turned around or get my my marketing piece turned around. Because, as you know, without getting people in the door to even check out the spot, we're gonna have a hard time leasing this place. So, what the plan is talk to talk to my friend John, get an idea of what we're doing. And what I might do is I might even in the very beginning uh take an office myself and work out of that office because I will be there if someone's like, hey, I'm interested, hey, come on by right now. And also I know when you are leasing up co-working space and executive office space, the first couple people they're gonna walk in, it's gonna be dead quiet, it's gonna feel very sterile. That's not the best, right? You want to hear some movement, you want to hear some activity and a little bit of action, not like a loud volume of like a roar of people, but just you know, a little bit of a humdrum to get that energy going. So, with me there, I feel like that would help increase the energy vibes a little bit, and it'll be easier to show people on a whim because it is about 25 minutes away for me to stop what I'm doing, drive there, meet the guy, drive back. You're talking an hour and a half, almost a two-hour ordeal overall, an hour of that just sitting in a car. So if I'm there already working, that would be pretty cool. So we'll see if that actually pans out. I really don't want to do that because I really do enjoy working from home, it makes everything just so much more convenient. However, I will gladly do that for a couple months to get this ball rolling. So now, Thunderbird is the redheaded stepchild, and grand is our cash cow. So I made the numbers on Grand last week, those numbers are very accurate. That's exactly the same lease that we signed. So if you wanted to hear about the numbers that we are getting on Grand, the industrial building, go back to the last episode called The Nembas and uh tune in on that. As far as the numbers on Thunderbird goes, I don't really have an idea. It is not going to produce the cash flow that grand does. However, it should be uh decent and it would be um, I would say a very my like a B plus or a like a double versus like a single or a triple, where I feel like Grand is not quite a home run, almost a home run, at least a triple. And uh Thunderbird will turn into a base hit or a double, right? I feel like it'll be something that produces cash flow, it'll have a decent value, it's never gonna blow anything out of the water or never really get crazy. So that is a building that I could totally see us getting stabilized, refinancing, getting out of our short-term debt, our hard money loans, and then listing that thing for sale is probably what will happen. But also, again, if we get it leased up and things are operating pretty good, the building is solid, the office in general is less uh active, I guess, than grand, I would think. So maybe it's something we do keep not even really worth the conversation now because I have a ton of work to do to get this thing going. So um, not a very long podcast here this week, guys. Maybe because the not so many crazy things have been going on, which has been really good. I'll tell you what. When a week goes by and it's like, oh my gosh, I didn't lose sleep over my commercial buildings. That's like really good. That's really, really, really good. So something I haven't really experienced in the last six months. Six months, nine months, shoot. Has it been nine months? We close on grand in September, October, November, December, January, February, March, April, May, June. Woo! Nine months, crazy. That went by fast. Talk about it. That's hard to fathom. It feels like it's been a handful of months, but nine months of this, crazy. So hopefully I can get some sleep again here and focus on Thunderbird. But that's pretty much it, boys and girls. Really appreciate you tuning in. We'll keep you up to date as things progress. If you liked this show and uh got some value out of it, do me a favor, leave me a review. Those really, really, really make a difference. And I checked the other day. Gosh, we have 10 reviews. That's incredible. I am I was stoked when I saw that. I I was thoroughly shocked and pleasantly surprised. So, guys, keep on keeping on. Leave me some reviews if you haven't done so already. Subscribe to the podcast, uh, leave me a review. Don't even have to write anything, just write me five stars and that's it, and move along your day. It'll take you seven seconds, and this guy on the other side of the mic would be ecstatic. So, thank you very much for that, guys. If you know of somebody that would enjoy a show like this, do me a favor, send it to them too. That would be again something that I would be very appreciative of because I am terrible at promoting this podcast. I do zero of it. In fact, what I'm going to do, guys, I'm gonna make a post on Facebook about this podcast. However, I am going to wait until we hit that thousand download mark. There's like this cool uh alb, not an album, what is it called? Like um my gosh, like a picture or something like that. Um an award, I guess you could call it from uh Buzzsprout. It's who I used to put these things out there. It's like a thousand downloads or a thousand episodes or whatever it is. I'm coming up on a couple different milestones here. Uh a thousand downloads is what it is. We are at 957, so 43 more downloads. So about a week and a half, two weeks, we'll hit that thousand mark, and I'm gonna put a fo post on Facebook. But wow, we diverged on that one. So terrible at marketing. I am gonna make that marketing post here, but do me a favor in the meantime, please share this with anyone that you think would enjoy this type of podcast and entertainment. Um, follow me on Instagram, John.cleish. I do post pictures of the buildings and cool stuff here, especially with this new Thunderbird um series coming up. I'm gonna be pretty active on posting things on there, and a lot of things will be happening on Instagram. So follow me, find me, follow me there, and enjoy that content from a little bit different version of a podcast style format. But other than that, I'm starting to ramble. So when I do that, that's when we end this puppy. Boys and girls, really appreciate you tuning in. Thank you very much. I'm gonna go celebrate getting that lease here on Grand. Ooh, and uh that is a wrap. Appreciate it as always, and take her easy.