Discovering Commercial Real Estate

I got started about six years ago in commercial real estate as an in-house leasing agent, six years ago, the market was very different. So I had a shopping center and an office building that were both about 40% vacant. So when I first got started, I had a lot of work to do. About two years into that, I stabilized those properties and realized that if I didn't find something else to do, I was not going to be making that much money that year. So I was working with a boutique development firm at the time, and they were building probably about a thousand town homes, either under construction and permitting or implanting by the time I left, so I was just watching them develop these town homes. So I went to put my first development deal together, which is 42 town homes in Bellevue which is just southwest of Nashville and worked on that for little bit. I also started taking on third-party work, so helping tenants lease space, helping investors start to buy space. That’s where I really started learning how the investing process works, because being on the leasing side, you can really see a lot of that. So after I launched my book, I decided to start my own company, I left and started working with investors and businesses, either looking to maximize their investments by keeping them leased up. They were managed properly or just expand their portfolio. So I actually the first building I bought, I had two clients that had it under contract, and they both ended up backing out. I said, “You know what? This is too good of a deal. I’m going to figure out how to do it.” So I grabbed a couple of investors. I said, “Hey, look. Here’s what I want to do with this property. Do you guys want to do this with me?” They said, “Absolutely.” I came out of pocket, nothing, on that first deal, I actually rolled my commission in as equity into the investment and then took an additional percentage for being the asset manager. That was my first real estate deal. So that was really exciting to be buying an office building as a 26-year-old with no money out of pocket, but in the meantime, I had actually a couple years ago got involved with a group called GoBundance.

So there's a number of guys in GoBundance that are apartment syndicators, I actually had never heard of syndication, probably three years in the business, I didn’t know what it was. I was like, “Wait. So these guys are putting deals together, and they're just getting money for doing it and taking all these fees everywhere?” I was like, “This is amazing.” So actually, Bruce Peterson who ended up becoming one of my partners, he owns about a thousand doors down in Austin, Texas. He kind of took me under his wing and just started teaching me how syndication works. So now, he and I partnered, and we’re looking to doing some more deals, but that's really what it was. I got him on to GoBundance and started meeting a bunch of people that had been doing apartment syndications, they were more than willing to teach me.

So I had found this apartment building in South Nashville that I thought was completely underutilized. They were asking way too much for it, in my opinion, so it had been sitting vacant. It was a two-story, 12,000 square-foot office building. It just looked like it was straight out of 1985. They hadn't really touched anything. I mean, the interiors, the carpet was still that plush like blue-green carpet your grandparents had. So the owner of that building, his company had occupied that building. So when he passed away, the family sold it, it was 90% vacant. So we were just looking at this, I said, “I think that there is a move on this building for affordable office space in Nashville,” which there almost is none. We've got one the largest spec office pipelines in the country, because of that, it's all class A. So it’s over 35, 40 dollars a foot, which is just crazy. I mean, small business owners can’t afford that, so my thesis going into this was, I think that we can get this at such a low price and renovate it for such a low price that we can provide affordable office space, lease this up, refinance, and move on to the next one.

Listen to full episode: https://lifebridgecapital.com/2019/10/ws358-leasing-up-commercial-real-estate-with-tyler-cauble/