StripMallGuy

I spoke recently with a real estate transactions attorney I think highly of. He told me he’s representing a landlord in a lease negotiation with a large national tenant, and the process has been tedious and complicated. Frankly, I don’t think he should have taken the assignment, for his sake and his client’s. The better move would have been to refer the client to an attorney who specializes in negotiating with national tenants - ideally, one who’s dealt with this specific tenant before. That kind of specialist already knows the tenant’s typical requests, what they’ll give on, and where to push back. The deal would likely move faster and with fewer headaches. Sometimes the best thing you can do is tell someone you’re not the best person for the job.

Total networking hack for young professionals in NYC: wear your alumni gear. Today I saw a guy in a Santa Clara University shirt - my old stomping grounds. I stopped to chat. Turns out he’s a new grad, here for the summer interning in finance. We exchanged info, I gave him some advice, and had a great chat. I should start sporting that Broncos gear too; you never know!

When you spin the roulette wheel in Vegas, you know that your odds of landing on red are just under 50%. It's very easy to understand how much risk you're taking, so you bet accordingly. The most difficult thing about real estate investing (and the most important concept to understand): It takes deep expertise to be able to identify how much risk you're taking on any given purchase. It's so difficult, in fact, that many investors want to assess risk, but lack the experience, training, or access to see the full picture. A simple example: Anybody can understand what it means to buy at a 6% cap rate. "I'm paying $3M for this Taco Bell building, they pay a base rent of $180k a year, so my annual return will be 6%." Yes, buyers review basic risk factors: The condition of the building, who covers which expenses, which entity is guaranteeing the lease, lease expiration, etc. The’re glossing over downside risk and checking boxes. But their focus is weighted heavily on that 6%. A buyer with very deep expertise (a small percentage of the investor pool) has the experience to dive into the downside risk and assess it to a degree that enables them to make a decision. Some factors those buyers look at: -How much of the value comes from the fact there’s a drive-thru here, and what does the city code say about my ability to operate the site as a drive-thru if the tenant leaves? -How much rent would I get if the drive-thru went away? -They don’t report sales, but can I tap into my network to find out what the sales are? -Who’s backing this franchisee? Private equity? How much debt is there? -The rent’s $180k/year. What do other tenants in similar buildings in the area pay? -Can I replace the $180k if they leave, or is the area rent actually $120k? -What will it cost to re-lease if they leave before the lease is up? -Is the drive-thru configured so it works for others, or is the trend going towards longer stacking or double drive-thrus? -A 6% cap is market, but what about price per foot? I’m paying $700/ft. Are similar buildings selling for $500 or $900? -Are there vacant parcels in the area, allowing competitors to open up across the street? -I’m paying $3M. How much would it cost to buy a lot on the block and build the same building? $2M or $3.5M? -How’s access? Is there a left-turn lane directly in front, or does someone going the opposite direction have to drive two blocks and make a U-turn? These are a few items that come to mind - there are countless more. One's ability to assess an investment is limited by their ability to understand its downside. The more you allow your knowledge to compound within one niche, the better investor you’ll be. The great differentiator in commercial real estate is the ability to assess downside risk, which enables you to know if you're making an asymmetric bet. Otherwise, you might as well be placing chips at the roulette table. At least there, you know your odds.

Really dove into how I started, our investment history, and how much social media is impacting our business. True honor to record this, and I hope you enjoy it 🙏

I would LOVE to know the story behind this, but guessing it went something like: “I DON’T CARE. I AM NOT SELLING!” Repeated over and over, as the price kept rising. Legend 🤣

It’s true. FedEx has basically a 100% open rate. Called him within minutes 🙌🏻

I’ve mentioned my dad here and there over the years. He’s not a businessman and never talks about entrepreneurship, but in his prime, he was a world-class mechanical engineer. And he was always an employee. All of his mechanical engineering patents are owned by his former employer, and that’s 100% fine with him. He loved his career and made a good living. He did his thing, and lived well. His thing was working on semiconductor machines that build wafers. When he needed to hire 50 people, the company hired them. No need to worry about marketing, investors, accounting, or any of that. So much good in that. Running a business is great for some, not for others. As brilliant as he is as an engineer, if he ran a business, he would not have succeeded. Entrepreneurship isn’t for everyone, and it’s not necessarily better. It comes with a lot of risk, stress, and a high failure rate. The W-2 career path has gotten a bad name with this generation, and that’s not a good thing. Don’t give in to the societal pressure. Do what’s in your nature. The “employees are suckers” mindset is doing a lot of damage.

When I was 22, I remember walking around ICSC events wide-eyed, surrounded by every major retailer, broker, and developer in the country. That young kid never would’ve believed he’d one day be taping a podcast with ICSC President/CEO Tom McGee 🙏 Hope you enjoy it: https://xmrrwallet.com/cmx.plnkd.in/eXrNpbpu

I genuinely do not undersand this: Mike is a full-time sales manager. He's really smart and great at what he does. He wants to invest in commercial real estate. He has zero hours of experience buying commercial real estate, but buys a property anyway. Kevin has been been buying commercial real estate properties for thirty years using outside capital. He is known as a really good person, has a great track record, and has invested through multiple cycles. He has over 60,000 hours of experience. Yet, Mike would rather invest $1M on his own, instead of investing it with Kevin. Why?

We kicked off something pretty special last week, with an incredible group of folks who manage outside capital. -Intimate, off-the-record discussion -Sharing ideas, challenges, and trends Big thanks to Agora RE (our gala sponsor) for hosting -- and looking forward to many more!