From $0 and Immense Ambition to Commercial Real Estate Freedom with Tyler Cauble

[0:00] Welcome back to the REI agent. My guest today is Tyler Cobble, a commercial real estate investor, broker, and host of the CRE Investor Podcast based in Nashville, Tennessee. Tyler has flipped a nine-story building for a $2.2 million profit, is currently developing a 350-unit self-storage facility, and is one of the few people in real estate who can speak to both the broker and the investor side of commercial deals simultaneously. Tyler, welcome to the show. Matthias, thanks for having me, man. Excited to be here to dive into this and really about the story of going from the brokerage side into the investment side and leveraging both to make both businesses better. So thanks for having me. Yeah, you’re a perfect fit for the show. I think that it’s funny how often people in the business don’t, in the sales side of things, don’t actually invest themselves.

[0:51] So what got you started in real estate? Man, I dropped out of college and, you know, hey, that’s how a lot of the greats get started in real estate, right? Yeah. Dropped out of college, worked as a project manager for my grandfather’s construction company. I figured I was just always going to take that over one day, but about three months into moving back to Nashville and working with him, I got a job offer from a boutique development firm here in town, unsolicited really. It was a developer I’d actually sold Cutco knives to when I graduated high school for a summer job. And he heard I was back in town and offered me the gig to come in and be his in-house leasing agent for, they had some retail, some industrial space, some office space. They wanted somebody in-house full-time working on those assets. And so that’s what I did, man. I got my start there and learned the business from the ground up. So, you know, knocking on doors, cold calling, building up a book of business. I got to sit in on all the development meetings every week. It was a really unique opportunity and learned how to put together my own deals from there. So in 2018,

[1:53] about four and a half years after I started, I went off and did my own thing. And so we’ve, we’ve grown the Cobble Group now, which is our commercial estate brokerage and advisory firms. We advise a lot of family offices on building their portfolios. We do some investment sales now. We handle leasing for properties that we manage or own as well. So we don’t really do any third party leasing anymore. And then I’ve got Hamilton Development, which is our investment arm. And that today currently has about $75 million in assets under management. Like you mentioned, everything from a nine story office tower that we flipped in downtown Chattanooga to we just opened up a 48 key boutique hotel. We’ve got the self-storage going on. I’m working on some flex space. So a little bit of everything, man. Wow. Yeah, that’s awesome. And I apologize. I think you said that you were doing like commercial stuff from the beginning, but then you said door knocking as well. So were you ever in residential sales or was this pretty much solely a commercial from day one?

[2:46] I wasn’t. I mean, it was solely commercial from day one, aside from a brief stint, because the development firm that I was working for was building custom homes as well. And they had an in-house residential agent that was handling those. But at one point he decided to move to California. And so they looked at me and they said, you know, you’ve got your real estate license. You’ve got some experience now. You go sell these houses. And you know, what was a $1.2 million house? I was like, well, yeah, I mean, I’m not going to turn down that commission. And very quickly learned that residential and commercial are night and day different. I had zero skillset around the residential side of things. And after I kid you not, probably two months of straight open houses, every single weekend, we gave it to somebody else to handle.

[3:29] Yeah, it is. It’s two different animals for sure. What would you say, you know, differentiates a good commercial agent from a good residential agent? Like if somebody had their license, you know, maybe was doing mostly residential, wanted to join your group, what kind of what would you look for to see if they were going to be a good fit for commercial? Yeah, that’s a great question. I mean, typically, like we work with a lot of residential agents and investors that want to transition into the commercial space. And largely what I see more often than not, they’re the people that look at things from a much more like traditional business perspective, right? You have residential agent, like the residential agents that crush it are the ones that are incredible at dealing with people, right? They love problem solving and helping people.

[4:13] And they’ve got a passion for, you know, exploring paint colors and the finishes and building the vision of what your family’s life is going to look like, right? Like that’s what it takes to be good in residential sales. I don’t have any of that, man. I’m like, dude, it’s a hard corner. You get 20,000 views per day with cars driving by. It’s 2,000 square feet. Either you like it or you don’t. Like the numbers work or they don’t. Let’s move on, right? So it’s just a very different like numbers approach. Yeah, that makes sense. So you broke down some of the different facets you’re in now. So I would assume that the investment one is kind of operating through syndication structures where with the nine-story commercial building, you’re building the self-storage. Is that all through syndication structure?

[5:04] Yeah, not all of it, but a pretty decent amount of it. I mean, I started buying real estate in 2019. So you can do the math basically from then until now, we’ve built up to $75 million in assets. I didn’t have the cash to do that. I wish I did. That would have been a great thing. But I literally started with $0, right? I mean, I was like the guy rolling my commission in from purchasing a deal so that I could have some sort of equity stake when we first started. And so a lot of it has grown through syndication. And then just over the years, having had successful syndications, successful deals, successful brokerage, whatever, I’ve been fortunate enough to start building my own portfolio of assets that I own solely by myself. So we do have like the self-storage, the 350 unit self-storage facility is just made a body, right? We own a 50-50. That’s going to be one of the best projects I’ve ever done. We’ve got like, I own my own office. I own a parking lot across the street from a bar, which has been a fun new venture because it’s a totally different thing, right? Like we didn’t have to do a building, right? Yeah. So yeah, I mean, it’s a little all over the place. Like the hotel,

[6:05] we syndicated that, right? So I’ve got 40 investors in that deal that helps me make it happen. Sure. If people listening now aren’t familiar with what that kind of structure is, can you give us like a bird’s eye view, a bird’s understanding like of what a syndication is? And actually, while we’re at it, we can explain why it’s maybe a good fit for somebody that is a real estate agent and is looking to invest, but doesn’t really want to have maybe some of the headaches that could come with traditional, you know, rental property. Yeah. No, of course. I mean, syndication is great. Like you can syndicate literally anything, you know, it’s just a type of deal structure and it allows you to go out, basically pass the hat and say, Hey, you know, Mr. Investor, I’m looking to raise a million dollars.

[6:46] It’s like Shark Tank style, right? I’m looking to raise a million dollars. How much do you want to commit? Okay. 50 grand. All right. We’ll go over to you. You know, Mrs. Investor, how much do you want to invest? All right. $150,000. So you get, you’re able to raise capital from a variety of different investors and the difference between a syndication and like just a true partnership, right? Like just saying, Oh, well we have an operating agreement in an LLC is whether or not somebody that is an investor in the deal has a say in the day to day. So if I’m raising the capital and I’m doing a syndication, my partners are silent. They agree to the deal on the front end. They gave me the money and then I run it. They can’t say, actually, I don’t like that paint color. You need to change it. Nope. I’m running this deal. You just invested with me. Whereas in a traditional partnership, but yes, you could go and raise capital from investors, but everybody has to be actively involved in making that deal happen.

[7:35] Right. Right. And that’s a blessing and a curse. Maybe I mean, so look, if you have a really good operator, it’s great. Like, you know, you can trust that that person is running the deal smoothly and, you know, they should be providing, you know, updates along the way to make sure that kind of, you know, the, the plan is being executed properly. But, you know, again, with that low hassle, like you think of, you know, I want to buy a rental, I want to own a real estate and I want to buy a rental property. I don’t want to have somebody calling me with a, you know, broken toilets or, or whatever, all that kind of stuff. Even if you have a, you know, property managed, like there’s still some, you know, possible headache, it’s not fully passive. And the, with, with these kinds of deals, you know, it is just, you’re, yeah, you’re putting the money in you’re, you’re looking over a deal that, you know, is projected to give you, you know, what’s up seven, eight, 10, 12% return on your cash.

[8:29] And, and then there’s a kind of a strategy for what, what we’re going to do, what they’re going to do with it. So, you know, for example, in the nine story commercial building that you renovated, that could have been set up that way where, you know, you could see how you could make the value higher with cap rates and then do a refinance to get everybody’s capital out after a certain amount of time. If you’re holding it long-term, then maybe they still have some sort of ownership. Their, their, their preferred returns would be less. So if you’re getting 10% at the beginning, they may get a lot less after that, but they’ve had all their capital back. And then it gets a lot more complicated when you get into things like the IRR, where it’s kind of like, you know, what is your money power or maybe you could probably explain this better than I can, but like, what is the power of your money over time? So like, if you get your money back really fast and you made X amount of money on top of it, your IRR would be better. Is that, yeah, you explain that.

[9:21] Yeah. I mean, pretty much like IRRs are incredibly complicated. Like I don’t know anybody that could actually calculate them on a calculator. Like you have to use a spreadsheet, but basically like if I give you a hundred thousand dollars in year one and it’s a 25% return, if I give you $50,000 in year one and $50,000 in year two, it’s technically like a 12 and a half percent IRR, right? You’re basically having it because of the amount of time that’s going on. So it gets really complex because you’re talking about the timing of when these distributions are made. So you can act like, I actually don’t like IRRs. A lot of investors, like professional investors will lean on that as one of their go-to metrics.

[9:59] I’m not a fan of it because you could actually juice it based on when you make the distributions to make it look better than it actually is. Typically what I’m going for is the annualized cash on cash return, which is the, you know, over, let’s say you hold a deal for five years, is the average return that you get every year for five years, including the sale of the property, right? So we’re typically aiming for an 18 to 22% annualized cash on cash return. So basically 20% on our money every year or a two times equity multiple, right? So over a five year period, if you give me a hundred thousand dollars, we’re aiming to give you back $200,000, right? So we’re basically doubling your money. And that’s a lot easier for maybe you’re less sophisticated, not necessarily institutional or professional investors to understand, right? Like if I give you a dollar, you give me two back. Okay. I get that. Yeah, no, totally. And it’s crazy that those kinds of deals are out there. Like, you know, the returns you were just talking about sound fantastic. And, you know, depending on your market, if you’re buying a traditional rental, it’s going to be hard to see

[10:59] that kind of returns. Especially if you’re getting property management on top of it. But, you know, there, there of course are risks. But I want to talk about another benefit quick before we get into those. That would be, you know, the, the possible possibility for accelerated appreciation. If you are a real estate professional, you’re earning, you know, let’s say you earn $300,000 a year in commission. And you are then designated as a, you know, a blank in the term now, real estate professional, yep, real estate professional, but also an accredited investor, invest in these kinds of things. And you can then also realize that if there’s, if there’s depreciation on these, these properties, then you can take that depreciation off your income, where as like a doctor could not, because it would only be able to be something they could take off of their like, uh, passive income.

[11:54] So like any, any kind of like, you know, uh, rent that came in, they could kind of offset that. But with real estate professional designation, you can actually get your commissions written off. So just to put that in a little bit easier terms, I invested $50,000 into a syndication in the first year, I got $67,000 of a write off. Um, so that was a pretty awesome, uh, deal, uh, including then, you know, I was getting distributions and, you know, making, you know, nine plus percent return on that investment. Yeah. It can be very powerful. I mean, we’re doing a deal right now, flex space that we’re building. Uh, it’s going to be about a $2.4 million deal all in, we’re raising about a million 18. And the first year we’re able to write off about $770,000 give or take. So I mean, you think about that, like 77% of the money that the investors are giving in year one, they get to take off their tax returns. Yeah.

[12:45] Cause we can appreciate 1.98 million. So it’s, uh, it’s pretty astounding to be able to do, you know, take advantage of the tax benefits. Like that’s one of the biggest differentiators, um, for commercial real estate investors that you can’t necessarily take advantage of on the residential side, or it may not necessarily make sense to take advantage of on the residential side. A hundred percent. And so I, in some ways I almost see the syndications as a possibility for somebody to think about, you know, you’re let’s say I’m moving from corporate America and I’m going to become a real estate agent and I’m seeing some success with it, whatever. Um, this is almost like a 401k, like, you know what I mean? Like this is almost like this like, but it’s better because you’re like real estate, get that money back. You’re probably gonna get better returning and get that money back in, you know, five years or whatever the plan is. So, um, it’s, it’s pretty powerful.

[13:34] I try to preach that a lot because I don’t think a lot of agents understand, um, those kinds of structures, especially on the residential side. So it’s a, yeah, I mean, I think, I think agents, you know, look, I mean, being a, being a residential agent, being a commercial agent is, is great. Right. Cause you can make some pretty phenomenal commissions, but at the end of the day, you don’t have a retirement plan. Right. You have to invest in real estate or build up a 401k, but that’s boring to me. Invest in what, you know, start investing in real estate because one, it makes you a more trustworthy agent. Right. I mean, how can you honestly walk somebody through the, I’ve always thought about this. Cause like, there’s so many agents out there that they work with investors that have never invested themselves. And I’m like, how can you properly walk somebody through the entire process if you’ve never done it yourself? Right. How can you properly advise them? And you really can’t, uh, in my opinion, cause you just don’t know what, what all is entailed. Right. Um, so, and, and two, you’ve got to build your retirement. You’ve got to start, you know, finding a way to replace

[14:32] your income because at the end of the day, two, we’re 100% like, you know, most of us don’t have a business. We have a job, right? Because if we stopped working, if you go to the hospital for a month, like God forbid, you’re not going to have any commissions coming in. Right. So what are, what’s going to passively work for you in the meantime? And that’s why everybody should be building up their real estate portfolios. 100% Tyler. And I, I, um, you know, have a book that will be, uh, it’s finished through editing and everything that’s, that’s coming out that kind of walks through what, like, you know, if I were to be like 18 again or something and, and just start real estate right away and just kind of be this young, hungry, uh, guy, um, you know, building up that portfolio as you go, house hacking, however you have to do it, uh, to start, um, you know, like you have to have a place to live. So like, you know, if you can maybe have a career somewhere, um, start transitioning over to real estate, buy a house before you get out of, um, you know, that career altogether, um, house hack it so that your expenses are next to nothing, or maybe even getting some cash flow

[15:33] on top of it. It’s definitely possible. Um, and, and then, you know, say for the next one and start building up that portfolio, if you can keep your, um, your rent covering your living expenses and kind of grow with that, I mean, you’re going to be a much better position with whatever the market throws at you. Um, you know, this business is, can be, you know, hot and cold. I just had a huge dry spell. Um, and you know, I’ve been doing this for 13 years and it was like, what is happening? It happens, man. I mean, that’s the thing. Like, it doesn’t matter how good of a broker you are every now and then it’s going to come back around. And a lot of, a lot of agents are seeing that today, you know, the past six months, 12 months have not been easy. It doesn’t matter if you’re in residential or commercial, it’s been a very different world. And so, you know, as long as you know, you like you practice the fundamentals, you, you have a process and a system that you follow every single day, then at least you can keep the lights on during those downturns. You don’t have to be one of those agents that gets out when the market shifts. Exactly. And yeah, you can just rest

[16:31] so much easier if you have that. Now that’s, that’s a lofty goal, like to be a hundred percent covered or your expenses. That’s a lofty goal. Like that’s going to be hard for a lot of people to do, but you know, to have that as like a pie in the sky thing you’re working towards, it’s going to do two things. You keep your living expenses down and it’s going to be putting money into things that are growing. And you know, if, if to be an accredited investor, to get into syndications, you do have to make a good amount of money annually. Is it, is it 200 or 300 for individual? I can’t remember what the difference is. You should always double check these things with an accountant. Yeah. Yeah. I mean, so it depends on what kind of syndication you’re doing, right? So there’s two different types of syndications. There’s a 506 B and a 506 C. A C is accredited investors only. So like when you see a real estate investment being advertised on Instagram, right? That’s a 506 C.

[17:20] Yeah. Since they’re only taking accredited investors, they’re allowed to market. 506 B is typically what we do. Like it’s, it’s called the friends and family syndication, right? So you have to have a preexisting relationship with me in order to get access to any of my deals. So two different approaches. But yes, I mean, if you’re like to be considered an accredited investor, I think it’s 200,000 a year. If you’re single 300,000, if you’re married and, and, or a net worth greater than a million dollars, it doesn’t include your personal home. Like there’s a bunch of rules to it, but yeah, I would go with those up. Yeah, definitely double check on that. But that’s, you know, if you’re building up a portfolio as you go, like eventually you’re going to have that, you know, a million dollars outside of your primary residency. And then, you know, it kind of affords you to get into these kinds of opportunities as well. So it’s like, it’s a, yeah, the book is basically like a roadmap of, of kind of how to, to, to live both worlds.

[18:14] Um, it is more of a residential, um, sales type thing. Um, but let’s go back to your, uh, your commercial building. Uh, so you closed a nine story commercial building and netted 2.2 million. Walk us through that deal from acquisition to disposition and what the key decision points were along the way. Yeah, that was a wild one. We found it through an Instagram post. I just posted on Instagram that I was driving through Chattanooga on my way to Atlanta to tour some properties down there and wanted to see if anybody knew of any off market properties we should take a look at. Uh, one of my followers screenshotted it, sent it to his buddy who reached out. We had lunch, we went and looked at three properties and then we had that one under contract like a week or two later.

[18:52] And it was a, uh, it was a nine story office building. This group had bought it, uh, out of a distressed, uh, foreclosure or just a stress sales situation, uh, during COVID. So nobody else showed up to bid on it. I think they bought it for like, I don’t know, 1.2 or 1.5 million. It was just nothing. I mean, this is a 40 something thousand square foot building, nine stories. And we bought it for 1.8, uh, bank of course pulled out the week before, uh, even though they already approved it. So ended up forcibly being able to negotiate seller financing. Um, but we, we seller financed it. I raised, you know, 400,000, give or take from, from investors, uh, got in there. We spent about $600,000 putting all of our plans together, carrying the property, uh, doing demo on the, on the building and getting it ready for our build out. We were going to convert it into 35 micro apartments, which we were, we were pretty excited about. And then the, uh, the contractor actually made us an offer.

[19:45] And, you know, I didn’t really want to sell it. Uh, we had some OZ like opportunity zone fund capital in this deal. And so we were planning on holding it for 10 years so that we could take advantage of the OZ benefits. And, you know, when the, when the contractor asked us if we’d be kids, you know, we would consider selling, I said, uh, I mean, not really make us an offer. He said, give me a number. So keep in mind, we bought it for 1.8. We, we, um, you know, put about 600 into it. I said, all right, uh, 4.5 million. And he goes, deal, send over the contract. And I was like, damn it. I didn’t say, I didn’t say a high enough number. He shouldn’t have accepted it that easily. Yeah. Um, so anyway, we, we go under contract, he starts doing his work. The due diligence on his end takes a lot longer. So he ends up extending by another month, actually several months. And, uh, so we ended up charging another $100,000, not applicable to the purchase price in order to extend that. So we ended up walking away with about 4.6 million on about a $2.4 million investment.

[20:42] So it was, uh, it was a pretty great little deal. Yeah. That’s awesome. Yeah. There’s definitely, um, speed of, of like kind of turning the capital over that, you know, I’ve, I’ve, I’ve struggled with that. You know, I kind of, if looking at a flip or something like that, you know, it’s like, do I, do I try to turn around and sell it really fast and not make as much profit, but that don’t have to do all the work, all that kind of stuff. Um, so I’ve done a couple of those, but I can see how, especially when you throw in the opportunity zone stuff, how that would be challenging, but on paper, it’s, it’s a pretty big win. That’s pretty awesome. Yeah, absolutely. Um, so for a residential agent who wants to start investing in commercial real estate, is there a certain asset class you’d recommend starting with and what does a first deal, uh, kind of typically look like? Yeah. I mean, so for your first deal, I wouldn’t even necessarily recommend picking a specific asset class. I would recommend picking a client that you know very well, a partner, a friend that actively invests in commercial real estate and partnering with them on a deal that they’re interested in doing,

[21:43] for your first one, whether that’s, you know, you’re bringing some capital to the table, you’re bringing some investors to the table, you’re bringing a tenant, or, you know, maybe you’ve got a client that bought a house from you that owns a business that needs to go somewhere. Bring something like that to the table and learn from somebody that’s done it before. Cause the last thing that you want to do is go spend more money on an education, doing a, doing a property like this. Cause like I said earlier, you know, when I got into the residential side, just on the brokerage side, night and day different, I was unsuccessful in selling a $1.2 million house. It’s very, very different. So make it easier on yourself. Do your first, you know, one, two, three deals with somebody that has done it before. See how they do it. Look at how they do the underwriting, how they go to the due diligence, how they manage a lease up and manage the property, and then go off and do it on your own.

[22:28] That’s by far the best way to do it. That’s what I did. I still do that to this day. I don’t do every single deal by myself. Some, some I do now, um, because I’ve got the money, but for the most part, I’m going out, like, even when I did the hotel, I brought somebody in that had 30 years of hotel experience. That way I knew I wasn’t the only guy sitting at the table that had to learn about hotels and operating this hotel. He already knew it. I got to lean on him. So it just makes it so much easier. And look, you know, the, you’d rather have a slice of a watermelon than an entire grape. It allows you to scale so much faster. And you talked earlier about, you know, people being able to replace their living expenses through these real estate investments and it being a lofty and it is right.

[23:08] I mean, it’s, it’s not easy to build up a portfolio that will actually replace your income, but I have seen people do it in commercial real estate in about a five to 10 year period, depending on how committed they are to making it happen. It’s entirely possible. There you go. Yeah. I mean, what, what kind of, this is kind of a followup question to that. So if you’re, if you’re a newbie, um, you know, what, what value can you bring? Like if you also have a ton of money, uh, what, what kind of value can you do? What kind of grit, what kind of hustle can somebody do to really provide true value and not be annoying to somebody who does have experience? Yeah. I mean, look, you, you basically have to have two of three things in any commercial deal, right? It’s knowledge, money, or connections, right? You can have money and connections. You can have knowledge and money.

[23:52] You can have, you know, money and connections or whatever, whatever, you know, whichever combination I left out there, you don’t have to have all three. So if you don’t have the knowledge, but you’ve got money and connections, you’re good, right? Um, let’s say that you’ve got connections and you don’t really have the knowledge, but you’re willing to put the work in. You can kind of limp along on that side by saying, I’ll put all the work in. I will be there. I’ll put the sweat equity in. I will go out. I’ll make sure that the space is cleaned up, that we get at least up, that we find the right tenants. I’ll knock on doors to make it happen. So you got to have some sort of hustle, uh, in that, in that side of things for sure. But that’s, that’s typically what I recommend to people. You got to have two of those three. If you have one, it’s not enough. I mean, unless it’s money, right? Then you can do whatever you want. But even if you have money, you still have to have connections to the people that are going out and finding these deals. Right? So, you know, that, and that’s going to be one of my golden nuggets for later, which is, you know, when you’re

[24:42] going through this process, find the right people that will help get you to the next level of where you want to go, because the connections is honestly the strongest piece. Totally. So maybe there’s ways that a new person could, um, assist, uh, maybe a commercial broker. Um, you know, uh, if, if they do get licensed, they could maybe open up a commercial space, um, you know, just kind of run flyers. I don’t know if you even do flyers often in commercial, but, you know, do, do something that, uh, some leg work maybe to kind of start providing some value and maybe that will help you learn, uh, get that knowledge aspect as well. Um, I think that’s, you know, I think that whenever somebody starting, um, experienced people do want to pass on the knowledge. They do want to have, and there is like some goodwill that comes from that. So I think that’s definitely something that is out there, but I think it’s also good to not take that for granted and to try to really provide as much value as you can, if you are, uh, something new, trying to get into the space. That’s right. Yeah. I mean, it’s, it’s,

[25:41] you want to be somebody that’s coachable. You want to be somebody that’s not in the way, right? I mean, look, I’m busy. I have people that reach out to me that want to pick my brain all the time. It’s the worst thing that you could ever possibly say to somebody. Like, I don’t want to meet up with you just so you can pick my brain, right? Like that’s, that’s work for me. I’ve got things that I’ve got to do and it’s not because I don’t want to help other people just make it more convenient for me. You know, like I just opened up a hotel. I’m there pretty much every day, making sure that the team is doing things right. They were getting the systems and processes, right. I’ve had multiple meetings there because people have reached out and said, Hey, I want to learn about this. Can I swing by the hotel and talk to you? Like, yes, I’ll be there. Come by whenever we’ve got coffee, right? You know, so just make it easy. Yeah. Take somebody out to coffee and pick their brain. Again, I would highly recommend you never do that. Don’t say that. But if you do that, buy the coffee, buy the lunch. I can’t tell you how many meetings I’ve had where I walked away. I don’t need somebody

[26:35] to spend $5 on my coffee. I’m more than capable of doing that on my own, but it’s, it’s a, it’s a gesture, a cultural gesture, if you will, that tells me a lot about how you value this opportunity to sit down and for me to teach you. And, you know, again, it’s $5, but I think about that with every person that’s ever done it. No, I a hundred percent. Um, and you know, just the, just the scheduling of that, of like when that’s going to work in my schedule, that, that, that is just annoying in itself. Maybe it’s also cause I just, I’m kind of terrible at schedules, but like just to like think through and like, you know, find that out. Okay. When can I do lunch? Have you even, do you even know what I do for lunch? Cause I usually work out over lunch. This is a huge ask.

[27:19] I don’t, I hate lunch meetings. Um, and yeah, you can come spot me. You can come spot me over lunch. How about that? A hundred percent. That would be way better. Um, so I don’t, yeah, maybe there’s a good question, a good leading question. Like, you know, uh, you know, I, I find, I find what you do very interesting. I would love, uh, to, to, to get into this space. Uh, what’s a convenient way for us to have a conversation for you? Yeah. I love that. That’s it. That’s a super easy thing. Easy way to put it. And also just do your research. Like if this is actually somebody that you want to be sitting down and talking to go listen to Matias, this podcast, I’m sure he has told you guys some about his like personal story before, you know, maybe he loves dogs. Well, cool.

[27:58] Can I, can I, you know, send your dog some treats and in exchange, you’ll get five minutes of your time. Awesome. Right. Like little things like that go a long way. Cause it means like one that tells that person that this isn’t just like a, Oh, I Googled commercial real estate in Nashville. I found this guy’s name and I’m reaching out. It tells me like, you’re actually serious about this. You’ve listened to the content that we’ve created and put out and you know a little bit about what I’m doing already. So I don’t have to catch you up from ground zero. Like one of the most annoying things ever, cause I’ve talked about this so much on, on the podcast, on YouTube, on the blog, wherever I get interviews is how I got started. Right. And so it’s always good when you’re going on a podcast to of course give the audience a background. But when somebody is sitting down with you and the first thing that they ask you is, so how did you get your starting commercial real estate? I’m like, man, you’ve done nothing. You’ve done no research. You haven’t prepared for this at all. No, it makes sense. It just, it shows that they’re not truly value, value your time,

[28:55] because that would be readily available. Yeah. So let’s get into the self-storage facility that you’re building. So it’s 350 units. What made you choose self-storage? And what are some of the biggest surprises that you’ve encountered so far in the developmental process? Yeah, this is a great deal. It’s probably the best deal that I’ll ever do. I mean, at the end of the day, I’ve got one partner in it and he and I will cashflow $30,000 a month once it’s up and running. So 15,000 each. And there’s not a lot of deals that you will ever be able to do that in your lifetime. There’s several reasons as to why we were able to structure it that way. One, it’s a property that I bought back in 2022. And we did a 1031 exchange from a deal that we did into this property and did attendance in common so that we could structure it properly and then use that money to build the space out. We structured the lease that’s already on the property as 10% of net profits. So we don’t have to pay any rent for 20 years outside of what’s coming out of our net profits. So it makes it a lot easier for us in that respect. But I mean, it’s just, it’s phenomenal.

[30:02] I love self storage as an asset class, you have to be very careful with it, because everybody and their grandmother started flocking to that when multifamily, you know, had cap rates compressed as low as they became. Right. And you know, I mean, I remember what, you know, 13, I got started 13 years ago as well. Back then, when we were looking at self storage deals, you could get deals at 15 to 18% cap rates, like nobody wanted to be in that industry at all. And now you’re talking about six, seven, maybe 8% cap rates. It’s crazy how much the values got up because of the demand. And we did the research. So one, it was low, capitally intensive, right? It cost us $1.6 million to build this out, right? Because we already I had bought the building for $3 a foot. That’s a whole different story. We could go on another tangent for that. But it was very, very cheap. And so it cost us 1.6 to build it out for 350 units. It’s like what 40 bucks a foot? Wow. I mean, it costs you 150 to build a home today. And so that’s one of the reasons why we’re able to cash flow so much, we have 350 units at, you know, whatever that cost per unit is, and they’re going to throw off 100 bucks a month,

[31:08] right? So that really starts to add up. It’s also lower management intensity, right? So we can hire a third party management company, I don’t have to get involved in it at all. And, you know, it’s consistent, I mean, throughout the pandemic, you know, one of the worst recessions that we’ve seen, especially that hit as quickly as it ever did, right? In terms of just rapid problems, right? Of course, 2008 was very similar. But you saw like a point 1% delinquency rate in self storage deals, because it’s 100 bucks a month, right? For most people, they’re just going to say, well, I’ll just keep paying 100 bucks a month, it’s not worth my time to go over there, pull rent a trailer, pull all of this stuff out and put it into my house. I don’t have anywhere else I’m going to put it, but I don’t want to get rid of it yet. So that’s just a great asset class.

[31:54] Yeah, okay. So it’s a building that you’re converting, not like building storage outside storage units from the ground up. That makes more sense about the numbers. But yeah, that’s awesome. Yeah, I was going to say the first thought I had was, yeah, it is, it became extremely popular. It was probably the, I don’t know, number one thing after what, like, you know, everybody got into Airbnbs. And then, yeah, obviously, there’s blood in the water with the apartments. But yeah, self storage, it’s been huge. What other types of asset classes are you thinking are exciting? Or maybe people don’t pay enough attention to? Or it doesn’t have the sexy craze right now? Yeah, I mean, I’m different because I’m a generalist, right? I’ll do a little bit of anything. There’s basically three neighborhoods that I actively invest in. That’s East Nashville, Madison, which is just on the other side of East Nashville, and South Chattanooga. So I get to know the neighborhoods really well. And then we just deliver whatever we feel is necessary in those neighborhoods. So because of that, you know, I’ve got 1.5 million square feet of industrial space.

[33:03] I’ve got several hundred thousand of retail. I’ve got some office buildings, I’ve got a boutique hotel, we’ve got some restaurants. So we do a little bit of everything. To me, it’s honestly like, what’s going to keep me entertained with my entrepreneurial ADD? Right. And, you know, I think here’s the thing, everybody always asks, like, what asset class is best? Like, what’s going to make me the most money? It completely depends on how you decide to approach any asset, and what you’re willing to, like the work that you’re willing to put into it. Right? There are guys that since 2021 have been buying nothing but office and are making an absolute killing. Right? There were people back in 2014, when, you know, everybody said that retail was dead because of Amazon, they were buying up grocery anchored shopping centers. And today those properties are worth two to three times what they bought them for. Right? So, you know, you can, you can be successful in any aspect of commercial real estate. It just depends on the deals that you find, the work that you’re going to put into it. Yeah. Yeah. That’s really well said. Because I mean, ultimately,

[34:08] you know, oftentimes the profit is in the buy, right? In the purchase. So, I mean, if you buy a bad deal in the, you know, in the best, most popular Instagram asset class, it’s not going to perform well. If you, you know, buy a good deal in a, in one of the ones that people like, I mean, everybody thought apartments aren’t, sorry, offices were going away. Right. I mean, that was one that people thought was a dying asset class. And like you just said, there’s people that are doing really well with it. So I’m sitting in a 30,000 square foot office building that I bought in 2019 at 40% occupancy. So going into 2020, we’re not even half occupied. And we’ve sat at like 92% occupancy ever since we bought it. We renovated it. We did it right. We approached the market in the way that I saw that there was a gap and the building sound great. That’s awesome. Yeah. What, what pitfalls would you say if somebody is looking to get into commercial, it’s a pretty general question, but like, is there any major pitfalls they should, should be aware of? Like, you know, is, I mean, yeah, is that, ask that question? Yeah. I mean, I’m going to, I’m going to give you a general answer.

[35:16] I don’t know what you don’t know. Like that is the biggest thing. You don’t know what you don’t know. I had no idea what I was getting into trying to run open houses, right. Or how you’re supposed to properly do any of that. I didn’t know. And so because of that, I couldn’t do it right. Now, of course, the second we handed it off to a third party, uh, residential agent, I think it was sold within three months. Right. So you don’t know what you don’t know. There’s a lot of tricks to the trade. And so that’s why I always say like, find a partner for your first deal. You are going to learn an immense amount, invest in your education, right? Go out and take the classes, go out. And like, there’s not really like a commercial estate brokerage licensing thing, right? We have the same license as residential agents. Go watch the YouTube videos. I mean, you know, shameless plug, I’ve got over 700 videos on commercial real estate on my YouTube channel. Now they’re free. Go watch those, right? Learn the, like the foundational aspects of commercial real estate before you ever jump into it.

[36:08] Because if you make a mistake, it can cost tens, if not hundreds of thousands of dollars. Now on the flip side, once you know what you’re doing, give yourself three to five years to, to ramp up into it. You can go and you can make $2.2 million on a flip, right? That’s like the scalability, the sheer amount of volume and income that you can make in commercial, like residential can’t rival that. Right. But you’ve got to make sure that you’re doing it right. Right. It’s, it’s the two sides of what like cap rates, like valuation is, right? Like it can go amazing. You do some calculations about, you know, 300 doors. And if you, you know, up the rent by $25 a door, it doesn’t seem like much, but you know, then you look at the value from a cap rate standpoint, it goes up drastically, but kind of what you’re alluding to as well as there’s the dark side of that.

[36:54] If you’re not operating things well, if things, if, if rent goes down, then there’s the opposite effect that can, can make it lose a lot of value. So it’s a positive. Or even if something that’s, or even if something that’s completely out of your hands happens, right? If you underwrote a 6% cap rate exit on a 300 unit apartment complex and interest rates went up like they did in 2022, and now you’re having to underwrite a six and a half or a 7% exit that will completely devalue your property. You might lose money on the sale, right? So you want to make sure that you have, you know, plan A, B, C, D through Z, right? To, to figure this deal out. Yeah. And then, or I heard other people, a lot of people had insurance problems to be like insurance skyrocketed and people weren’t really expecting that, or back from that in either. So it’s, you know, hindsight is 20, 20, but yeah, this is awesome. We could, we could talk, I’m sure for a long time, but I do want to ask you about golden nuggets and you’ve already shared a lot and you mentioned one already, but what else do you have for us? Yeah. And I’ll go a little bit more into detail on that.

[37:58] Number one, roll your commissions into your first deal. Because you are a real estate agent, you have a license, you can get paid commissions. You are more than capable of representing yourself as the buyer group, right? Or you and your partners. So get paid a commission, roll that in as equity on your first deal. That’s what I did on my first one. I still do that to this day. Partner with your clients. Y’all are, y’all are working with people that are buying homes all the time. If somebody can afford a home, chances are good they’re making some money, right? And I’ll talk to residential agents all the time and say, Hey, I’ve got a client that owns this business and they just bought a home. They’re relocating everybody to Nashville. You know, do you have any locations for them? You can also partner with them to go and help them buy a location, right? And then leverage your strengths, right? Like we mentioned earlier, you’ve got to have money, knowledge, or connections. All right. The people with money and knowledge are more than capable of doing these deals. But if they’re not able to go out and find them, or if they don’t want to put the work

[38:53] into finding them, maybe they’re sipping Coronas on the beach all the time because they’re at that point in their lives. They don’t want to put that work in. You have a unique skillset to be able to go out and find deals and help them put this stuff together. That’s great. That’s very true. I love it. What about a book that you think there is, do you have any books you recommend as a fundamental read that everybody should pick up if they haven’t read it already or one you’re just currently enjoying? I’m going to cheat and give you two. So one is building a story brand, right? This has nothing to do with real estate. This is business in general, but the residential agents are, and this is something that we don’t necessarily have to compete with on the commercial side. As a residential agent, your marketing is everything.

[39:35] Your storytelling is a huge component of that because you have so much competition out there. Building a story brand is great because it’ll walk you through how to actually create a brand out of your story so that people remember that. And then the second one, which is my favorite book, I always recommend this, is Blue Ocean Strategy. It started off as a white paper for the Harvard Business Review and they ended up writing an entire book on it. But the Blue Ocean Strategy essentially says, hey, the Red Ocean is where all the sharks are fighting over all of the food and the blood and the water. All right. Why don’t you go find your Blue Ocean where you have no competition? You’re not having to fight with other people over scraps and you can really create your own destiny. And that was one of the most influential books that I’ve ever read in my life. I love Blue Ocean Strategy.

[40:19] Okay. Those are great. Yes. Thanks. That second one may have come up before, but I don’t know if the first one has. So those are great recommendations. Thank you. They’re certainly not as commonly mentioned as as Rich Dad Poor Dad. Everybody knows that one already. Yeah. Tyler, so you mentioned you have a podcast of where you operate, et cetera. How can people follow you? What socials are you on and what your handles are? Websites, that kind of stuff. How can people find you? Yeah, absolutely. So if you’re on the podcast right now, you can find me, the Commercial Real Estate Investor Podcast. Got a big, pretty picture of my face on the thumbnail. The one thing that I like to plug is YouTube. Like I said, we’ve got over 700 videos on the channel. It’s just my name, at Tyler Cobble. Tons of free content, tons of stuff for you to go dive into and really learn how to get started in commercial real estate. Awesome. Well, Tyler, hey, thanks so much for being on the show. It was a lot of fun talking to you. Thank you, Matias. This was great.

[41:21] Thanks for listening to The REI Agent. If you enjoyed this episode, hit subscribe to catch new shows every week. Visit REIAgent.com for more content. 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.