The Psychology Behind Winning Commercial Real Estate Deals

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Commercial isn't no emotion.
There's emotion it's but it's

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different.
Tell me that you're working with

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a family who is taking their
entire life savings, taking a

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second mortgage on their on
their home because the mom's

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dream is to go start a
restaurant.

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Tell me that's not an emotional
transaction.

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Every bit of that is emotional.
Then when you go out there and

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you support them and you realize
mom can't cook, it's the true

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story.
Then what are you doing six

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months later when they're
closing down and they're calling

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you like, what did we do wrong?
What happened?

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That could be me, that could be
my mom, you know, that could be

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my wife.
But us doing the same thing that

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the motion is there.
Where did you come from and how

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did you get to 1 billion in
commercial real estate

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transactions and counting?
Right.

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And counting's the important
part, right?

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If not, I may not have a happy
wife at home.

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I kind of came at commercial
real estate completely by

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accident right out of high
school, end up joining the Army,

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spent some time in the service
and had a, what we call a

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command financial specialist
who's typically the guy that

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tells you don't go and buy the
Camaro for 36% interest rate.

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You have to balance your
checkbook and you do have pay a

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credit card.
Those are typical classes they

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give on basic financial
literacy.

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And he came in and gave a very
rich dad, poor dad type

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presentation about how he was
making more money in his real

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estate investments than he was
as an E6 with 20 plus years in

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the military.
And here I am as a young private

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making 1200 bucks a month and
going this guy is normal.

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He's not brilliant.
He's a normal guy.

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I need to go do what he's doing.
Like that's how I'm going to

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build.
Well, so I started looking at

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going in that direction.
And when they change the the GI

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Bill in the military to where
they actually would pay you to

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go to college, I was like, well,
now's my time.

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I'm gonna go out there.
I'm gonna get a degree in real

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estate.
I'm gonna be the smartest house

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flipper there ever was.
And I was gonna go Commission

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back in the Army and live like I
was a living, like I was

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enlisted guy, end up going to an
undergrad program in real

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estate, started learning there
was this thing called commercial

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real estate and had no idea that
was even a thing.

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I thought the government owned
shopping centers.

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I had no idea, right?
It just wasn't anything.

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It was on my radar and just
happened to get lucky to get

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paired up with a, you know,
small family office.

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He was a fraternity brother
needs somebody to answer the

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phones.
And I started to answer the

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phones and then he's like, well,
you're not dumb.

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Here's a lease, here's a
management agreement, here's

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tenant relations.
And then next thing you know it

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grew into, you know be starting
off on the commercial property

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management side of things.
OK, wait, First off, thank you

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for your service.
Did you just say this happened

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in Iraq?
Yeah, it was.

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It was kind of an after after
work kind of thing where I think

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I was working the the like the
overnight to morning shift.

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So right about lunchtime was
when we broke for the day.

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So he had, it was say 1:00
something like that.

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He did a class and me and my
roommate both were like, hey,

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let's go do this.
Let's go sit through it.

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Let's go learn something and and
see this whole real estate

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investing thing so literally in,
you know, just outside of

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Baghdad, sitting in a class
learning about it.

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You got to keep, you got to put
that part in the initial.

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That's wild.
That's super, super interesting.

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So I know your efforts in the
Army have served you today in

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commercial real estate.
And I want to talk about that

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because I think storytelling is
a really profound way to get a

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point across.
So that's my little I'm throwing

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the ball up and you're going to
hit a home run with me.

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I know there was an airplane
incident.

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Oh, yeah, yeah, yeah.
So in that side of it, it's

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really kind of formed me as as a
leader while we're still dealing

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with that idea of am I still
gonna get out of us, still

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gonna, you know, trying to go
through that, that struggle.

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I was still trying to work to
promote, still trying to do

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everything because at the end of
the day, I still wanted to have

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the military as my career as we
kind of got started into it.

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Part of the process of going to
promote is you've got to go to

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something called the Soldier of
the Month board before you do

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it.
And basically it's a trial run

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before you go in front of your
promotion board.

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So they ask you, what's the
effective range of AM/16A4, What

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is the, you know, the weight of
a hand grenade, just all sorts

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of random stuff that should be
general military knowledge.

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So you go to it.
I went, didn't win, but I was

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pretty stinking close.
It was, you know, half a point

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between me and the other guy and
my squad leader knew that was

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the plan.
I wanted to go to to the

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promotion board after that.
And as we're getting ready to

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prep, about a week or so before
I was going to go to the

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promotion board, he came to me.
He's like, look, I'm not

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recommending to go.
You're not ready and you know,

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at 2223, you know, full of ego
and military machismo.

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That didn't sit well with me.
I was absolutely floored and

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furious that how dare you.
You don't know me.

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I know as much as you do.
And pride really kind of stepped

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in in a lot of that.
We had an aircraft that had a

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really weird fault and I was an
Apache guy.

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That's what we maintained was
the Apache helicopter.

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I was an avionics electronics
tech.

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So we had something where
suddenly the in flight controls

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would switch off of the manual
push pull rods, but to fly by

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wire randomly.
So you'd be flying normally and

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all of a sudden he would get a
different input and fly

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somewhere else.
And it was just a disaster of

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aircraft.
So we had all the best people

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working on it.
I was like, you know what, I'm

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going to show him.
I'm more than ready.

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I'm gonna go out there and I'm
working the aircraft.

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So I go out there, I talk to the
flight company that manages the

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aircraft basically, hey, this is
like 4th or 5th down the list.

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Like it was going to take four
other aircraft to break before

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we get to it.
You're completely fine.

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Go work on the aircraft.
So I get out there, I start

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tearing it apart.
I'm troubleshooting, I'm doing

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all the things and I'm kind of
watching, you know, the blades

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spin an aircraft, you know, four
or five bays over from me and

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then they stop and then you can
hear the crew start moving in

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the next aircraft.
All right, well, that was weird.

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First one didn't work, that's
fine.

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Second one's fine.
Then the next one didn't work.

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And then the next one, this time
I realized, oh God, they're

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literally an aircraft away from
me.

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I need to start figuring that
out.

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I've got this aircraft
completely tore apart.

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So finally they jump to last
aircraft, which is mine that I'm

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sitting there got tore apart.
The crew chief comes and be

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like, hey, they're going to
launch.

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So we're putting everything
thing back together.

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The maintenance test pilot, the
guy who was in charge has the

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ability to sign off on
everything, but there's a ton of

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paperwork legally you're
supposed to do put it back in.

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He blessed it.
They got in, they went to go fly

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off in mission.
This is in Iraq.

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You know that.
I still didn't get it.

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I couldn't fix it.
I couldn't fix it in time.

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Go to lunch, come back, and I'm
sitting in the shop and we've

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got a radio sitting in the shop
that we can hear all the

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aircraft traffic and those kind
of things we'll use for

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troubleshooter and whatnot.
And as we got to that point, you

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know, sitting there, nothing
else to do, There's really

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nothing going on.
So we're all kind of sitting

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there, the shop and all of a
sudden we hear over the, the

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radio, we hear fallen Angel,
fallen Angel, fallen Angel.

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And for us, that was that's code
for the aircraft went down.

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So of course, immediately we all
stop what we're doing.

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We're playing cards and chess
and whatever we're doing, we

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stop everything.
We're listening to it, trying to

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figure it out.
And the moment that happened,

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they call it a call sign for the
pilot.

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And I realized that was the
aircraft I was working on and

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my, my gut just dropped, put the
aircraft back together in a

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hurry, doing everything that I,
I thought was right.

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And for me, the first thing was
I screwed up and I just killed 2

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pilots.
It was literally what I thought.

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And you know, I kind of stepped
away.

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My squad leader was wise enough
to watch me and watch my

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demeanor change very quickly.
He pulls me outside.

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He's like, what's going on?
I was like, I was working on

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that bird.
What do you mean we'll go now.

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So I walked him through
everything and he's like, you're

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an idiot.
He said other things, but that's

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the nice, that's the nice way
you put it.

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You're an idiot.
Let's just chill out.

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Let's just wait, let's see what
happens. 45 minutes to an hour

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later.
What we found out actually

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happened was it was actual, it
was a missile that actually came

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up, hit the aircraft.
It's the only time I've ever

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been happy that an aircraft got
shot down, right, because it

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means I didn't kill pilots.
Ultimately, both pilots were OK.

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They they lived, they came out
just fine.

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But I think one of the biggest
things I took away from that,

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especially leadership was that
every time that, you know, you

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get real prideful, you think you
know everything, you know, you

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kind of get knocked down a peg
and that humility comes in and

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you go from there.
So there was a, there was a good

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like 3 months worth of just a
whole lot of humility, like, Oh

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my God, I was almost scared to
touch aircraft again, you know,

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thinking, oh jeez, I, I can kill
people with not doing a good

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job.
And from there I got picked up

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shortly after that.
We're like, hey, he's ready to

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promote, we need to do this.
Went to the promotion board

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first time go the whole 9 yards
with all that.

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But that experience is always
stuck with me, right?

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Because as you know, I started
going to something make making a

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change in commercial real estate
thinking I was going to be it.

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I was going to be that, that
machismo.

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And then I got in and couldn't
get a deal closed the first

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several months, man, deflated.
And I go back to that moment

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while it's completely different.
I go back to that moment going,

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all right, I got to be humble
and humility, you know, kind of

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having that opportunity to kind
of kick you in the face a

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little.
Bit the risk that you took when

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you were in the Army, how do you
find that apply to your

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day-to-day today?
I believe you said 25 years

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later in commercial real estate?
15 not that old yeah no, I mean

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I think the risk is there.
It's just different in aircraft

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maintenance small mistakes or
life and death.

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So just coming in that attention
to detail is literally in there

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right.
So you know in underwriting you

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don't screw it up because that
attention to detail is bending.

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Now obviously the deal blows up
not you know somebody's life.

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But I want to say that that
attention to detail really comes

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in there.
So even the in the humility side

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of things.
I mean just this last week

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Monday terrible day cold call
and doing all the things I

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haven't had a worse day in a
long time.

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Tuesday comes through phones
ringing off the hook with people

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coming into me and it was just a
complete different day right and

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especially in brokerage where
you're going out and killing

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what you eat the hour can make
complete difference.

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A matter of fact Monday it was
literally five O 5 somebody

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called me going hey do you do
this Yeah, we do.

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I've got something it's huge.
Do you think you can work on it

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Yes, I will figure out how we're
going to work on it.

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But yet the rest of the
beginning of that day was just

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terrible.
So that humility absolutely

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comes in on on a very regular
basis and if you get too

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prideful.
I think that's just life going

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to turn around and beat you down
just a little bit more to kind

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of keep you going.
In my household, in my family,

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the cards have fallen in that
you either work in 2 lines of

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professions, medical or real
estate, and both can feel like

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life or death and both have huge
risk, huge reward.

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I mean, look, you do a smaller
transaction and it's the biggest

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transaction of a person's life,
or you do a huge transaction and

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who knows, you know who's got
money in the deal, right?

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It as much as somebody won't
necessarily die in front of you,

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we still have a responsibility.
It's like you said, have that

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fiduciary duty and see your
clients transaction through as

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if it were your own.
I share this story all the time

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when residential agents want to
come in a commercial, like I'm

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tired of the emotion.
I'm like, commercial isn't no

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emotion.
There's emotion.

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It's but it's different.
Tell me that you're working with

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a family who is taking their
entire life savings, taking a

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second mortgage on their on
their home because the mom's

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dream is to go start a
restaurant.

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Tell me that's not an emotional
transaction.

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Every bit of that is emotional.
Then when you go out there and

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you support them and you realize
mom can't cook and it's just a

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true story, then what are you
doing six months later when

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they're closing down and they're
calling you like, what did we do

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wrong?
What happened?

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And tell me that doesn't tug on
that.

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That could be me, that could be
my mom, you know, that could be

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my wife and us doing the same
thing that the motion is there.

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So absolutely, there are some of
the huge risks that some of

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these folks take and you're
you're a part of it.

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Out of curiosity and for the
listeners, where do you find

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yourself today transacting most
frequently?

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Are you like product type?
What?

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What do you work on mostly?
Most of my career has been in

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medical office.
We've kind of branched out from

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medical office, of course, come
COVID as that happened, what a

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lot of office transactions to
begin with.

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I've always dabbled in in
industrial and I actually was

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through COVID, was working for
an industrial port.

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So I was brought in as their
office guy.

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All of a sudden it's like here
is these airfields, here is all

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this industrial products.
So I very quickly became the guy

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doing specialty office and all
the, the industrial side of

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things as well.
So we've done a good bit of

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industrial, that's where today
most of our transactions are

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generally office or industrial.
And then we do a good bit of

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property management as well.
And we, we found that, you know,

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starting there, understanding
how it's supposed to work and

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realizing there's so much value
that many investors lose because

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they hire terrible property
management.

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Or they hire their cousin or
their sister or their brother to

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do property management, thinking
it's easy, only to find that

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they've lost billions of dollars
for the value because they just

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didn't manage it well.
I see that more often than not.

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Sadly.
Way more often than not, there's

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like a stigma with brokers who
can't, who have property

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management.
We have a property management

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company as well.
I find it to be hugely

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beneficial, hugely beneficial to
our clients, hugely beneficial

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to the tenants and to the
owners.

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It's a whole ecosystem that
feeds itself, so I vote in favor

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of brokers who are property
managers, but that's just me.

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I think as a broker who has
understanding of property

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management, it makes you a much
better negotiating the lease or

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negotiating the sale because you
understand you're not just

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negotiating a clause and never
going to see it again.

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You're negotiating a clause that
you're going to understand how

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it's going to impact the tenant
3 years from now, how it's going

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to impact the owner three years
from now, because you have a

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very different understanding of
how that property actually will

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run.
I say this every day, I'll say

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so I'm blue in the face.
Every property is different,

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every owner is different.
Everybody wants a

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00:13:24,040 --> 00:13:27,280
one-size-fits-all answer and
you're not going to get it in

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this business because it's not
so simple.

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Will I ask this to all my
guests?

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00:13:31,360 --> 00:13:33,640
What is your commercial real
estate secret?

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00:13:33,800 --> 00:13:37,680
I think it comes down to being
extremely nerdy on demographics

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and psychographics.
But one of the things we started

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00:13:39,800 --> 00:13:42,400
doing in our business probably
in the last year and a half, two

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00:13:42,400 --> 00:13:46,440
years is kind of a combination
of AI and using psychographics

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00:13:46,440 --> 00:13:49,080
and really sitting down and
saying, here is my trade area

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for this property.
Here are my psychographics,

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00:13:51,160 --> 00:13:52,960
their property.
Who is the best tenant to

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00:13:52,960 --> 00:13:55,840
actually come in here based off
for the psychographics and AI

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can run a lot of that.
And you know, somebody had

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talked about you can do it.
And I was like, whatever, we had

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an office building, we put it
together, we ran it.

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I just wanted to see how it was
going to work.

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00:14:04,840 --> 00:14:07,760
And it first thing it said it
basically you need to create

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00:14:07,760 --> 00:14:10,000
the, the market didn't have
enough third spaces.

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So you needed a coffee shop,
bookstore or something like

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that.
I was like, this is dumb.

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00:14:13,320 --> 00:14:15,560
It's an office building, never
going to happen.

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00:14:15,560 --> 00:14:18,920
First 3 phone calls was used
bookstores and I was like, okay,

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00:14:19,080 --> 00:14:20,760
we're we're we're on to
something here.

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And and what we've now shifted
because of that is that as soon

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00:14:24,520 --> 00:14:27,480
as we get a new listing that is
a first report we pull is what

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00:14:27,480 --> 00:14:29,200
is the trade area?
What are the psychographics of

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the trade area?
Who are the tenants are the

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businesses that would likely fit
this best?

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We then run through and look at
Nate's codes, get all the

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businesses that fall into that.
And rather than putting a sign

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00:14:40,720 --> 00:14:45,320
and praying, we've got a list of
A100150 businesses that would be

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a good fit here.
And now we're calling existing

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clients looking to look for a
second or third space or

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relocate a space.
And we've seen our days on

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00:14:53,240 --> 00:14:56,840
market just shrink simply by
getting nerdy and looking at the

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psychographics of a market and
then going after those

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00:15:00,360 --> 00:15:02,000
individuals cause a very
different call.

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00:15:02,280 --> 00:15:06,040
Hey, are you interested in new
space versus, hey, the

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00:15:06,040 --> 00:15:09,040
demographics of this location is
identical to what you have

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00:15:09,040 --> 00:15:11,920
currently and there's a hole in
the market for your product

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00:15:11,920 --> 00:15:13,720
here.
Have you thought about another

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00:15:13,720 --> 00:15:16,000
space?
Very different.

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00:15:16,000 --> 00:15:19,680
Call, you know, we talked about
the use cases of AI in our

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business and the use cases of
social media in our business.

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And I think like the inherent
response with change is just

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00:15:27,160 --> 00:15:29,720
like, no, right.
It's just like, no, no, no, like

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that's bad.
And what's funny is hearing use

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00:15:33,520 --> 00:15:37,360
cases like that where it's like
no, no, no, no, no, it's

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00:15:37,360 --> 00:15:41,560
actually useful.
I'm not saying have a robot go

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00:15:41,560 --> 00:15:45,120
cold go, you know, make your
cold calls, but we're just

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00:15:45,120 --> 00:15:50,600
saying, you know, use AI in an
efficient way to maximize your

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00:15:50,600 --> 00:15:52,720
transaction.
It's like like you said, you

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00:15:52,720 --> 00:15:56,200
used AI to increase your
efficiency and then you saw a

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00:15:56,200 --> 00:16:00,360
tangible result in the time on
the market.

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00:16:00,480 --> 00:16:03,000
And I would say the other side
of it is it's thinking outside

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00:16:03,000 --> 00:16:05,920
of my biases, right?
For an office building, I would

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00:16:05,920 --> 00:16:08,840
have never thought bookstore.
Why would you think bookstore

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00:16:08,840 --> 00:16:11,400
for office building would it
looked at here's what the market

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00:16:11,400 --> 00:16:14,400
needs, bookstore made sense.
And if you look at it, it

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00:16:14,400 --> 00:16:17,520
actually would potentially work
which hadn't found the right

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00:16:17,520 --> 00:16:20,400
tenant for it.
But it was something that would

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00:16:20,400 --> 00:16:23,720
never have occurred to me.
And sometimes it'll give you bad

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00:16:23,720 --> 00:16:25,840
information like, yeah, that's
not going to work, but I'd much

360
00:16:25,840 --> 00:16:29,640
rather have bad information with
a couple things that I may not

361
00:16:29,640 --> 00:16:32,200
have thought about that now
spins the wheels a little bit

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00:16:32,200 --> 00:16:35,640
differently.
So AI1 haters 0.