Due Diligence, Bad Partnerships & Why Listening Is Your Most Valuable Asset | Tanh | Part 5

This episode isn't a highlight reel. It's a closing accounting - what went wrong, what the checklist should have looked like, and what Tanh would do differently if he could run those deals again.

In the final part of this conversation, Tanh Anh closes the series with his two biggest real estate mistakes, the operational habits that keep him building when deals are slow, and what he'd tell someone starting from zero in commercial real estate today.

We cover:

• The $2M flex property post-mortem: an off-market deal with insufficient area research, a tenant who ghosted at four months and left with the keys, $50K in leasing commissions already paid, zero market absorption, and a break-even exit two years later
• What a proper due diligence checklist actually looks like - including contacting economic development, checking local social media for neighborhood sentiment, viewing the property at night, and underwriting the downside scenario before closing
• The partnership mistake that came first: knowing from the beginning that values weren't aligned, getting persuaded to proceed anyway, and why he still holds himself accountable for ignoring his gut
• Why he wrote 900 pages in a year, self-published on Amazon, and considers the book a labor of love rather than a revenue strategy - and what his second book (a parable) is going to require
• Why listening is the most underrated skill in commercial real estate - and how it functions differently when you're talking to an investor, a seller, or a tenant who can't make rent
• The SAVERS framework from Miracle Morning and how Tanh adapted it to protect the first half of his day: no email before noon, gym before calls, reading before decisions
• Why he's a partner to his tenants, not just a landlord - and how that framing changes what problem-solving looks like when a tenant's business is struggling
• What he'd tell someone starting today: stay open-minded, because one commercial lead has multiple ways to generate capital if you're willing to see all of them

This is the final episode of a five-part conversation. Parts 1-4 are available in the Chief Milestones feed and cover the value-add model, buy-and-hold math, leverage strategy, investor relationship systems, and the networking habits that actually close deals.

Chief Milestones is a video podcast featuring honest conversations with founders, parents, and investors about building real businesses, staying healthy, and raising families.

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Transcript

Off-Market Deal Goes Sideways

Tanh 0:00

I did not go through the proper due diligence steps. In essence, a lot of the pieces were missed. Because it was off market, because they didn't have all the information, we skipped out on a lot of things, which is always a bad thing. Within four months, he ghosted everybody. He didn't talk to any of us. We tried to get him on a meeting, nothing. Moved all this shit out. I cold call, I get some direct mail, I get some door knocking to try to find some tenants for this thing, and nobody. Like there was zero interest in this thing. The biggest mistake was not researching the area well enough, not doing the due diligence

Tenant Ghosts And Leasing Nightmare

Tanh 0:34

properly. In my due diligence checklist, you also would want to contact the city, talk to economic development. You want to jump on the Facebook page to see the feel of the area is.

Reshma Vadlamudi 0:47

Value over volume. Yes. Okay. So tell us like how did you get started on the book? Why did you want to write it? And so you said like it's 300 pages now, and then you have 600 more pages. So are you publishing that? So yes, tell us more.

Tanh 1:05

Oh boy. I would not recommend anybody writing a book. I want to write a book. I I applaud you. And I I I think I think if you're if you're you have the mentality or the fortitude to carry it through, and I think a lot of healthcare practitioners do, it should be fine for you. From my perspective, the reason why I wrote the book was because I learned all this shit, but it's not on paper. So like I had to reference things a lot of times. Like, oh no, I know I wrote that down somewhere, but I have no idea where I put it. So writing a book is a labor of love. You're not going to be a millionaire on this thing unless you're a really good marketer. It's you're

Area Research And Due Diligence Gaps

Tanh 1:47

not making a lot of money per book sales, like five, ten bucks or something, something stupid. But it takes you hours and hours and hours to write this. So the reason why I did it was because one, I wanted to organize everything that I had into paper form. And hopefully it could help somebody. So I I did a data dump in my head, just vomited everything out that I could, which turned into roughly 900 pages. And the process was so crazy. It's like rubbing a cheese grater against your forehead for 40 hours a week. It was the I read a lot, but at the same time, like reading the same thing over and over to edit it to make sure everything is correct is mind-numbing. It's it's a lot of work.

Reshma Vadlamudi 2:39

So that that was also one 40 hours a week?

Tanh 2:42

I so I wrote 900 pages in roughly a year.

Reshma Vadlamudi 2:46

Wow.

Why Write A Book At All

Tanh 2:47

But that's only one part of it. Now you have to edit it. Now you have to add pictures to it. Now you gotta design it. The book, a book is just not a book. A book is really a tool for the audience to use.

Reshma Vadlamudi 3:03

Yes.

Tanh 3:03

And your goal is to maximize their learning experience with that book.

Reshma Vadlamudi 3:07

Yes.

Tanh 3:08

Whether it be with resources or how you how you translate that message across has to be easy for them to understand. And it depends on your avatar too. So all those things I had to keep in my head in order to figure out how to lay this book out and make sure that the audience learns the most that they can from it.

Reshma Vadlamudi 3:31

Yes.

Tanh 3:31

So that takes up a lot of time. But yeah, roughly, you know, 40 hours, I was I was spending a lot of time, and shout out to my accountability partners for getting me there, but that you know wrote the 900 pages, went back, and I had to separate it down because I can't sell a 900 book, 900 page book on Amazon. It's gonna be worth like you have to charge like $150 for just to break even. It doesn't make any sense. Yes. So I edited it the first 30, and it was I just had to get it out the door. The more I look at it, you're always gonna change something.

Reshma Vadlamudi 4:06

Yes.

Tanh 4:06

And maybe it's borderline perfectionism, but there's always something that's not gonna not gonna be right. And you're always gonna want to change it. So it's gonna be stuck on your desk pretty much forever. I self-published the book on Amazon. That was a whole learning process.

Reshma Vadlamudi 4:21

Okay.

The Grind Of Self-Publishing

Tanh 4:22

So everything I did was by myself. I wrote it, I edit it, I had some people look at it, give me some input, the design, design I actually hired out because I suck at design. Uh the pictures, too. I can't draw pictures, so I had to get that hired out. But in reality, I could have hired out everything. But if I did that, it would have lost my voice. Yes. And it wouldn't have been how I talk to people. And I wanted someone to read it as if I was talking to them. My second book is gonna be a parable. I'm I'm I'm shooting to make it a parable, and that's gonna take me even more time because it's not a parable right now, and now you have to convert 60 something thousand words into a story as a parable, so that's gonna be challenging. But I did it because I wanted a good reference for myself, and I wanted to shorten the learning curve for people that were in my shoes from when I was looking at commercial real estate information, trying to learn myself. That's why I I I like I said it's a labor of love. For 40 hours a week for 52 whole weeks, I was writing. Yeah, that's that's not something I enjoy doing. It it's it's a long process.

Reshma Vadlamudi 5:37

Okay, biggest mistake you made in real estate.

Tanh 5:40

Biggest mistake in real estate. I think I have a couple for you. I'm gonna cheat and probably give you two. I think the first mistake is having a partner that was not truly aligned with your interests. I my my first partnership was with some residential guys. These are the pharmacists that I that I

Designing For Reader Learning

Tanh 6:03

partnered with in my residential days. Um I would like to I I think that I'm a pretty good reader of people. I have a pretty high EQ. And if my gut tells me one thing, I usually generally follow it. But in our partnership, I knew it wasn't gonna work out, but I let another partner persuade me that it will. So I went along with it. I wanted everybody to be happy, let's try it out, etc. And in short, it didn't work out, right? And I knew that from the beginning, and I think I still blame myself for that. I should have listened to myself, but what do you do? You know, it it's one of those that it's in the past, whatever. So for partnerships, I think I would be more intentional on who I want to be around and whether or not our goals are aligned. If your character and your integrity aren't there, nine times out of ten, they're gonna be a shit partner. That's that's or or something's not gonna work. You know, the people were fine, it's just I don't think the values were aligned. The second biggest mistake that I did was when it pertains to real estate, was a deal that I bought off market. I did not go through the proper due diligence steps. In essence, a lot of the a lot

Keeping Your Voice In The Work

Tanh 7:32

of the pieces were missed. Because it was off-market, because they didn't have all the information, we skipped out on a lot of things, which is always a bad thing. It was a deal that was about an hour north of us, and it was a flex-based property. 40,000 square feet, roughly two million dollars. Low twos, I think two, two, two, three, somewhere around there. It was a sale lease back. There was no personal guarantee on the deal. And I should have done more research on the area at I don't know, it was fifty bucks a square foot for this whole building, which from my perspective, you can't even build for fifty dollars a square foot nowadays. So that aspect was nice. It had the value add, but the area was not as prominent as I thought it had been. And with the demand for flex space at the time, I thought this was should have been really easy to lease up. So I bought this December 23, 24, somewhere around Christmas time of 2021. We got a tenant to occupy the vacancy. We gave him some concessions, gave him two months of concessions, and after that, they were paying half rent, half rent, then rent. So within four months, everything was fine. He got moved in, business was looking good. He actually wanted to expand, but within four, and and this guy signed a personal

Breaking A 900-Page Beast

Tanh 9:04

guarantee. Within four months, he ghosted everybody. He didn't talk to any of us. We tried to get him on a meeting, nothing. Moved all of his shit out. So we found this out because I drove up there and you know one day and nobody was in there. I was like, what the hell? Stole some of our keys, too. So that's a nightmare. And we paid the commission on this, right? It was a five-year deal, maybe ten, and the commission was like 50 grand. So we were already 50 grand on the hole to pay this guy to jump in. And then eventually we we had this marketed and there were no hits. Very, very little volume of of interest for that space. It was roughly 15,000 square feet of office and warehouse. I think warehouse made up about 12,000 or so with 2,000 of office. All all the all the all the amenities of this property looked fine. It's located in a very decent area in relation to the airport and and and the highways. That's always a good thing with with industrial properties. But for some reason, you know, we did I cold called, I did some direct mail, I did some door knocking to try to find some tenants for this thing, and nobody. Like there was zero interest in this thing. I think it was just because the population was so small and the businesses no more business, there were no other businesses that could support it, right? Yes. So that was one aspect. And then eventually

Biggest Real Estate Mistakes

Tanh 10:37

the the other tenant in the law in the larger side, he was the one who did a sale lease back. He sold us the building. Older gentleman, he didn't have a personal guarantee. And he, this was probably two years ago, he started saying that he was having trouble selling his uh or making rent work. So business was slowing down. He's a tech incubator. So we heard this and we were like, oh shit. So now we're we're banking, we're teetering on a hundred percent occupancy. So obviously that doesn't pay the bills. You gotta pay your mortgage, you gotta pay taxes, insurance, etc. So we did a little bit of a payment plan with the tenant to get some money out of them continually while we continue to market it for sale and for lease. On the leasing side, not a lot of activity. And we marketed it for sale, and luckily now we're selling it for a little bit more than what we purchased it for. So, in essence, it was a break-even deal. So the biggest mistake was not researching the area well enough, not doing the due diligence properly, and I I guess um no, I think those two are the probably the biggest things there. The my due diligence, the area research that I think would have solved a lot of problems and avoided us being in this position.

Reshma Vadlamudi 12:19

Yes. So with the due diligence, why would

Flex Deal Numbers And Assumptions

Reshma Vadlamudi 12:22

you say you didn't get through the due diligence?

Tanh 12:25

Why is that like so a lot of it had to involve your a lot of it was market research. But but you in my due diligence checklist, you also would want to contact the city. You want to talk to economic development, you want to jump on the Facebook Facebook page to see what the what the the feel of the area is. Are there good things? Are there bad things?

Reshma Vadlamudi 12:51

Yeah, okay.

Tanh 12:52

Like I would want to go view the property at night. How's the lighting at night?

Reshma Vadlamudi 12:56

Yeah.

Tanh 12:57

What are other businesses around there?

Reshma Vadlamudi 13:00

Okay.

Tanh 13:00

Are there other industrials?

Reshma Vadlamudi 13:01

Are there so that is all part of due diligence? Yeah. Yeah.

Tanh 13:04

So you I I didn't know everything that I could about this property or this area, yeah. Which was my biggest downfall.

Reshma Vadlamudi 13:13

Okay.

Tanh 13:13

Yes, yes. And and I didn't know the the absorption rate in the area. What's the typical vacancy? And I looked at, I think I briefly looked at what the going market rate for lease was for a certain for a similar type of area/slash building. But the sell lease back, the guy was paying a little bit over market, but it was a gross lease. So it didn't include all your triple nets. If you broke it out, he was pretty much at market or maybe a little bit above market, but he had class A space.

Reshma Vadlamudi 13:50

Yeah.

Tanh 13:50

So that was kind of my rationale for it. But in reality, to get a lease rate that's adequate for the remainder of the space and even his space, it would have been a little bit lower. So I think I might have been, I might have, I should have done a little bit more conservative underwriting to figure out okay, if he does go vacant, what can I actually get for this and what would it be worth to protect my downside.

Reshma Vadlamudi 14:14

Okay. Most underrated skill a real estate investor needs to succeed.

Tanh 14:20

Most underrated skill that a real estate investor needs

When Tenants Struggle To Pay

Tanh 14:24

to succeed. I can't say it's the math part. Everybody should know math. I mean, this is just it is what it is. For a real estate investor to succeed, from my perspective, it has to be the listening piece. And you have to, and I've alluded to this earlier, but the more that you actively listen, whether it be to an investor, a seller, a tenant, it's going to take you very far. You're actively listening to for their problems and you're trying to help them solve that problem. What does an investor what's an investor's problem? Like l and we're talking about this from a capital raising perspective, from a syndication perspective. An investor comes to you because they have a problem. Because they don't know where to park their money. They're looking for yield. Your solution is to be a deal finder, to find the opportunity for them to invest in. What is a seller's problem? They need to recapitalize. They need to offload this asset. They need money. They might be motivated in some way, shape, or form. But you are a problem solver. You're listening to his problems and you're going to offer a solution. I can buy this for you. It'll take care of all these headaches. Find the pain point, solve the pain point. Another problem. When you talk to your tenants, what type of problems are they having? Are they having any problems? If they're happy, let them be.

Reshma Vadlamudi 15:49

Yes.

Tanh 15:49

Don't bother them. Yes. If they have a problem, it's because their business is not succeeding and this is an issue. Whether it be plumbing, small mechanical issue, can't make a rent, whatever. Or they're not having enough customers. You have you are their partner. You're not just their landlord. You are a partner, and you have to figure out how to solve that problem for them so that they stay here to continue to pay rent. That's how the relationship works. So you are a problem solver.

Selling For A Break-Even Exit

Tanh 16:20

The biggest underrated skill is listening. And you have to listen in order to be able to solve problems.

Reshma Vadlamudi 16:27

A habit or daily ritual that keeps you grounded and focused?

Tanh 16:31

Oh, I love that. That's a great question. I'm a huge believer in the Miracle Morning. It's a book written by, I can't remember the author, I think Hal Elrod was one of them. Yes. I'm a huge believer in the Miracle Morning because it gives you a good framework to get your day started correctly. The acronym is SAVERS. And it's fully customizable to you. You don't have to be up at four o'clock in the morning. Uh Savers is silence, which is where you meditate or you just spend some time alone in silence. The A is affirmation. You tell yourself what you're going to be, what you're going to do, something that you want to see happen. And whatever that

How To Do Market Diligence Right

Tanh 17:16

image is, you have to visualize it. Or whatever you're saying, you have to visualize it with the V, visualization. The E is exercise, 30 minutes, 60 minutes, whatever fits your schedule. The R is reading. So spend, I think, and these are just all recommendations. Once again, it's fully customizable to you. You read, you can read 10 pages, you can read for 30 minutes, an hour, whatever. The last S is scribe, which stands for journaling. You just want to dump everything in your head out onto paper. So I preface this with Miracle Morning because I practiced this for over a year. And this was the year I did this every day. I woke up at 4 o'clock in the morning. I went through the the system. I do something similar, but I don't do all the steps of savers. I will I'll probably wake up around 5 to 6 now, depending on how my day goes. But I'll still go to the gym. I'll do a little bit of reading. I'm not as I'm not reading as much as I used to, nor am I journaling anymore. I don't know why. I just gotta I just gotta build that habit back up. But usually in the mornings, I pay myself first. I there's a couple tricks you can do. You can put the focus mode on your iPhone, or if you have an Android, I don't know how to save you there. Figure that out. But from the time I wake up is let's say it's five. From five to noon is my time. I'm paying myself first. I'm reading, I'm educating, and I'm at the gym. So I don't even check emails before noon. So once noon hits, I can either eat lunch or from there start working on the other stuff. Emails, you don't need to check emails every day. You don't need to do that 24 hours a day. If it's an email, more than likely you can respond to that within 24 hours. Yeah. 48 sometimes. A phone call,

Conservative Underwriting Mindset

Tanh 19:10

probably important. Maybe. I don't know. But a lot of times from what I've seen, those phone calls are just five, 10 minutes of just bullshitting. Yes. So I've trained people to call me after noon. Or I myself make phone calls at afternoon.

Reshma Vadlamudi 19:26

Okay.

Tanh 19:27

It's not always perfect, but I will answer calls sometimes, depending on what's going on in that moment in time or whatever deals that I have going on. That's kind of my routine. Yes. And I think The Atomic Habits is a phenomenal book. That's one of my favorite books. It'll teach you how to break bad habits and build good habits. You just have to be able to recognize it.

Reshma Vadlamudi 19:49

A book, a podcast, something that had a major impact on your journey.

Tanh 19:54

Oh boy. I think I've leaked a couple of them, right? So Atomic Habits is one of them. Miracle Morning is one of them. And once again, the Go Giver is the book with a billion-dollar idea in there. The billion if you choose to implement it, this is obviously over the course of your life. That's that's a phenomenal book. Podcast-wise, um, I will have to give a shout out to the investors podcast. They were the first podcast that I found that taught me

The Most Underrated Skill: Listening

Tanh 20:24

how to invest and look at businesses, investments in general. Preston Pisch and Stig Broderson were instrumental in teaching that throughout the podcast. They've been going on for well over a decade. However, it's not real estate-centric. It's it's through listening to them, I acquired habits that so their tagline is we study billionaires. And that's that's what really drew me to it. And they study the habits of all these successful people and what what what they did, you know, business included. So that was the start of my journey into hoarding more information, reading a lot of books. And that's how I stumbled on all these great books that were recommended. From a real estate perspective, I think I would have to say Fayless's best ever podcast. It's now all CRE. And I think you can get a couple good nuggets somewhere. There's a couple other really good commercial real estate podcasts now. Beth Azor has one. Aviva, I forget her last name, but I think it's the commercial real estate secret show or something like that. She's she's really good. They're bite-sized episodes. I think the other one is the Fort Podcast. No, I'm sorry. Chris Fort does do one, which is pretty good. I think it's more business related than it has some real estate, but the other as the other last one that I had was the industrial real estate podcast. I forget the name of the host, but you learn a lot about industrial on. That one, things that I never even heard of.

Reshma Vadlamudi 22:02

If we could give one piece of advice to who to

Morning Routines That Compound

Reshma Vadlamudi 22:07

someone that's getting started today, trying to build their wealth through real estate, what would it be?

Tanh 22:14

Be open-minded is probably what I would tell them. You have to be able to figure out uh aside from learning all there is to know about commercial real estate, you have to have never close the door because that's where the opportunities are. Similar to what I was doing in the residential side, if you were to be able to be open-minded in the commercial side, you there are multiple ways you can generate capital from that. And by that I mean you could pull some of the stuff from residential where you're marketing for off-market deals, but at the end of the day, what are you gonna do with that deal? Are you gonna take it down? Are you gonna wholesale it? Can you wholesale it? People have. Do you get a broker's license in order to list it yourself? It all depends on what you want to do. But if you're open-minded enough to be able to realize that there are multiple opportunities with one lead, you can do very well. Whether it be buying and holding, value add, being a developer, flipping land, there's value everywhere. You just have to be open to seeing those.