Why Savvy Investors Are Quietly Buying Shopping Centers

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  0:00 - Welcome & Episode Introduction 1:00 - Brian's First Flip: A $10,000 House That Sparked Everything 3:31 - Scaling From Single Family Flips to Multifamily & Retail 4:42 - Why Retail? The Overlooked Asset Class Explained 8:14 - Finding Distressed Multifamily Deals in Today's Market 11:25 - Using Debt Data to Identify Off-Market Opportunities 13:20 - What to Look For When Buying Retail Shopping Centers 15:28 - Tenant Improvement (TI) Explained: The Key to Retail 19:04 - Red Flags in Retail Investing You Must Avoid 22:51 - The Best Advice Brian Would Give His Younger Self 24:44 - Building Broker Relationships That Generate Deal Flow 30:01 - Using AI to Automate Deal Screening in Real Estate  IN THIS EPISODE... 🎙️  What if the path to financial freedom in real estate wasn't through single family homes or even multifamily — but through something most investors are completely ignoring? In this powerful episode of The Real Estate Investing Club, host Gabriel Petersen sits down with Brian Ferguson of Fergmar Capital to pull back the curtain on retail real estate investing and distressed multifamily acquisitions — two of the most effective wealth-building strategies available to investors right now. Whether you are just starting your real estate investing journey or you are a seasoned operator ready to scale, this episode is loaded with the kind of actionable, boots-on-the-ground insight that most podcasts never deliver.  Brian's story began in 2005 with a single $10,000 house bought after watching Flip This House on TV. That first flip sold for $89,000 and ignited a career that eventually grew into an $80 million portfolio — all before he ever brought in a single outside investor. From hundreds of single family transactions per year, to building a multifamily portfolio, to acquiring major retail shopping centers, Brian's journey is a masterclass in consistent action, smart pivoting, and long-term wealth building through real estate.  #RealEstateInvesting #RetailRealEstate #MultifamilyInvesting #PassiveIncome #FinancialFreedom  Want to learn more about our guest? Connect here: fergmarcapital.com  Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

00:05All right. Welcome back to another episode of the Real Estate Investing Club. I hope

00:10you guys are having a great day, great week, wherever you are and whatever day it is for

00:15you. It is February 13th when we're recording this, so it's probably Valentine's Day for

00:20everybody listening. Happy Valentine's Day to you. I hope you guys are spending time

00:23with your loved ones. But today we're going to talk about real estate. It's a good day

00:28because we are talking about multifamily and retail with Brian Ferguson from Fergmar Capital.

00:33You know I love retail as an asset class. We just actually bought our first one that I've

00:38been telling you guys about. So this should be a good episode. I'm excited to jump into

00:41it. Brian, thanks for hopping on. Yeah, man. Thanks for having me. Absolutely. I told you

00:47before we got on here, we always like to start with stories. We like to hear how people got

00:51to where they are. So why don't you go back to the beginning of your story in real estate

00:55and just tell us how you got here. All right. So 2005, I was working in finance in the auto

01:03industry, watching the Flip This House, the original Flip This House television show. Bought

01:09one. It was me and a couple of guys that worked together, bought a $10,000 house. Did that.

01:15$10,000 house. Nice.

01:17$10,000 house. Yeah. And sold it for $89,000. Wow. Nice. Yeah. I think we probably put,

01:25you know, $40,000, $50,000 in it. We made a few bucks on her. We think we did. I

01:28don't

01:28know. Our margin tracking probably wasn't the best back then. And then bought another one.

01:34There was three of us at the time. And then by like the fourth house, there was two of us.

01:38We eventually just, we kept going. He left, went full time. And then about, I guess,

01:43it's 06-ish. I went full time. We went from flipping two to a couple hundred transactions

01:48a year. Went right into kind of the, you know, the great, the, you know, the GFC there, you

01:53know, 07, 08, 09 when things started crashing. And we kind of organically started keeping some

01:59of those that wouldn't sell. We just had this sell or rent motto. Fast forward, we had about

02:04150 of those. We were buying some multifamily along the way, like just, you know, 21 units

02:10completely, you know, vacant, 10,000 a door type stuff or less. And we did all that. And

02:19then, you know, things started recovering and we, you know, the market got really hot. We

02:23started selling off all these houses that we had, selling them in tranches, 1031 and buying

02:28more multifamily. Just kept going through that process. Fast forward to like 2019, 20. It was

02:35about when we bought our last bigger complex and then went into the COVID time. Just every,

02:41as you know, multifamily, everything was kind of going crazy. We pivoted to start buying a little

02:47bit more commercial and shopping centers. And then I started doing some passive investing just

02:50because everything was operating and running well. 21 decided, no, passive wasn't the route.

02:58We still wanted to be active. Uh, and then kind of 21, 22, I I've always had people approach me

03:04asking, you know, Hey, can we partner with you? We always said, no, it was just me and my partner

03:07the whole time. 22, a couple of guys jumped in and we started buying bigger shopping centers.

03:12And we did that for a few years. And then, um, 24 just really started focusing on this multifamily

03:19distress and went into 25, doubled down on finding distress multifamily. And that's what we did.

03:25Then picked up some last year, buying some more now. And so that's our focus now is next few years,

03:31just distress multifamily and buying these shopping centers. Nice, man. I love it. Um,

03:37man, $10,000 a door back, uh, back, what'd you say? That was 2006 and multifamily. It is,

03:42uh, what Metro is that, that you're buying? So that's all. So that's all in our home base,

03:47Victoria, Texas, which were a couple hours, like two hours from San Antonio, two hours from Austin,

03:51two hours from Houston. Yeah. And you guys are, that's right on the, uh, the Gulf, right?

03:55Yeah. We're about, uh, it's like, we're just far enough away to not have the extra insurance

04:00requirements. So about, but you could be at a, you know, you could be at like Port-a-Connor

04:04fishing in 30 minutes or so, something like that. Nice. That's crazy. Well, awesome. So yeah,

04:10I mean, it sounds like a trajectory that a lot, it's familiar to a lot of people. You start in

04:14single

04:14family, you're doing the flips or the rentals, you're watching HGDP, getting that little bit of money.

04:19Um, and then it snowballs into multifamily. Uh, so what, what made you attracted to retail? A lot

04:26of people, once they get from single family into multifamily, um, they, sometimes they'll stay

04:31there or they'll go into something that's more, uh, you know, self-storage, something that's a little

04:35bit more media friendly, uh, that, you know, all the other content creators are talking about,

04:40but, um, retail is not something that a lot of people jump into. Why'd you choose to go retail?

04:46So few reasons, one of it's exactly what you just said because of all, because of what's

04:50the height, what the, the hyped asset classes, but what got us, what got me into it was we had

04:57decided, okay, we're Victoria, Texas people. We don't want another market. So instead, instead of,

05:03you know, if I can't buy multi, I'll just buy whatever I can. So I bought mobile home parks.

05:06I bought single, I have single unit, triple net buildings. I have, uh, some medical stuff. I

05:12bought a dentist office from my kid's dentist when he retired. I mean, we were just all over

05:16the place, like all over the place. I owned some restaurants. We owned some bars, not, not the

05:21business, the buildings. Like, it was just like, we're going to buy anything that pencils out and

05:24makes money in cash flows. That's what we're going to do. And that's where we're going to place our

05:27money. We don't do that anymore. Now we've determined let's focus on two asset classes. But while doing

05:32that, we bought a few smaller strips and I just, and at the time I was taking all the calls

05:37and I

05:37just, just very passionate, like getting on the phone with these business owners or in like putting

05:42that deal together. You know, I'm not, I used to be in that day to day in multifamily. I just,

05:47I don't get that same drive whenever I'm seeing this business open, then they thrive and it's a

05:50second location. And just, I just love that piece of it. So very passionate about it. And we got to

05:56be

05:56pretty good at it. And then when I brought in these partners, we bought our first big center.

05:59And then that's when it all like, yes, it takes longer to stabilize, but if you do it right,

06:05I mean, sometimes I'm spending five minutes a month on a $10 million asset, you know, that

06:10will never be the case on a multifamily, but they both have their place. The reason I doubled down

06:15in retail was a, you could not buy, everyone was overpaying for multifamily. We all know that now.

06:22Um, you know, we didn't do it much. We did it on one or two. Um, but the, every, and

06:28the barrier

06:29to entry though, in these, like, like a 20 year old center, that's 30, 40,000 square feet. What

06:34happens is like, if like right now I'm buying, I'm under contract on a multi and on a, on a

06:40retail

06:40deal, you know, the multifamily, like if I'm going to go get agency debt, right? Like the barrier to

06:45entry is so easy. They'll let someone be your KP. Like there's just all these ways that you can get

06:49in.

06:49And that's how these, you know, everyone knows a lot of guys that, you know, they're buying 150

06:53units and no experience or their balance sheets, very small retail. Like I have to, I got to

07:00personally guarantee this. I have to have the liquidity. I have to have the balance sheet.

07:03And I was able to do that because I had 16 years of building up. I mean, but before we

07:08started

07:08syndicating, like we already had a portfolio at about an $80 million range. So like I already had

07:13balance sheet. I had everything I needed. So my competitions, like your big national,

07:18like REITs aren't going after 35,000 square foot, 2004 shopping center, or I call it like

07:23more neighborhood style and syndicators aren't coming after it either. So it's just, it's a

07:29smaller competition pool there. And that, that's been nice for us. You know, multi was, it just went

07:36nuts. Like we couldn't compete with anything. It didn't seem like, so that's what's kept us in the

07:40space. And we just, I think we've gotten really good at it and we like it now.

07:44Yeah. Yeah. And that's the same argument that a lot of people make for the kind of small to

07:48midsize multifamily between like 20 to like 50, 60 units, somewhere around there is that there's

07:54just not a lot of people going for it because the REITs don't want it. The little guys, it's too

07:58big for them. And so it kind of fits a nice mix. But for most of you family, it sounds

08:03like you guys

08:04are, you aren't looking at that strategy. You're looking for the bigger deals.

08:07Um, tell us a little bit about that. You've mentioned the distress, uh, that's kind of

08:11happening in the sector right now. What are you guys seeing in terms of, um, opportunities?

08:17Um, so like last year we bought one, so we, we, we repositioned. So we have a larger acquisitions

08:23team because we still do a couple hundred transactions a year on the single family side

08:27and you have to have a big, big acquisitions team to do it. So we repositioned our model and,

08:31um, or took some of it and brought that team in and use resources we had and just really

08:35started focusing on like, uh, not necessarily off market. Like I don't really care if it's

08:39listed or not listed or what it's listed at, like the whisper prices of no bearing. We look at

08:45where's that loan sit and that's where we research before we make offers. So just looking for that

08:49trouble, like we closed on one mid last year and it was, you know, it was pending foreclosure,

08:54not for debt service, but because they weren't doing the repairs and it was a Fannie Mae and we were

08:59able to take that. Yeah. It was an interesting model for us too. It brings a, I will say,

09:05assuming something that's in that type of default better be prepared for it because it's,

09:09you're assuming all that, those were, you know, everything they haven't done and the requirements

09:13of, you know, I did not know. I actually, well, I wasn't aware of that. So you, the Fannie Mae

09:19loans, they can, you can go into foreclosure just for deferred maintenance. Like you can be servicing

09:23the loan and still go into foreclosure. He was servicing the loan, paying investors and this guy,

09:29so he actually had a, we had, believe it or not, a little bit of snow like a year or

09:34two ago or

09:34whatever it was not common here. And that weight on the carport collapsed on, I don't know, 15 cars

09:41underneath it. And then it became a headline. And then I think somehow that just got wind between

09:45lender and investors and it, and then the bank, they had sent him a report, you know, like, Hey,

09:51like, I mean, his, his stairwells were rotten, rotten wood. Like they send these things,

09:55like they're not messing around. Like insurance isn't either. Right. But insurance will just drop you

09:59and you go get another policy. Like the bank will foreclose. I had never experienced that either,

10:03but we did on this one. And, and then like the one we have now, they're coming up against a,

10:09you know, like we're closing into this month. I think their payoff is next month. And it was one

10:12of those they bought in 22 CapEx funds got frozen and, and just, they were in default and we're picking

10:19it up for loan balance, but with new debt, nothing assumable. Cause it was like a adjustable rate

10:23bridge debt. And you know, what we're seeing is the lenders are just done. Like they're

10:28seemed like that guy, like he had not been making those repairs for years, but the lender was letting

10:32it go. And we're just, what we're seeing in these deals where they're just done and they're pushing

10:36for it. So we're looking for something there. And where I think we compete against, like we're buying

10:40288 units. Now, a lot of people, there's a lot of big groups that could have taken that down,

10:45but like we're buying this deal for like 57 K a door, but it's a heavy, heavy lift,

10:49you know, be a home run, but it's a lot of work, but it's across the street from our

10:54corporate office. You know, so I think a lot of people hit it back even harder because

11:00you know, they're not boots on the ground and it's a lot of work and we know that,

11:03but when we're done, it'll be positioned for, you know, some REIT to come in and buy it or

11:07some big buyer out of Cali or something like that. So.

11:10Yeah. Yeah. That makes sense. So in terms of identifying these deals, it sounds like you are,

11:15you're using the debt on the property to identify which ones to go for.

11:19Is that something like that is how you're finding the off-market deals is you're looking

11:22through whatever costar property radar or whatever, looking at the debt balance and then deciding

11:27whether it's something worth pursuing.

11:29Yeah. Like balance. Yes. More so. Like, um, we, we try to focus on the status of that debt.

11:36Like, is it expiring? Um, and we'll go, and then sometimes they're like, yeah, it's expiring.

11:41I'm refining it. Everything's great. So we like there, and there's multiple lists and none of

11:44them are super accurate, but then more so like we get, like, I mean, I'm sure everybody, you,

11:49you get it too. Like I get like 50 emails a day and it's like 49 or delete or 50

11:54or delete most

11:55of the time. Um, but every now and again, you'll get one where, you know, like I love it when

11:59I

11:59open it up and it's like, here's a T12 and a rent roll. There's no OM. Like they've put no

12:02work

12:03into it. And then I'm like, okay, five brokers are shopping this to me. And then if I go look

12:07in and

12:07that cross references to like, Oh, an expiring loan list in nine months. Okay. Now. And then

12:13we've built in some AI to where, so we have like a bot inside. We use a sauna for everything.

12:18And

12:18our, our, I got a guy, super smart and all this. And, um, we, it will send it to that

12:24deal

12:25bot that will afford the email over and then it'll just outsource everything. And then we cross

12:28reference to those lists. And then it kind of tells us, does it hit those bullet points

12:31or not? And then that's attack mode, you know, not every, like we're underwriting one right

12:36now that I don't have any information on the debt. The guy that owns it has like 5,000 units

12:40looks to be some pretty good meat on the bone. We're just always, I should try to ask that

12:44like, why it's priced well, why? Cause if you don't have to sell, you're not just pricing

12:50it low. Yeah. There is always hair on deals that are priced well, that's for sure. Um, but

12:56for good reason. And that's a, you know, can't, you can't get value for nothing at your, if

13:00you're buying the deal and there's, there's meat on the bone, that means that you're the one

13:03that has to do the work. Um, so yeah, I love that. Uh, let's talk a little bit more about

13:08retail. Um, it is something that I've really been interested in. You know, I mentioned that

13:11we're buying our first one here coming up soon. Um, so what is it first, what do you look for

13:16when you're buying retail properties? You already mentioned the size you said, what'd you say?

13:20Like around 30,000, 40,000 square feet. Um, so like we, I bought one that I, like I've done

13:27some that like six to eight, three tenant, four tenant. I wouldn't, I, we just updated our buy box.

13:32I won't do that anymore. Like I think 10 to 12 is our just bare minimal. I like that 30

13:36to 50,000 range. Um, we like to see like 20, 25 years. Uh, I mean, they could be as

13:43new as

13:432014, but probably I'd say at least between 10 and 20 years old is a good sweet spot for

13:48us. Uh, call it neighborhood retail centers. So we're looking for stuff that think of something

13:53that's surrounded by a bunch of rooftops and it's going to be filled with like the one

13:57we're buying right now. We have an Edward Jones, we have a donut shop, a nail salon, Montessori

14:00school, a couple of dentist offices, and I'm probably forgetting something. I think a

14:05behavioral school. So think of things that mom, dad, and kids are going to drive by to

14:09and from work every day. So you need to be by a bunch of rooftops for that to work. Um,

14:14to us, that's recession resistant. No one's taking out the monitor. You're not going to

14:18throw your kid in front of a AI bot and get them to be better. Like, I mean, to a

14:22certain

14:23extent, right. But now you're not replacing a dentist. And so we like it for that aspect.

14:27And then we look for stuff that has, um, this isn't always the case. Like sometimes you can

14:32just find the deal, but most of the time it's the value add comes in like this center where

14:37you need to paint it, put new awnings, clean it up, you know, make it nicer. And then there's

14:41a bunch of vacancy where, you know, tenants moved out. They've done nothing to the space.

14:45They're not marketing it properly. They're not offering TI dollars. So what happens is like

14:49these guys, you have these 10 year leases, they've owned it for 10, 15 years. Well, now leases

14:53expire. Well, the new tenant doesn't care. They want, they want, okay, I need 20 bucks a foot,

14:5830 bucks a foot to remodel it. And you get these older owners that are like, I'm not going to

15:01pony

15:01up a hundred grand. Like, I don't want to do it. They can rent it or not. And, and that

15:06used to work

15:07just like kind of multifamily. You didn't have to give concessions. Think of it in that aspect.

15:11We're not in that space anymore. Like you need to be aggressive with your TI dollars. You need to be

15:15willing to pay the full 6% to multiple agents. Like I get it didn't used to be that way.

15:19And these guys

15:20don't realize it, but for them, if the center's paid off, it's probably cash flowing, you know?

15:25So that, that's kind of where the value add play. It's very similar. It's just a different way of,

15:29it's like a different way of looking at concessions, I guess.

15:32Yeah. Yeah. And, and I mean, I just got into the space. So these terms are new to me,

15:36but for people who are listening, TI is something that I didn't know before, but that is basically

15:40when you give money back to the person who will be renting a space from you for repairs. So if

15:45you,

15:45if they're renting and correct me if I'm wrong here, Brian, but if they're renting a, you know,

15:4820,000 square foot space, you'll give them $10 a square foot, $20 a square foot to do the repairs

15:54once they move in versus you doing it or just renting it as is. Is that, is that right?

16:00Yeah. And like normally the way it works. So like 20 is probably on the low side depends on,

16:03so let's say it's 20 bucks a foot on, you know, 10,000 square foot space. So 10,000 times

16:0820,

16:09and then they'll get that normally once they've paid the first month's rent. So they don't get anything

16:13right. Yeah. So they have to do the work, get their CEO certificate of occupancy from the city,

16:18or whatever the governing agency there move in. And then once they've occupied and paid the first

16:23month's rent, then they put in a request and we'll, we'll pay it to them. And then your leasing

16:26commissions are normally 6% of that lease amount. So if someone's paying a thousand bucks a month,

16:31that's $12,000 a year, it's a five-year lease, you're paying on that total. So it's 60,000 bucks

16:35times 6%. Yeah.

16:37And I didn't realize, that's interesting. I didn't realize retail commissions were on the full duration

16:42of the, of the lease. I thought it was like the first year, but, um, you gotta be, you gotta

16:47be

16:47careful too, because they'll try to sneak in on all renewals. So we normally throw that language

16:52out. Oh yeah. Okay. But if it's a national deal and they have a national brokerage representing them,

16:58they'll want it there. And then those guys get paid the second to lease assigned half. And then

17:03the other half, once the tenant moves in normally. So, but I mean, that's, that's a good chunk of money,

17:08like between those two things. And if the center was already stabilized, it's hard to,

17:14and you have to bake that into your deals. Like, oh, this lease, I'm buying this deal and it expires

17:17in two years. You better bake in that TI and leasing commissions again, assuming that these people are

17:23going to move out. So that's another one where I think, you know, people get bit like as you go

17:28through it. So I know I did like two years in, it's like, oh, I got to pony up another

17:3350 grand.

17:33Yeah. Is there any, ever a situation where you like white box it prior to, to listing it where

17:40you feel like you need to do work before doing, you know, before doing the listing versus giving

17:44the TI to the person once they rented the, um, the unit from you? Well, it's not either or it's

17:50both. Like you need to white box it and then they're still going to want the TI. Like, so you

17:54need

17:54to go out everything you paid this guy to do five years ago. Now you need to go spend more

17:58money,

17:59rip all that out and be prepared to pay the next guy so he can build it out and then

18:03go rip that

18:04out when he's done in five years based on the space, right? Like if it's a cash store has a

18:07counter in the middle, maybe you're okay. But like, like the one we're buying has a space. It was like

18:12some type of medical deal. I mean, it's a hodgepodge of offices and hallways. You can't even find

18:17yourself in there. And then there's like a, we'll see that moved out when like all the pill bottles

18:22are still in the back. Like, it's just, it's just creepy kind of, you know? So just go in there,

18:26gut it, like gut out, maybe not all the walls, but like get any of the scary out,

18:31like roll the walls, white, rip out nasty carpet. Same thing you would just kind of do to like,

18:35if you're a hotel in a house for like, take it to single family world. But like, to me,

18:39it's like in the multifamily world, like it's the same concept. Like you're renting an apartment

18:44for 900 bucks a month and a tenant moves out and you're going to spend three grand make ready

18:46and get like, it's, you know, it's, it's similar concept. Yeah. Yeah. That makes sense.

18:52What are for on the retail side, what are major red flags that once you see them,

18:56you're like, no, this is not a deal for me. Assuming, well, yeah, I mean, red flag,

19:01obviously purchase price is too high, but let's not talk about purchase price,

19:04but actually physical about the, the unit itself.

19:07Um, like buy box would be like age. I don't want me, like I won't buy seventies,

19:14eighties, anything like that. Um, I don't know that there's like some, if it was like,

19:20if we're 2000 or newer, I don't know if there's a, you know, we look at a average household

19:24income and demographics, that's the first place we start. Like if you're in, you know,

19:28like, you know, like color coats, if you look at the, the, your, your household income map,

19:32like if we're in a red zone, we're out, like we're walking, like, I don't care if it was built

19:35last

19:36year. Um, there there's, there's ownerships that look just for that though. So there's nothing wrong

19:41with that. It's just not our, not the tenant base we want to deal with. Um, yeah. And that's

19:45actually, um, we were talking about, uh, before this, before we got on here, we were talking about

19:50self-storage and I was telling you, you know, I've had some storage facilities that were broken into

19:54and that was the lesson I learned is buying in those, those red areas. Um, especially if it's

19:58a storage facility that is unmanned, you're, you're going to get broken into. So you really need to

20:03be aware of the specific location you're buying in. Um, don't learn it the hard way.

20:10Yeah. I mean, there's a home for it. Like let's call those D class shopping centers. I mean,

20:14we want to buy B class. Like I don't buy a class. I don't want those either,

20:17you know, more B class, which is kind of the same world we live in in multi, but yeah,

20:21I mean, I would say like we, if it's, if it's very heavy restaurant, um, like we try to stay

20:27away from that, you know, if it's, you know, uh, if one tenant, like I don't mind having an anchor,

20:32like we've got a center that, you know, 20,000 square foot of the 37 is a planet fitness.

20:36And then the other 17, but when it does have those large ones, we look at like how that footprint's

20:40laid out. Um, like we're buying one right now that has a dollar tree, dollar tree eats up,

20:45I think 16, 18,000 square feet, but you can clearly look that the center was meant to be

20:50broken up. And they just, when it was a shell gave it to them. Okay. Well, those guys are gone.

20:54I can

20:54go put a hundred grand, 200 grand wall this off. And now I can, which that's fine because they're

21:00paying eight bucks a foot and I can go put a couple hundred grand in at the end of their

21:03lease

21:03in three years. And now I can get $25 a foot. But if you, we've looked at some where it's

21:07this

21:08big restaurant or something, it's so customized, it can never be anything else or not easily.

21:12We kind of walk on that. If the big tenant moves and we can't reconfigure, that's a big

21:17deal. Or if it's just primary, like 90% restaurant, we try to stay away from that. Just, just, I

21:23guess, kind of PTSD from the COVID days. Yeah, that makes sense. Nice, man. Well, um, I just

21:31took a peek at the clock. It looks like we have run it down. So it's time to jump into

21:35the quick

21:35question round. Are you ready? Yep. Let's do it. Let's do it. Starts with education. It could

21:39be any form, could be a book you've read, movie you've seen, conference you've gone

21:43to, mentorship program you've been a part of. Um, I just need two recommendations, one

21:47for general life wisdom and then one for real estate. Uh, general life wisdom, maybe if

21:57it's like the business front, I'd say EOS. We operate on EOS. I think that's, that's a major

22:01one. Um, and you said one for real estate specific. Real estate or business, it could be either

22:07or, um, so I'll change that. So put EOS for like business real estate. Cause I think running

22:13a good real estate company, the business EOS is, is huge or some platform like it. And

22:17then personal book wise, um, um, 21, like 21 laws of leadership book is still one of my

22:26favorite. I recommend that one all the time. That's huge. I probably read it every once a

22:29quarter, you know? So, um, nice. Maybe those two. Yep. And for everybody who's not aware, EOS

22:35is entrepreneurial operating systems. All right. Yep. That's it. Nice. All right. Next question

22:41is for your younger self. Let's go back to the Brian who was doing that first flip with his, uh,

22:45his three other buddies back in, I think you said 2005, go back to him, look him in the eye,

22:50give him one piece of advice moving forward. Partner sooner. It's okay. Nice. I like that. You

23:05we've had people on here who are, you know, on both sides of the fence. I want to do everything

23:08myself. I want to partner with other people. I land squarely. Um, I like partnering. I like,

23:13you know, partnering with other people, other, other, um, organizations. And so I love that you

23:18said that. Um, why do you say that? I mean, I've had a partner since the beginning, but we were

23:23always, it's just us. Like, let's buy it before them. Let's do this better. Let's beat them. Um,

23:28and that workforce, we did really well, but I think at some point, like I remember all the deals,

23:33like I bought some of those five and $10,000 doors, but there's a lot of them I didn't buy

23:37like at a hundred, 150, cause I didn't have enough capital. And I had people that would

23:41have brought the capital in for a piece of ownership and we just refused to do it. We

23:45couldn't get out of our own way. And now I'm doing, and it's great. We're positioned to do

23:51it now with the experience, but I don't know. I just, I wish I would have gotten not just partner

23:55on everything, whatever, but like, I wish I would have, I don't just been more open-minded

23:59to that earlier on. Yep. Nice. I like it. All right. Uh, next question is about the U S it's

24:05a big place. There is a lot of opportunity out there. Give me the single Metro you're

24:09most excited about investing in today. Um, outside of where we're at in Victoria, Texas,

24:14I am in Houston sub market. So Katie sugar land, Rosenberg, um, Richmond, that area right

24:21now is where we're very bullish buying. Uh, we already have our shopping centers there,

24:26fix and acquire another one. And then I'm going into multifamily there now.

24:31Nice. I like it. Yeah. The Texas triangle is a, is my favorite area. Absolutely. Um,

24:37next question is about finding deals. It all starts with getting, getting in contact with

24:41the seller and pending that purchase agreement. So what is your favorite way to generate leads

24:45and find new deals? Um, direct to seller is great. I don't know that that's my favorite way.

24:51Uh, just, you know, um, relationship building. Like I go to conferences, I shake a lot of brokerages

24:56hands. I think everybody in the, in the syndication world says, thinks that, Oh, let me go to the

25:01conferences and find a bunch of like investors. Like, I don't think that's the way to find

25:05investors at all. And I've proven that that's not the case anymore. Uh, you know, making

25:09relationships with a lot of the brokers there. Um, what market are they in? Who do they know?

25:14And then when you get these 50 emails, go sign up for every single list. And then I literally

25:17have a template in my email. I auto respond. Thank you for sending. This one doesn't work for

25:22us at Fergmar Capital. Here's my buy box. Please keep me in mind. We'd love to schedule a call.

25:26Here's my calendar link. And I read that out for two years. And now I get text messages

25:32and calls all the time, but you got to put in the work and people have to know who you

25:35are. If not, because we all know the general email is not worth buying.

25:39You know, absolutely. I like that you said that. And that's something that I, um, only

25:44recently, maybe I'm, I'm dense or something, but only recently have I kind of, uh, jumped on

25:49the broker train, call it a train. It's like the thing that everybody does. But for some

25:53reason, I thought you could only find deals off market for a long time. And that's what

25:56I focused on. But now I really just like calling brokers. I like talking to brokers. It's, uh,

26:01they're the deals. They have the deals in the first place. They're the ones out there calling

26:05there, you know, even before it hits the market, they'll probably find a buyer sometimes. And

26:08so just making those relationships is, uh, is so much better and, and just more enjoyable

26:14in my opinion. So, um, yeah, like, like a two second story on that. We had a, this deal

26:20had a hurricane damage, been vacant for like five, six years. My acquisitions team follows

26:24up this guy every month. Or if he says, Oh, he's going through a lawsuit, like with insurance,

26:28call me in three months, call me in this. Their next followup was on February 28th. Cause

26:32he said he'd be through court. They've been following up with them for three years, three

26:35years. Broker sends me the deal two days ago as the listing. He never even called us.

26:42So like that doesn't always work, but he sold it to the guy. And I think that they just feel

26:47more comfortable dealing with someone that they think is a professional in that space.

26:50So it is what it is. Yeah. Yeah. And it's, uh, yeah, I just, I've really enjoyed, um, just

26:57speaking with brokers versus sellers, because when you come in, when you, yeah, when you're

27:01on the call with a seller, they tend to get a little bit more defensive. Um, if you are

27:06the buyer, uh, versus a broker, they'll, you know, they'll, they know that the broker's

27:10on their side, trying to get the highest dollar. So they're, they're willing to talk

27:13to them. Yeah. Even for like PSA, like when you're renegotiating, you may ask for something

27:17to the seller and they're automatically defensive where brokers like, no dude, like, listen,

27:22you need to give them the roof credit. You didn't disclose that, you know? So it can be

27:26helpful. Yeah. All right. Next question is lessons learned. Not every deal we get into

27:32goes the way we expect it. In fact, pretty much every time something goes wrong, but that's

27:36when we get to learn a lesson. So what was a deal that went a little bit sideways for

27:39you guys? And then, uh, what was the lesson you pulled from it? Um, so our first, uh, syndicated

27:47deal was actually in a multifamily was a 56 unit, like in 23, um, and, uh, doing well now

27:55it does phenomenal, but it was a bumpy road getting there. We, what we learned was, so we

28:01had a hundred plus unit complexes with staff, and then we had up to 42 units standalone. So

28:08we thought 56 units pro forma, this just like the 42 all day long. The 42 was just townhouses,

28:16right? Like just individual standalone. This was a complex, a complex has a pool and common

28:21areas and it has to be staffed. Well, guess what? You cannot afford a staff at 56 units.

28:27So we ran through this wall of, and it didn't help that it was a fraudulent seller that had

28:32ghost leases. And we learned our lesson on not trusting people there. So that was another

28:36lesson we'd learned. I just guess not, we're not in a big town. Like no one had fraudulently

28:40tried to screw us before. So we learned that. And so now we don't trust anyone, but, um,

28:45then we, so as we're recovering from that, we're having a hard time leasing, but it doesn't matter

28:50the unit count. It matters. Is it set up as a community? I don't care if it's 20 unit, 200

28:54units,

28:55you have 200 townhouses next to each other. And there's no amenities. You probably don't need

28:58anybody on site and probably can get away with it. But, uh, you had to have it for this 56.

29:03Luckily,

29:03we owned enough stuff around where we packaged it together so we can have it on site. Now it's

29:07doing great. But that was just, we had 700 units when we bought it and we were clueless to that

29:12fact.

29:13So, yeah. So, yeah. And that's a, I mean, we were talking before this, how, um, for self-storage,

29:19I learned that same lesson. If you buy something too small, uh, it's it, and you don't have somebody

29:24on site, it can really tank the deal. So, um, buying, that's one of the biggest lessons that I've

29:29learned is buying bigger, uh, is actually safer than buying smaller. People think you buy small,

29:34you don't have as much to lose. The risk is smaller, but really it's, it's a bigger risk

29:38because you can't staff it. And then if something does go wrong, all of your NOI is just gobbled

29:43up by whatever, whatever issue that you run into. So, um, all right. Second, the last question,

29:48this is about AI. Um, it's new here or it's a, it's a new question that we've been asking. Um,

29:54AI is here to stay and we try to implement it in as many places as we can responsibly do

29:58so. So

29:59what is the way that you're implementing AI in your business that's most impactful to your day to

30:04day? Um, so specific to this, I guess I, I mentioned it a little bit earlier. So we've

30:10built a bot that like kind of scrubs, uh, scrubs all the deals. Like we still have to send it

30:15over

30:15and it scrubs all the deals and kind of cross references our buy box. And then like kind of

30:19auto assigns it to the first person in that process of getting it through. So that's worked out really

30:24well. And then from a personal standpoint, I use, I'm a Claude person. I have like the upgraded

30:27Claude, but I mean, so I have Claude like tied to my Gmail calendar, my Gmail email, it's tied to

30:33my

30:33Asana. So like, it has just saved me. Like I use it as my assistant. I don't have one. I

30:38had one and

30:39I don't need more, but literally I'm like, Hey, search this email thread, look at this Asana task,

30:44cross-reference this, draft this. And then like, I just let it go and work by itself while I jump

30:48into

30:49something else. So, um, and I think that's more of like a, like a juvenile way to use it. It's

30:53not like

30:53I'm not coding or doing anything crazy, but it has just been like the new one can literally build

30:58comprehensive spreadsheets, work inside of Excel. Like, and if you're missing, if you still manually

31:03doing stuff like that, it's, it's just, it's crazy. Yeah. Yeah. I, I have a subscription to

31:10literally every single one of them, perplexity, chat, GBT, Gemini, Claude, you know, you name it,

31:15I got a subscription and I am too. I did that in order to kind of decide which one to

31:20use,

31:21you know, forever. Um, and I'm starting to go towards Claude. I, I like Claude. Uh, I mean,

31:26it integrates with everything really well, but it's also the responses that come back.

31:30I just like them the best. I don't know why they just seem more comprehensive. Um, and it is better

31:35with Excel. Some of them, I think it's Gemini or, or a chat GPT just can't do Excel well, but,

31:39um, yeah, Claude is, is winning me over. That's for sure. I can't get its tone right. You know,

31:44when like, I don't even use it for like social media or like investor email responses, anything anymore.

31:49Or the only thing I use chat GPT for, which, so I use it for two things. Um, I, I

31:54spent hours and

31:55took pictures of every piece of equipment in the gym. And so I have it right in my workout plans.

31:59And then it has every picture of every clothing item I have, cause I'm colorblind. And so I would

32:04tell it what I'm doing and it picks out my outfits for me. That is a good use case right

32:10there. I love

32:10it. Yeah. All right. That, uh, that leads us to the very last question. This is for the listeners.

32:16Um, you've given us a lot to think about and I'm sure people want to reach out, get in contact

32:19with

32:19you. This is a two-parter. Where can they find you? And then what can they expect when they reach

32:23out? Uh, so for mark capital.com is our website. I'm very active on LinkedIn. So you can, and then

32:31my contact info is only can message me or you can email, call me, uh, when you reach out, I

32:35guess it

32:35just depends. Like, you know, if, if someone's looking for advice, I'll take the calls all day long.

32:39If you're looking to invest, obviously we're, we, we have some active deals now. Um, and then,

32:45you know, if it's vendor services, it just depends on what that is. And you know, you know,

32:49if it's something that lines up with us, but I, my stuff, my, I'm very active on LinkedIn. I take

32:53calls constantly. So always happy to connect. Cool. And I will put Ryan's link in the comments or in

33:00this, um, show notes. So if you guys want to reach out, all you got to do is click the

33:04little more

33:05in the description. It's going to pull down that full description and in there, you can find his

33:09links. All right, man, that wraps it up. Thank you very much for hopping on the show. Yeah, man.

33:14Thanks for having me. Absolutely. For everybody who's with us today. Thank you guys for showing

33:18up. You are the reason we do this. So if you guys have any questions, reach out to me, Gabe,

33:23the real estate investing club.com. If you guys want to support the show, just leave us a review,

33:27comment, anything like that. Other than that, I hope you guys have a great week. Keep rocking real

33:31estate. And I look forward to seeing you on the next episode.

Category

Transcript

Comments

Recommended