From Farm Roots to Fortune: Turning Chaos into Commercial Gold with Joe Killinger

[0:00] Welcome to the REI Agent, a holistic approach to life through real estate. I’m Matias, an agent and investor. And I’m Erica, a licensed therapist. Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing. Tune in every week for interviews with real estate agents and investors. Ready to level up? Let’s do it.

[0:24] Welcome back to the REI Agent, Matias here. There’s been a lull in recordings, and that won’t be apparent for you because we post consistently. But I haven’t recorded anything for, like, a good, almost two weeks, probably. So hopefully we’re not rusty here. Or maybe I’m more enthused and ready to go and talk too much. But in that time, we went camping at a state park, which was a lot of fun. We typically enjoy the camping life. It could be tough at times, for sure. But we try to get out and get the kids some different, unique experiences. And camping has been something we’ve done three to four times or so a year, on average, I would say. A lot more during COVID, for sure. And then also Erika went to visit her nephew, went to Kansas to her parents’ house, and her nephew was there.

[1:32] So she got to meet her nephew, and she really enjoyed it. That meant she was gone for about a week, and I was home alone with the kids. And that is a challenge, for sure.

[1:46] We talk about this pretty openly. When we got married, we never had the intent of having a more traditional household. It was never something that I was seeking or she was seeking. But definitely, as my real estate career and my personality type and stuff has evolved, I’ve definitely been probably more 70% of the work in the house, like income earning work, where Erika has been more heavily involved, maybe 70% of the household stuff, even though she still works and I still help around the house. So that transition, though, from her being 70% in charge of the household to me being 100% in charge of the household is a bit of a shift. Figuring out what the kids are going to eat for lunch, have to pack the lunches, all that kind of good stuff is definitely can be a challenge.

[2:42] But we got through it and I can tell that I have a better relationship with the kids for it. It’s good to do that. I had been working to have a quarterly trip with the kids, probably the oldest ones right now, that we would go somewhere and spend a weekend or at least a night together without Erika just to kind of keep building that bond. And that hasn’t happened for a little bit. But this is definitely a very bonding experience for us. So we did have a lot of fun. Today, we have Joe Killinger out of LA, a commercial agent into investing as well. He was a great person to talk to. He dabbled in residential sales as well a little bit. Talked a little bit about the differences between the two and maybe where somebody might gravitate towards if they’re getting started in their career.

[3:48] But yeah, it was a great conversation. And we kept kind of coming back to learning the new things, learning real estate as a whole is so important. Even if you are only looking to learn about the commercial side more to be an investor, there’s a lot of value there. And that’s one of the big purposes of the show. I think it’s trying to get a whole more holistic picture of real estate. If you’re just a residential agent, there may be a lot of things that you’re not familiar with on the investing or the commercial side of things. But it is such a great opportunity for us. We talked a little bit about the 100% bonus depreciation coming back and how that can be a huge game changer for agents. He talks about starting a fund for his agents that is kind of like a 401k.

[4:45] And think about if you’re investing in a 401k, you’re putting your stocks maybe, you’re buying index funds maybe, or you’re buying stocks. How much do you really understand about those industries that you’re actually investing in as opposed to they are actually investing in commercial properties? And there’s a fund of their agents that are buying into this to help make the deal go and they get a return based on it. Not only do they get a good return, they get an appreciating asset, but they also get some awesome tax write-offs especially with this 100% bonus depreciation. So we as real estate professionals have a huge advantage there. And it’s definitely something people should consider. But yeah, anyway, Joe, it was a great person to talk to.

[5:33] And we are on this journey together to continue learning. If you’re listening to this podcast, you are learning more and more. Hopefully every time you listen, you’re learning something great. And Jess, it’s a friendly reminder to go ahead and subscribe on your favorite platform. Give us a review. Help us grow our audience and share this great content with everybody. So without further ado, here is Joe Killinger.

[6:03] Welcome back to the REI Agent. I’m here with Joe Killinger. How are you, Joe? Not too bad. How are you doing? I can’t complain today. Thanks so much for being on the show. I’m excited for this conversation we’re going to have. Tell me a little bit about how you got into the wild and wonderful world of real estate. Yeah, I started off from the Midwest. And my father, I grew up on a working farm, wall back Nebraska, 10 of 281 people. So dating pool was pretty shallow, as you can imagine. But my father got to be an auctioneer. And he started off doing your typical sale barn stuff, livestock. And then he got into machinery. And then he wanted to do real estate. And the real estate really was intriguing to me.

[6:50] And I just love the way. And this is mostly farmland, of course, back there, because this was central Nebraska. And so I really got into it. And then when it was time for me to go off to college, I decided to get my real estate license. And if you can imagine, I was 18. I looked like I was 12. And Wood Brothers Realty in Lincoln, Nebraska. I just went out there to interview. And one of the Pace Woods Junior said, OK, we can give it a try and see how it goes. And I just fell in love with the business. And I was really learning how to do farmland there and residential. I didn’t like residential, but it was just interesting learning. The people were interesting and were so welcoming. And I just love the way to put deals together.

[7:35] They ended up moving to Los Angeles. I ended up in the real estate auction business because it seemed familiar. Turns out it’s completely different than the way I grew up, of course. And I just love the business. And I eventually gravitated to doing some residential. And then I’m like, well, this is definitely not for me. And I got into commercial real estate. So I do brokerage and I do investing as well. Matter of fact, we are just starting to raise a small fund to help some of our agents in our office invest. So that’s cool. Yeah, it’s fun. There’s a new law that’s been proposed that used to be. And don’t hold me on this. It was 250,000 you had to have. There were a million net worth and 250.

[8:20] And then before you could invest, while they’re removing that, you just have to have experience in or a knowledge base in real estate for you to invest. So I think that’s going to really open up a lot of doors for a lot of people. And I just think real estate agents should invest. And so this is the way we get our agents. They’re going to be able to invest right alongside of us. And so I just love the industry. I love seeing young people get into the industry and really grow their business. And that’s what joekillinger.co is really all about, is helping people get into the business or that are in the business and have been struggling a bit, help them figure out their path. I love it. Joe, I actually had not heard that they were changing.

[9:08] The million net worth.

[9:14] It hasn’t passed yet. Not part of the beautiful bill. That’s something separate. I don’t think so. I think it was something separate. And I only know I heard it on the news and I’m like, oh man, that’s going to really open the door for our agents. And then our partner in our fund that we’re raising is a real estate attorney. And he goes, there’s nothing on this yet. And then he emailed Jessica, oh, it’s proposed. It’s not in stone yet. So you want to watch out for that. Yeah, that’s interesting. I actually heard maybe a year or so ago that they were thinking about, or people were expecting maybe that the limit to increase because having a million net worth now is way different than it was. Yeah, exactly.

[9:59] So yeah, the expectation was that probably the bar would be set higher, not decreased. But it does make sense that if you do have that experience, if you are seasoned in the space that you’re wanting to invest, that you should be able to. Absolutely. If you’ve got the background and understand how to do the due diligence, then yeah, you should be able to. Lord knows. I mean, how much do you know about crypto and how much do you know about the stock market? And people are investing in that. You know, I think real estate, you know, it’s a better investment. Yeah, yeah. I mean, doing a fund or doing a syndication is definitely something that I like to talk about in this podcast space because I don’t think a lot of agents know what those things are.

[10:46] And I think to better understand that and better understand the power of being a real estate professional and taking advantage of these big commercial deals, or a fraction of them by investing in a fund or a syndication, that you are able to greatly offset your taxable income. And especially now that this part, I believe, has been passed with the big beautiful bill of having the 100% bonus appreciation coming back. And also with that, I could see a trend of Airbnbs going up again because of the high income earners wanting to do that loophole of being able to 100% bonus appreciate that asset and offset their income, their earned income, not just their passive income. So it’ll be interesting to see what that does in our markets.

[11:41] Yeah, well, I just think it’s going to open up a lot of doors because, and I think, you know, as somebody that’s really learning the business, if you invest, trust me, you learn a lot faster when it affects you. It’s your money that’s on the line. Boy, do you listen a lot better. Yeah, absolutely. And, you know, one of the biggest reasons I invested in a syndication to begin with was because I wanted to learn more about it. And I was like, you know, I need to put my money there. If I want to one day lead these, if I want to do these, I need to experience it on the other side. And it’s been an amazing experience. I did have a question for you about the residential versus commercial space. And, you know, I definitely heard that a number of times, that there’s just kind of like, I don’t want to deal with residential.

[12:30] And I think the residential people might be intimidated by the commercial. Can you maybe speak to that a little bit, break down what it is about the differences and maybe who would be better suited for both? It depends, you know, I see. And I’ve had bad luck taking residential agents, converting them to commercial agents. They typically, you know, this is you have to come from the investor mindset, you know, where’s the return at? And, you know, as a commercial real estate agent, you’re looking at, you know, investor profile, understanding what your investor wants, understanding where you’re going to get that return for them. Maybe it’s not here. Maybe it’s in another state. You have to understand, you know, each asset class.

[13:11] And if you’re going to focus on, which I always tell them to focus on one asset class, which makes it a lot easier. Sure. But there’s just a lot more to it. When I was doing residential, I learned homes on the west side of LA. And then the finishes and what I hated about it the most was every time I did a deal, I had to go find a new client. Whereas in commercial real estate, if I get with a good investor that’s buying properties, I can now build a business because they’re going to be buying multiple properties every year or in retail. I’ve got I do a lead or office, whatever it is, I’m going to renew that lease in the next few years again, too, if I stay in touch with them and, you know, stay in touch with them.

[13:52] And so it’s just a real opportunity to really build a bigger business there. But personalities, I mean, I think you just have to be for both of them. You just have to be an entrepreneur. Yeah. I think there’s the TV shows that are on are probably doing the business a disservice because that’s not the way it’s really done. It’s not. We’re not going into a restaurant and talking on the speakerphone and negotiating a deal there that, you know, you’re not making those kind of decisions without contracts. Otherwise, there’d be a lot of lawsuits. But, you know, it’s both of them are incredible businesses. It just depends on, you know, commercial real estate is very analytical. You have to understand how.

[14:40] Yeah, you have to really understand how to analyze properties, you know, break them down, you know, forecast. So it’s just completely different. And I started doing residential and it just wasn’t for me. But it’s not that I enjoy it. But I knew that I really wanted to build a bigger business. And I knew I could do that with commercial real estate. And that’s why. So I have Commercial Brokers International in Los Angeles. We have 21 agents and we also have an affiliate network that we do deals all around the country with. Okay, cool. Well, I was going to say, is it maybe if you lean a little bit more on the analytical side versus the relational side, maybe that’s where you could think about if you’re looking to get into real estate, which way you want to go.

[15:30] You have to have both. Yeah, you do have to have both either way. But if you’re preferring to deal more with numbers and that kind of thing, maybe that’s more commercial if you’re a very analytical type person. And if you want to deal more with people and emotions and anxiety. Oh, we still get that in commercial, trust me. But yeah, no, it’s just you got to pick your poison. And, you know, commercial real estate, yes, it’s more analytical, but you still have to be able to deal with the clients. You have to understand empathy and how to understand where they’re coming from. And it’s going to help you win negotiations, of course, because you understand where they’re coming from, why they feel the way they do listening, you know, and that’s very much so the same as residential.

[16:18] But commercial for me is just we find that those people are typically a little bit more analytical. And, you know, in commercial, we’re in the office most days, you know, whereas I walk into a residential office right now, there’s hardly anybody in the office. Yeah. Yeah. Yeah. Maybe basing decisions off of numbers versus making decisions based off of emotions is maybe also a very broad, not perfect way to say the two different worlds. But it is fascinating. I’ve done some commercial. I just have not had that part. We’re in a small town. So it’s not like that we have an immense amount of commercial property and not a ton of leases. To sign that kind of thing. So that’s residential’s been my game.

[17:07] Well, I think commercial, there’s a huge opportunity for the younger generation right now, because, you know, the average age of a commercial real estate agent is between 55 and 62. And so a lot of people are aging out. Now, younger generation were born with these things in their hands, right? You can do digital marketing, you know, how to write a blog, you know, with AI writing a blog and AI as a tool, the way it can really help you put your analytics together, put your packages together. I think it’s a huge opportunity for the younger generation to get into commercial real estate and take over a marketplace because if your competition is 60 years old and they just cold call and live off referrals and you go in and you’re putting content out and you’re writing blogs about it, you’re out networking in that market, you can take over that market pretty quickly. I think there’s a huge opportunity.

[17:56] I mean, it’s, I look at getting started in commercial real estate, actually any real estate, it’s just, it’s a startup and you have to have that mentality. You have to think I’m going to open my door at eight 30 in the morning and I’m going to close it when I’m done and, you know, and get everything done. It’s got to be, you know, you got to focus on not just outbound leads like we’ve done in this business and commercial real estate forever. You got to focus on inbound leads now too, because the opportunity exists. Whereas, well, not with all firms, but you want to make sure if you’re getting started, you find a firm that’ll allow you to market yourself so you can get inbound leads coming in because those are going to close. You’re going to close a lot more of those.

[18:34] And so inbound and outbound leads, writing blogs, getting an email program going, having a great CRM, having that great tool for both residential and commercial, critical because that CRM is your data. That’s your base for your business. Yeah. Yeah. Really learning how to actually use it.

[18:54] That’s the thing. You got to find one. I was on Salesforce the other day. I’m like, good. I’d never been on that one before. And it was so confusing to me. Yeah. What the person used was whipping through it. And she has all these tools she knows how to use that just has increased her business significantly because she’s using the right tools. And there’s so many tools out there right now. And AI is growing. You’re finding that there’s just a lot more opportunity. And I mean, even with the robo calls right now, they’re, you know, six months ago, you could tell it was AI. Now, I mean, I just think where we’re going to be with this in the next year, you’re not going to be able to tell at all. Yeah, that’s pretty crazy.

[19:39] Yeah. You can just sit at your desk and create your content where your system is dialing. And then when somebody answers, you just start talking. And so, yeah, it’s really going to revolutionize commercial real estate. Which is due, by the way. I think we’re well overdue. I think the number one rule with CRMs is to have something that you use. Actually use it. And it can be simple. I think that there’s a lot of advantages of some of these fancy tech. I’m using one now that is very robust and love playing around with automations and all the possibilities there. But at the end of the day, if you’re not actually reaching out to people,

[20:26] it doesn’t have a spreadsheet if you use the fanciest Salesforce system. Yeah, it is. You got to get in action. Action gets the deals. And I talk to so many people that have been struggling for a long time. And you sit down and you say, well, what are you doing? They’re cold calling about 60 calls a day. They’re doing some networking.

[20:52] I talk to them and go, you’re not doing an email program. You’re not doing any kind of content creation. You’re not writing blogs. They aren’t doing any of that. And it’s a shame, because they have a great service. You can have the best service in the world, but if nobody knows about it, you don’t have a business. Or if you’ve got the worst service in the world, but you’re a great marketer, you still don’t really have a business, but more people know about it. We can probably both think of examples. Yeah, yeah, for sure, right? Yeah, no, it’s important. I put on the jillkellinger.co under learn, I put together a booklet. It’s all free and it’s your first 90 days in commercial real estate. And I just think it’s important for people in our industry to understand that you just got to keep activity going. There’s plenty to do. Actually, I put another booklet up on there because when we launched this commercial brokerage company, Commercial Brokers International, we went through all, I put down all the mistakes we made, which was plenty, because we didn’t, we were agents. We decided to start our own company and we made a lot of mistakes. I put

[22:07] that up there too. So those are all free. You can go on there. On the website, there’s books that you can get that are all been recommended reading by other investors and agents. So it’s all there and it’s all free. It’s a platform for agents and investors to use. And there’s documents too. If you need documents for signup sheets, for tenant walkthroughs, all that stuff is on the website. Just print it off there if you want. Awesome. Thanks for that. We’ll definitely have that in the show notes as well. But I was curious if you thought on this, I mean, let’s say you are an agent that is wanting to get into multifamily, like wanting to invest in multifamily. Does it make sense to niche down as a multifamily specialist? And how do you think you walk that line of wanting to buy some of the opportunities that come across your table?

[23:03] Yeah, if you want to be a multifamily investor and you’re a multifamily broker, you want to just focus on the asset class because you can create a lot of opportunities. Now you have to be careful if you end up buying a property in your market and it doesn’t get marketed property, the owner might come back at you and say, hey, you bought my property and you didn’t market it very well, so I need to get more money out of you. And then you’ve got a problem. But understanding your market is really no different between a broker and an investor. You want to pick an area, I know everything about that area and really be the best at it. So if you’re a broker and you’re multifamily and you’re in Virginia somewhere and you say I’m going to do multifamily, I want you to pick out an area a couple miles of each way and I want you to know everything about that area. I want you to know how many properties are on the market right now. What’s the average days on the market? What’s the average list price? What’s the average sale price? What’s the average size of the building? You know, parking, you know, all of it, you know,

[24:10] know everything about it and that plays through to the investors too. If you know all that, a lot of your due diligence is done up front and it can save you a lot of headaches because, you know, when I bought multifamily properties in Los Angeles and in Dallas and a lot of the properties, well, 100% of the properties we bought in Texas were because the out-of-state owners were losing the properties and because the property management companies were not, they were, I mean, I had one that I’m sitting there, we’re in escrow on it and I’m sitting there with the manager that’s an on-site manager at the time and she goes, are you going to keep me on? And I said, well, no, we can’t. I said, what you’re earning is double the industry in this market and she goes, no, I’m not and I showed her the numbers. She goes, well, I’m getting half of that. She goes, the company is, the property management company is keeping the rest and so, and we kept digging and we found out there was a handyman there that was working on another one of that property management company but living for free in that building and they had a assistant

[25:19] manager living on that property to discount her rent. So yeah, it was a mess. They were getting their ass handed to them and so, we kept the maintenance guy but not at a discount and he worked on our property only. The manager got the salary that she was getting. She stayed and got the salary that she was earning and we didn’t need the junior manager for 70-some units. We didn’t need all that staff and then we just brought in another part-time maintenance guy and cut all those expenses. So, even when you become an investor, you want to get out there and really boots on the ground and know what you’re doing because people, I mean, there’s another, we’ve got a horse of properties that we’ve brokered where we started looking into books with our investor and there would be showing vacant units when you go out to the property, the vacant, the unit is occupied but the on-site manager was collecting the rent for herself. Yeah, yeah, I’ll let you in here for cash. Matter of fact, a big discount. I know it’s $1,200 a month. I’ll give it to you for $900 but you just pay cash and yeah, and then there was like five people living in there too.

[26:28] So, yeah, it’s really being smart about your investment. It makes me leery when I hear people say passive investing. I’m like, in real estate, you know, you better be watching it. You got to manage the managers if you have them in place, right? Yeah, that’s crazy. Yeah, how are you seeing that multifamily market now? I know that we kind of went through a big, a really rough spot. Are we through it? I mean, so if people want to I think that we, again, this depends on the area. Now in Dallas, there’s so much inventory coming on the market and stable, they’re all stabilized. You know, LA, it’s pretty tough right now. Nobody’s really, there’s not a lot of activity. You know, people are thinking that there’s going to be a bunch of foreclosures, which we’ve been hearing about now for what, two years, three years?

[27:22] Right, right. Yeah, that’s not really happening. And honestly, the fires that we had out here filled a lot of the buildings up. So, you know, that changed that in this market. But as far as like, you know, Midwest, you’re seeing multifamilies starting to really pick up because a lot of the inventory that was looked like was being overbilled is being absorbed. And so you’re starting, you’re going to start seeing more developments start to happen again the way look in certain markets. Some markets just have way too much inventory. But we’re not actually in multifamily right now. We had a syndicator, and this is another thing to watch out for a syndicator that came to us. And he goes, I love your portfolio you have here in Dallas, I’d like to buy it’s in an area I want to be and it wasn’t for sale. And he goes, well, what do you want for it? We told him and he goes, okay, because we plan on demoing the building and adding more units. And you know, rebuilding and adding more units and then retenanting. But he wanted him and turns out he was a syndicator and the contractor. So he front loaded everything. And I’m guessing all

[28:28] the work that he put in was pretty labor intensive. So he got his money and I’m sure it’s back to the bank now, all the properties. You got to really, you got to really vet the people that you’re investing with. Yeah, yeah, there’s a lot of people that were in hot waters and people doing capital calls and stuff. And the main reason is people didn’t project the interest rates going this high and they had short term rich debt that changed drastically. So their numbers didn’t work anymore. And that’s what I was what I was referencing to when I said going through a rough patch. But it’s interesting to hear that you say that it’s not really, you’re not you’re not seeing them actually come into foreclosures. So not many yet. There’s some I just asked for. So I have a icon capital advisor, we have a commercial real estate mortgage company and asked for a list of foreclosures the other day because there’s not many for LA County. And it was there was less than 10 right now. And so that was shocking to me. That was for this month. Yeah. Okay. Yeah, I was surprised. So then what asset classes are you focused mostly on? Triple net right now. So we

[29:39] were doing property management, we weren’t planning on selling the properties, right. But when this guy came in with his offer, like, okay, well, I’m saving a ton of headache, and I’m getting the money that I want, I don’t have to go through the development. So yeah, we’ll sell. And then we’re like, well, now what do we do? Because multifamily was too high in Texas at the time. And so we bought some triple net stuff. And that’s really what our fund we’re raising now is for triple nets. And singleton at least deals. Yeah, for those that aren’t aware, it’s it’s kind of the holy grail.

[30:12] You don’t you don’t have to really take care of much when a triple net day. I mean, you better than I can. Yeah, no, it’s just I went from phone ringing all the time to I get an email once a once a month going your deposits in. And so, but it’s again, you have to vet it out, know what you’re doing. And, you know, I really love the asset class. And that’s what our fund is for, we’re going to start buying stabilized triple net, and then our next fund will be more higher risk stuff with like, you know, three months and three years left on the lease, four years left on the lease. And then we’ll retain it with clients are my business partner and the CEO of our commercial brokerage company, George Pino. He does nothing but triple net deals around the country. He’s done them in 39 states. And so I think there’s a big opportunity for us there. And, you know, a lot of people don’t realize that the triple net deals are, you know, they’re the most liquid asset as far as real estate goes, because you put on the market price are right, and it’ll sell pretty quickly. It makes sense. I mean, it’s it is very,

[31:16] yeah, it can be very stable. If you have like a 10 year 20 year lease on it. And again, they’re taking care of maintenance and taxes and insurance and all that, right? Yep. Yeah, we still stop in, I still stop in and check on the properties. And, you know, there’s, I was at a the one that Jack and Jack in the boxes that we own in Allen, Texas, which Allen, Texas is one of the fastest growing cities in the nation. And the bathroom was dirty. So I called the owner and said, Hey, your bathroom is dirty. And he goes, I’ve never had a owner of a property stop in before he goes, this is new for us. And so I went and met the manager. And she said, I’m on it. And I’ve been back in there several times since spotless. Nice. Yeah. And so even with the triple net deals, we stop in, you know, it just doesn’t it’s the money. But again, it’s a due diligence, you want to be on a signalized intersection, if possible, or at least you want to be on the intersection, you want to make sure there’s a great traffic count, great walk score, you know, what’s your competition look like in the area? Are there any churches, schools or

[32:20] synagogues, whatever it is in the area. And, you know, you just you got to do your due diligence and buy it right. What would you say? How are cap rates compared to multifamily typically on those kind of deals? And do you see the more work with the multifamily asset class having a higher return? Or is it about the same? Higher return because you get the turnover in the multifamily, you know, every year you can take it up a little bit. Sure. You know, it just it’ll drive it up a little bit faster. But the less work for the single tenant at least and I’ll take that all day every day. I mean, you still get your bumps every year, but just typically not like in multifamily. Yeah. But I love both assets. Right. I mean, you bake in the rent increases into the lease upon initial signing.

[33:09] Yeah. Yeah. You could really think about, I don’t know, I’ve heard it described as like a real estate investing pyramid. Like if you’re looking at, you know, forming a base with maybe strongest cash flow or something like that, and then kind of moving up the pyramid. And if you’re if you are looking to have more freedom to be more passive, right? That might be the perfect solution to work towards. Yeah. Yeah. We like that’s what we’re going to do with our funds or just build a, like you said, a pyramid and we’re going to have the base that’s going to be the low risk. I mean, obviously, there’s still risk, but lower risk. You know, and then the next one will be higher risk and then maybe the next one will be higher risk. I mean, there’s we’ve had we had one Del Taco out in the Inland Empire. We’ve owned three times and, you know, our tenant wanted some money once, so we sold it. And then as it was a couple years later, and the lease was coming, getting close, I think there’s three years left on it.

[34:10] We bought it back, renegotiated the lease with Del Taco. They remodeled the property, then we flipped out of it. Just kept going. It kept coming back. Yeah. Yeah, it was it was quite a deal. And, you know, but it’s a great asset class. We know what we’ve got to chase bank right now that is dark, meaning that the chase bank closed down and closed down about two months after we bought it. We knew it was coming, but there were seven years left on the lease at the time. And that was a couple years ago. And we’re going to re-tenant it with either a new hamburger chain or chicken chain or a gas station wants it. So either way I can take it and we’ll get a buyout from the landlord, current landlord or tenant, and we’ll take that money to redo the property.

[34:58] Have a brand new lease with a brand new property on it and higher rent. Yeah. Yeah, that’s great. What would be the risks of triple net lease investing?

[35:10] Right. It’s a prime example right now. They’re closing down across the board. You know, there’s always that that the business ends up closing down and or the area, you know, something happens in the area. You know, we’re here in Los Angeles and the smashing grabs were, you know, they were getting hit pretty hard. And so we’ve got to, we had another pharmaceutical company end up closing down. They just couldn’t keep the doors open. So you really got to make sure that you’re looking at, you know, what’s going on in the area. They’ve got that turned around now. That was just at the peak of everything that was going on. But you’ve got to really know what’s happening and understand the tenant, understand the client and their financials. Because if you’re going to buy a triple net deal and you’re buying with a franchisee that has three properties only, you got to, that’s pretty high risk. You want to have a hundred, you don’t want them to own a hundred properties or more or a, they franchise or owns it. And you get a, you can get a personal guarantee, that kind of stuff. Very, very powerful. I mean, when you get with a national tenant

[36:18] that gives a personal guarantee, the cap rate is, you know, not that great, but there is a ton of security there. Yeah. And I would imagine the depreciation is the same. So that’s a benefit as well. Yeah, that’s fascinating. And it’s definitely something I had not invested in yet, but something that’s a little more expensive to get into. But, you know, and again, you’ve got to know what you’re buying. You know, we had one client that wanted this in the middle of nowhere, Wyoming, wanted this kind of off-brand tire company. And it was kind of like the Econolubin tube. And we’re like, why do you want that? He goes, a cap rate. I just love that property. I love that area. He goes, I know it’s going to be booming. He was right. You know, everything built up around that property. I think he still owns it. You know, and that was like 10 years ago. Wow. Yeah. Made a killing on that little property. But he knew the area, you know, so. Yeah, it definitely helps.

[37:22] And yeah, I think like, you know, you say it’s more expensive and everything, but that’s again, kind of the, where I’m talking about like the investment pyramid, where you kind of, you know, are able to get into the higher asset classes as you go. But, you know, starting off maybe in the startup phase, like we talked about with sales, right? I mean, you’re grinding your, you know, maybe doing burr deals where you’re flipping a house and keeping as a rental to make the numbers work better. Maybe you’re doing, making that also into an Airbnb, which is also more labor intensive, but then can overcome the higher interest rates so that you can actually get some cashflow on it. And then over time, you start getting equity and you maybe want to roll that equity into something a little bit more sophisticated, a little more expensive, like that kind of deal or something a tier below that. And you kind of keep working your way up. Absolutely. You know, you want to, when I was, I was interviewing a guy and he had, I think 30 Airbnbs around, I want to say Illinois, Idaho, and I’m like, what’s the plan

[38:29] when everything slows down? This is right during COVID. Well, I’ll just, I’ll keep them. I’m like, yeah, but if you’re not getting, keeping these homes filled out, because he was taking one, leveraging it, buying another, leveraging it by another. You know, you got to be smart about how you do it. And they were just blowing and going. And it’s just like the investors just saw over Twitter during COVID with, you know, the two, 3% interest rates and posted about how they bought yet another 200 units or 300 units. And, you know, they’re doing this every few weeks. And, you know, with ICON Capital, we got to see some of these guys’ numbers because they were looking for a loan. And I’m like, when interest rates go up, this is, this isn’t going to work.

[39:13] Yeah. But you got to start thinking about long term, because you have to refi, which you will in commercial, you know, it’s going to be, you’ve got to refi and you’ve got to put those numbers in there. So, but banks have been extending a lot of that stuff to make it work because they don’t want it back on the books. Yeah. Yeah. The Airbnb’s as well have been, you know, the people were often doing, using numbers before there was that boom. So like, you know, like we’re analyzing based on this much occupancy, but now there’s, you know, a hundred percent more Airbnb’s in the area. So like the occupancy numbers aren’t going to be near as good. So I definitely, I was, I was nervous about that market. We have a local resort seeing if we’d, you know, see a flood of, of failed Airbnb’s come. But yeah, so far it hasn’t happened. And, you know, this whole hundred percent bonus appreciation may increase the interest in buying them. However, that doesn’t really solve the problem of high interest rates and maybe way less bookings or shopping is good. And people also didn’t travel internationally when it was a bit

[40:21] as much. And so like they were wanting to go to a private Airbnb kind of thing, seen better than a hotel. And so it’s, it’s definitely a shifting market. And I think, yeah, it, it was, at least they would have it locked in on a 30 year mortgage, probably. Right. That would be a bit of that low interest rate time. But yeah, could definitely be having some people in hot waters because of those elements. Yeah. It’s anything with real estate. You always got to be thinking, how can you, you make money? You know, when we were, when we were investing in multifamily, we would buy a property and we would do things like an accent wall. So you’d have five different paints, paint colors that they can pick from and have like above their, if it was a fireplace and that wall, they’d want to have a different color, a custom color in their apartment.

[41:08] You charge $15 a month extra for that. It takes you an hour to paint it $15 a month while they’re there. That was a pretty good return. Carports we put in were a very good return because we were buying 400 unit properties and they didn’t have any carports. We put like a third of the, the number of units we would put up carports for them. Then we charge extra for the carports. And in Texas that can, you know, when it was that hot or snowing, very little snow, but occasionally did, you know, people wanted it. So that wasn’t an extra because we could build those things for so cheap and rent them out and added a lot of value to the property. We just have to be looking for ways to add value. Yeah, absolutely. Especially in the commercial game. I mean, that’s if you look at how cap rates, the magic of cap rates and that operating expense lower and the profits higher, it’s pretty powerful. Yeah. And that’s how the syndications and the funds work, right? I mean, that’s why it’s such a great win-win and such an awesome opportunity you’re providing your agents.

[42:14] Um, that’s really cool. It’s fun. It’s fun. It’s just, I love to see, I always wish somebody did that for me because getting started was so difficult. And, you know, I bought my first property and I thought I overpaid for it, but fortunately here in Southern California, we get a good amount of appreciation and we own that property for 10 years and bought it for 275, sold it for just over 2 million. We just were, we were in an area that was up and coming. Sure. And in that 10 years, it really took off. Uh, but then our second property was a three story walk up in Korea town, uh, with no elevator. So there’s a lesson for everybody. Don’t buy a three story walk up because nobody wants to haul groceries up those steps. Yeah. That was hard to keep the, I mean, the building was beautiful, but nobody wanted to carry groceries up three flights of stairs. So that was it. We got out of that when we broke even, but that was, I think our ego got a little big because we did so well on the first one. The second one about got our ass handed to us. It’s almost harder to have the grand slam at the first at bat. Yeah, it is.

[43:18] I was like, Jesus, we were lucky. We were lucky. We got out. Yeah. I did pretty well with the first flip I did. Um, and you know, kind of had that in the back of my head. It’s like, okay, you can’t get too ahead of yourself now. You can’t get the ego going that you’re going to print money no matter what you do. But yeah. Yeah. Well, that’s, that’s awesome. I’m curious if you have any, uh, golden nuggets you’d want to share with the listeners, um, that, you know, it could be about commercial real estate, could be getting started in commercial real estate and real estate in general, investing cells, anything that comes through. I think, you know, if you’re getting into real estate, you need to come with an entrepreneurial attitude. You know, what you’re seeing on TV is, is not the reality of it. You’ve got to come in and put the time and effort and never stop learning.

[44:08] It’s, it’s just, it’s a great, great business, both residential and commercial. I do. I love commercial the most, but residential, I had fun in it. And you know, you’ve got to just come with the right mindset. And it’s a business that you can really build for a great career and have a great career path and a great family life too. You can do it right. And there’s so few industries that, um, will allow you to make this kind of money so early on in your career. I mean, I’ve got one agent started last September. He’s done four deals already. And so they’re not big deals, but it’s more than he was making and selling doing retail. Um, but he’s doing everything that we’re telling him to do. He’s doing the cold calls. He’s doing the content creation. He’s writing the blogs. He’s doing the show. He’s doing the block program, which he’s a retail agent. Um, he’s doing everything and then never stop learning. And you know what the biggest thing never stopped listening. You know, as a real estate, we’re all salespeople, right? So we want to talk.

[45:09] So we say something and then somebody else started talking. We started talking over him. If you listen and then respond, you’re going to hit rates going to go up a lot higher, a lot faster. Yeah. The, that can be such a good sales tactic as well. Um, to, to listen more than you’re just talking. Yeah. My dad always said, he goes, Joe, he goes, just shut up. He was, you got two ears in one mouth. Keep that in mind, buddy. Yes, dad. Um, with, with the theme of learning, uh, I’m curious if you have any, uh, favorite books, uh, currently or ones that you think are just fundamental that everybody should read, um, if they have. Yeah. Yeah. I interviewed Chris Voss. Uh, he was the FBI lead, um, negotiator, hostage negotiator, and he wrote a book, don’t split the difference. And I think every salesperson should read that because it’s all about negotiations and how empathy plays into it and listening. And it’s just a whole gamut of it.

[46:07] And he’s really great on YouTube as well. So, but yeah, and actually the book is up on, it’s under recommended reading in my website or joekillinger.co. You can go in and get the book there. It’s a great reason. It’s not that thick. Um, even has a TV show coming out now. So he’s really on a roll. Nice. Yeah. Check out, don’t split the difference. I think he also maybe did a master class. Um, if it’s, I think that’s a subscription you can get where he can kind of go over the strategies as well in video format. If, if that’s of interest. Yeah, that’s great. Um, and then I guess you mentioned your website a couple of times. Is there anything else you want to plug at social media or anything like that? Oh no, you can follow me on Instagram under joekillinger, linkedin joekillinger, twitter joekillinger. It’s pretty easy to find.

[46:52] Uh, yeah, please give me a follow. We’re posting content about, you know, how to grow your business in real estate every day. And, uh, the YouTube channel under my name, uh, we put out a video every Monday. We actually, we didn’t this Monday because I’m working on something special for next week. Um, but, um, it’ll, it’s under joekillinger. You can go in and find it. And it’s all about how to grow your real estate business for residential and commercial real estate agents. So yeah.

[47:18] Thank you so much for doing that for the industry. And thanks so much for being on the show. I appreciate you having me on very much. Appreciate it.

[47:36] Until next time, keep building the life you want. All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.