Ep 41 - Thunderbird Hammer Time

3 really cool things happened this week.  I was so excited I was a blubbering idiot, couldn't keep my train of thought throughout the whole episode.  

-The podcast hit 1,000 downloads
-A legendary local CRE investor John Trautman came to the office and gave me a masterclass on leasing office space

-First tenant will be moving in Monday

I have a long list of to-do's but they're all money making activities so bring em on baby!!!!!  Will be a busy  but extremely productive next few months.  Should make for some great content.  

AND DON'T FORGET TO LEAVE ME A REVIEW!!!!!

Transcript

SPEAKER_00 0:01

Boys and girls, welcome back to the Commercial Real Estate Starting from Scratch podcast with me, John Kleisch, on episode number 41. If this is your first time tuning in, really appreciate you doing so. Uh, what's going on here? Well, I am documenting my journey from starting from scratch in commercial real estate in the greater Phoenix area with no experience, no commercial buildings, and documenting my journey all the way up until I stop buying buildings, I guess. Uh currently, right now, it's been a little bit less than one year, and I own $2.7 million worth of commercial real estate via two buildings in the Greater Phoenix area. One is an industrial building, and the other is a mostly vacant office building. So we're documenting that, the good, the bad, the ugly, and we're bringing it to you just like this. So thanks for tuning in. Guys, a uh pretty good week overall. Been busy, very, very busy. A lot of things happened here. My head's swirling with all the stuff that I need to talk about here. So uh maybe let's start with the easy stuff first. Guys, the podcast, it crossed a thousand downloads this week here, thousand and nine or thousand and six or something like that. Uh, I thought that was really cool, very, very cool. Uh, so congratulations to you guys for staying in there and listening and growing and continuing to share it because uh I guess people are liking what they're hearing, which is just crazy to me. That's just wild to think. But uh very happy to see that was nice, uh, very cool. Uh, what else did I do here? Oh my goodness. So uh, John Troutman, shout out to you. You're a freaking legend, man. Awesome, awesome dude, awesome, awesome, awesome. Uh John owns like a gazillion commercial buildings here in Phoenix, and uh we've ran into each other a handful of times here. I told him I got into commercial, ran into some problems. He's like, Hey, let me come check out your building for you. So, on that office building, he's the one that I called and asked about that one company who told us, don't do it, don't do it. And then he offered him, he's like, Hey, let me come take a look at that building. I'll show you what I do and I'll tell you what I think. And I was like, That's amazing. Hard to link up times and everything like that. Finally, it happened uh yesterday. So he took time out of his very, very busy day, drove across town. Uh, we were at our building for at least an hour walking through and him getting a feel for it and seeing kind of what he would do. And I just got a master class in leasing out uh executive suites by the office, and awesome. It was so so helpful, extremely, extremely helpful. So can't believe uh a guy like that would take some time out of his day to come help me. So, shout out again to you, John. You are truly world-class, man. Uh, thanks again. I'm forever indebted to you. Uh that was so cool. And so gave me a bunch of different tips on how to lease this space, uh, you know, the types of pictures you need, what people are looking for, how to advertise it, what other type of people like what other types of businesses can you attract? Like you can do salon suites in these offices, they just need a sink. So we were walking around and looking where existing plumbing was where we can add sinks into an office extremely easily, and there's a handful of spots. And he says that he uh all of the salon suites that he has are uh there's a waiting list, they're they're booked. So I kind of like that idea because if you've been following for a while, I was looking at salon suites there very seriously, and uh kind of still am in the back of my brain, but I got enough of my plate right now, not not looking to get into anything else. However, in the future, and on this deal here, we could turn a couple suites into some uh salons, and those things I know rent for somewhere uh on the cheap end, 175 bucks a week, uh, all the way up to three four hundred dollars a week for a good one, but ours wouldn't rent up there nearly as much, so we would have to be cheaper than those, but still that uh beats the piss out of 500 bucks a month for a private office for sure. So exciting. Um, so that happened, and then we can go into more updates. I probably shouldn't have even started spewing on that, and then oh, I guess we could talk about uh Thunderbird still here. I have been marketing the uh the the building, uh many different facets right now, just Facebook Marketplace. I'm working on tweaking the ad and and everything like that, and uh met up a guy there today, and uh he's ready to go, wants to move in on Monday. So uh that's cool, right? Talk about timing, right? So uh a lot of things need to happen first. They're like, we don't even have Wi-Fi on uh in that place. So I gotta go out and get Wi-Fi. And he's also cool without Wi-Fi if he doesn't uh if it doesn't get in there soon. He's he's starting Monday, regardless. He's a guy that's not really gonna be there often. Uh he's a claims adjuster, insurance adjuster, so he's out in the field quite a bit. He basically uh just needs an address for his business so mail can get sent there and he has a proper address, and once in a while a client or two, I guess, will come to the office or uh just a place where he can stop by and make some calls, and uh maybe that's like his base station type of deal. So I like that. Uh that was pretty easy, and um, so that's great. We're working on getting him uh an agreement sent out and working through all of that and getting the Wi-Fi set up, blah blah blah blah blah. So that's really neat that we're actually starting to get some get some movement here and um talking to a couple more interested people. Had another person that was supposed to meet there, but apparently there was this big snafu on different times where she texts me two hours later, hey, I'm here, ready to go. I'm like, Well, listen, lady, you're two hours late, but uh we'll see. Uh they seemed really they were my hottest lead, actually, uh up until I showed the place today. So hopefully they can uh figure out a time that we can get out there because they seemed like they were hot and bothered on getting into an office. So um what else was there? Um bing, bang, boom. Yeah, so uh some stuff that John talked to me about. Let's see here. One thing that I mean, nothing like crazy earth sharing, like wow, I never heard of that before, but it was just a getting it solidified and having him be there and walk the space and seeing it um was just the different the types of people that are looking for office. Uh there is such a wide range you could name any business legitimately, and they would have a use for a private office. He was just naming down all the different folks that rent from his offices. He's got like 11 office buildings, and one of them 15,000 square feet, and it's fully, fully booked. So he's got something good going on. But uh he'll rent out sections, three, four offices to law firms, and uh even some medical and things like that, the eyebrows, chiropractors, um, mortgage folks, insurance folks, real estate, uh any kind of small business, senior health care services, you name it. Uh podcast studio. I I was talking to a guy who sells uh cards, uh like playing collectible cards online. He needed an office, so that really opened my eyes to the wide variety of folks uh that are gonna be interested in a spot like this, and uh got some great tips on marketing. What we're gonna do is three ads on Facebook Marketplace, three ads on Craigslist, and just different variations, different words, different deals, right? And uh name of the game right now is the uh place is empty, right? It's 6,400 square feet, it's a pretty big office. It's a little bit harder to get people uh excited about that in the very beginning because they walk into the office and you can go, hello, hello, hello, hello, hello, hello, hello, hello, right? So uh incentivizing these folks to get in the door is is very huge. John said about that first 30% is when it feels kind of sluggish, and then after that is kind of when you hit that hockey stick upwards trajectory because there's energy, there's uh commotion, and then you have the upper hand while negotiating because you can easily say, hey, this office just left three days ago. I have four appointments right after you. This is something that you wanted to move forward with, right? Yes, please, right? As opposed to now. I just hey you tell me what do you guys want to, you know, what price are you looking for? And I'm just working deals. We're working on right now the special $199 for the first two months, regardless of the size of um of office. So that's really, I thought, pretty aggressive. And then we're bringing everybody up to four, five, six, seven hundred dollar range. And I don't know what the market's gonna bring. We're gonna find that out, but at this point, I don't care. We're burning two hundred and fifty dollars a day on interest alone. So if I gotta get this place filled up with two hundred bucks for the first two, three months, I don't even care because it's just sitting there, we're burning that money anyways. And then obviously eventually start bumping everybody up. And if they don't want to get bumped up, start renting out that office, everyone gets a 30-day notice, bada boom, bada bing. So that's the plan right there. I don't want to do any kind of retrofitting and putting any sinks and tubs and stuff like that for the hairdressers quite yet. What I want to do is uh rec another recommendation from John is to just do like AI, get a picture of it, and then have AI boom put in a sink and a pedestal and a haircutter chair and make it look like a salon and rent it and see what kind of feedback you get. And then once you get feedback, or you can even rent it and say, hey, this is gonna be ready in 30 days or 45 days, whatever, right? So that way you don't have to go out and spend that, I don't know, five, six, seven, ten grand on all the sinks and the plumbing and everything like that. And I can probably get it done for cheaper, probably closer to five. I have no idea, but I can't imagine the plumbing is gonna be ridiculous. Um, either way, you don't got to go out and spend that money with on hopes and prayers, right? You have that uh solidified, kind of like what we're doing now, right? Just testing the waters and running this special to see kind of what hits and hey, it's hitting. So um excited to to get that going. And uh especially getting out the like I mentioned, getting out these deals that people is that's like makes my job easier too, right? Because everyone wants the you know McDonald's price for the steak, but at this point, hey, we're giving it to them and um you know eventually get them turned up and get that office backed.

SPEAKER_01 11:15

So there's an intruder.

SPEAKER_00 11:35

Alright, hopefully AI edits that out because uh I don't know how to go back and edit AI does all the uh all the touch-ups for me. So um that was a cool tip from from John as well to test the waters on things. And um like I mentioned, yeah, running uh the the secret there's three Facebook marketplace ads, three Craigslist ads, boost them, pay for 'em, gotta stage the place, uh get uh couches in there, and artwork on the walls, plants, whatever type of stuff he was walking around and showing me. And we're talking about doing just the main areas, uh, not any private offices or anything like that. He even suggested painting, and I know he's not wrong, but to be honest, right now, and he even said if you don't want to paint, you don't have to, but you'd want to paint those main areas a different color. So uh that'll happen in the future. But uh and then so get the place staged. Uh he even recommended he gave me a number for a gal who uh we could hire for a a couple grand, and that includes all the stuff. She'll just go through and figure out all that cool guy decoration stuff, what types of couches, the color pattern, the theme, all that stuff that I have zero clue on. And uh she'll do it all for uh a few grand. He said that's like really, really cheap, and that's like a must. And then uh so getting a stage, and then uh just like anything else when you're listing anything in real estate is to get really good photos. Right now, I just have snaps of photos from my phone. There's like brooms in the background, there's piles of stuff there, so that gotta get all cleaned up and then get professional photos, put those on those ads, change them, uh, you know, three different pictures, three different or different sets of pictures, three different descriptions, all of that, and boost them, and then just run it, run it, run it, run it, and then answer every lead that comes in, and that's pretty much the the recipe. Now, John does use a broker for like the bigger spots where if there's someone that wants three, four, five offices or something like that, uh, because also the commission check on getting a guy signed up in a $500 a month office, I mean, is going to be pretty weak. You're not gonna have a lot of high-level players that are really interested in jobs like that. So uh, but the bigger uh, you know, three, four, five offices for sure, uh, we could rent out a whole floor to somebody else, too. So uh there's definitely a play for another broker in there to handle the big stuff. But John told me for the onesie twosies, the Facebook marketplace and Craigslist will uh will crush. And uh he said the areas matter too. Mine is uh in an area where there's more older folks in Sun City, Arizona. If you're familiar with Arizona, you know that area. And he said that focus on Craigslist there because you're gonna have a little bit older of a clientele, and they're more on Craigslist than they are on uh Facebook Marketplace. So getting little tips like that is just so cool to really speed up the process on on everything like that. So um overall, yeah, the having John come out there was was really clutch. We're already applying everything that he said slowly but but surely. I mean, probably the biggest takeaway was just to do what you got to do to get butts in the seats for that first 30%, and then you can start to be picky. I really like that because inherently I don't like uh giving away deals. I like to be I like to be the one getting the deal. So it's not in my blood to just eh get out there and just let people have my way or their way with me. But uh hearing him say that, it's like, cool, all right, let's run it, let's just do it, get it, and uh which is great too, because it it like I mentioned, it makes my job easier, get the place filled up and then get some action going, and then we can really find out and move and shake and see what that market rent is. And once I have a good idea on what the market rent truly is for a building exactly like this, I'll I'll redo the numbers. But if I had to guess, I'm looking at $400 a month for a private office, even if it's really, really small, I think is going to be on the low end. Uh, I'll rent that price to people right now, like the guy that I'm rented to this morning uh or this afternoon, he's at he uh he's at that intro price of $199 for two months, and then he's getting bumped up to $400. That's low, in my opinion. I really firmly believe that office is at least $500, and then we can maybe, maybe touch $800 on the big conference room getting turned into an office, or there is one really sweet big corner office. That one could maybe fetch $800. That I don't know. I'm not really banking on that. I still think that would probably be in the $700 range, but I have no idea. I have no idea. And then the suites, anything from a salon suite, I imagine you could easily charge $600, $700 for a small one, no problem. Easy, I would say, no problem, right? So uh that's that's pretty cool. We really I think we need to average $500 a month on office building to hit the numbers that we would like to hit. And I think that's gonna be a little bit aggressive, but also another tip from John was that just anything that you can turn into an office, like turn into an office. There's a lot of different weird kinds of not like they're big, huge nooks that are like kind of walled off, that are kind of like a part of the hallway, not part of the hallway, but I mean it it's just a weird area, right? He said, Oh, this would be perfect for uh, you know, if this was a chiropractor and he could have his assistant or the desk lady sit right here behind this. He's like, Market this towards that person, right? Or you can um lease that part out for maybe 200 bucks a month or something like that. Uh there's like a corner where you could stick a desk that's like kind of off in the distance, uh things like that, which I thought were really clever because it's all wasted space, right? And I have a feeling there's a lot of people that just basically need a place to put their address, right? That's not a PO box or whatever, it can get mail and everything like that. So I know there's a lot of businesses that need that, at least for like licensing purposes and everything, but also people just like to have uh a building that's not their own address that they can get mail to as well. So uh that's really cool too. So I think that with all of those different ideas and everything, we can we can hit those numbers, which is uh really promising because this building's been really tough. Yeah, obviously. If you've been following, you've you've known all the L's we've taken here along the way with the HOA and the uh building flooding uh and the lack of really interest in a big large office in that in that area. So uh taking our our lickings on that, the crackhead stuff, you know, the broken windows, all of that. So oh, dude, another crackhead broke into the freaking outdoor bathroom um last night. I was there two days in a row and it wasn't like that the other night. So this guy must have just popped it open with the screwdriver or something like that, and then slept there or just did his drugs or whatever. But uh I saw that there today, so I gotta get some like heavy duty locks and uh the he stole our freaking camera too, which is a damn shame because that was like expensive. Um I don't know how we got up there. He had to have uh you know used some not a ladder, but at least a step stool or something like that, or got really, really crafty with it uh because that was kind of far up there, 10 feet, something like that, up in a corner. But uh yeah, so I gotta kind of cracky proof that place a little bit more. But what I'm also excited for is to get that place a little bit more activity and action because the crackheads don't like that. They don't like the commotion, you know, they like the the quiet piece of a vacant building. And uh there really hasn't been much activity because I do have other cameras there, and there hasn't been much uh homeless person activity uh overall. So I was kind of surprised they missed with that camera, but you know, one dude rolls through and it's toast. So um, I don't even know what the heck I was talking about before I got into that uh the crackies and the uh the bathroom. So I guess it couldn't have been uh that important. So overall, got some really good tips from John. We're gonna go out and execute those, see how many people we can get in the doors here. And oh, we were talking about hitting those numbers, that's right, and see really what the uh what the true market rent is for this thing, see how it operates, learn a lot. Um, I'm very excited to get through this process. Now, what I'm not excited for is like the time, effort, and energy that it takes to lease up 15 to 18 different offices. But this is a skill that if I can get really good at leasing up industrial buildings, if I can get really good at leasing up office buildings, that's like how you make your bread and butter, right? This is exactly uh how like without having this as a skill, it's gonna be very difficult to operate commercial real estate, right? Like, of course, you can rely on other people and brokers, and that's great and all, but if uh I'm the one doing it and I'm better than most of those people at it, then that's just gonna serve me and my partners, whoever my partners are at that time, really, really, really well. So very excited to get to school on this and really uh learn how to do it, the ins and outs, the phrases and and everything like that. Because going through grand shoot, man, I got like uh I feel like a master's degree in leasing industrial and body shops for sure. I just I learned a ton about everything, uh the ups and downs, the ins and outs of body shops and uh mechanics and what they're looking for. Look, we got another intruder here. Yeah, there we go. She's shy. But uh all of that uh to say, yeah, got a got a lot to do, a lot going on, and we'll uh we'll execute here, and it's gonna be it's gonna be a fun ride. Uh, I'm gonna make a lot of different episodes about this. Um I talked about doing a series on Thunderbird specifically, but um honest to gosh, that's just a lot more work, and I don't really think I have the time for that. So I'll probably just utilize this this platform here and uh really soak up a lot of the uh the time here on this podcast because that's what I'm gonna be doing. So uh nothing better than getting it live right from uh right from the horse's mouth. So all right, I'm tired, boys and girls. Long day, long few days here. I could probably fall asleep here if these bright lights weren't in my face. So uh guys, again, really appreciate you. Thousand downloads, that's amazing. Uh tell your friends about this podcast. You can let them know that uh we are literally in every single continent, we're worldwide. This podcast has been downloaded in every single continent um on this planet. So share this with your friends, tell them about it, and then before this episode is over, like right now, just go back to wherever uh you leave a review and just click five stars and say, Oh my gosh, John is the best. Thank you so much, you've changed my life. Um, you don't have to say that, but it'd be cool if you did. You can just literally hit five stars and then back away. Last time I checked, we had 10, which I was blown away on 10. So that was awesome to see. Thank you guys very, very much. Share this with your friends. Uh leave me a review, follow me on Instagram, John.cleish. I post pictures and videos on there of the building so you can see them a little bit better. And now that we have video, I'll probably actually go through some slides and maybe do some b-roll of the office. So anyone here that doesn't follow me on Instagram, even though you should if you're listening to this podcast, like weird if you don't follow me on Instagram. Um, I'll post those videos here too. So you uh weirdos that uh listen here but don't follow me on Instagram can see the buildings as well. I think that'd be very cool. So, all right, rambling again, gotta go. Uh guys, thanks again. Really appreciate you tuning in. Uh, catch you on the next one. In the meantime, take her easy.