All Forum Posts by: Joel Owens

What I have learned so far in 48 years on this planet.

1. There is no such thing as balance. You can have equal hours into 4 parts and be miserable in life. Harmony is where happiness is at. This is where various aspects of your life come together and you feel good about the day to day living and where your life is heading. There can be an ebb and flow to various aspects of your life as you age and evolve to create this harmony.

2. Research by Harvard has shown money doesn't buy happiness, owning a business doesn't, religion doesn't ( has shown a sense of belonging ). Surprisingly the research over many decades shows that SOCIAL CONNECTION with others for life experiences leads to more direct happiness. Whether extrovert or introvert everyone at some point needs to get out and socialize and feel connected in person with the world and relationships they value around them.

3. One of the most valuable assets is not money but TIME. You could have 1 billion dollars but without time and health to enjoy the proceeds it's meaningless. So many people work their lives away at a job or business that they miss out on living life itself. Those moments in time only come around ONCE where you get to create those pictures and video memories to remember back on yourself and share with future generations about who you were and what you did.  

4. In your 20's you want to rule the world. In your 30's you try out different careers and businesses. In your 40's you want to be ultra successful at the chosen profession or business. In your 50's and 60's you realize you aren't 20 anymore and really need to enjoy the fruits of your labor more and travel while you can. In your 70's time and statistics are no longer on your side and you know everyday is to be treasured even more. Having lost a lot of people early on in life I developed a unique filter that most do not see until their 60's in age and up. I value every second, minute, hour of everyday as special.

5. Track your time. If you track your life with time you live with intention. If you fly by the seat of your pants then the impact and quality of life with goals you want to achieve can pass you by. Everything is life is measurable and trackable. By tracking your time you will learn what you want and don't want in your life and will become more focused and efficient. My goal is to be a billionaire by the time I am 70 years of age. I am 48 now. The goal is to do it working no more than 30hrs a week. I have a vision board, goal tracker, and timeline to complete. I also have  a vision board for my health and my family, relationships, etc. I want harmony in all aspects of my life through proper planning. Often people get success with business and pour unlimited hours into that because in other parts of their lives like marriage etc. it's tough and they run from that. Instead you have to work on all aspects of your life harder or not to be more well rounded.

6. Have perseverance and never quit. Constantly learn. People consider me an expert in the NNN commercial space but everyday I still open my mind to the max to take in all information I can to get better. It doesn't matter if people think I am awesome because I know personally I can be even better each day. Those small increments of gains once you know most of an industry might seem not a lot to some. But those small gains each day add up to huge distances over time between you and the competition. If you just accept being mediocre or good enough then people can get arrogant and close minded and stop learning. That is when they stagnate and regress as a person with potential. Our life DNA cells in our 20's for regeneration have reached their peak and then less cells are replicating new then are dying off. That is the visual aging process as we go through life. What's great is our mind, heart, and soul can constantly evolve and grow regardless of age.

I can keep going but will stop here.

Yes I am a multi-millionaire many times over and successful. I have been doing this about 20 years now. You will face lots of adversity. Expect life to get tough. Realize when success hopefully comes that you are doing what very few in the world accomplish. That feeling makes all the hard work worth it.   

Walgreens and CVS are fine my clients own many of them. The key is what are the terms of the lease and what rent are they paying?

There are historical rents in place on some of those where in exchange for excess TI paid by the developer the tenant started with inflated rents for the market and hoped to make it up over time with increasing sales. When that didn't happen Walgreens likes to sublease the space until they can get out from under the lease or pay extra to terminate it early.

Often the sublease goes to a Dollar Tree or Dollar General. The key is if you can get sales for the location of a Walgreens or CVS. If you can get sales you can compare that to the in place rent to gage how they are doing at the site. Poor sales and higher in place rent even for a good location is a big no-no for a purchase. In that case you want the rent to be replaceable if they go out. There are newer Walgreens at maybe 5k sq ft in smaller suburban areas now. Before decades ago they put locations everywhere expanding in all directions on an upcycle. Wal-mart used to do this also. The tenants learned over time when they paid high rents and hoped the growth would come there and not fully materialize then they hardly made any profit running a business at that site.

Tenants are smarter these days and really analyze the sites more they go in for controlled and high impact profit growth. That is why you have to be careful with vintage leases.

The 5,000 sq ft building in small town if it doesn't work out they can subsidize with much less rent to sublease and exit the market.

This is where the experience of NNN brokers and investors comes into play to know what you are buying.

Some Urgent Cares can be good if backed by a super strong A tenant like BCBS. You get the long term lease plus rental increases and the 2.4 to 2.8 million range. The good ones are hard to find and I locate them off market for my clients. Finding the good stuff takes a lot of time and effort. There's a lot of crap on the market just like any asset class.  

I have this conversation all the time. Literally have talked to thousands of millionaires over the phone through the decades. 7 to 9 figure individual net worth and some families that are billionaires.

I do this day and day out so know the reality. Buyers with a thought of the space have well intentioned theory but often does not line up to doing a real deal in the marketplace.

Brokers and agents just starting out live off the deal. Brokers in the business and already wealthy can tell you what they really think. They do not want to sell high risk stabilized deals that can go dark and the client wants them to fix it. When you already have tons of money you do not want that headache plus it's slimy to just sell junk to close a transaction. Be careful who you listen to and what they are saying. 

If you do not want to deploy 1 million down an alternative is to invest in syndication deals as an accredited investor or value add NNN. I focus on value add NNN minimum 100k investment at a time for accredited investors. Some will do that while stockpiling more cash to eventually own a NNN property.

It's better to wait and own a quality NNN property then just buy one that fits in the budget you want to pay. Those can be lemons. I mention to people a 2 million commercial NNN property is like a 200k house. It's the starter level with lots of buyers looking for the quality and often unrealistic expectations.

20% down is a pipe dream.

In low interest rate environments before with cap rate at 5.0 and debt at 3.5% with DSCR ratios still looking at 30 to 35% down.

Now because cap rate maybe in 6's and debt in 5's for credit grade BBB- or better tenant making down payment about 40% or more down.

20% down not happening on these.

I don't want to comment further because you are looking for a miracle. I have been in NNN about 20 years now as a principal broker and an investor. I review about 1,000 a week. In a suburban core area to urban core in NY not finding a 2 million pharmacy CVS or Walgreens. You would likely need to go to small suburban to rural towns with weak demo's. The more expensive the dirt gets the more per ft the tenant pays in rent. Cheap rent is 20ft for 10k sq ft box that is 200k NOI in good location. Also not all pharmacy equal (some leasehold, some absolute NNN, some NN, some have rental holiday, some zero cash flow, etc.)

If you want to get serious look for putting down about 1 million to get something decent with dirt and location.  

You can always ask anytime you want to the leasing administrator. You do not have to wait as landlord. The TENANT can however decide to engage in negotiations early OR say they want to WAIT until the time they are obligated in the lease to say if they are renewing or vacating the space.

6 months is minimum notice for options. I would rather see 9 to 12 months to be given more notice to start working on other tenants for the space. There are typical signs before that if you have sales numbers to see how tenant is doing and if they re-imaged their store recently. Those tend to point to staying unless the site is a C site and they had no other options when they moved in that market or the rent is abnormally high. Those would tend to cause them to move. 

In a rising rent rate market a developer when they first did the lease would have the options stating MARKET instead of another fixed rate. They could also say a combo like 10% rental increase in option period or market rate whichever is greater.

The TI play possibly you could approach them if they want to reimage the store.

Have you checked recently if they already spent the money redoing the inside and out of it? If they haven't that may be an angle you could take.

If you do not want to hold forever and want to go into something else you could possibly reduce the 10% increase every 5 years to say 8% in exchange for them signing a brand new 15 year lease. That may compress the sell cap rate some.

Sometimes rents are below market and brokers tout as value add when buying but if the tenant never leaves the value is never unlocked so then you are buying on straight yield only. So when I see that I discount and throw away the value add side if I can't unlock it with a 5 year or less period.

Ground leases are harder to finance. Maybe 20% of lenders will look at them and often require much more down to purchase.

The tenant with locked in below market rent will not want to change that deal as it hurts their profit per ft in sales unless they can absorb an increase in exchange for TI infusion that might make sales jump more. Everything is case by case basis. Maybe you could try to acquire more properties around the site to have few land control plans.

Sometimes Walgreens for instance might extend early if you give them TI. What you have to ask is ( What am I giving and what am I getting in return and is it a long term, short term benefit, or both?) 

No legal advice given.

I am having an engineer custom code a site for me where the investors can log in and check status updates on my syndication deals.

My acquisitions manager needs to be out there sourcing and closing more deals. If you had to talk to every investor at different intervals for updates all the time would be taken.

In between the updates you can do zoom or livestream every so often maybe once a month. 

I pay them more to have focus on my properties. If retail leasing fee is 6% total to them I am now looking to offer 7% and build into my model. 

Of course everyone wants the great credit national tenants. National tenants are ultra picky on sites in an area and take more time in negotiations than regional, small franchisee, mom and pop type tenants.

You need a void analysis to see if even feasible for national tenants to want your site.

If you have a smaller center the retail property management companies that focus on up to 25k spaces and below tend to be better with lease ups. The large companies might have a big client in the area but once they lose that business or the client sells the management of the smaller properties with lease up efforts tends to go in the toilet. 

Sometimes lenders on properties that are non-optimal in the portfolio with TRY to find any reason to call the loan due especially if interest rate is low and they can relend that money at higher rates.

They can look for any reason to try.

These are more complex type deals.

Regular single tenant NNN are vanilla deals so nothing really to go after there.

My NNN value add deals typical 1 year to stabilize but cap rate in double digits for break even.

My goal is to hit 2 to 3 equity multiple over 3 year hold.

Nothing is guaranteed like any investment but I am heavily invested with time to see equity upside on the back end as the sponsor otherwise I keep making even more millions doing the commercial brokerage thing.

Accredited investors invest for different reasons. Talking to thousands of them over the decades they all have different viewpoints on living life and where they want to go and when they want to take the foot off of the gas pedal and coast.

There comes a time when max yield might not be at the top of their list. It's more passive equity growth over time as their jobs bring in mid six or seven figures a year already.