What are the pros and cons of office, retail, and industrial? What should your real estate agent do for you as a buyer? How to get over fear in real estate investing? Trinity (Trent) Herrera, commercial director and real estate consultant of Black Tie Real Estate, shares his insights.

Read the entire episode here: https://tinyurl.com/4dzzaart

The pros and cons of office

Professionals need an office, so it's a staple in downtown areas. A stabilized office can fetch a premium. Some of the most expensive and impressive buildings in the world are office buildings. The cons are that we have a lot of office vacancies, and we have more work-from-home opportunities post-COVID, which completely turned the office upside down in some cities, counties, and towns. We have many cities with a lot of impending office vacancies. However, as another pro, I'm hearing about a lot of discussion about multifamily conversions and turning these office buildings into high-quality multifamily units, which also serve a need. The singular scariest thing about offices as products is being left responsible for the building. If it's 30% vacant or more, that's the single most frightening thing.

The pros and cons of retail

The cons we're talking about here are the opportunities. What scares us are often the opportunities. While the scariest part of an office could be holding the bag, paying the property taxes on a building that's assessed for what it's worth is a little frightening. But when you lease it, when you hold and plan correctly, you have a good team, and you have it for 10 cents on the dollar because it's been vacant, it's a whole different story.

If you want to be extremely safe, you'll put your money in a savings account. If you want a slightly higher risk, you put in a retail triple-net tenant that will give you the mailbox money, but it's at 5%. It goes for everything.

The pros and cons of industrial

The biggest pro for me is that there has been a recent focus on the domestic industry. We have a lot of local infrastructure being built around US-based industries, such as manufacturing, warehousing, new Amazon distribution, data centers, and OpenAI Stargate. A lot of money is being invested in it. There is this sentiment that each country should be able to manufacture its products, and I think we're sensing that now. Hopefully, we continue to see this trend.

Americans love buying things. The same reason that retail works is why the industrial works. So much industry is built around shipping products, getting them from A to B, warehousing for Amazon, etc. Even if people stop going to the retail store, Amazon is always going to need warehouses. There will be many companies providing other forms of distribution and accessory services to Amazon. As long as Americans love buying stuff online or in person, the industry will likely remain strong.

And then there's opportunity. There are a lot of small towns, especially here in Texas, that have 100 to 300,000 people, where you can buy quality industrial for 30 dollars a foot. If you can tolerate a hold and lease it up in a year or two, those deals can be had all day, and there are lots of more stabilized national credit tenant deals to be had. There are all sorts of things that can be found with a propensity for appreciation.

Trent Herrera

trinity@blacktie-re.com

Join our investor club here: https://montecarlorei.com/investors/

What should be your acquisition targets and goals as an investor? What are the pros and cons of different asset classes? What should your real estate agent do for you and what should you do as an operator? Trinity (Trent) Herrera, commercial director and real estate consultant of Black Tie Real Estate, shares his knowledge.

Trent Herrera

trinity@blacktie-re.com

Join our investor club here: www.montecarlorei.com/investors

How to make sure a syndicator/operator cares about your money as an investor, what can you do to mitigate the risk of investing with a bad operator? Trinity (Trent) Herrera, commercial director and real estate consultant of Black Tie Real Estate, shares his knowledge.

Read the entire episode here: https://tinyurl.com/mr4ces9c

How can a passive investor know that a syndicator/operator cares about their money?

We've all looked at deals that, at the surface, the sponsor looked great, and everything was above board, and the yield was what we wanted, and it was our appetite. And something happens. And to some degree, I think that you can never, 100%, insulate yourself from a bad egg, but there are signs. We have this term in the industry, commission breath, that's always a number one red flag. Someone with a servant mindset is not going to have commission breath at all. There's no sizzle in that industry of building generational wealth, the sizzle is, we're going to build generational wealth using math and fundamentals. But when there's too much sizzle, that's a red flag.

The biggest single indicator is the math and the story, and the history track record. When you have a target of an asset type or class that you're comfortable with, and when you have a track record, when you have some under your belt, it's easier to see when something doesn't look or feel the way it should in that industry. I guess I will answer that by saying the single biggest defense is sophistication and experience, and maybe even leveraging your friends, there have certainly been friends that have saved me from bad investments, just from a second look and talking through a deal.

We're talking about the foundation of what makes a syndication or an investment successful, Underwriting is no joke; it's 75% of what makes a syndication work. My best clients, my best investors, all understand underwriting, and if they don't, they've hired me to help them understand it, and to walk them through it so that they can see what I'm seeing. There are so many ways that you can look at a property wrong. And I also believe that not one person should look at a property. There should be a multitude of people and aspects looking at a property, opining and giving valid, good criticism and feedback. My number one tip when it comes to foundations is to dive into underwriting and do your best to understand each deal; it takes years, and even then, there are still deals that you see and you struggle. The underwriting in the math is where you'll see if the deal is truly viable for you or not. And that goes along with the risk management side and accreditation.

Each one of us has a very different life. We all live such different lives, and we all have different amounts of kids and cars and mortgages and investments, and so we all have these tolerances and knowing what those are for you through the eyes of someone like you or I, who's been doing this for a long time, is important, understanding the level you should be playing at. How much is too big a bite off for you? How are you accredited? What's your accreditation level? Those things are all guardrails that are in place to help each investor make good decisions. Each style of offering that is done is styled differently to either accept less of a wealthy and sophisticated base or not, through your underwriting and through your understanding of your life and your position, not biting off more than you can chew, and only investing money that you can tolerate losing.

Trent Herrera

trinity@blacktie-re.com

Join our investor club here