16 - How a Former Teacher Built a Thriving Industrial Portfolio

Speaker A: As you alluded to being, uh, on a teacher's salary, I'm sure finances were tight those first few years. How did you finance those first few acquisitions?

Speaker B: I used a lot of my teaching income. We lived very frugally and used a lot of my excess teaching income to fund rehab projects, things like that. I didn't just quit teaching the next day. I was doing both simultaneously for a couple years. Success wasn't guaranteed from there. Going out on my own, but I wasn't going to go down without a fight.

Speaker A: Hey everyone, I am super excited for this one. Jonathan Hayek is on the line with us. You have one of the most, uh, the more interesting pivots of any guests we've had on 5 to 50. Take me back to the moment where you realize that the world of nonprofit and teaching was not for you. And how did you realize that?

Speaker B: Yeah, Jeff, thanks for having me. Looking forward to this conversation. Like you alluded to, I started my working career working as a special education teacher in a public school. And I taught and I, I took a hiatus in the non for profit world for about 10 years. And I remember there was this moment I was talking with my wife and we were in our first house together and I said, you know, I, I guess we're just not gonna make very much money, uh, because I was, I was a teacher at the time. She was working for pennies at, at a non for profit. And um, so I said that to her and then had like the night to reflect on it and I woke up the next day and I just thought, you know what? That's not good enough. I was, I was probably 31 or 32 years old at the time. And I just thought, you know, I, I've got a lot of life left in me and I am not okay with, um, just being bound to the public school teacher salary schedule where, you know, you max out at $75,000 a year and there are some, you know, ancillary benefits along with teaching. But, um, what we were really after was time, freedom, geographical freedom, uh, you know, flexibility to live the life that we, the way we wanted to. And um, just maxing out on a teacher salary, uh, I decided was, uh, just not okay. And so, um, I, I, you know, success wasn't, certainly wasn't guaranteed from there going out on my own, but I wasn't going to go down without a fight. And so, um, that at that point, that's when I started, uh, just kind of dabbling in real estate and um, and eventually transitioned full time into real Estate. I have always had an interest in real estate even from the time I was a kid. Like I would, I grew up in uh, in a, in suburbia where there was a lot of growth in the 90s. And so my friends and I would just go around to these new subdivisions and just walk through uh, these houses under construction and just imagine where stuff is. Oh, this is the bathroom. Oh, this bedroom. Oh, this could be my room. Oh, there's going to be a balcony here. So like the, just the interest in real estate was planted from early on and uh, and so I just had an interest in it. I also had some family friends that achieved, um, some success in real estate. Um, and then it was also something that I just found uh, accessible. So it's interesting. Accessible, something I could do alongside with teaching. Because when I transitioned into real estate, I didn't just quit teaching the next day. I was doing both simultaneously for uh, for a couple years. And so it was kind of a good side hustle. Um, and I guess now that I think about it, I really didn't have any other skills. So like I couldn't go like start an accounting firm or a construction company or a tech company. I didn't have those skills. And so, um, real estate I guess could be for people that don't have a lot of other skills as well in time.

Speaker A: Right. Is the passive industry, right? For the most part, yeah.

Speaker B: I mean it certainly has that reputation of passive, but as you know, we might talk about, there's uh, you know, very few options that are totally passive. Um, but, ah, but yeah, it definitely has that reputation where you can have it going on the side. It's, it's certainly not a 24 hour job. I don't constantly have clients contacting me. Um, and so, you know, there are periods where it is more passive.

Speaker A: Yeah. And so as you alluded to, uh, being on a teacher's salary, I'm sure finances were tight those first few years. How did you finance those first few acquisitions early on?

Speaker B: I mean, I'll just tell you about my first deal. So early on, uh, I used a lot of my teaching income. We lived very frugally and used a lot of my excess teaching income to fund rehab projects, things like that. I was also scrappy. Um, I would use credit card balance transfers. Like, you know, you. I don't get them anymore, but I used to get those 0% balance transfers in the mail.

Speaker A: Yep.

Speaker B: I would take advantage of those. Um, and then I also partnered with friends and family. So I had some, some uh, good Friends that for whatever reason believed in me. And so um, we, they would, they would lend on some of my projects. They still do lend on my projects. And in return I, I uh, pay them a fee. And um, so those were some of the key ways that, that I got it off the ground initially.

Speaker A: Got ah, it. And what was that first deal that you got done?

Speaker B: My first deal I purchased at an online auction. It was a house that I lived in. And so there's this real estate podcast called Bigger Pockets. And so, you know, it was a weekly podcast. It's still going. I'm not active with it any. But um, you know, it's basically like uh, teaches you how to buy a duplex, how to flip a house. And so, you know, I just binged on those and um, I started looking at deals and I saw this house, ah, come up at auction in my town and I saw the numbers and I was like, wow, that you know, these numbers could work. And I was able to tour it and um, it needed some work, uh, which I was willing to do myself. I was willing to be very scrappy. And so I was able to uh, get a loan for the initial auction. So it's, it's cash only. It was like $135,000 purchase. I did not have $135,000. Um, so I was able to uh, acquire lending, private money, lending from a friend and use that for the, for the purchase. Used uh, my own cash for the rehab. Once I had it rehabbed, I was able to refinance it on a conventional mortgage, paid off my friend and then had a conventional mortgage on a house that I was living in with my wife and was able to take out some equity from it and just continued to go from there.

Speaker A: Wow, that's uh, a very creative way of doing it. And it's a little bit of connection. It's a lot of bit of knowledge and a ton of bit of sweat equity. Right?

Speaker B: Yeah, I mean you can't avoid the hard work. You know, like social media is littered with people looking to get big results with the least amount of work possible, whether it's using AI or VAs or uh, just tricks and shortcuts. And you know, the viral posts are like the stuff that makes things look easy or the shortcuts. And that's just in my experience, uh, that is not how I have achieved success. There's a whole lot of hard work and sacrifice, uh, that goes along the way. And even with those things, nothing is guaranteed. Um, and so yeah, there's just there's scrappiness and hard work. And that's what's worked for me.

Speaker A: Yeah, no, I agree. Um, my uncle has a favorite quote that uh, you know, related to hard work and um, subscribe to it. It's the harder you work, the luckier you get. And so absolutely kind of create your own luck by the effort you put in. So seems like you were, you were living that uh, back when you were started. So you have your first deal and then how did you know that things are starting to work or how did you, how did you pull that into the second deal and then continue to expand those operations? Um, I'm sure still being a teacher and having one deal under your belt, um, doesn't make you a real estate magnet.

Speaker B: Yeah, this was like 2017, 2018 time period. And the real estate world in that time you could still get great deals on market. It wasn't that hard to get good cash flowing deals. And so that first deal I was able to take that equity and turn it into another deal. I took equity from that, turned it into a duplex. Um, I called on a sign that was uh, down the street from another project that I was working on and um, was able to buy that duplex. And um, and so, you know, got a, got a good deal on that great value and held onto that for a couple years and then made probably 75k on that duplex and then turned that duplex into another property. Um, also at this time I started flipping houses. And so those were, you know, buying properties from other investors or distressed homeowners. Um, these are houses that need a lot of work. And so I was able to buy them off market at great deals, put a bunch of work and money into them, and then sell them at a good profit. And so my, my plan at that point was to flip a bunch of houses and use the capital generated from the flips to buy small multifamily properties. And those are like duplexes, triplexes, fourplexes, um, cash flowing real estate, you know, small apartment buildings. And um, and, and it worked for a while. I got up to 20 or 22 doors, something like that. Um, and I realized that, uh, you know, it was great building, but when you have that many little apartment buildings, it's a lot of work. And so I was managing everything myself. And um, I just got to the point where I was like, man, I do, I see myself doing this for the next 10 or 20 or 30 years. And I decided that, no I didn't. And so over the last few years, I'VE been transitioning my portfolio into commercial real estate and that's um, small industrial properties. And so I no longer am pursuing the small apartment buildings, but I'm looking at industrial properties now. And um, eventually I quit teaching. I quit teaching in 2019. So at about the two year mark of investing in real estate, I eclipsed my teaching salary. And so I thought, wow, if I was able to do this part time on the side, what could I do if I devoted my uh, you know, full time energies to real estate? And so, uh, just Before COVID in June 2019, I retired from teaching and I've been in real estate full time ever since.

Speaker A: Wow. Congrats on the quick success with, with real estate specifically. Um, using debt is kind of inevitable. How do you get comfortable with taking on debt? And is it just kind of ah, a fact of life or is it something that you have a specific approach to that you recommend or you just subscribe to?

Speaker B: It doesn't have to be a fact of life if you're starting out. Certainly debt is going to be a part of it. But I know investors that own real estate outright with no bank debt. And I hope to be there one day. I hope to have one day have fewer properties, but no debt. Um, I'm not there right now. I have debt on, on all of my real estate right now. And I guess one thing that helped me was just knowing my numbers and being confident in my numbers. And so I get comfortable with debt because I know I'm buying good deals. And so if I know there's value there like, and when I talk value, I mean buying below market value, maybe you get something that's off market. And when I say off market, I mean not through a real estate agent, it's not widely marketed. Maybe I have a connection through ah, a volunteer organization or through a plumber that did some work for me or something like that. And um, this is someone that's distressed. Maybe they've had a death, maybe it's a child and their parent has recently died and so they're looking to just sell this property. Um, and it's full of junk and it needs repairs. Those are the types of properties that I'm looking for. And so I know my rehab costs, I know what it could rent for, um, and therefore I know the value on the back end. And so then it's just a math equation. And so you get really confident in your numbers and you know your numbers. And then if you're not sure then you have real estate agent and broker friends that can help you with your numbers. And so, um, it was very often that when I was doing those residential deals that I would send an address off to my broker friend and just say, hey, fixed up. What's this worth? And he would give me a range and then I could back into it with a number. So sometimes the numbers don't work, um, and, and sometimes they do. And so then you build relationships with local banks and local lenders, um, that understand your vision and understand the local market and are willing to give you debt, um, at reasonable terms that make sense, um, that, that makes sense for everyone. And so it's definitely a learning experience. Um, plenty of real estate people early on use hard money. This is very high fee, high, high interest rate debt. I've fortunately never had to use hard money. It's much harder to make deals work when you're using, um, that really high fee debt. Um, and so I've always had a lot of success working with local banks, uh, with low fees and reasonable interest rates.

Speaker A: Got it. Yeah, there's a lot of things, so I'm going to unpack that for a bit because there's a lot of takeaways in there. The first thing, um, was knowing your numbers. So, um, how did you go about learning what's the important metrics? What are those KPIs that you need to hit? What are the targets you need to hit? Um, how did you learn how to budget and track against that? What was the systems that you utilized, uh, to on those initial deals? And do any of those processes still

Speaker B: exist for key metrics on those early residential deals? Uh, the most important number that you need is arv and that stands for after repair value. So fixed up, rented, or you know, in the, in, in the best use for this property, what's it worth? So if this kitchen, instead of, uh, instead of laminate countertops and um, and ugly flooring and, and 70s cabinetry, if this was, you know, white and gray and, and vinyl plank flooring and granite countertops, and the bathrooms are remodeled. What's this house worth? What would someone pay for it? And so, um, ARV is probably the single most important number that you need to know in residential real estate. Very different in commercial, but in residential real estate, that's the most important number to know. And so then after that you need to know rehab costs and you learn rehab costs by doing rehabs. So you like, you can m. On my first deal, I mean I ballparked it, I had a general sense of what stuff costs, uh, but not a Perfect sense of what stuff costs. And so you uh, do as much research as you can. You bid out what you can. You can read books, you can talk to other investors in the area. Hey, what are you paying for drywall? Um, how much per hour are you paying for an electrician, a plumber, what's a roof cost? You can gather that kind of stuff from, from other investors, but ultimately there's going to be stuff that you don't know about or can't predict. And so um, you learn that by getting experience and doing deals.

Speaker A: Right?

Speaker B: And in those early deals you cover yourself by buying well enough. So um, don't buy deals that are like on, like on your back of the napkin math or your spreadsheet or like barely scraping by. Like you're making 5,000 or $7,500. That is too close. Those margins are too close because your first deal, the rehab is almost certainly going to go over budget and that 5 or $7,500 is probably becomes a loss. And so uh, build yourself plenty of uh, yeah, plenty of leeway, plenty of buffer for those early deals for, for stuff to go wrong.

Speaker A: Yeah. So that makes total sense. Now how do you do it now? What are your systems for operating at scale, to track acquisitions, to track rehab, to track purchases and the, the ongoing costs, the rental collections, what do you, what uh, do you recommend for someone that might be a little bit further along that's starting to build their portfolio?

Speaker B: Well, I've transitioned out of residential, so I, the truth is I don't have a lot of systems because I got to the point where like I needed, I needed that stuff, I needed software and there was a lot to track. And if with 22 separate tenants and someone falls behind, then you're um, you're tracking all kinds of stuff and maintenance items and things like that. So I've transitioned out of residential into uh, into net leased industrial assets. And so uh, what that means is these are single tenant industrial properties. These are the very unsexy properties that you might see in the industrial part of town or on the side of the highway. This is where landscapers have their offices and shop plumbers, cabinet makers and woodworkers, granite fabricators, uh, environmental cleanup companies, H Vac companies. So think those types of service based businesses and um, they need space, they need shop space and they need a small amount of office space. And so those are the types of assets that I own now. And the reason I own those now is, is because they are low management and pretty darn passive. So they are on um, net leases. And what that means is the tenant is responsible for paying property taxes, property insurance and property maintenance. So if the toilet gets clogged, if a light bulb goes out, the lawn needs to be mowed. That is the tenant's responsibility. And that is the key factor in why I invest in these net leased industrial assets now. And so I, I mean my systems right now are pretty basic. I've got spreadsheets in Google sheets where I um, can uh, you know I've got a master property list where I can track uh, key lease information and contact info for the tenant. But those calls for, for uh, backing backed up toilets and um, pests or, or whatever, I'm in general, I'm not getting those calls because those are the tenants responsibilities. Um, I will thr one piece of software that we use is called Monday.com. i'm sure you're familiar with it but it's very inexpensive and very easy to use and very customizable um, for uh, for workflows. And if you've got a project you can create a template um, ah, especially for a repeatable project, have a template and you can duplicate it and you can tag people, um, different team members. Very easy to use, very simple, uh, very accessible.

Speaker A: Makes sense. So the team that you need to manage residential is much different than the team that you have to manage industrial. What's your team look like now?

Speaker B: Sure, so I'm, for the most part I'm a one man shop. Um, my wife also works part time and kind of uh, doing stuff in the background, managing um, insurance and uh, with our bookkeeper. Um, you know tax season feels like it's 12 months long and so we're constantly m interacting with our bookkeeper and our cpa getting them documents. Um, we have some vehicles and so they're you know she's doing vehicle registration and stuff like that and so um, so she's a key part of the team. And then we do have a third party bookkeeper, we have a third party CPA and then you know those are, those are third party, they're not on payroll.

Speaker A: Right. And then uh, definitely necessary or the operations.

Speaker B: Yeah and you know, broker contacts for when I have questions, um, or when I, when I need some information.

Speaker A: Got it. So what led you to the path to go from um, from residential to industrial? Obviously we know that um, it's a lot more work but how did you stumble upon industrial?

Speaker B: Yeah, it was you know like you just asked me the question like what does my team work? Like what does my team look like. And I'm kind of embarrassed, like I don't really have a big team. And that's exactly why in the residential world I was starting to get to the point where I was like, well I need a, I need either a property manager who you have to pay a lot of money to do very mediocre work, um, or I need to hire a part time maintenance person, uh, because you know, I was having trouble and lacking interest in doing all the maintenance myself. And so I was kind of at a, at an inflection or you know, transition point where I was like, okay, I've either got to go one way or the other. And so, um, it was a desire to get more passive. And um, you know, residential deals were getting harder and harder to come by. Um, and so I was just, I was also kind of looking for a new challenge. My first commercial deal was an office building. I bought a vacant office building and leased that up and learned a million different lessons, um, on that deal. And um, one of those lessons was that I didn't want to be an owner of office properties. Um, and so um, then I was like, well, what else is there? There's retail. Okay, that, that could be okay, but industrial. What's that? Like those, I don't think anyone wants those properties. Those are very unsexy and no one's interested in those, which is not true. But um, so then, you know, bought my first deal in Oklahoma City and um, just kind of as a way to learn. And um, have bought several deals since. And so um, now I'm able to largely spend my time how I want. Stuff, you know, occasionally does come up that I have to deal with. I have to, I'm installing a new H Vac, um, uh, on one of my properties. Um, but you know, doesn't take a lot of time. Does take some money. So those were some of the key factors in transitioning to commercial.

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Speaker A: So let's, let's talk about the money aspect. Of it. Um, there are many different flavors of real estate investors. There's owner operators, there's sponsor promoters, there's a bunch of different categories. How would you consider yourself in this phase of the business? Um, you mentioned you have some, some partners that co invest with you. Um, help us describe or describe the current business and how you do your current deals.

Speaker B: My goal is to maintain 100% control and 100% ownership of my real estate. Um, like you alluded to, there's lots of different ways to do real estate. Um, something that's very popular right now is a syndication, um, where like you pool 30 different people together, everyone puts in 50 or $100,000 and you split the profits. And um, that's, that model is having a very rough time in real estate right now. And so for uh, for many reasons I want to maintain ownership and control of my real estate. And so um, most of the equity in my real estate is my own. I do. Now that I'm starting to do bigger deals, I'm taking on m, uh more, getting more interested in taking on investor capital. And so these are friends and family members that are closely aligned with my values and they understand what I'm doing, they trust me. And um, in return for their capital, I pay them a straight debt payment. And so, um, in my case I pay 10%. Um, and so that's 10% of their invested capital. I pay a monthly, they're happy. It's very straightforward. They get a stream of income. And it works for me because I'm able to maintain ownership and control. And I have, it's a known quantity. I know how much I'm going to be paying them each month. Um, and I can work that into my numbers. And um, so that's the, that's the strategy that works for me. I don't charge any fees. Um, there's, you know, nothing crazy, nothing sneaky. It's just kind of a very straightforward way of doing real estate.

Speaker A: Makes sense. Why are syndications having a tough time right now?

Speaker B: A lot of syndications, uh, that was a deep breath. Uh, no, I, I, uh, fortunately none of my deals are, are struggling. But it. So most indications that are struggling right now were initiated in the 2021, 2022 time period where interest rates were rock bottom. Which many listeners would say, well, what's bad about that? Aren't low interest rates great? Well they're great if you get long term fixed, fixed, uh, rate and fixed rate debt. Um, but uh, most of these syndicators during 21 and 22 they thought that these low rates would last forever. And so they got short term debt. So one year, two year, three year bridge debt. And so they may have gotten debt at 3% or 3 and a half percent, but then once the Fed started adjusting rates, their interest rates started uh, adjusting upwards as well. And so while they underwrote for 3% debt, um, some of these syndicators now have 7, 8, 9% debt. And so that totally messes with their business model. And so, um, this is very popular or very common in the multifamily world. Um, large, multifamily, large multifamily groups underwrote deals this way. And then on top of that, um, you had a lot of inexperienced operators starting to raise money and syndicate deals. And um, when you get in that syndication space, it's largely fee based. And so these operators were charging, you know, crazy fees. So they were getting paid sometimes six figures just to close on the deal without having delivered any returns to their limited partners. And so they get a six figure payday on the day it closes. Meanwhile, they've never done a real estate deal or done very few real estate deals. They don't know how to operate a large real estate deal. Um, interest rates go crazy and um, so a lot of those deals are really struggling right now.

Speaker A: Yeah, private real estate is, can be very lucrative. But you got to be in with the right partners, right people you can trust, people that align to your point, aligned your values, um, give good reporting, have good financial habits. Uh, you got to do your due diligence on the promoters to make sure you're investing with an uh, organization that can stand behind the things they're promising.

Speaker B: It absolutely starts with the operator. If you don't trust the operator, don't get into that deal, um, because the nature of the fees create a misalignment of interests. And so if someone gets paid just to close the deal, they're being compensated for not even delivering any returns. And so you have to believe in the operator and trust them and see that they have a track record of success uh, before you choose to invest with them.

Speaker A: Yeah, makes a lot of sense. So, um, we've talked that, we've kind of danced around the cyclical nature of real estate. There's a lot of boom and bust cycles regardless of how higher or lower, um, you go. How do you navigate that as, as an investor? How do you plan ahead for that and how do you make sure that, how do you anticipate, um, when things are going well, how to prepare for an upcoming downturn how to make sure you don't over invest, um, because you know, people can, people can invest a lot in the uptimes and make a lot of money uh, really quickly if, if they time it right. So how do you prepare and how do you ride the waves of the cyclical nature, uh, of real estate?

Speaker B: Couple ideas come to mind. Number one, you have to have a long term outlook. And so the, the shorter time frame that your mind is, so say flipping houses, that's like the shortest outlook that you can have in real estate. That's the riskiest way to do real estate because you're banking on that ARV that I talked about earlier that after repair value is going to be the same or higher, um, in six months from now when I'm ready to sell it. And so if everything goes great, then you shouldn't have any issue. But if there are uh, hiccups in the market then that could be a problem and maybe you end up selling for less than what you projected. And so whereas if you have a 10 year time frame, a 10 year outlook and you're saying, hey, this is a long term, maybe even a legacy property, and so I'm going to hold this for at least 10 years, maybe longer, you're going to do fine. Because in 10 years from now is real estate going to be worth more or less than it is today? I mean, barring a disaster, it's probably going to be worth more. And so the longer your outlook is, the safer your investment is. Um, going along with that, I would say get the longest fixed rate debt that you can. Um, so a lot of commercial deals are three and five year debt. Um, I closed a deal earlier this year with seven year debt. Um, I could have gone shorter and gotten a slightly lower interest rate. But I said, you know what, the future's uncertain. I want to lock in my interest rate for as long as possible. And so I got seven year debt. So I don't have to worry about my debt maturing for um, another six and a half years at this point. And so that helps me sleep at night. And then a third thing I would say is just have capital reserves for stuff that can go wrong. So I mentioned earlier that I have an H Vac repair to do in one of my properties. That's a $15,000 expense, but I'm not sweating it because I had capital reserves for that property. I knew in that property I was responsible for H Vac and roof. And So I had $50,000 set aside in capital, uh, expense account for when, not if I would need to use that capital for when I would need to address the H Vac and roof. Um, and so I think if you have those three things that helps you feel better about investing in real estate.

Speaker A: Yeah, makes sense. Sounds like you take a very, very realistic and reasonable approach to your investments so you can have success but not get over your skis. So um, it's, it's commendable. Uh, in this industry a lot of people like to go very fast.

Speaker B: Yeah, I, uh, you know, Jim Collins talks about the idea of the 20 mile march where the best companies in his research go slow and steady. They have a floor and they're not going to do below a certain amount, but they also have a ceiling for when, even when times are great, even when things are amazing and when maybe your competitors are going all in and trying to grow as fast as possible. He found that the best and most successful companies maintained a, uh, slow and steady approach, like, you know, like the tortoise and the hare. Um, and the, one of the big, uh, one of his big reasonings for why not to go all in when things are good is because you get out over your skis, because then you get, you get over capitalized and you rack up too much debt or too many clients. And for when things aren't so good or when you have trouble hiring, then, uh, then you can't handle all of the growth. And so, um, you know, he found that the most successful companies have slow and steady growth over time. And that's something that I try to emulate.

Speaker A: Yeah, that's a great lesson. Um, now one thing we haven't alluded to is the preferential tax treatment that real estate provides. Um, obviously I'm an accountant. Uh, a lot of our clients take advantage of these benefits. Uh, but how do you approach that or how do you recommend investors approach that? Um, or keeping that perspective, is that a, an added benefit? Should that be factored into the analysis early on?

Speaker B: I'm, I'm not going to pretend to give people, uh, tax advice. Um, I can kind of share my experience. Um, it is common for these syndicators to tout the tax benefits. Um, and there are many tax benefits, but they're going to impact different investors in a different way. And so I'll kind of share with you a little bit about how I take advantage of the tax benefits of real estate. And so, um, there's something called in the real estate world, reps, and that stands for real estate professional status. And um, the, the short definition of that Is you spend more time on working on your real estate than anything else. So if real estate is a side hustle, it uh, doesn't apply to you. You can't take advantage of reps. But if real estate is your full time job and you spend more time on real est, anything else, then this can apply to you. And so basically what it allows you to do with is it allows you to take all the depreciation from your real estate and apply it to your earned income. And so if you're maybe flipping houses or maybe your spouse is a high income earner, you can take a lot of the deductions and depreciation from your real estate and actually deduct that from your earned income, which is a huge benefit. And so then you can now pair that with um, the recent uh, legislation, the one big beautiful bill, um, we got 100% bonus depreciation back. And so, um, usually you know, in, in pre trump years you could depreciate your real estate, but residential real estate had, you had to do it over 27 and a half years. Commercial real estate, it was like 38 years, something like that. And so you get some depreciation. Uh, but it, but it was, over time it was a small amount of depreciation. But now, um, and you, you I'm sure, know more than I do about this topic. Um, now you can take it all in one year. And so those are a tremendous amount of losses that you can take all at once. And so if you do have maybe um, you know, husbands and real estate, wife is an attorney and uh, you know, wife is making $400,000 a year, husband starts buying some commercial real estate, starts getting 100% depreciation in year one. You can um, just save tens of thousands, even hundreds of thousands of dollars in taxes. Um, and so it's really, really powerful. But you definitely want to work with a competent CPA who knows how to follow the rules. And um, there are, there's, you have to, if you sell the property, you have to pay that back. There's depreciation recapture. There are ways to avoid that as well. Um, but some, definitely some really powerful tax saving strategies, especially for high income earners.

Speaker A: Yeah, absolutely. There's. Now the famous uh, phrase from any lawyer or accountant is going to be, it depends. Everyone is different in the things that they can take advantage of. Um, but yeah, we're seeing a lot of clients, uh, take advantage or plan to take advantage of the benefits when it comes to accelerated depreciation now qualifies on shorter Term assets doesn't qualify on the land or does it qualify on the building M. But there's a lot of potential to take advantage and should definitely work with your accountant, uh, to see where you can qualify or what, uh, opportunities you have to minimize, um, to minimize tax with, take advantage of the new bill. So definitely understand that and appreciate that. Um, so one more question before we get into some rapid fire. Um, looking back at your career, it's obviously you've, um, done a lot in real estate world. Um, what's been the single best decision that you made in, in your career that you point to and say, you know, I'm glad I did that.

Speaker B: I, I think the cop out is getting started in real estate and I guess more broadly it's taking a ch on myself. And so I know there's probably a lot of listeners that like, have that thing in the back of their mind that are like, what if I, you know, what if I started a personal training business? Or what if I did this thing? Or what if I did that thing? Uh, what. You know, for me it was fear of failure. I had a big fear of failure stemming from my childhood. And you know, I always thought, well, what if it doesn't work? And then I eventually realized, well, so what if it doesn't work? At least you tried. And so I would say the biggest thing that's, that's translatable to listeners would be to bet on yourself. And for me that was real estate. For other people, it, it might be something else. So bet on yourself and don't fear failure.

Speaker A: That's great. Awesome. All right, so let's get into some rapid fire questions.

Speaker B: Sure.

Speaker A: Um, who would you say is your biggest business inspiration?

Speaker B: Sam Zell.

Speaker A: What's one book that has had the biggest impact on your career? You mentioned your Jim Collins previously, but, uh, is there a book that point to frequently?

Speaker B: I've read a ton, I guess. I guess one would be what It Takes by Steve Schwarzman, the founder of Blackstone.

Speaker A: If you go back and give yourself one piece of advice about investing in real estate, what would it be?

Speaker B: Start sooner, I would guess. Yeah, I mean starting, starting in 2017, um, was great, but man, if I would have started in 2012 or 2010, that would have been even sweeter.

Speaker A: What's one financial mistake you made early on that turned out to be a big lesson?

Speaker B: Spending too much and not saving enough.

Speaker A: If you can instantly master one new skill, uh, to improve yourself today, what would it be?

Speaker B: Networking.

Speaker A: And lastly, where can people find you a lot of learnings. Um, you also have a podcast. Where can people learn more about you, your business and and your content?

Speaker B: I have a podcast with nearly 200 episodes. It's focused on commercial real estate that's called the Source of Commercial Real Estate. Um, I'm active on LinkedIn and you can find all of the links to me and how to connect with me on my personal website. And that is Jonathan Hayek co awesome.

Speaker A: Jonathan, thanks so much for the lessons today. It was great talking to you.

Speaker B: Thanks for having me. Jeff

Speaker C: uh, thanks for tuning in to 5 to 50. If you found today's episode helpful, be

Speaker A: sure to subscribe, leave a review and

Speaker C: share with other business owners. Looking to grow. Do you have a question or a topic you'd like us to cover? Connect with us on LinkedIn or reach out to us at Pro Seer, where we're empowering entrepreneurs with real time, actionable insights and financial infrastructure through smart, smarter accounting, tax and financial strategies. Let's keep this conversation going. Together we'll help our businesses thrive. Talk to you soon.