MJF 021 7 Rules For Real Estate Investing with Nick Raithel

by Michael Flight

12.03.2018

real estate rules 1

Michael Flight interviewed by Nick Raithel on the ‘7 Rules For Real Estate Investing’ podcast

Episode Release Date: December 5, 2018

Nick Raithel interviews Michael J. Flight on his 7 Rules For Real Estate Investing.  They go deep into Retail Real Estate and shopping centers but also discuss hard earned wisdom from a 30+ year career running several businesses and personal development.

7 RULES FOR RETAIL REAL ESTATE INVESTING

  1. Adding Value in Everything You Do
  2. Retail Real Estate is Truly About Location
  3. Demographics Are Destiny
  4. Retail Real Estate is a Team Sport
  5. Protect The Downside – Buy at or below replacement cost. Low Price Per SF.
  6. Keep Learning –  You are a Human Doing along with a Human Being
  7. Take The Time To Enjoy Your Family

The 7 Rules For Real Estate Investing show interviews today’s most successful real estate investors.  Interviewer Nick Raithel has the episode guest distill their career down into 7 clear rules for real estate investment. As a bonus, some guests even disclose hard earned life lessons. On each episode you’ll hear a different guest with their own set of 7 rules. Past guests have included: Hunter Thompson; Victor Menasce; Jeremy Roll; Trevor McGregor; Gene Guarino; Tamar Mar; Richard Wilson; M.C. Laubscher; Dave Zook; Marco Santarelli and many others.  Topics discussed are Shopping Center and Retail Real Estate investing (of course); Multifamily (Apartment Building Investing); Flipping Houses; Wholesaling; Mobile Home Investing; Loans; Notes;Cashflow; Financial Independence; Financial Advice.

Nick Raithel is the creator of the “7 Hour Book” a powerful marketing tool he developed at Content Corps.    The 7 Hour Book/Content Corps assists entrepreneurs and business owners write books as a marketing tool.  And …. The whole book is completed in only 7 hours of the clients time. Nick works with real estate investors, coaches, dentists and entrepreneurs or anyone that wants to demonstrate their personal experience. Authors can then leverage the power of the book by increased awareness in the right circles and gain success with new leads, meetings or speaking opportunities.  Nick and his team help you with the following: How to Break Through the Clutter; How to Craft Your Story; How to Attract an Audience; How to Turn Your Story into a Book.

7 Rules For Real Estate Investing with Nick Raithel

1) Your story:

I went to Concordia College because I thought I wanted to be a Lutheran pastor. The Greek and Hebrew language is where a sign from God that I should not be a pastor.! And then in about my sophomore year of college my brother and I attended a “nothing down“ Seminar. We were extremely excited about how we could build a fortune in real estate. When we showed up In the local brokers office we were disabused of that notion. But I got the bug for real estate and while still in school obtain my brokers license and got a job rehabbing apartment buildings for a local investor Merrill Becker. Colonel Becker went on to his reward this year living to a wonderful age. Upon graduation, Merrill directed me to go into commercial real estate. Surveying the options I saw that you could do multiple deals with retailers expanding into a market like Chicago. That sounded a lot better than constant cold calling for office or industrial tenants.

2) Top 7 rules for successful real estate investing:

7 RULES FOR RETAIL REAL ESTATE INVESTING

  1.  Adding Value in Everything You Do
  2.  Retail Real Estate is Truly About Location
  3.  Demographics Are Destiny
  4.  Retail Real Estate is a Team Sport
  5.  Protect The Downside – Buy at or below replacement cost. Low Price Per SF.  Replacement costs in most markets are around $125-$200 per square foot. Anything at or below $100 will get a second look from us Protect your lenders downside, they will appreciate being in the deal further below replacement cost.
  6.  Keep Learning –  You are a Human Doing, Not Only a Human Being
  7.  Take The Time To Enjoy Your Family

 

  1. You Have to Add Value – The main rule for success in life is: Are YOU adding value? Are you adding value in your relationship with God? Are you adding value to your family?  Are you adding value in your community? Are you adding value for your investors? Are you adding value to your tenets? Can you and are you adding value to charitable organizations or some form of public service?  You are born a Human Being – you are an asset when you are a Human Doing.
  2. Retail Real Estate is Truly About Location

a. A Retailer can only pay you rent if they do the sales volume

          b. They can only do the sales volume if people can see them and get to them – signage and entrances

          c. Rent and occupancy expenses (re taxes, common area maintenance, insurance should be less than 10% of sales

          d. You cannot give away a bad Retail Real Estate location

3. Demographics – Demographics are destiny

a. high incomes = high end tenants

          b. low incomes = low end tenants

          c. and no incomes or population = no tenants

  4. Retail Real Estate is a Team Sport

          a. You the Investor

          b. The Tenants

 

i.  Like any sports team be it soccer, American Football or basketball team you have the offense which are anchor tenants

  1. Traffic drivers which help everyone around them score
  2. Grocery stores, Unique restaurants or clusters of restaurants, department stores like Nordstroms or Walmart/Target, or discounters like TJ Maxx and Ross, smaller markets these could be a dollar store or farm store (Tractor Supply).

 

ii. You have a supporting cast of tenants who are called Specialty Stores

1. Stores that compliment the anchor tenants and add to the reason for going to the shopping center or

2. a classic example is Victoria’s Secret, but also shoe stores, women’s fashion, beauty supplies like Ulta or Sally Beauty, pet stores are great tenants and auto parts

 

iii.  And the defense would be service types of tenants which compliment and also fill holes in your line up.

  1. Nail salons, restaurants, health clubs, insurance or real estate office, banks, auto repair (TBA)

 

  c. Attorneys

  i. Attorney for the Purchase & Sale Agreement (PSA) and project financing – use someone who knows commercial real estate

  ii. Attorney for the Retail Lease

 

     1. Retail leases extend 5 or 10 or 20 years.  We have done 25 year leases and with options can extend for 50-60 years.  That is a long term relationship. Most investors don’t think about the consequences but we have inherited leases that were written before zip codes and we have even bought a leasehold out of bankruptcy because of the location and favorable terms

     2. Retail leases have very specific clauses not seen in other areas of law including percentage rent, co-tenancy, exclusive uses, prohibited uses, triple net charges (real estate taxes, insurance, common area maintenance).

    iii. We have used additional specialized attorneys for zoning, environmental contamination, real estate tax appeals, income tax attorneys and a big issue in retail real estate is Reciprocal Easement Agreements (REA) and Covenants, Conditions & Restrictions (C,C,R)

     d. Leasing – almost all of the value created in retail real estate is through leasing. A lease with a national tenant can get you the financing or the additional fee price on your disposition. A bad lease can also destroy the value of your shopping center or retail real estate for a very long time. For example, a gross lease where the real estate taxes at some point exceed what the tenant pays in rent. A good leasing agent, broker or leasing representative I can make or break your project based on their knowledge of merchandising and their relationships with the tenets you want and need.

      e. Financing – we have been privileged to work with a few great lenders from banking relationships and smaller projects to correspondent representatives for insurance companies in structured finance funds. A great financing representative knows which lenders are in the market to lend on the investment/project you were looking to create.

      f. Operations – Are the relentless execution i’ve continually improving and maintaining the property. Accounting, property management, redevelopment and construction are all items that cost money but can save you money in the long run. I like it in property management and property accounting to having a roof on the property: it is expected And yet something people will not pay extra for but if you don’t have it or if it is bad it can cost you a lot of money. We have also been able to add dollars to not operating income by going in and cutting expenses where appropriate or rightsizing staff levels.

     g. Experience – this will probably sound self-serving but retail real estate is one of those areas in investing world where takes a little longer to get the proper experience. That experience includes knowing how a retailer operate their business and how they make money to marketing to a very important skill which is dealing with community groups and local politicians because the visibility and financial impact on the community is where retail project are located.

    5. Protect The Downside – Buy at or below replacement cost. Low Price Per SF.  Replacement costs in most markets are around $125-$200 per square foot. Anything at or below $100 will get a second look from us Protect your lenders downside, they will appreciate being in the deal further below replacement cost.

    6. Keep Learning – continually expand your mind, learn history, economics, great literature, philosophy and theology.  It will make you a better investor, better citizen and better human being. Become – Do – Have = most people are Have – Do – Become which gets it backwards.

     7. Take The Time To Enjoy Your Family

 3) Guidance on your “Top 7 Rules for Successful Real Estate Investing”:

We have been reinventing our company in 2018 in an attempt to broaden our investor base from predominantly institutional investors to include more individual accredited investors. Institutional are more like B2B and individual investors are more like B2C.

We have been investing a lot of time with educational materials and trying to implement systems designed to provide an excellent investor experience. We have also been underwriting a tremendous amount of deals but we have been extremely selective trying to find The right type of investments that will not only provide a solid return but also mitigate downside risks.

Book Recommendations:

Why We Buy: The Science of Shopping-Updated and Revised for the Internet, the Global Consumer, and Beyond     by Paco Underhill

Call of the Mall: The Geography of Shopping   by Paco Underhill

Threshold Resistance: The Extraordinary Career of a Luxury Retailing Pioneer  by A. Alfred Taubman

Halftime: Moving from Success to Significance   by Bob P. Buford (Author), Jim Collins (Foreword)

Letter From a Birmingham Jail      by Martin Luther King, Jr.

Property and Freedom Paperback    by Richard Pipes

The Creature from Jekyll Island: A Second Look at the Federal Reserve  by G. Edward Griffin

The 10X Rule: The Only Difference Between Success and Failure  by Grant Cardone

Last Call For Liberty   by Os Guiness

Am I Being Too Subtle?: Straight Talk From a Business Rebel   by Sam Zell

About the Author: Michael J. Flight

Let your investment dreams take flight with the expert help of Michael Flight, principal investor at Concordia Realty.

Michael has worked for more than 28 years and handled more than $500 million worth of real estate transactions on behalf of his clients at Concordia Realty. Michael began his business in the realm of retail real estate, with Concordia Realty now handling third-party property and asset management services for a variety of commercial real estate investments.

He also specializes in revitalizing distressed investments for partners, adding value for clients … including banks, insurance companies, and hedge funds. Michael has consulted for some of the top investment and development companies in the world … and now his knowledge is available to YOU.

Are you searching for someone who can maximize the full potential of your property? Not only do Michael and his team at Concordia specialize in intensive hands-on property management, but they also bring the right relationships with attorneys, consultants, and contractors to the table.

With extensive experience in development, leasing, sales, property management, and innovative financing techniques, Michael and his trained team have the ability to make your property into the cash cow you know it can be.

Ready to take flight? Use the CONTACT page HERE, and a member of the Concordia team will be in touch promptly!

LEGAL AND TAX COUNSEL: Concordia Realty Corporation and Michael J. Flight and their affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction or undertaking. Concordia Realty Corporation and Michael J. Flight highly encourage individuals and investors to seek the counsel of a qualified attorney as well as seek the counsel of a tax professional or Certified Public Accountant (CPA) to determine if there are any potential tax liabilities or consequences as the result of anything contained herein. NO GUARANTEE: All users of this website should understand there are NO GUARANTEES of any success, outcome or profitability of any transaction or undertaking, expressed or implied by Concordia Realty Corporation and Michael J. Flight or any of its members, shareholders, officers or affiliates and will NOT be liable for any financial or other losses or damages incurred as a result of any undertaking. Go HERE to view complete DISCLOSURES.

Michael J. Flight

Principal at Concordia Realty Corporation
CEO & Co-Founder of Liberty Real Estate Fund
Co-Founder & Chief Strategy Officer of Invest On Main
Co-Founder of Blockchain Real Estate Summit

Michael J Flight was named the Godfather of Blockchain Real Estate by Forbes Crypto Editor Dustin Plantholdt. Michael achieved that distinction by co-founding Liberty Real Estate Fund, the World’s First Net Lease Security Token FundTM and creating the Blockchain Real Estate SummitTM. More recently, Michael has co-founded Invest On Main (IOM.ai) the Real Estate & Alternative Asset marketplace of the future and AcceleratedLaw a faster, more affordable way to create and tokenize securities offerings!

Michael is a real estate entrepreneur and real estate tokenization pioneer who is an expert in retail real estate investment, redevelopment and real estate on the blockchain. He started his commercial real estate career in 1985, and then co-founded Concordia Realty Corporation in 1990, which continues to partner with some of the world’s most well-known banks, insurance companies, hedge funds and institutional investors in many successful investments.

Michael is a real estate entrepreneur and Blockchain Real Estate evangelist who is an expert in retail real estate (Shopping Centers and Single-Tenant Net-Leased) investment, redevelopment and real estate on the blockchain. He has an extensive record of value-add shopping center redevelopment and with partners Merchant Equity Group, LLC as a pioneer in de-malling (repurposing enclosed malls). Michael has been active in commercial real estate over the past 35 years.

Ready to take flight?

Use the CONTACT page HERE, and a member of the Concordia team will be in touch promptly!

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