Leaving Residential for Flex Space | Ron Scott

In Episode 4 of the Flex Space Network Podcast, host Hamza Ali sits down with Ron Scott, a seasoned real estate investor transitioning from decades of residential investing into flex space, office warehouse, and small bay industrial real estate.

Want to break into flex space investing? Learn more here:
https://insider.flexspace.network/podcast

Ron shares how he built a portfolio of hundreds of single-family homes before shifting his focus to commercial real estate—specifically flex space and warehouse investing. Now based in Monroe, Louisiana, he is actively acquiring, developing, and scaling small bay industrial properties while simplifying operations and reducing management headaches.

In this episode, Ron breaks down his current flex space deal, including a value-add warehouse acquisition with additional land for ground-up development. He also explains how he structures creative financing, evaluates deals, and plans to scale to 50+ flex units as he transitions into a more passive, travel-focused lifestyle.

In this conversation, you'll learn:

• Why investors are moving from residential real estate to flex space and office warehouse properties
• The key differences between managing single-family rentals vs. flex industrial assets
• How to structure creative deals using seller financing and construction capital
• A real-world example of a value-add flex space deal with expansion potential
• Why smaller markets like Louisiana are seeing increased demand for flex space
• How to underwrite flex space deals, including cost per square foot and rental assumptions
• The benefits of building new construction vs. buying existing properties
• Why flex space offers a more scalable, low-maintenance investment model
• How to find partners and mentors to accelerate your success in commercial real estate

Ron also shares how he landed his first industrial deal at a significant discount, why patience is critical in deal-making, and how he’s positioning himself for long-term growth in the flex space sector.

If you're interested in flex space investing, office warehouse development, or small bay industrial real estate, this episode offers a practical look at how experienced investors are making the transition and scaling in this rapidly growing asset class.

📌 About the Podcast:

The Flex Space Network Podcast with Hamza Ali explores the rapidly growing world of flex space, office warehouse, and small bay industrial real estate. Each episode features investors, developers, brokers, and operators sharing strategies, deals, and insights into this high-demand asset class.

Subscribe to stay up to date on the people and opportunities shaping the future of flex industrial real estate. 🚀

Transcript

SPEAKER_02 0:00

Hey guys, welcome to the Flex Space Network podcast. This is episode four, and I have uh with me today Ron Scott. Hey Ron, thanks for being here.

SPEAKER_00 0:11

Thank you.

SPEAKER_02 0:12

Uh Ron is a member of the Flex Space Network, which is where uh him and I uh sort of uh go back and forth on a weekly basis. Ron does have an existing history in the world of Flex, and he is currently looking to, I guess, get better, Ron, or bigger, or scale, or what are what are we doing here?

SPEAKER_00 0:33

Actually, all the above.

SPEAKER_02 0:35

All of the above.

SPEAKER_00 0:36

We are trans uh transferring from residential to commercial, and I do have several warehouses. Matter of fact, we're adding a warehouse next Wednesday. But we're just moving away from toilets and regular tenants to new commercial uh flex space. I like it.

SPEAKER_02 1:00

Yeah, okay. Well, I mean that's good. And you know what? I feel like at this point in time, just because I've been doing this so long, uh I I I actually till today get pushback on I'm getting rid of toilets and tenants, you know? And uh I think it's more of a either, you know, like we've done that and we really know what we're talking about, or uh we just from the very get-go don't want to get involved in it. So you obviously have done that. So can you walk us through what that journey has been like, what the transition has been like as well?

SPEAKER_00 1:32

Yes. We uh became landlords part-time in 1984, went to a seminar, learned some information on how to buy houses, and and either flip them or fix them up and rent them out. And it worked out really well. We've done several hundred on a part-time basis, and my background is furniture, and this was my side gig until we sold the store about 15 years ago, and started doing real estate full-time, and I partnered with a seasoned warehouse builder, and he and I did put new properties together, and then I went out on my own when he retired and hired the um our contractor to build our seven spaces that we have now on Flex. But I realized I didn't know as much as as I would like to know on analyzing the deal. I was very good at buying houses, not so good at analyzing warehouses. And that's why I became interested in uh partnering up with you guys and learning how to do it right.

SPEAKER_02 2:46

Yeah, for sure. So obviously there's a few things, you know, that that are a little different when you're uh when you're doing homes and then versus when you're doing uh when you're doing commercial real estate in general, especially an added layer to all of that is when you're building it yourself.

SPEAKER_01 3:02

Right.

SPEAKER_02 3:03

Because there's you know, there's timelines, there's schedules, there's payout, there's a lot of interest uh as far as debt is concerned, and that type of thing. Um and so that's definitely something that you know you have to sort of you know be very well versed in, because if you're not and you make a mistake on one of these commercial deals, you know, it's gonna cost you a pretty penny. And that is the case. But before we get into that, let's talk about uh you know, you've had success in residential, so nothing against it. You sort you did that part-time. What are some of the benefits or what are some of the reasons that you're seeing now that this is the way forward for you?

SPEAKER_00 3:43

So I'll I like the idea of having more new properties instead of the older residential, and having them grouped all together, uh, seven, eight, ten, fifteen units, is much easier to manage, also.

SPEAKER_02 4:00

Yeah. Speaking of management, um I have been working with this AI tool, and I created my own property management software uh in about 10 minutes. And that's impressive. Yeah, and believe it or not, um it's the same property management tool that I would have paid a couple hundred dollars a month to run two years ago. Uh I'm I'm actually bringing that to the network in the next couple of weeks, uh, and it's gonna be completely free for everybody to use, and it's specific to Flex.

SPEAKER_00 4:32

That's a nice value.

SPEAKER_02 4:33

Yeah, so definitely lots of uh techno technological advances happening uh right now in the space. So we're really excited about that. Okay, so uh walk us through what is ideal, you know. Uh first of all, where are you located? Uh, where do you want to buy? Uh what is the market like? Uh, what is your criteria, and what is the timeline?

SPEAKER_00 4:57

Okay, so I'm in Monroe, Louisiana, and it's Monroe, West Monroe. Uh we're in Northeast Louisiana. Um, I've been here most of my life, so I'm very comfortable with the market. It's not exciting like California and Florida, but just a nice easy growth that's easy to manage.

SPEAKER_02 5:18

I look, I think uh, believe it or not, that there's going to be a lot of movement uh coming to your area because you know a lot of people are getting priced out, and a lot of markets right now also, believe it or not, um, we're starting to see a lot of flex come up. Um, and uh and you know, just looking at it now and looking at maybe like a five-year horizon, if this keeps going, uh people are gonna have to start moving to other places in the country. So I don't know how quickly people are getting into this, but it is definitely faster uh than what we're seeing other asset classes grow across the across the country, I would say.

SPEAKER_00 5:58

Right. And and we are we have a new uh meta plant that is being built about uh 20 miles down the road, and now Google has also bought property in the same area. So we're gonna have a lot of influx in the construction business for that monster monster plant.

SPEAKER_02 6:19

Yeah, and see that's exactly what I'm talking about. Like the movement, uh Alabama, Louisiana, you know, parts of Florida that were in the past untouched, um, you know, Arkansas, Arkansas is a bit higher up north, but like very similar trajectory. Like in the past, we're not we weren't really seeing too many flex space players in those markets. And right now, what we're noticing is because of the larger business that's coming in, there's just a lot of demand for smaller product. Or a lot of you guys, like the visionaries, are seeing future demand come in, and so you guys are you know in there. Now, I think the one thing that allowed you to build more confidence than someone coming into this brand new is that you have existing flex. So you have somewhat of an understanding, and that sort of gives you, in my opinion, an edge over somebody brand new. But with that being said, if someone had no edge and is listening to this podcast and they really want to get into flex space, right? Um how would you suggest they get into it? Uh and what would the steps be?

SPEAKER_00 7:22

So for me, um, just like I did with the warehouse, I partnered with a a seasoned um developer, and I brought my skills to the to the game. I did a lot of the grunt work, a lot of the things he didn't want to do, and so and I got paid very well for it because I was a partner. And so for me, that's the easy way to go. And partnering with you guys is kind of like that. And tools to the tool chest.

SPEAKER_02 7:56

Okay, well, that's really good. So you came in with the skill set, you found somebody who was a developer, and they already did industrial flex product. And so you just went in. So, what is the skill set? Like, what did you have to offer them that they or was it just time? Time, time and money. Time and money, okay. So you had a little bit of money and you had a little bit of time, and you're like, I'm gonna put both of those together and I'm gonna work with you, and you're gonna, you know, uh grow this. And so did you start with one deal? Did you start with multiple deals? Were you afraid when you first started? Like, what was that first deal like for you?

SPEAKER_00 8:35

Okay, so the first deal was a an industrial property that had been on the market for several years, and it priced too high, vacant. And he he made a low offer. Um, and finally came back a year later, said, Okay, I'll I'll I'll take your price and would like to close in 30 days. And so he reached out to me. Would you like to be a partner? I said, Yes, I would. And by the time that deal was done, we um we cleared a really nice profit, and I kept two warehouses on that property. So it it was a very uh good start.

SPEAKER_02 9:17

Okay, so you got a discount, you worked that out percentage-wise, what was the discount for whatever they were asking?

SPEAKER_01 9:26

50%.

SPEAKER_02 9:28

So you offered them 50% less. And you know, the reason I bring this up is a lot of people don't believe that these type of deals still exist, you know, or they exist somewhere, right? And believe it or not, I have also made offers, uh, 50%, maybe even less. And yeah, it takes time, uh, especially if there's multiple owners, but the deals still somehow do exist. Maybe they're not gonna be there for long just because you know, it's just growing like wildfire right now. Uh but I mean, this at some point, you know, I feel like uh it is a uh it is a buyer and seller's market. Like both of you have to come to an agreement, and you obviously knew that the seller or you know, the seller was kind of motivated or something, which is why you offered the 50% less, and then you got you got that deal done. Right?

SPEAKER_00 10:20

Yes.

SPEAKER_02 10:21

Okay.

SPEAKER_00 10:22

And and and you know, like I say, it the offer was on the table for a year before they finally came back and said, okay, we're we're ready now.

SPEAKER_02 10:32

Yeah, sometimes you just have to wait the deal out. That's just how it is. That is the nature of the game. So my advice would be put offers on multiple deals and then just wait it out and see which one sticks, you know. Uh, I think that's the best way. So it's a it's a numbers game more than anything else.

SPEAKER_01 10:46

Totally.

SPEAKER_02 10:47

Okay, so today, what ideally are you looking for in your deal? So you've graduated from that and you want a brand new product, you're ready to build. What are you looking for in today's world?

SPEAKER_00 10:57

So I have a broker working really hard now to find me a value add product uh project where I can maybe rehab an existing warehouse on a property with some extra space so I can build flex space on it.

SPEAKER_02 11:13

Okay. Walk us through the deal. Like, ideally, what does this deal look like? What does it rent for per square foot? What do you buy it for price per square foot? Or like uh is it a little built more land, or is it very built, no land, and you just do value add work? What are your thoughts?

SPEAKER_00 11:30

So I've got an LOI on a property now that used to be a car dealership and has 18,000 square feet of warehouse and 3,700 showroom and an additional warehouse that's maybe 2,000 square feet. Um I would like to take the bays on this property. There are 18 service bays that I would like to divide up and lease as storage, um, and then build on the vacant property. Looks like we can build about 15,000 square feet of flex space uh next door to this dealership.

SPEAKER_02 12:15

Okay, now you say 18 bays of storage. I'm assuming you're doing storage because you don't have to put utilities, no offices, no nothing. Just like divide and sort of rent them out individually. That's the plan.

SPEAKER_00 12:26

Yeah, I was thinking maybe for uh RVs, boats, that sort of thing. That just make it easy, easy uh rental.

SPEAKER_02 12:36

And then for the new building that you're gonna build, is it is it gonna have office, glas like what are what are the plans for the new building?

SPEAKER_00 12:45

And we're we're still working through that. Um, but I would like to start with probably 1500 square feet per bay, and with an office and a bathroom, of course, and and air.

SPEAKER_02 13:01

And air, like HVAC, AC?

SPEAKER_00 13:04

So what I'm using on my existing is a two-ton uh split unit on a 1750 square foot space.

SPEAKER_02 13:14

You know, speaking of split units, they have become very popular over the past two or three years, and I think a lot of it has come down to the way they're designed. Like uh the designs have gotten better, they've gotten quieter, they're more efficient, uh, they're easy to maintain. Um, and I'm actually noticing even the luxury flex builders now are starting to use uh split units in their as opposed to traditional ducting into their HVAC, you know, and I'm sure that saves a lot of cost. And it it's more efficient end of the day, ultimately.

SPEAKER_00 13:49

Sure. And if you if you go to Europe or Mexico, that's that's everywhere, the split units.

SPEAKER_02 13:58

Yeah, and then um how big are your bays uh for these for this development?

SPEAKER_00 14:05

For the one they are twenty feet wide and about forty feet deep, but I have doors on both ends, so I can divide them in the middle uh and go twenty by twenty.

SPEAKER_02 14:19

Okay. So smaller units, uh and uh what are you renting them for, or what do you think you'll rent them for?

SPEAKER_00 14:28

So if I just rent the 20 by 20, um I would think about 150 per unit.

SPEAKER_02 14:35

Okay, per month.

SPEAKER_00 14:37

And that's the opposite with just doing nothing, just going in and renting the space.

SPEAKER_02 14:42

Yeah. And then for and then for the flex with the office, what is that square footage looking like?

SPEAKER_00 14:49

Okay. Uh and I want to do 1,500 square feet on those.

SPEAKER_01 14:53

Okay.

SPEAKER_00 14:54

Because I have 1750 where I am now and 1130. And I think in between might be a better mix or better size unit.

SPEAKER_02 15:07

Yeah, look, I I think uh 1500 and above, depending on what the building looks like, is ideal. I also personally like to rent two bays to individual tenants. So I always prefer the tenant who is like interested in multiple bays versus the tenant who's gonna come and take one bay. Um just because they're available. As in, like the tenants are available, they they they're still out there, they're still looking for that 3,000 square feet plus or 4,500 square feet plus. Um, and in many cases, if your building is let's say 6,000 square feet plus, the chance of you renting it to one single tenant is actually pretty high still in the market. Um, in your case, you have 15,000, so I I I think it would have to be like multi- is that multiple buildings?

SPEAKER_00 15:55

Yes.

SPEAKER_02 15:56

Okay, three buildings, and then you plan on building them out uh one at a time, or are you are you tackling this whole thing one goal?

SPEAKER_00 16:02

I will probably build two, and I may go and build all three, but probably two.

SPEAKER_02 16:07

Okay, so 10,000 square feet right off the bat. Five to and then is there a requirement in your county that the building needs to be below a certain square footage for you to avoid certain things?

SPEAKER_00 16:19

So, and I've not gone through all of that yet. I believe the number is 10,000 to avoid sprinklers.

SPEAKER_02 16:25

Yeah. And yeah, you bring up a good point uh that sprinklers are expensive and not really required in most cases. Uh definitely, guys, if you guys are listening to this and you're brand new, you know, look up your county, uh, do your research with the county, figure out what the square foot limit is, and if you can avoid sprinkler systems, you're gonna save, I would say, at least ten bucks a foot now today, uh in just sprinkler work. That is really in most cases not required for our tenant profile.

SPEAKER_00 16:57

And just to be clear, four units would make six thousand per building.

SPEAKER_02 17:02

Okay. Okay, yes, you're right. Yep, yep, exactly. Um, all right, so now in your case, let's get to the underwriting. So obviously, the math is probably the most important element here. Um, you have a portion that you're gonna pour a little money into um to rent it as storage, and then you have some more stuff that's gonna be rented out. What uh like how are you underwriting this project? Are you on are you dividing the land separately for the flex space and calculating that, or are you calculating this as like a cumulative development and then justifying building the flex on the additional piece of property?

SPEAKER_00 17:41

Okay, that's a good question because we we've looked at it both ways, and I tried to get the owner to divide the two, he is going to own or finance it for me. Um but my goal now is to underwrite the existing um buildings to make sure that they will carry the the debt for the entire project.

SPEAKER_02 18:04

And by debt you mean the construction debt. Okay. Okay.

SPEAKER_00 18:19

So making sure that the buildings are there will rent for enough to cover the debt service.

SPEAKER_02 18:25

Okay, so when you say debt service, you mean the debt service for all the land that the flex will be built on, plus the existing structure, um is is going to basically cash flow uh the deal.

SPEAKER_00 18:38

Yes.

SPEAKER_02 18:39

And then so how do you structure construction debt on top of that? Because you have a one one note to the seller and then a separate note to the lender.

SPEAKER_00 18:55

At some point, yes, but I would probably use other other funding for the construction and then pay off the um the owner and then refinance the entire deal.

SPEAKER_02 19:10

Actually, that makes that makes pretty good sense because that way um the deal is cash flow and so okay. Let me just try to try to you know holistically look at this. So your cash flow does not need to re does not need to cover construction, it just needs to cover the hold for the existing.

SPEAKER_01 19:30

Correct.

SPEAKER_02 19:31

Okay, and then in that case, you are basically uh just interested in the land. Uh and so the land comes with these attachments, you're just taking them, uh, but your whole play is actually just the land and the refinance. Okay, and the refinance is happening uh so that you can then take all the appreciation that you've created after you've developed the flex space and then pay off uh on cost uh the seller and then keep all the upside for yourself plus the cash flow.

SPEAKER_01 20:04

Correct.

SPEAKER_02 20:05

That's a great strategy. And okay, so this by the way, this is the this is um you know very creative, uh definitely see very seasoned for sure. Um I I would not I I don't think new people coming into the space can operate at that at the level that you are operating, just because you have so many different things, moving parts, um, but they're all working for you.

SPEAKER_00 20:28

Yes.

SPEAKER_02 20:29

You know, okay. And so um how how would you underwrite just the flex portion of this deal? Do you know what your c cost of land is? Do you know what the cost of construction is, what the thing will rent for ultimately?

SPEAKER_00 20:44

So, and I don't have hard numbers, but the property that I built in West Monroe, uh, we came in $91 a square foot plus the land. And if we if we use a five dollar number just for the land um on this one, I mean 96 under 100. Adding the office probably probably bring it just over, just about a hundred.

SPEAKER_02 21:15

Okay, well, but the thing is, you know, the when you so the way you need to or the way I would underwrite this deal is the land is let's I don't know, let's just assume the land is uh 10,000 square feet, right? And it's at five dollars a foot, um, and so that's fifty thousand dollars for the land, for example. But when I come to build on it, um I'm only gonna be able to build on 10,000 square feet, assuming that I have 30% coverage, I'll only be able to put like a 3,000 square foot building, and that will be at $91 a foot. Uh, but then you have to take the land and also uh put it on 3,000 square feet and not the entire land to calculate. Total cost. So like do you know what I like your own because now you're not really like the land is not really five dollars anymore because you you now attached it to the building and the building itself is only three thousand square feet. So like uh the land is three times more if you're gonna calculate it on the price of the building. Does that make sense?

SPEAKER_01 22:27

Maybe we we we have missed each other.

SPEAKER_00 22:31

The the buildable land that's attached to this project um is big enough to put 18,000 square feet of buildings.

SPEAKER_02 22:42

Okay. And and but how big would the land be that the 18,000 square foot building would be on? So is the is your assumption five dollars on the eighteen thousand square feet?

SPEAKER_00 22:59

Okay, uh no, the it's it's almost an acre of vacant.

SPEAKER_02 23:03

Yes. So then your assumption is on forty roughly around 45,000 square feet at five bucks a foot. That is what the land is worth.

SPEAKER_01 23:10

There we go. Yes.

SPEAKER_02 23:11

Well, yes, but so when you then recalculate that same number on 18,000 square feet, your cost of land goes up. So like let's say you said it was $96, it might be like $101, you know what I mean? Or maybe like $103 or something, something closer to that range, because you have to underwrite the land at that value.

unknown 23:34

Okay.

SPEAKER_02 23:35

Yeah, so that so that's one that's definitely one thing you need. Like when it comes to underwriting, you definitely want to underwrite it that way.

SPEAKER_01 23:42

Okay, I didn't realize that. Thank you.

SPEAKER_02 23:44

Yeah, yeah, for sure. No, that and and that will give you then uh, you know, because once you underwrite it, and let's say you come up with that $103 number or whatever it is, right? Uh and and then you calculate your rents. Uh what are the rents in the area for brand new product?

SPEAKER_00 24:01

Okay, for brand new product. For mine, I'm getting about $12 a square foot.

SPEAKER_02 24:05

Okay, and that's for brand new product.

SPEAKER_00 24:07

That's a little low, I'm sure, compared to what you guys are used to.

SPEAKER_02 24:11

Yeah. It it is a little low uh compared to what we're used to. Uh but what is then what is the sell on the other end? Like, are you making $35, $45 a square foot on this on the refi side? Like where I'm just trying to understand where is the premium coming from? Because sometimes it doesn't come from the rent, it comes from uh from from from the trade, you know, whatever the trade is, whether it's a refi or it's a uh or a sale.

SPEAKER_01 24:41

Don't know that yet.

SPEAKER_02 24:42

Okay, all right. Well you're still early on, so it's a good thing that you know uh you're still early on in that. Uh we definitely need to sit down, take a look at all your numbers, make sure everything is like really, you know, just uh rock solid. And of course we do that every Friday. Uh, and I love those calls, you know, because I get to see everybody in there. Um let's talk a little bit about the vision now. So now you have this one deal, you've done multiple flex deals, you're transitioning uh from residential real estate. What is the end goal? Where does this stop or does this keep going, or how big does it become? Um, and do you scale out of Louisiana?

SPEAKER_00 25:23

Going to get out of Louisiana. Um we are reaching retirement age. Technically, I think we're there, but uh I like I like doing deals, and we're trying to have less tenants. So no, I would like to have probably 50 to 60 units of new flex as we start selling off more and more of the houses.

SPEAKER_02 25:54

I mean, yeah, uh, I think that's great. 50 to 60, uh, you probably need one virtual assistant managing all of those things, and that person doesn't even need to be and now with AI, it could just be an AI person, you know? Uh the phone, calling, making sure. And then, okay, so are your leases in Louisiana? So tell us a little bit about the market. How is it a triple net market? Is it a cam market? Is it a gross lease market? What do tenants like in Louisiana?

SPEAKER_00 26:23

Gross lease what we normally do. Okay. I tried to move toward the triple net. We get a lot of pushback there, and maybe I'm I need a little more coaching on how to present it better.

SPEAKER_02 26:36

As far so you're saying that $12 gross is what brand new product is renting for in Louisiana. Okay, we definitely need to, you know, get more. We need we need to do a second episode in which we need to know what is the sale price or what are things that you have traded out per square foot uh in Louisiana, because that is going to be the key metric on you know on the success of uh this flex space development. Now, one thing I will say, $12 is a little lower uh than what we are used to, um, but that doesn't mean that you can't get that $35, $40 a square foot in premium once you exit, right? So let's just assume, and just for assumption's sake, you build this for $100 a square foot. The idea is that you should be able to trade out of it for $135, maybe $140 a square foot. And that is where we sort that is sort of like a benchmark where we're like, okay, you know, that's almost like a 2x return if you have debt. Uh assuming that one-third of the project uh was equity and two-thirds was, you know, you you got a construction loan of some kind. Um, that is sort of where these deals really start making sense.

SPEAKER_00 27:48

And I'd I'd really like to partner with somebody. Um I've never I've never sold a flex unit. So working through the ground up refund.

SPEAKER_02 28:01

So, okay, so I've actually uh you I don't think you've attended one of my boot camps yet, but I've actually done a timeline of sell versus refi uh over 10 years. And uh basically, obviously, I was much younger when I came to America. I was 29 years old. I started with my first flex uh when I was 32, traded out of it, I believe, when I was 33, I'm 41 now. Um, and so I I created this timeline had I and I sold. So I went against the grain, and I, you know, I was like, you know what? I'm just gonna keep trading out of them and uh and just keep building new ones. And my whole thing is I don't acquire existing, I always just build brand new, right? Um and so I I have this timeline that I created that I'll share with you, uh, where I show if I had if I had just re-fi'd out over the course of 10 years where I would have been versus uh trading in and out of them, you know?

SPEAKER_00 28:56

That would be interesting. I'd like to see that.

SPEAKER_02 28:59

Yeah, and so the comparisons are actually pretty like the difference your your six and seven, uh it's a re it's really phenomenal, you know. Like it's a huge difference when you sell uh versus when you refi. Now, obviously, the one caveat, and maybe this because I don't show it on on that graph is the taxation, right? Because when you're trading in and out of deals, there's a huge tax uh that comes with that. Uh but then uh with the refi, there isn't, right? So you're just consistently just taking the capital, moving it, moving it into new deals and stuff like that. Um, but it is a very, very interesting uh timeline. And actually, now that we we spoke about it, I think I'm actually gonna post a video on it uh and post it in the community so that they can see, you know, uh, because that is a very important element for a lot of people uh who are looking to maybe grow faster than just a refin method, you know. And I'm sure and I'm sure for your homes it's probably very similar as well, because you start with one, then you know you go to another one, then those two make a third, then the third one brings a fourth, and then you know, so on and so forth.

SPEAKER_00 30:06

And we've always done both, you know, rehab and sell, or rehab and keep. So probably the same thing on uh on flex.

SPEAKER_02 30:15

Yeah, I agree. Um now let's talk about your property management uh st and lifestyle as well, flex versus uh your single-family stuff.

SPEAKER_00 30:30

So I I do have a management company that oversees all my rental units, and I oversee the rehab if something becomes uh vacant.

SPEAKER_02 30:43

Okay, and that's on your residential side and on the flex.

SPEAKER_00 30:46

And and and the flex, both.

SPEAKER_02 30:48

Oh, and the flex. So they've they've got everything covered. Um common issues. Let's talk about some common issues with residential versus also we want to hear about common issues with your flex spaces.

SPEAKER_00 31:01

So common issues perhaps if people are a little more uh hands-off in the residential, they want me to take care of everything. And in the commercial arena, uh tell the tenants if it breaks, you fix it. If the roof leaks, call me.

SPEAKER_02 31:23

Okay, and that's it.

SPEAKER_00 31:24

That's it.

SPEAKER_02 31:25

And roof leaks, are they common? Are they uncommon? Like every couple of years, every couple of months? How does that work?

SPEAKER_00 31:33

Yeah, in my commercial properties, I rarely get a call at one building that I get calls on, but for the most part, yeah, the uh the warehouse spaces, I don't get calls.

SPEAKER_02 31:45

That's great. And that's what we love, you know, that's why we're in them. And I think that's why everyone is transitioning now uh into this space because they realize like it's the same thing, it's just easier and simpler. And so why wouldn't we be in that, you know, versus all this you know, finishing and uh complicated stuff with residential real estate.

SPEAKER_00 32:05

Right. And simpler is better at this stage of life. We love traveling, and the flex space is going to give me more of that.

SPEAKER_02 32:15

Yeah, you're gonna you're gonna get to live wherever you want uh without worrying about you know real estate. Speaking of, so interesting story. I remember uh when we had uh, you know, because we get hurricanes every now and then in Houston. And I actually didn't come from hurricane culture, so where I am from in the Middle East in Dubai right now, uh tough times there right now, but um we don't really get hurricanes and stuff like that, you know. Um so there's not really there's not really an element of storms that I was used to before coming to America. So when I came here, I got into Flex. Um I never actually thought about like you know storms and stuff like that. And I remember we got a huge uh hurricane uh a couple of years right after I had built my first one, and the residential arena had taken a huge beating. Not only that, the residential stuff was all made out of uh wood. And a lot of these homes that flooded and things happened to uh were older homes, and so that wood had was already like you know, uh like older stuff like that. Um the repair process for residential homes was a disaster in Houston compared to uh industrial stuff, which like barely any damage, but that's just because of where we were located. Regardless, like let's just assume you know it was the same place, like there was a res single family home, and right next to it there was a warehouse, and they both you know got affected. Um man, the residential stuff was just so complicated.

SPEAKER_00 33:52

Absolutely. Yeah, you know, difference in fixing a warehouse and repairing someone's home.

SPEAKER_02 33:58

Yeah, and and and that's the other thing that the home needs to be repaired at a whole probably a different level of repair just because there's people living in there, you know. Uh with the warehouse, it's like you just dry it off with a with a leaf blower and you know you're kind of good to go. You scratch off whatever's there and then you're kind of good to go, sort of, so to speak.

SPEAKER_01 34:15

Much easier for sure.

SPEAKER_02 34:17

Much easier. So that's definitely one thing that uh you know that I enjoy as well uh as part of being a flex. And you know what? I think owning flex space, there's this is another thing, uh, because I've done residential real estate as well. Whenever I would uh, you know, if let's say, for example, there was a big issue on one of my properties, residential properties, and I wanted to go in and check on the property, um, I would I had a beater card that I used to take. And if anybody asked me who I was, I'd be like, oh, I'm just the manager, you know, I'm just hanging out. I'm the owner sent me. I you know, I don't I don't want to, because I don't want them to know uh because then they're then they start asking for more, right? Like fix this and fix that and do this and do that. With the industrial, with the flex space, believe it or not, like I want to show more. Um, and the tenants love it, you know. They're like, Yeah, our landlord is such a nice guy, he's all over social media, he does this, he does that, you know, and they and they love and they stick. They're like, you know, pay on time, everybody's having as long as their business is good, of course.

SPEAKER_01 35:18

Right.

SPEAKER_02 35:18

So that's one other thing uh that I have noticed uh that's a little different. Yeah, a big difference. You it's a life, I think it's a lifestyle difference more than anything else. Um, and it just allows you to maintain, like you said, you get to travel more. It doesn't matter if your tenants really know who you are, it's not like they're gonna come and try to tell you to fix anything, because like you said, they have to fix everything, right? So definitely a good uh place to be. Well, um Ron, I always ask um this question towards the end of the podcast, and it's very important. Um, if you were advising somebody, you know, uh just think about a younger you, maybe a younger me at some point, who is now looking to get into the world of real estate, number one, uh trying to decide between the different asset class, because you know, there's a lot of different real estate. Um what could they do today to get in the world of flex and sort of find their way to success?

SPEAKER_00 36:18

Okay, very good question. And one of the reasons I partnered with you guys is I do have my children that are in the residential real estate business, and two of my grandchildren are in the in the game already. And I'm hoping to blaze a path for them into a better way to do real estate. And I think flex for me is going to be it.

SPEAKER_02 36:42

Yeah, so I think basically uh find the right person who's kind of sort of you know successful in the space and then just latch on to them and hang on for your life and wait ten years and see where you end up. Well, all right. I think that's great advice, and guys, I definitely echo that advice as well. Um, for a lot of people that don't know this, I actually also had a mentor who got me into Flexpace. Um, I talk about him all the time. I've stopped taking his name because people keep harassing him after I mention his name every time. Uh, but if you go back through history, you know, it's very public as to who he was. He was actually younger than me uh when I first came to America, and he sort of uh walked me through the world of Flex, and I got to see him build it, rent it, lease it, you know, uh become successful in it. And that's when I personally decided that, you know what, I think I can do this as well. So uh definitely the right advice. Find somebody who's done it or doing it, even if they haven't completed it, if they're doing it, chances are they've done their research enough to where uh you know they're definitely hopefully going to be successful one day. Well, with that, Ron, thank you. I really appreciate your time once again. Uh, look forward to seeing you on the Friday call. Definitely want to discuss your deal in a little more detail because we do need to run those numbers and just make sure they're a little tighter. On your existing stuff, not worried at all. On your brand new stuff, not worried, just want to make sure that you are aware of some numbers. Also, walk you through a strategy on triple net leasing for sure, because I think it is time that you uh you start moving flex into triple net or at least some type of cam lease, maybe not fully triple net, maybe we do like a double net lease to start with, um, and then we move you on to uh triple net because gross leases uh are we we need to sort of you know uh make sure that those are trending out uh as you retire and you want less work on your hands for sure.

SPEAKER_00 38:36

Okay, I like it.

SPEAKER_02 38:37

All right, perfect. Thanks, Ron. Appreciate it.

unknown 38:40

Thanks. Goodbye.