Thread by @paytonjkelly

1/16 THREAD: How my first cold call landed a 25,000 SF neighborhood strip center leasing and renewal client and made him $3.5MM of tax-free cash on a refinance after a 4-year hold. #ColdCalls #CRE #REtwit

2/16 I made my first cold call after placing a retail fitness tenant in a 2,550 SF end cap. I was fortunate to have a mentor who allowed me to show listings for him on tenants who did not have a broker so I could earn a commission in the event of lease.

3/16 The tenant moved from a nearby shopping center for more traffic and visibility to our listing that was anchored by Safeway and had many popular tenants. The transaction went well and he opened up quickly.

4/16 Speaking with the Tenant once the deal was done, I mentioned that his old space was still off the market and asked what he thought about the Landlord. He told me that the Landlord had just purchased the center from the previous owner and didn't know much about him.

5/16 The next day I was able to find the Landlord's contact information off of Costar and called him up. I was surprised and nervous when he answered right away and we ended up talking for 30 minutes for so asking him his plans for the center and the vacant unit.

6/16 Unfortunately, he was signing a listing agreement with a more well known broker around town but it hadn't been put on the market yet. He said that he was impressed that I called him and told me to stay in touch for the future.

7/16 I was determined to add some value for this owner and get my first client of my own. I called every tenant that didn't work out at our similar listings and asked if they were still looking and would consider a space at this shopping center.

8/16 After calling and following up with many tenants, I had one call me back and say that she was interested in touring the space. I used this as an excuse to connect with the owner again (the space still wasn't listed) and scheduled a tour with the owner for the following week.

9/16 The tour went very well with a tenant who was looking to expand her business into a bigger space, we wrote an LOI, and went to lease quickly. The owner was even more impressed than before because I was able to find a tenant for his center without having a listing.

10/16 The Landlord honored his word to the well known broker, although the listing agreement was never signed, and paid him 1/2 of commission on the deal that I did the work for both sides but in the end I had gotten myself the listing that I wanted when I first called.

11/16 Now I have the listing and learn about the property; he had purchased for $2.8MM from someone who inherited and ran the property into the ground as his own personal project. Leases were expired on modified gross leases meaning the tenants only reimbursed for CAM expenses.

12/16 Working in shopping centers from the beginning, I knew this was a sin in our world and we immediately started the process to convert all tenants to NNN leases so that he would be reimbursed for property tax and insurance expenses as well, drastically increasing the NOI.

13/16 Fast forward about two years and we converted 80% of the shopping center to NNN lease agreements. It wasn't easy getting tenants who weren't used to paying for these expenses on board but we leased the tenants who left and made deals with escalations for tenants who stayed.

14/16 Learning to have these difficult conversations is one of the most important tools you can have as a broker or owner. Not easy at the time but extremely rewarding when underwriting the value and analyzing opportunities.

15/16 At the NOI (net operating income) that the property was currently yielding, the owner was able to perform a cash out refinance at a value of $7.5MM, keeping his asset, and taking home approx. $3.5MM of tax-free money that he is currently holding onto waiting for deals.

16/16 This is how we increased this owner's equity by over 2.5x and pathed the way for him to take home a significant amount tax-free money for future investments. I love real estate, adding value, and can't wait to do this for myself and partners!