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Rich Dad Radio Show: In-Your-Face Advice on Investing, Personal Finance, & Starting a Business
The Untold Truth About Commercial Real Estate!
00:34:34
Everyone talks about flipping houses, but what if the real money is in commercial real estate? In this episode of Rich Dad Radio, we dive deep into big-money real estate deals with expert Hanifa Brown. From multifamily properties (5+ units) to...
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- [00:00]
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- [01:31]
Brent Daniels
This is the Rich Dad Radio Show. The good news and bad news about flipping real estate. Here's your host, Brent Daniels.
- [01:43]
Hanifa Brown
Welcome back to Rich Dad Radio where we're talking about the good news and the bad news about flipping real estate. I'm your host, Brent Daniels, and today we are talking about big, massive deals. We're talking about flipping commercial properties with Hanifa Brown. Let's get started. Welcome back. Hanifa Brown. How are you?
- [02:06]
Brent Daniels
I'm great. How are you doing?
- [02:08]
Hanifa Brown
I am excited to learn more about commercial real estate. I feel like commercial is the mystery box, right? Residential we understand we live in houses. We buy and sell houses. We understand what realtors do. We understand that land on some level, I understand, right? It's pretty easy to understand what, what, what you can do with land. But commercial, besides this building that we're in, which was an interesting process to go through, I feel like commercial is the biggest kind of where everybody wants to go, right? It's the biggest goal that most real estate Entrepreneurs have is owning big time apartment complexes or owning big office buildings or owning skyscrapers or whatever else. When we think about dreaming big, it's not just, you know, I want to own 100 of these little houses in, in Detroit or Indianapolis or something like that. I want to own big pieces of commercial real estate. Like why is it so? I mean, is the information out there kind of like guarded? Are people kind of not telling us the full story about commercial?
- [03:21]
Brent Daniels
I think that's a great question. I wouldn't say that it's guarded, but it's more so a situation of you don't know what you don't know. Right. You touched on the asset classes already. Commercial is comprised of not just your residential and clusters, which would be multifamily, that's anything over four units technically is converted to a commercial product.
- [03:46]
Hanifa Brown
Right.
- [03:46]
Brent Daniels
You have the office sector, you have the retail sector, which is going to be your restaurants, your nail salons, different businesses that fall into that category. And then also your industrial warehouse space, which is a major sector. Yeah. And then you have land. Right, Right. So depending on what you do with the land and how you convert that, it could be used for either residential or commercial, depending.
- [04:11]
Hanifa Brown
Now when I, when I bought this building, it was an interesting process. Right. I had to put more down than I'm used to for residential. I feel like I had to have some experience with owning commercial real estate, but maybe I didn't. Does that. Do you have to have to be able to buy a commercial with, you know, just conventional financing or bank financing? Do you have to have experience? Right. Or do you have to have somebody that has experience?
- [04:43]
Brent Daniels
Yeah, that's a great question.
- [04:44]
Hanifa Brown
To get qualified.
- [04:45]
Brent Daniels
So to get into commercial, depending on the level of which you're moving into the commercial sector, there, there may be a requirement for experience. If you're looking for a larger space, a larger building, and then you're looking for financing there, typically that down payment is going to pretty hefty. So they're definitely going to be looking at assets and then like you said, your experience because they're taking a risk at that point. But there are certain facets of commercial where it's easier to get started in the business if you're looking into maybe your multifamily or maybe a single tenant office where it's priced, you know, reasonably within the scope. And so still coming in with that down payment. Having those assets is important, but they may not lean so hard on the criteria of experience. Also taking into consideration that one way to get into the Commercial sector would be through real estate investment trusts. So REITs. Right. So if you don't necessarily have the experience up front, finding a good REIT that you can contribute to and basically become an investor that way would be one way into the business.
- [05:55]
Hanifa Brown
Guys, if you have watched the channel, you recognize Hanifa. Hanifa has done a lot of videos years ago with Alejandra and myself, and we were answering questions about wholesaling, real estate and traditional, just residential real estate. But you made the transition over to commercial. I assume that you made that because you like doing bigger deals, Correct. Is that it?
- [06:19]
Brent Daniels
That is correct.
- [06:20]
Hanifa Brown
Was that always the plan?
- [06:21]
Brent Daniels
Well, it's about scalability. Right. After being in residential for so long, it's like, okay, how can I take this to the next level?
- [06:29]
Hanifa Brown
Sure.
- [06:29]
Brent Daniels
I wanted to learn the development side of things and getting my feet wet on the commercial side. Understanding that product, the asset classes there was important for me to fully encompass the bigger picture.
- [06:41]
Hanifa Brown
Why development?
- [06:44]
Brent Daniels
So when it really, really piqued my interest was right when that Boom hit in 2020, when we saw a surge. I mean, Arizona, Phoenix specifically, has been on the watch list for a while in terms of population growth, but we really, really saw an expanding trajectory during that time. And so I was in a position, like all the other Realtors, where we're fighting, right. To get these offers accepted. And so it just sparked an interest in my mind. I'm like, why am I fighting on this side? I want to be on the demand side. Right. There's going to be a demand for more product. Historically, I mean, we've been behind in terms of the amount of product available on the market.
- [07:33]
Hanifa Brown
Yeah.
- [07:34]
Brent Daniels
Versus the demand.
- [07:35]
Hanifa Brown
But isn't the big thing with commercial is, oh, the sky's falling. Nobody works in offices anymore. All these buildings are empty. I mean, you've got the tallest building in Arizona, which is the Chase building downtown, that I think is pretty much all empty, if not like 80% of it is empty. So, I mean, when everybody's going all doom and gloom with commercial, you're rushing in.
- [07:59]
Brent Daniels
That sounds crazy. So you have to take into consideration that office is only one sector of the commercial availability of products. You have your industrial warehouse, which is, I mean, they've seen their third year, I believe, of astronomical results. They're doing extremely well. You have multifamily, which does really well. So all in all, commercial for the past few years has been doing fairly decent. Now, you do hear about the doom and gloom in the office space, which makes sense, Right. You have a lot of these larger corporations who did have that work from home situation. And so they weren't utilizing a lot of that space.
- [08:40]
Hanifa Brown
Yeah.
- [08:41]
Brent Daniels
I mean, I don't want to make it political, but we've already seen that the president is starting to order, at least for the federal employees.
- [08:49]
Hanifa Brown
Yeah. People to go back. Yeah.
- [08:50]
Brent Daniels
To go back to the office. And that's. I feel like that's a great step in the direction because, you know, a lot of other corporations are going to look at that, that it's like, okay, if we have a certain sector that's going back to the office, I think it kind of makes it easier to follow suit and kind of command for other businesses, say, hey, we need these folks back in the office. And there's a direct correlation to productivity. So they're doing a lot of studies on that.
- [09:15]
Hanifa Brown
Just to get weird here for a second. AI, Right? They're like, oh, AI, the computers are going to take over. They're going to take all these jobs. There's not going to be as much office space. And then I saw a report that they actually need more space to replace where people sit with servers.
- [09:33]
Brent Daniels
Right. Isn't that insane?
- [09:35]
Hanifa Brown
Right?
- [09:35]
Brent Daniels
Yeah, no, it's.
- [09:36]
Hanifa Brown
So, I mean, they still have that. And something that I always think about Hanifa is I think that I did. I looked at a report in, in the Phoenix Business Journal and I think only nine. It might have been 11, 9 to 11% of the zoning in Maricopa county here is. And this is pretty similar around all, all the major metropolitan areas is actually zone commercial. So if you look at it like a supply and demand and you go, okay, well the population has like doubled in the last hundred years here. Right, Right. But the amount of zoning has not exploded with that. One would say that if you hold commercial longer, it's going to be more valuable than residential.
- [10:21]
Brent Daniels
That's correct.
- [10:21]
Hanifa Brown
Is that, is that right?
- [10:22]
Brent Daniels
That is correct. And then one other aspect, that's a great point. Another reason why commercial is great just to spin off of that is you do have the ability to a certain degree to force appreciation versus your residential aspect, where you're gonna look at appreciation over time based off inflation, based off of the local economy. If you have a commercial product where you're constantly revamping and ensuring it's coming up to standard, that's a way to kind of increase the value of the property within that moment. Right. And then command higher rents depending on what's happening.
- [10:59]
Hanifa Brown
Well, listen, I get asked on a weekly basis, hey, can we wholesale commercial deals can we wholesale commercial deals. Can we wholesale commercial. Right. Then I said, absolutely. I said the issue that you run into with wholesaling or flipping commercial deals is the pool of buyers is much smaller. Right. Because these are bigger price deals. Right. Typically. And so if you have buyers that are really ready to jump on a great opportunity and you're reaching out to property owners directly when they're ready to go, or maybe, you know, unfortunately, somebody passes away and it gets inherited by the family and the family has no, no, you know, kind of passion for the real estate business and they just want to sell these things and these properties are in rough condition. It's the same thing as residential. It's just the pool of buyers is much smaller. And typically that pool of buyers is not going to be coming in all of their cash just sitting in an account. They're going to be coming in with a creative offer and. Or they're going to be coming in with bank financing.
- [12:03]
Brent Daniels
Exactly.
- [12:03]
Hanifa Brown
And so it is different. And the values of commercials based on the income it is.
- [12:10]
Brent Daniels
That's correct, right? Yeah, exactly.
- [12:12]
Hanifa Brown
So let's just speak right now to the audience that goes, hey, Hanifa, do you have buyers? If I went and found an off market commercial deal, do you have buyers that you could sell this to?
- [12:23]
Brent Daniels
Absolutely. Right, absolutely.
- [12:25]
Hanifa Brown
Okay. So connecting with really good commercial agents, wherever you're at in the country is important. If you're going to go with the.
- [12:31]
Brent Daniels
Strategy, that is the most important thing is really understanding who the brokers are who are moving product in the space. I think it's a little bit easier on the residential side to say, okay, I'm not licensed, let me look into this and maybe pick up something as an investor. But on the commercial side, it would behoove you to lean on a broker for that to be that resource of knowledge. Yeah. The technology, like the platforms, such as Crexi, I'm going to speak a little jargon, but Crexi, LoopNet, your costar really being able to pull data and analyze that, you're going to want to lean on a commercial real estate broker for that.
- [13:11]
Hanifa Brown
Yeah, I feel like LoopNet's kind of like the Zillow for commercial and Crexi is kind of like that. It doesn't have as many like of the comparables. I feel like maybe if you buy some sort of membership to it. I don't know if you could see what actually sold. Can you or no, you have to go through a broker.
- [13:30]
Brent Daniels
You can, but you can see what's available. But CoStar is going definitely going to be more encompassing.
- [13:37]
Hanifa Brown
No way.
- [13:38]
Brent Daniels
Like you could see what sold on LoopNet. No, no.
- [13:42]
Hanifa Brown
Right. Is there any, is there any Zillow for commercial?
- [13:45]
Brent Daniels
No, not necessarily.
- [13:45]
Hanifa Brown
Is there any Redfin for commercial?
- [13:47]
Brent Daniels
No, not, not customer facing. Which is again why you want to lean on that broker for that strategy and really being able to pull the data to analyze.
- [13:55]
Hanifa Brown
Right. So if you need, is this a deal or not a deal? You bring it to your broker and say, hey, listen, what should I offer? I've got this, I got this property owner that has a 16 unit apartment complex. They want to sell this, I don't know what to offer them. And you go, hey, you know, this is what you want, a smoking deal here. This is the price that I would offer.
- [14:13]
Brent Daniels
Exactly, exactly. And then there are different strategies into looking into the value of the property. So for the typical investor who is coming from the residential side, they would look at comparables in the area. It doesn't necessarily work that way in commercial. There are times where that does work if you're looking at certain multifamily properties. But if you're looking at a retail space, for example, or maybe some type of warehouse, it's. You're going to want to rely on certain data such as the income for that business coming in.
- [14:46]
Hanifa Brown
So, yeah, how does that work? So I've got, I'm looking at a building and it's destroyed. All right, It's a warehouse and fixed up. If it was looking decent, I can get 5,000amonth for a lease. Okay, let's go, let's go, let's have fun. I could get 10,000amonth. How do I know what the value is?
- [15:12]
Brent Daniels
So again, relying on the broker, right? So there is a way to do an analysis based off of comps in the area, but then also understanding, you have to know what the cap rate is, right? Understanding the noi, which is the net operating income of the property, and then comparing that to the property value, that's actually going to give you your cap rate. And understanding that aspect of it, that'll give you more information on as to whether it's a good deal or not.
- [15:41]
Hanifa Brown
I don't want to understand any of that. I just want to go and have a conversation with people that have run down commercial buildings. And then what? Just bring it to a good broker and they go, hey, this is what you should offer.
- [15:54]
Brent Daniels
That's my point exactly.
- [15:55]
Hanifa Brown
Doesn't the, won't the broker steal it though? Won't the broker then call up and be like, hey, you know, I Heard you're selling this.
- [16:01]
Brent Daniels
No, there's a risk.
- [16:02]
Hanifa Brown
There.
- [16:03]
Brent Daniels
There's a risk in everything. Right. But the whole idea is that the work. The broker is working on behalf of you as their client.
- [16:10]
Hanifa Brown
Right.
- [16:11]
Brent Daniels
And there is a way to sign an agreement, and as long as you're, you know, you build up that relationship of trust. Like I said, there's a risk in everything. I don't. I don't know if I necessarily.
- [16:22]
Hanifa Brown
I feel like. No. Well, my experience with commercial brokers is this your first five years in commercial, all you're doing is hammering the phone all day.
- [16:30]
Brent Daniels
Yeah.
- [16:30]
Hanifa Brown
You're calling. You're calling the property owners. You're trying to talk to the buyers of this. I bought this building and boom, all of a sudden, I'm getting text messages, emails, calls from. From every broker that works in this area. Right. And they're like, hey, do you want to sell? Do you want to sell? Do you want to sell? They're trying to build that relationship over time. Someday do that. Right. That's why I think it's, It's. It's. It's an interesting competition that you work with. If you, if you're not a commercial broker, if you're just a, you know, somebody that's transitioning from residential wholesaling to commercial wholesale, these people have had tremendous amount of calls.
- [17:04]
Brent Daniels
Right.
- [17:04]
Hanifa Brown
They had conversations with people. Now, it's a timing thing, but a lot of the brokers are not afraid. You can't be afraid of the phones.
- [17:12]
Brent Daniels
No, you can't in commercial realms. Exactly.
- [17:14]
Hanifa Brown
Right.
- [17:14]
Brent Daniels
Yep.
- [17:14]
Hanifa Brown
And so that. That is the concern is like, wait, they might have already talked to this person. You know what I mean?
- [17:20]
Brent Daniels
And, and what does that mean? Right. It's a numbers game.
- [17:24]
Hanifa Brown
Yeah.
- [17:24]
Brent Daniels
Right. You have to understand that. That being in front of the person constantly, whether that's through mailers, kind of like the same strategies on the residential side through mailers, through contact. Right. But also having that wealth of knowledge, you know, sometimes it helps to be able to provide information to clients, you know, just for the sake of saying, like, hey, this is what's available. There was a sale in your neighborhood around this time. Maybe you should look at that. I know you have a property located here because you're creating value for that person. So, yeah, there are different strategies.
- [17:59]
Hanifa Brown
Well, listen, I mean, it's. If you get a name, address, phone number for somebody that has a property that needs significant investment, whether it be residential or commercial, that's really all you need, Right. To really start building some momentum and building your pipeline. And see if they would consider an offer and see if they've made the decision to sell that property or not. And then what you're saying is, instead of like just trying to run the comparables like we do with a deal machine or a prop stream or a Zillow or the mls, you really need to get access to a broker to be able to understand because there's a lot, there's a lot more nuance to it. There's a lot more understanding what is the potential of this building, because that's really what the bank's looking at. Yes, they're looking at comparables that are the same asset class, but really they're like, it could be different. You could have a building that is way more valuable because you can get way more in rent.
- [18:55]
Brent Daniels
Exactly right, exactly.
- [18:56]
Hanifa Brown
It's income based.
- [18:57]
Brent Daniels
Yep, exactly. There's a cost value approach.
- [19:00]
Hanifa Brown
What would you suggest? You're talking to somebody that maybe has a year or two or three in. In, you know, maybe wholesaling real estate, maybe flipping real estate, maybe being a real estate agent. What asset class would you go after commercial wise, that you think is a good way to just kind of build the foundation and a little bit of experience and it's not as tricky as something else. What's. What's the least tricky and the most tricky when it comes to commercial?
- [19:29]
Brent Daniels
Yeah, I think that's a great question. And if you're coming from the lens of someone who is a Realtor prior to or has, you know, a little bit of experience investing, I think the easiest way in would probably starting with a multifamily asset class, up to how many units. I mean, so it depends on the level, experience of experience that you have in addition to at that time, like what you're able to do in terms of investment. Right. Like you have to be wise with your money. It has to make sense financially. But also remember that this is something I mentioned previous. Once you get beyond four units, you're moving technically into the commercial asset class. You have 5, 6, 7, 8, 9, 10 units. And then you have that experience. That's definitely going to be the easy way in. And then looking at it from the perspective of asset management, the benefit there is you're managing one property or you have a property manager who manages one property versus managing, you know, 10 different single family residences, which could be a complete headache.
- [20:34]
Hanifa Brown
Yeah. One of my heroes, and it was a book that I read way back, it was called Real Estate Riches by Dolph Deroos. And Dolph lives here Just at the, at the Biltmore. And he's phenomenal. And he talks about, you know, hey, listen, commercials. You're not putting kitchens in every unit. You're not like. And he likes office, he likes strip malls, he likes airports, he likes these type of, you know, assets. And he's just talking about the way that he looks at it is the least amount of plumbing that goes in a building, the better.
- [21:07]
Brent Daniels
No, this is true. This is true. I mean, that's something that we're seeing now with the office product. You kind of mentioned that there's a lot of office that's been sitting vacant with some of these assets. They're able to do conversions. Right. And convert it to another use due to the fact that it doesn't necessarily have all those plumbing issues.
- [21:29]
Hanifa Brown
Yeah.
- [21:29]
Brent Daniels
That you would see if you were to convert a different type of product. So.
- [21:33]
Hanifa Brown
So just to get back. Sorry, I. I went off track there a little bit. I was just. I. I think Dolph is amazing. Anyway, the. So you're saying gateway drug is, you know, kind of the five to maybe 12 unit apartments. Definitely is probably a good way to get going, start building relationship with a commercial agent. Does a commercial agent do all assets, or are there certain commercial agents that just do multifamily, that just do commercial, that just do industrial, that just do medical, whatever.
- [22:05]
Brent Daniels
Typically, you want to find a broker who specializes in the product, Right. So there are products or. I'm sorry, there are brokers who specialize in industrial warehouse. There are specific things that, you know, are specific to that class that really need to be studied. And you want someone who understands that when you're moving into that type of space, medical is a whole different animal, Right. Having certain power capacity and having a broker who understands that, Right?
- [22:36]
Hanifa Brown
Yeah.
- [22:38]
Brent Daniels
Again with multifamily, that's completely different. So having a broker who specializes is definitely very important.
- [22:44]
Hanifa Brown
How do you find that?
- [22:46]
Brent Daniels
Me?
- [22:48]
Hanifa Brown
Well, I mean, the people that, you know, aren't in Arizona. The people that are around the country, they want to do a, you know, 12 unit in, you know, whatever. Green Bay, Wisconsin.
- [22:59]
Brent Daniels
Yeah. I mean, it's easy to go on LoopNet for starters. Right. If you want to be very simple with it. Starting off, LoopNet is the consumer facing technology for CoStar. Right. They're. They're created by the same company, but it allows the consumer to get a little bit of data and kind of research their local market to see what's available. And it'll have broker information there. So find a local broker that way.
- [23:26]
Hanifa Brown
I got A, I have a, I have a friend John, that, that flips commercial. He does a pretty good job and everything.
- [23:33]
Brent Daniels
Yeah, okay.
- [23:34]
Hanifa Brown
Yeah, exactly. And, you know, he'll go find a building that's in pretty rough shape. He'll, he'll, you know, make it look good and modern and open it up, you know, kind of stabilize it over a few years and then flip it. Right. When you're working with, when you're going after like a wholesale deal and you want to wholesale to somebody like John, what are, what are the numbers look like? You know what I mean? Like, you have to understand what it'll sell for in a few years.
- [24:04]
Brent Daniels
Right.
- [24:04]
Hanifa Brown
Which feels very heavy. It feels like that's a long way away. You never know what's going to go on. You don't know what's going on with inflation or the economy or interest rates and all those things. So I assume that commercial flippers are more conservative. What do you, what do you, what do you think? Maybe I'm crazy. I have no idea.
- [24:24]
Brent Daniels
No, I would say that's an accurate statement. But then you also want to take into consideration that, I mean, just like the stock market, different investors have different risk appetites. Right. And so looking at commercial, what's really going to be important for the most part is understanding where someone wants to be with their cap rate. And so the higher the cap rate, the more risk involved, and the lower the cap rate, the less risk involved. So basically what that means is if you have a higher cap rate, you're probably going to have, maybe you're less of like a credit tenant, but there also may be the opportunity to make more money in terms of doing a forced appreciation. Right. Providing more improvements to the building so that you can create the circumstances so that you can get a better tenant in there or someone who's willing to pay a little bit more for the area.
- [25:26]
Hanifa Brown
Yeah, yeah. So this building right here next to me has been empty forever, and it's ugly and it's old. How do. What are they doing? You know what I mean?
- [25:35]
Brent Daniels
Like someone who doesn't want to sell, they just want to sit on.
- [25:38]
Hanifa Brown
Is that what it is?
- [25:39]
Brent Daniels
I mean, it's just.
- [25:42]
Hanifa Brown
And they don't want to lease and they don't want to improve. I mean, I, I feel like there's a few buildings in this area that are like that. Are these just independently wealthy companies that are. Or they just planning to exit it, you know, from appreciation or whatever else? I feel like the longer it sits empty, I mean, there's, there's People that walk down the canal and are, like, living, you know, in these areas and the police are here and they kick them out all the time. And it's like, why aren't, why aren't they selling it? Or why aren't they fixing it up? Or is it just. It's just an asset on their, on their, you know, kind of balance sheet and they, they just don't mess with it.
- [26:19]
Brent Daniels
So I think that is.
- [26:20]
Hanifa Brown
This is crazy.
- [26:21]
Brent Daniels
No, it is crazy, but that's a great observation and I.
- [26:24]
Hanifa Brown
Can you sell that, please?
- [26:26]
Brent Daniels
I'll look into it for you. To be honest with you, I feel like that's a deeper question than maybe you have realized. You may have realized on the onset because there's a direct correlation to these owners who are willing to sit on a property like that. It's like, why aren't they selling?
- [26:43]
Hanifa Brown
Right.
- [26:44]
Brent Daniels
So the big stigma has been around commercial real estate necessarily not doing so well over the last few years. But if you look at the data consistently and you kind of remove the numbers from office, because that is a specific situation. Commercial real estate has been doing fairly well. Generally. If you remove that data, it's just.
- [27:07]
Hanifa Brown
Office that's taking a hit.
- [27:08]
Brent Daniels
It is office primarily and for a specific reason. But if you take into consideration that the market and what's happening with these property owners basically tells you it pretty much dictates, like, the real situation. Right. So if you have these owners that are not willing to sell, what does that tell you? Right? Like it's not doing that bad. You have a lot of people who are coming in who are wanting to invest, and so they're, they're low balling. Right. Because that, that's the name of the game when you are looking for something to invest in. You want to try to.
- [27:39]
Hanifa Brown
You make money when you buy, Right.
- [27:41]
Brent Daniels
You capture it at the, the lowest price available. But these sellers are not budging. They're not budging. You know, you may find a deal where, you know, it works out, but for the most part, I feel like that's kind of dictating, you know, the market where sellers are still feeling confident in, you know, what's, what's moving.
- [28:01]
Hanifa Brown
Do you feel, you know, every deal. Sorry, versus no, that's okay.
- [28:06]
Brent Daniels
I was going to say what's moving versus, you know, what people are saying, like, oh, it's so bad. If it was that bad, really, then, you know, a lot of these sellers would be forced to sell.
- [28:14]
Hanifa Brown
Yeah, got it.
- [28:15]
Brent Daniels
Yeah.
- [28:16]
Hanifa Brown
Every commercial deal I've done has been an individual that Owns it. Is that who we should be going after? I feel we should be reaching out to, you know what I mean? Like, I, I've called, I didn't mean to, but it just happened. I'd call like these big, you know, property management companies or these big REITs or whatever and they want nothing to do with it. They don't even know what the property is. They don't know what I'm talking about. They don't care. It's somebody else's department or whatever else.
- [28:43]
Brent Daniels
Yeah.
- [28:43]
Hanifa Brown
And so I don't really get to talk to any of the decision makers.
- [28:46]
Brent Daniels
Right, right, right.
- [28:47]
Hanifa Brown
Do we just filter all those out and just focus on, okay, these are individual owners or somebody that maybe it's in, you know, some sort of LLC or a family trust or something like that?
- [29:01]
Brent Daniels
Yeah.
- [29:01]
Hanifa Brown
Is that, would, I mean, that be better to target?
- [29:04]
Brent Daniels
That's the low hanging fruit. Right. Like it makes sense. It makes sense from, it makes sense from the standpoint of what you're able to do in that time. If you single property owners, it's easier to approach them like you said. Now when you want to move into these bigger, more goodness. Wow. This isn't live, right?
- [29:27]
Hanifa Brown
No.
- [29:28]
Brent Daniels
Okay. Now when you want to move into these larger scale opportunities, then you again, this is something that you absolutely want to rely on that broker for because of the contacts that we have and the rapport that we've built with these companies. So. But it's still certainly doable.
- [29:46]
Hanifa Brown
Awesome. Wealth foundations.
- [29:48]
Brent Daniels
Wealth foundations. So I'm glad you brought that up. That is my ebook that I am launching currently. So it is the simple blueprint to starting in commercial real estate.
- [30:01]
Hanifa Brown
Nice.
- [30:02]
Brent Daniels
So again, typically when people think of commercial real estate, it could be daunting at the offset. There are a lot of people who invest in single family commercial real estate and they've never really thought or considered that they could possibly own something in the commercial sector. So for those guys and gals who are currently in the market of investing for single family residences, maybe it's something that you should consider maybe looking over here and saying, okay, if I'm able to, you know, find success in this sector, maybe there's something or an opportunity for me here. And then it just kind of gives the blueprint for where to start and how to get your feet wet.
- [30:43]
Hanifa Brown
Yeah, I love it. You know the, when I think of, you know, the perfect asset, like when you look at the cash flow quadrant, right there's employee, self employed, business owner, investor. When I think of the investor, I think of one Being the bank, which is lending money out. And two, commercial real estate. I do, I think of. I would rather own one huge complex.
- [31:10]
Brent Daniels
That is the idea.
- [31:12]
Hanifa Brown
Or, you know, a bunch of warehouses or something. You know what I mean? That's just super easy to manage. You don't have a tremendous amount of tenants, maybe if you're doing like a, you know, apartment complex. But you got to, you got property managers on site doing that. That's the end game.
- [31:29]
Brent Daniels
Exactly.
- [31:30]
Hanifa Brown
You know what I mean? And then you get something like that, like either paid off or, you know, you, you get it down. You get that debt paid down to where you can pull some equity out and then go buy some more and then get twice as many of those properties, sell half of them, pay the other half off. I mean, that's real.
- [31:50]
Brent Daniels
That's.
- [31:51]
Hanifa Brown
That's real cash flow.
- [31:52]
Brent Daniels
Exactly, exactly. Exactly, exactly. And that's another great point. Looking at the cash flow, I feel like that, that's going to be critical on this side of things. I know it's sometimes it's easier in other aspects of real estate to say, okay, you know, I'll rely on the appreciation over time. But looking at cash flow, especially in the commercial sector, that's. That's really where you want to put your attention as an investor.
- [32:17]
Hanifa Brown
What are you going to buy? What gets you excited for cash flow for that? You know what I mean? When you're looking at. Because you got the commercial for a reason.
- [32:25]
Brent Daniels
Yeah.
- [32:25]
Hanifa Brown
Right. You were doing luxury houses. Luxury houses. Now to commercial.
- [32:30]
Brent Daniels
Yeah.
- [32:30]
Hanifa Brown
You like doing the bigger deals.
- [32:32]
Brent Daniels
The bigger deals I like.
- [32:33]
Hanifa Brown
Because you get. Because bigger, bigger deals means excess income to actually go buy assets.
- [32:39]
Brent Daniels
Exactly.
- [32:40]
Hanifa Brown
Right. And so what do you like?
- [32:41]
Brent Daniels
I like mixed use.
- [32:42]
Hanifa Brown
Okay. What does that mean?
- [32:44]
Brent Daniels
So mixed use could be a little bit of your multifamily, but then it also has a business component. It could be retail below mixed into that structure. So, I mean, if you're looking for diversity, I feel like that's the way to go, and that excites me.
- [33:02]
Hanifa Brown
Awesome.
- [33:02]
Brent Daniels
Yeah.
- [33:02]
Hanifa Brown
Neva, how can people get the wealth foundations ebook?
- [33:06]
Brent Daniels
Excellent question. Go to wealthfoundationsebook.com and you can go ahead and make your investment into your start over. Start over.
- [33:16]
Hanifa Brown
Yeah.
- [33:17]
Brent Daniels
Okay. I've been talking too long.
- [33:19]
Hanifa Brown
You're good.
- [33:20]
Brent Daniels
Okay, okay, okay. Can you ask me the question again?
- [33:23]
Hanifa Brown
How do we get the wealth foundations ebook?
- [33:25]
Brent Daniels
Great question. Go to wealthfoundationsebook.com and that's easy. Yeah. And you can take that route and make the investment into your future directly.
- [33:35]
Hanifa Brown
Cool.
- [33:35]
Brent Daniels
Yeah.
- [33:36]
Hanifa Brown
And Then people reaching out to you. People want to buy commercial real estate or talk more about commercial real estate. Is it something that they, if they're out of state or if they're in state, is it more just Arizona?
- [33:47]
Brent Daniels
I'm licensed in Arizona and Florida.
- [33:49]
Hanifa Brown
Oh, awesome.
- [33:50]
Brent Daniels
Sunbelt.
- [33:50]
Hanifa Brown
We got a lot of, we got a lot of people, a lot of rhinos, A lot of, a lot of people that are doing amazing things in both states. So. Yeah. How do they, what, what's the best way to reach out?
- [34:02]
Brent Daniels
Reach me@hanifabrown.com I'm on Instagram, Facebook, LinkedIn, but hanifabrown.com is my website. Direct inquiries.
- [34:10]
Hanifa Brown
Yeah, we'll put all the links down below. Guys, awesome.
- [34:13]
Brent Daniels
Thank you so much for your time.
- [34:14]
Hanifa Brown
I mean you disappeared for like years now. I know what you've been doing. So good to see you.
- [34:19]
Brent Daniels
Great seeing you. Thank you.
- [34:20]
Hanifa Brown
That is it, guys, if you are interested. Listen, I think the end of the road, the real, the real big players play is commercial real estate, without a doubt. And so being able to, I don't want you to get distracted if you're just starting on your real estate journey, but as you're looking forward, I think we all have those big goals of having that big passive cash flow and it's staring us right in the face. We all know it's going to be from commercial real estate. So start educating yourself a little bit. Don't get distracted. But if you're at that point where everything's running and you've got a really good business and you've got the, the residential side down, start tip. You know, getting your toe into the, the water of commercial and learning it because the faster you learn it, the faster you can get to those deals and get really good deals. And that's when the long term asset building those big assets, that's where that happens. Because I'm telling you, I think it's the classic four green houses to a red hotel and so the red hotel.
- [35:30]
Brent Daniels
That is a great analysis.
- [35:32]
Hanifa Brown
That is it, guys. Thanks for joining us on the podcast. I'm Brent Daniels, your host and I encourage you as always to go out there and talk to people. Love you guys. See you soon.
- [35:47]
Brent Daniels
Thanks for listening to Rich Dad Radio. The Good news and bad news about flipping Real estate hosted by Brent Daniels. To learn more, go to richdad.com don't forget to like and subscribe. Wherever you get your podcasts.
- [36:03]
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