Real talk about taking on a business partner: Business partners can be great.

They can take you to heights that would've been impossible on your own.

But most of the time, the opposite happens, and things often end in disaster.

Gotta be honest with yourself about why you're taking on a partner, and what you're giving up.

When we're in due diligence, I can't help but cringe as I review leases.

The unnecessary and senseless mistakes many longtime owners make that cost them millions of dollars are beyond belief.

Literally throwing boatloads of cash into a fire for no reason.

3 Most Common: "5 Year Lease with Four-5 Year options at 2% increase"

All options are terrible for the landlord, and fixed rent options are insanity.

They give away control of the property for no reason, and take away any chance of benefiting from rent growth.

Why are you setting 2035 rents now?

What if the area grows and rents increase by 50%?

If you have to give options, set them at Fair Market Rent

After call, who can argue that "Fair Market Rent" isn't fair?

There's countless mega talented real estate professional out there working for large and small firms.

Many have the exact same thought every day:

Why am I still here and when I can run my own shop?

If this applies to you, this may be worth a read: Many of you work in asset management and acquisition roles.

You're stars.

You can find deals, you know how to maneuver to increase values, and you see how much money you make your firms.

But there's a great differentiator you may not have thought about closely.

I was a broker in my 20s, on a long flight back home from Europe.

There was no Wi-Fi on airplanes then, so idle thinking would occupy my time.

I'd been trying to solve a hard problem for months.

With no distractions, a million dollar idea appeared that would change my career: As a newer broker, competing for listings was an intimidating task.

Landlords received constant phone calls and mailers from brokers much more experienced than me.

I knew my career wouldn't survive if I couldn't figure out a way to separate myself from all that noise.

I believe that in order for someone to consider themselves a real estate investor, they need an edge.

What advantage do you have that others don't?

If you don't have such an edge, are you investing, or simply speculating?

A couple examples of advantages that provide an edge: Deal Flow Edge

Do you have a unique relationship with a large institution which brings you deals other don't see?

Do you have a known brand that will keep you top-of-mind in the brokerage world?

Do you have a longer track record than anyone else?

Because of this community, I was invited into Charlie Munger’s home this past fall.

It was 90 minutes, just Charlie and me, talking strip malls, real estate, business, finance, and life.

It was perhaps the most surreal experience of my life.

Here are 10 fun highlights: 1) Simple Living

As successful as Charlie was, he didn’t have a fancy house or car, and wasn’t living in a gated community.

I pulled up to a normal house on a normal street.

He didn’t want the spotlight - he had no desire for flash or to show wealth.

Silicon Valley in 1999 was wild beyond words.

There were countless wild stories.

Here's mine: I was a sophomore in college at SCU

Beyond using Napster and burning CDs, many of us couldn't help but notice the stock market.

Yahoo up $67 in one day to $348! Then to $500!

Qualcomm up 2,585% for the year!

AOL, Amazon, Ebay, Verisign

People were getting rich.

Mega rich.

Some real estate principles I live by: Keep Deals Simple

Complex deals feel smart and sophisticated, but actually introduce more risk and less profit.

The fewer people involved and the less complicated the math, the more chances you have at success.

Our best deals can be explained in seconds.

Coming up on three years in New York City.

Here's what stands out the most: Everyone's on an absolute growth mission.

No matter the field, they're here to push and challenge themselves to reach new heights.

They're incredibly determined, or it makes no sense to be here.

Earlier this year I had the surreal honor of speaking to a group of students at Harvard Law School.

One of the students asked me what makes a good lawyer.

Here are my thoughts: In 21 years in the real estate business, I've worked with and watched countless lawyers.

Transactional lawyers, estate attorneys, securities lawyers - the list goes on and on.

What separates the good from the bad?

Here are the top 5 things I look for.

When you invest with a real estate GP (expert who manages the investment for you), it is important to understand what fees are being charged.

Trouble is, many quickly compare one GPs fees to another, without digging deeper.

Huge oversight, and costly at that.

Let's dig in: The first question to ask yourself is, what is actually being incentivized?

Does this GP make a lot of money regardless of how they perform?

Let's start with the management fee:

Deal Case Study:

Bought Retail Property for $1.1M and sold for $3M.

Thought I'd take the time to go through one of our deals, step by step: 1) The Subject Property

Building: 10,000 SF
Lot: 24,000 SF
Parking Spaces: 24 (2.4/1000)
Corner Location: No
Age: 60 Years
Building Condition: Very Poor
Occupancy: Single-Tenant (vacating)
Rent: $10,000 + NNN, for another 18 months before tenant vacates

Some common traits of the most successful people I've been around: They can tell right away if someone's wasting their time.

Lots of people are fighting for their attention, and they know what to filter out.

You will hear back from them quickly if they think it's worth their time, but not at all if they don't

4 CAP this, 5 CAP that.

Everyone talks about cap rates, yet most market participants have lost touch with what they mean or what they stand for.

Commercial real estate is about yields. That's it.

We don't live in these properties, and they exist as a financial product👇 First, this thread refers to stabilized properties, not value-add.

Long-term leases, increases to offset inflation, no material capital updates.

It's what most investors seek - cashflow they can depend on.

They are not looking to do a bunch of work - just collect checks.

We hear about the impact of artificial intelligence a lot, and the other day I started thinking about what a real estate transaction would look like if we used AI: 1) The purchase contract:

"Write a strip mall purchase contract for 123 Harbor Lane in Kansas City - be sure it's seen as neutral to buyer and seller."

Done in 3 seconds.

Comments come back:

"Review contract changes and highlight only the edits that are material to the deal"

Jack makes $190k/year for two years, no bonus.

Jill makes $190k/year for two years, but gets a $10k bonus each year because their employer did well.

As a result, Jill is considered an accredited investor.

Jack is not.

This law makes perfect sense 😅 Ed is a great salesperson.

He sells lots of Hondas, makes $190k/year.

Bill is a terrible salesperson.

Sells one home in Manhattan a year, makes $200k.

Bill is considered an accredited investor, lots of opportunities open up.

Ed is not, and they don't.

This law is smart 😅

20 Traits of a Great & Successful Real Estate Broker: 1) A great broker is easy to get on the phone, no matter how far into their career they are.

2) A great broker wants the junior members of their team to do even better than they do.

20 thoughts on 20 strip mall tenants: Chick-fil-A

Many of their locations do over $8M in sales, they often pay over $300k in rent, and their buildings sell for a ton of money.

I personally will not make a deal with them because of the parking mess they create for surrounding tenants.

Great as a standalone.

Many buyers are having a really hard time making fast money in commercial real estate right now, so they're staying on the sidelines.

What changed?

The easy money strategy of the past decade went away.

Here's what happened: Many commercial real estate buyers relied on something called "cap rate compression" in order to make fast money.

Example:

Property produces: $200k of income/year
Market Cap Rate: 5%
Purchase Price: $4M (200k / .05)

The 10 Real Rules of the HOA: If you speak intelligently and make logical arguments, you'll make lots of enemies quickly

My friend Zarna was practicing law in New York City

She was 28, a mother of two, working not-stop.

She had to make a change, but leaving the workplace could make it impossible to return.

What unfolded next is one of the most incredible entrepreneurial stories I've ever heard. The long hours at the office would mean missing countless memories with her children.

She also knew that the longer she stayed in her role, the harder it would be to make a change.

So, she just went for it.