Triple Net Leases and Industrial Real Estate: Building Long-Term Wealth | Ep 102

In a world where change is the only constant, Mo Choumil stands at the forefront, guiding title professionals to not just grow their businesses, but to master the art of innovation. With every episode, you're handed the keys to unlock unparalleled growth and stay ahead of the curve. Get ready for a transformative journey. Welcome everyone, and welcome to another episode of the Title Agents Podcast. I am your host, Mo Choumil, CEO of Alltech National Title.

Today I have the pleasure of having a good friend from my GoBundance Mastermind Group, Drew Wired with Clear Sky Commercial. Yes. And yes, so as to keep the show diverse and address different topics in our business, would like to focus episode on commercial specifically. You may wonder what Triple Net is. This is why Drew is here to help shed the light.

Welcome, Drew. Yeah, thank you for having me, Mo. It's good to be here. Well, as we start off the show, always give us a quick background. How'd you get into commercial real estate and Triple Net investing?

Yeah, sure. I'll give you kind of a high-level review. I was a pharmacist by trade and worked at the hospitals for years, got into hospital administration and Did that for about 20 years. On the side, I was just buying single-family residential rentals. That was my, the plan was just to have a nest egg for the future, and I never expected it to grow very big or set me free from a W-2 job or anything like that.

But I made it through COVID. My real estate portfolio had gotten big enough that if I wanted to step out, I could. And so I made that switch and there's a lot more along the way. We'll talk about my transition into commercial, but that's kind of where we landed today. So from the hospitals to investing.

So let's stick with the first part of your real estate investing. And I said that you're trying to build your future. What was the original plan? And I'm amazed how many, even realtors who sell real estate do not own real estate, especially investments. And for the folks in the title space, this is a great opportunity for you to to buy real estate and invest in your future.

There's a lot of ways to go about it. And Drew, tell us how you got started and what made that process happen. Sure. Yeah, I think, yeah, for me, you know, I'm married, we have 4 kids, so I went to work every day. Mama stayed home with the kids.

And so I was really just looking to either kind of pad things for retirement downstream or rainy day emergency type of things. But really just start creating multiple streams of income, tiny little streams of income. So it was just one rental at a time, you know, one this year, maybe one or two the next year. And I wasn't going crazy because I had a big job that took a lot of the time and, you know, little kids and all that kind of stuff. But man, I found that I just fell in love with passive income, which is tricky.

We all know passive income isn't completely passive. But man, you know, I could either go to the hospital and crank their widgets and keep having to go back every single day, or I could go to sleep at night and wake up and my tenants would've cranked some widgets for me. And so once I kind of got this taste of, you know, on one hand you trade time for money and on the other side, you buy an asset and you let it just go to work for you quietly in the background. I've been hooked ever since. That's awesome.

It's no different than buying stocks, but this is more real estate, something we know, and this is what we do for a living. I always advise kind of stick with what you know, since we know real estate would be a great space to invest in over stocks and something you don't understand for most of us. Yeah, absolutely. So for listeners unfamiliar with triple net or investing, why has that space become so attractive? Yeah.

Well, if I may, let me kind of define 2 things that I think get blurred together from people who aren't in that niche. We talk about commercial real estate and then we talk about triple net leases. And both of those, there's a lot to both of them. And commercial real estate can be a lot of things. It can be industrial like I do.

It could be retail, office, self-storage, outdoor land, places where you park campers and RVs. It could be all those things. And so Commercial real estate is a huge umbrella with lots of verticals within it. And then we talk about triple net leases, and triple net really doesn't refer to the property, refers to the type of lease that you would put in place. And office requires one form of that.

Retail is a different kind, and there's triple net, double net, Modified gross. And if you want to drill into that a little bit more, I can explain some of that actually. Yeah, please go ahead. I kind of want to explain. I know, I mean, you know that much more than what our audience understands.

Sure, sure. Well, so start with what most people know. If you have a single-family rental, right? The tenant pays you rent, right? But the landlord is responsible for what they would call all of the nets, right?

And those nets are insurance. I, as the landlord, have to pay the insurance. I have to pay the taxes, which is another net, and then I'm responsible for all of the maintenance and capital expenditures to keep it up and safe and all of that. So those are the 3 nets. So when we talk about a triple net lease, the difference is if it's a true triple net lease, that means that the tenant pays a rent to the landlord, but they also are accountable for all 3 of those nets.

So they pay the taxes, The taxes go up, the tenant has to pay that. If the insurance goes up, they have to pay that. And then similar with maintenance and maintenance and repairs kind of gets chopped up a lot depending on the asset class and who's responsible for what. But that's one of the biggest shifts when you go from residential to commercial is a double or a triple net lease. Is, do you consider triple net the holy grail of commercial?

I think most people call it tenants. Yeah. It's very romantic looking from the outside in. I think it's wonderful. And, you know, for, I have at Clear Sky Commercial, that's the company that I own.

I have a 50/50 partner and he and I do everything together. And when we set out early on, we really wanted to begin with the end in mind. So if we're going to invest, what do we want to own? What sort of lifestyle do we want to create? And we just don't want phone calls at 3:00 AM because someone flushed a diaper.

You know what I mean? At our warehouses, nobody's there, or it's the night shift crew. And if they have an issue, they call a plumber, right? You know, unless it's fire, flood, or blood, we really don't hear about it at all. And so that's one of many reasons why we went towards triple net.

And I do think people kind of think of it as the holy grail. Not because it's not without its challenges, but it's a great place to be and it has served us well. What are some of the challenges with triple net leases in your experience? Yeah, so if you're going to go into triple net leasing or commercial, and I'm going to speak primarily, we've done a little bit of retail, but mostly industrial. So that's kind of the context through which I look.

For me, I think If you're going to invest in single families or maybe even apartments, we all know what a home feels like or an apartment feels like. You've either lived in one or you know someone that owns one. You've spent time in them, right? Whereas a warehouse, a shopping center, not only is it wildly larger, so there's usually an extra zero or 2 at the end of that purchase price, but it's just different and it's not immediately relatable. And so I think some of the challenges is really just getting the education and getting your head right about the asset class and how you create value from single-family investments to commercial real estate is wildly different.

And admittedly, it took me a while to wrap my head around. Awesome. What's your read on today's commercial real estate market? That's a loaded question. Yeah, so no, it's a great question and honestly, Like we mentioned before, commercial real estate is a large umbrella and there's lots of niches.

So you almost have to look at some of those niches. So for example, in office, we have done a little bit of office. I don't do a lot of it, mostly because post-COVID we saw them kind of take a bath as everyone went home and worked remotely. And so that has hurt office. But with all the AI stuff, what is the office labor force going to look like in the next 3 to 5 years?

I don't know. So I would say within commercial office is kind of a question mark, but I've got buddies who do really well in it. If you want to talk about industrial, I think, well, I could go deep in the weeds on that, but I think it's a very good time to be in industrial flex space. But retail, I thought Amazon was going to kill everyone and we're seeing retail do really well if you buy good locations. So it's, You kind of have to go in each vertical.

The one overarching thing I will say about commercial and the state of it right now is it is really tough to get deals to pencil as interest rates have just slowly kind of ticked up even more and more. And I could say a lot more about that. Yeah, that's actually my next question about how much has the higher rate environment for the last 3 or 4 years changed the way deals get done? I know it's Yeah. It's changed it radically.

Yeah. My partner and I, Tyler, we really started ramping up our commercial and industrial investing in 2021 and '22, but that was the tail end of 3, 4, 5% interest rates. And so we got a lot of great deals. Things penciled out really well. And Tyler and I are cash flow investors.

You know, sometimes we'll do a value add where it's, a vacant building or you need to fix it and then you create value by placing tenants. But Tyler and I, the majority of what we do is buy in-place cash flows. And those were pretty easy to find in 2021, '22 because the interest rates were so low. In the last year we've acquired quite a bit, but 5.5%, 6.5%, you can still create deals and find ways to make them pencil. But today we just signed off on one and we locked our rate in 6 months ago, thank goodness.

But today it would be north of 7%. Wow. And man, it would really be redlining at this point. So I'm hoping, you know, they're talking about rates maybe ticking up again the last couple days they've been talking about it, but I'm hoping for a little reprieve. We'll see.

One thing about commercial loans, they typically reset 3, 5, 10 years. That's right. So a lot of the properties that were bought during those lower interest rates, they reset. And I think the banks pretended to extend for the last 2, 3 years. Like when those loans became mature and due, a lot of the banks kind of extended those loans.

What are you seeing here? And my understanding, banks are not doing that anymore. They're actually foreclosing on properties or taking them back or? Yeah, so that's definitely a thing. Loans that are up to their 5-year readjustment time period, we're definitely seeing some more motivation from the sellers that own those.

Now, I personally haven't seen or had a lot of opportunity in the foreclosure world. I haven't seen a lot of those go back, but there's a lot of discussions about it. My company, we market directly to sellers. So lots of mail, phone calls, building relationships, things like that. And so we talk to sellers all the time and what we're really hearing from them is, you know, if they're older folks who made their money once upon a time and their pockets are deep, they can ride out this storm.

They'll sell whenever it gets comfortable. They don't have a lot of debt on it. Not a big deal. You know, the guys like us who are still running our businesses or trying to grow our businesses, it's It's very tough for them right now. And if they're going from 4% interest rate and they're staring down the barrel of 7.25%, a lot of them are looking to either sell the building and keep their business there so they can infuse those dollars back into more trucks or more equipment or something like that, or they're just hurting altogether.

So the conversations are getting more, there's more motivation from sellers in the last 6 to 12 months than I've seen in a while. Yeah. Where are you still seeing strong opportunities right now? Yeah, I would tell you, everyone wants to know like, what does a good deal look like? Where do you find your deals?

And I don't know that you really find deals today. I would tell you, you can create deals. And so I think for those of us that are still transacting right now, I think it's in scenarios where we can Look at a building and look at the seller's needs and what they're really trying to achieve and create creative outcomes. And I'll give you a perfect example today. We just, we signed today, seller's closed tomorrow or signed tomorrow.

But when we first started talking, they wanted $4 million. We got down to $2.3 million, but they're going to carry back $500,000 at 3.5% interest for 10 years. Now that is a deal that if I had to pay my own money or just pure bank debt, it would not pencil out in today's deal. But we were able to financially engineer it in a way where the seller gets what they want, we get what we want, and if we're just patient and go to sleep and wake up a whole bunch of times down the road, we'll be really happy about how that turned out. Do you think we're closer to recovery or still early in the correction cycle?

It's a really good question. I have tried to make my prognostications and somehow the stock market just keeps ripping one day after another. So I guess I would tell you niche-specific. I've been watching single-family for a while. I think there's some distress and I'm not touching single-family again until probably mid-2027, because I think it's going to take a while for it to get back.

I think office is a big question mark. I don't know, but I would be very open to retail strip centers. I love the industrial stuff that we're doing, and I think industrial has legs for a while. I could dig deeper if you want. It's tough to say.

The market is just behaving differently than I've seen in a very long time, and it's tough to make a global statement about it. So I'd be niche and location-specific on my feedback. Yeah, I personally think We're a long ways from the correction. I think there's a lot— we're a long 2, 3, 4, 5 years, but at least that's my personal belief. I just, the rate's going to stay high for a while.

And I don't think the current administration wants to lower rates, but their action is not— they're literally very inflationary. That's right. There's a lot of incongruence there. I would agree. Pay attention to what they do, not what they say.

They keep talking about lower rates, but everything they're doing from tariffs, from the war, everything's Inflationary. Right. That's right. And that doesn't change overnight. So that's my, just my personal take.

Let's get back to dig deeper into triple net investing. What makes a great triple net investment in your opinion? What's your experience? Yeah, it's a really great question. And I think it kind of, you have to begin with the end in mind and know what your goals are.

And so I would tell you, if you're a value-add investor, you're looking for something that's probably been mismanaged, or there's physical distress to it, or just everything's really under-rented and there's an opportunity for you to buy it for $1.5 million and turn it into $2.2 million. You know, that's kind of, if we do a value add, that's what it looks like. And you do that by increasing the financial performance of it. So, you know, you repair the building, you put the tenant in place, or you renegotiate leases. We do a lot of lease renegotiations.

And we drive value that way. And on the flip side of that coin, if you're buying more stabilized things like the example I just gave you a few minutes ago, that has a tenant in there that is private equity. They own companies all over the world. And we got 5 years on the lease and there's a 5-year option beyond that. So short of that private equity firm having financial collapse, we should be able to largely set it and forget it for 10 years.

Check on the roof, check on the infrastructure, but just let it go. What are the biggest mistakes investors make when evaluating triple net deals? Boy, that's a really good question. I'll give you an answer from the context of having come from single family into commercial. I think you need to understand that in single family, If you're going to buy a $300,000 house, it's $300,000 because the one across the street was $300,000 and the one down the street was $300,000.

And you use comps, right? Like whatever's next door is what your house is essentially worth. In commercial, that could not be further from the truth. You could have 2 buildings that are identical next to each other and one of them's vacant, but one of them has an amazing lease in place. And The valuation could be $500,000 for the vacant one and $1.2 million for the one that has the lease, which is wild to think about.

And what that really means is in commercial, yes, you're buying a property, but you're really buying the lease or you're going to put a lease in place that creates your value. And that took me a while to kind of make the switch. To understand that, like, yes, I like that building and I could get real romantic about it, but that's the mistake. You ask, what is the mistake? I think that's the mistake people make is I like that location or that's a good-looking building or whatever, but the lease is everything.

Isn't it? It's all about net operating income. How much can you, it's like a business. How, what's the net profits at the end of the day? Yeah.

Well, and I think people, you know, they make the mistake of thinking that I'm buying a building. And what you're doing is you're buying a stream of income. Yeah. Just like you would a dividend stock or if you acquire a business or something. And so you need to know the inner workings of that income stream.

And yes, the building's important. Location is super important, but it's how does it make money and how are you going to either maintain it or improve it? And it's critically important. So let's stick with the tenants and leases. How do you evaluate tenant risk today?

Because that's very crucial to the business. Sure. Yeah, no, it's a really smart question. So if you don't evaluate it, I'm certain that the bank that is going to give you a loan is also going to underwrite it. So I would tell you to get really good at understanding the company that's in place.

So if it's a small mom-and-pop shop, That is likely going to come with more risk than a regional tenant that has 13 locations, something like that. Even if that mom-and-pop business is just killing it, the bank is just going to see that as a little bit different risk. You know, if a tenant has been in the building for 10 to 20 years, it's likely they're doing well and they're likely to stay. But I, one of the things I think that landlords are really slow to do, and I was timid on this as well, is you need to be asking for tenant financials. Now, if you're buying a building and the tenant's already there, they already have a lease, you have to accept the lease that's there and they don't have to show your financials.

You're just, you're going to get that lease. But if you have a vacant spot and someone wants to lease it from you, absolutely. 3 years of returns and some P&Ls and financial statements, those are all things that the bank is going to want to underwrite as well because the bank knows They're underwriting the lease, you know? So there's a lot we could talk about as to kind of what to look for, but, you know, trends of profitability and track record and things like that get really, really important. So through your experience, what matters most?

Tenant, location, or lease structure? Lease structure. Okay. So I would say, man, you have to have all 3 to be able to, you know, make it work. But I would say the tenant is maybe the least important because that you can change.

And you don't want to be flippant about your tenants. You don't want to displace them if you don't have to. You want to have good relationships, but you can find new tenants if you have good properties. Location might be the answer depending on what vertical you're in. So if you're in retail, location is everything, right?

Because if you've got a Chick-fil-A next door and you've got a Walmart across the street, And there are 40,000 cars per day going by. That's important stuff to know. In industrial, location is less important because it's a machine shop. I'm probably going to be out by the airport. I'm probably going to be out by the bypass or the highway so that semis have good access and things like that.

And so there's some important things, but it's Depends on your vertical. But man, lease structure is everything. And negotiating leases and knowing how to put new leases in place, like that is the engine of the income and thus the value of your investment. So there's a windy answer, but I think lease is probably the most important. Yeah.

Are there any certain tenants or industries you're actively Avoid right now? Oh, that's a great question. I would tell you there are none that I'm avoiding right now, but I'm working hard to maintain diversity. So for example, we're in the Midwest, we've got a lot of HVAC folks, so we've got a couple of factories, we've got some manufacturing, some warehousing, But one of the things we wanted to do is we went to Texas or New Mexico and we bought an oil and gas type of company down there. That's a tenant just to diversify both the market and the niche of business that they're in.

I will say, I guess we do kind of avoid dirty manufacturing facilities, and that might be places that do like Or if you're adding like magnesium and zinc and it could corrode your whole building. Like it can be a very dirty environment that's tough to clean up afterwards and it's tough to get a new tenant in there. So we've never done any of that. I don't see us doing any of that anytime soon. What separates successful commercial operators from those who struggle during market shifts like we're going through right now?

Yeah, that's a great question because we're seeing a lot of that, aren't we? I'll give you my answer. I don't know that this is a universal truth, but I like base hits and I want to hit multiple base hits. I don't need home runs and grand slams, right? So if you're swinging for the fences on some of these massive deals, I think that can come with some pretty significant risk.

I would also tell you, at Clear Sky Commercial, we've built a fund that people invest in, and the driver behind that is diversity. So we're stacking up multiple buildings in multiple markets with multiple tenants, multiple verticals so that not one deal can sink the ship. And I think you and I, like we have seen some of our peers and other folks who swung really hard. Oh yeah. And put, you know, 9 figures, 10 figures in a building and it's one property and if it falls, Like the whole thing falls.

And so my answer for me is I want to be consistent, very moderate risk, and stack up lots of deals to spread my risk out. How important are relationships and reputation in the commercial space right now? Well, I would tell you reputation matters in every facet of life, right? I mean, it takes a lifetime to build trust and about 2 minutes to lose it. And I think that carries over to business.

We talk about this a lot and I'll give you an example of how it comes into play for us. We put a lot of properties under contract, but only if we believe that we're going to close them. And I don't like putting things under contract if I know that I'm going to come back and retrade downstream. Now, if an inspection comes back and something material pops up, of course you have to have a conversation. But if you do a lot of that, feels nefarious to me because you're not coming with good wholesome intentions.

And so we want to be buying deals throughout the Midwest for a very long time, and we want our reputation to precede this, right? So I think our close rate is something like 97-point-something percent, or, you know, because we do the things we say we're going to do. And if we don't, Slowly our ability to get those pocket listings and relationships with brokers and title agents and all these other things start to erode. So we're trying to be proactive and hopefully it pays off. I remember like the, not that many years ago, just like, oh, 2020, 2021 during the heydays.

I know a bunch of guys will just tie up a building, tie up a property, like put a contract and put, and just to kind of tie it up and see if they can raise money or Which is like literally the opposite of what you do. And like, hey, only put an offer that's very concrete to something you believe in and close. And your closing ratio is over 97%. That's incredible. It's very professional of you.

Well, we try. And I think, you know, a lot of those folks, I know that we miss out on deals because I'm not willing to take that approach. Whereas most guys just get it under contract, get it under contract and figure it out later. And I don't know that that's evil, but it doesn't resonate with our, You know, our guiding principles. Well, you build a bad name as well.

I mean, at the end of the day, even though the USA is very, very big, there's niches. I mean, a very small niche of whatever vertical you're in, and it's a very small world. Everybody knows everybody and the word will spread very fast. That's right. And the one thing that I admire about you, like you're playing the patience game, like real estate is not a get-rich-quick scheme.

It's like literally, it's It's decades, like kind of set it and forget it in a way. And it's just like 10 years, 20 years, 30 years later, it may seem like a long time, but literally I always look back and I'm like, I wish I bought more. I wish I bought— That's right. Yeah. And I can tell you, I've been in the game long enough now.

Like, I don't mind doing value adds. I don't mind even in the single-family side, like doing some flips and things. But like, for me, I want my investing to be a small, snowball that starts at the top of the mountain and rolls and gains with momentum. But if you're flipping houses and we do some value add, I'm not trying to get down on it, but if you start that value add or a flip, it starts to roll downhill, but then you cash it out and you have to go back to the top of the mountain and start it again and start it again and start it. And for me, it's a grind.

It's not a wealth building. It is. That's exactly it. So for us, like we know the lives we want to live in 10 to 15 years. And so we're building that today, even if it means a very slow start and that snowball's just slowly going down the mountain, but experience tells me you get 6 or 7 years down the road and that thing is just cruising.

It's almost an avalanche at some point. How important to have like a team supporting you from mortgage, from title, from other vendors, relationships that you work with, with the amount of transactions you do? For me, I think it's critical. I don't understand how people do this without Intentional relationships and showing gratitude back and forth. You know, when I was buying hundreds of single families and rentals and turning them here in town, I had my rockstar brokers that would bring me deals and list my properties.

I had my title company that was just, I mean, just amazing to work with. Now we're really fortunate as we've transitioned to commercial. They have a commercial division and we've been able to just kind of slide right in and that's been wonderful. I will say I love doing the deals here at home because I know these people and I go to bat for them and they go to bat for me and it's great. It's always tough when you get, like, we just closed one in Canton, Ohio, and I'm in Fort Wayne, Indiana, so it's 3 or 4 hours away and it's a whole new cast of characters and they're wonderful.

It's great to work with, but I haven't met them. I don't know them. Like, we haven't gone out to lunch and hopefully someday I'll drive over there. We'll get to meet some of them and build that relationship. But yeah, when you can have consistent relationships, it's a game changer.

The transaction just has a whole different flavor. So as far as title agents, title reps, or agency owners that want to build their commercial book of business, what advice do you give them approaching people like you and investors, developers like you? Yeah, that's a great question. From all parts of— we're all over the country. We have listeners all over, so not just Indiana.

Sure, sure. Yeah, it's an interesting context that you ask that because From my mind, I, it's always my job to go meet them and like try to be their best client. Like I want to be their favorite client. So when they call and they need something, like I'm going to get it right away. And so I don't know, I don't know that I've ever thought about it from how do they court us on our side.

But I mean, I think most people that are doing deals in your local market, if they're doing multiple deals, they know the value of networking and just knowing people in the business. Right. And so an offer to meet for coffee or even just like a simple Zoom call. I, my schedule's tight enough that I do 30-minute blocks of Zoom calls long before I'll ever go get lunch or coffee because I could go out to lunch 13 times in a week and get no work done. So I think maybe presenting yourself as, hey, I'm not here to sell you anything.

I just want to get to know you. I want to know if I can support you in any way. And if you have 15 minutes, 30 minutes to chat, I'd love to connect. And maybe leave it at that. That's great advice.

What do you think the biggest opportunities will be over the next 3 to 5 years? Specifically in the investment, like the real estate investment niche? Yes. Commercial. I think retail's still going to have really good opportunities if you can find some of those nice kind of medium-sized strip centers.

I see guys doing really, really well there. If they have the essential services, haircuts, fingernails, things that you have to go to those locations for, as opposed to like retail boutiques where you could order that stuff online. I'm in industrial for lots of reasons, but one of the main reasons is because the cost to build new is up here, but the cost to buy existing is here. And if you're not watching the visual, I mean, Cost to build something new is $150 a square foot, and I'm buying them for $60 a square foot. So as time goes on, as existing gets to be $80 a square foot, $90 a square foot, eventually it'll get close to that $150 and then people will just build new.

But for now, the demand for the existing is really, really, really hot because it's just too expensive to build something new. And so that's why we're living in that space. And I would tell you that we probably have at least 3 years of good runway before existing inventory costs what new inventory does. And so that's why we're doubling down and buying everything that we can find, not just because we think economically this is a good market or interest rates, or now's the time to buy real estate, but in our niche, that's the unique Proposition that's there. So what advice would you give someone trying to build long-term wealth through commercial real estate?

Well, I would, I mean, I tell everyone to start with education or residential. Yeah. Yeah. Whether it's, yeah, any niche. I mean, I think it's going to be networking and it's education.

I know everyone wants to get to work right away. They want to rush to buy something. And if you find a good deal, go ahead and knock yourself out. But I know my success has really come when I've humbled myself enough to be the dumbest guy in the room and learn from people who are actually doing it. Not people talking about it.

Not YouTube, not YouTubers. No, I mean, yeah, I mean, there's some good stuff out there, but most of them are gurus. Like, you know, if you can't do, you teach, right? And we've seen a lot of guys who are not buying deals and they're teaching, you know. I don't mean to sidetrack here, It's so funny, like I've been into AI and watching so many videos.

It's amazing all these YouTubers, like, hey, here's how you can build a $10 million company. I'm like, why don't you build it yourself? Right? They're telling you how to do something when they have never done themselves. But it's similar to real estate as well.

Yeah, that's why I tell you, you know, don't ever take real estate investing advice from someone who doesn't invest in real estate because your Uncle Bob will tell you all the reasons you can't and your buddies will tell you how stupid you are for even thinking about it. Go find the room where people are actually doing it and have lived through a cycle or 2. Like, that's where you'll learn the things you need to learn. And I think most, most of the most regions of the country, there's REIA groups, I guess, the Real Estate Investors Association. Is that a good group to recommend where people actually do deals?

100%. And I know that you don't know this about me, but I started the local REIA here about 8 years ago. And we charged nothing. It was free for, because I just wanted to hang out with people and learn, and there wasn't a platform for such a thing. And so now I have since sold that group.

I never monetized it except for when I sold it to someone who really saw the value in it. But we had 80 to 100 people every single month, you know, and just in Fort Wayne, Indiana, you know, there's maybe 400,000 people here. We're not a major metro, but man, they showed up all the time and I, There are, I can point to probably a dozen people who showed up in 2017, 2018, 2019 who are now millionaires, multimillionaires who, you know, not that I directly did that for them, but we learned and we grew together because we were in the same room and that group was wildly impactful for them. That's awesome. So REIA, it's R-E-I-A.

You can Google it, you can search it. There's a, there are Multiple chapters in every, probably every city, every zip code. And it's a real estate investors meetup. So if that's something that interests you, you want to dig deeper, yeah, just Google it and find your local chapter. Well, and to your point earlier about how do I, as a title agent, like how do I get in front of those people?

Show up at those meetings because you're going to have a captive audience of people who will eventually need your services if they don't need them right now. Go there and add value, kind of be a resource. That's right. What's next for Clear Sky Commercial? Yeah, so I kind of alluded to what we've been working on fund-wise, but basically Tyler and I, we bought a whole bunch of deals ourselves.

Then we started bringing JV partners on and the JV partners said, we love this. The distributions are great. We're love— but like our dollars are locked into one property and What if you guys set up a fund where my same dollar amount could be spread out across lots of different things? And we said, that's brilliant. Let's do that.

And given that our deal flow from our direct mail and cold calling and all that is pretty high, we have access to more deals than we had capital for. So felt like a good marriage. So what we've built and what comes next is we're building a $25 million fund. where we just add 1 or 2 properties every quarter. And right now we have $6 million acquired in the fund.

I think we'll have a contract by the end of the week that'll take us to $7.5 million. And every time I bring on a new property, we go out and we raise $500,000 more, $800,000 more, and bring investors into that. And what we do is we really try to make it very collaborative where We don't charge fees, which is very rare, like incredibly rare, but I only get paid when the fund performs for you as the investor, right? So a lot of alignment where I'm incentivized to make this work for all of our benefits. And so monthly distributions, own it for the long haul.

Like this should hopefully appeal to people who want to own real estate, but they don't want to take the debt on themselves or they don't want to run it. Maybe they want to just be that title agent or that veterinarian or whatever you do for your— Realtor, attorney. Yeah. You got it. That's it.

Um, uh, I know you're big on lead generation. You said you have a big pipeline, a bigger pipeline than I can actually buy. Uh, are you leveraging AI at all or what's— Absolutely. Um, we've done a little bit on the lead gen side, um, but a lot with Supplementing legal documents and contracts. Now, of course, the lawyers always get the final say, as they should.

Of course. Right. Yeah. But we've been leaning into it a lot that way. We have built a lot of underwriting tools that AI has helped us to generate.

If you go to clearskycommercial.com, that's our website, that was all built with AI. So I think AI can be a dangerous trap because people get so involved with it. Like, They do interesting things, but it doesn't move your business forward. And so Tyler and I have to kind of stop ourselves every now and then and say, okay, is this making our lives easier or is it just adding something that's just really cool? And I do think that's a healthy question people should ask as they add AI to their business.

I mean, so you're not working 100-hour weeks like I am? Well, it depends on the week. I've fallen in that trap and I've like getting really deep and deep into it. Yeah. Yeah.

I need to step back. Well, yeah, it's a dangerous trap, but when you love what you do, it's tough to not do it. It is fun. It's so much fun. It's like learning, it's growing.

Like it's, there's so, it's like it's a fire hose. There's so much information, so many tools, so many, everything is new every 2, 3 days. So it's just, it's fun. So for me, it's more of a learning experience and building a lot of things. And so as far as the lead gen, what was the challenge?

Or you said you kind of tried it, but you're not really You're not focusing on leveraging AI? I don't know that we've even, it's kind of the next challenge for us. We haven't really hit a challenge. Like it's not as though we tried it and we hit a wall. We just, it's probably the next project for us to work on.

But we've been so laser focused on launching the fund and then delivering on all the promises that we've made. Like for example, our first distributions, we do monthly distributions for our investors that starts Hopefully at the end of this week, if everything goes the way we want it to. And so that's my laser focus is delivering for my LPs. But we've started talking about probably 3rd quarter is our quarter to really look at what we're doing for lead gen, which has worked really well. So I don't want to break it, but supplementing some things to make it more efficient, more accurate, more cost-effective.

That's awesome. We're coming close to the end of the podcast. I always ask this couple of questions. Do you have a favorite book? Or something you read recently that kind of sticks out?

Yeah. Yeah. I mean, it's not real estate specific, but I love The Alchemist, which is Paulo Coelho, I think. But it's really kind of a story about following the omens, like looking for signs and following the omens. And I don't know why I romanticize that book, but I come back to it a lot.

How about a favorite quote? I don't know that I have a favorite quote. I will tell you one thing that I've been kind of sitting with lately is this idea of When someone shows you who they are, believe them. And the context behind that is I tend to be very trusting. Like Mo, you and I haven't spent time together, but like I would just trust you.

Like for the most part, people know you, I would trust you. Right. But there have been a few examples where I've been a little more trusting than maybe I should. And you start to see some things that give you pause and I don't always listen to it as well as I should. You know, so that doesn't mean I need to get my defenses up, but maybe just be mindful about the way people act.

Yeah, I think I follow the same philosophy. Always give people the benefit of the doubt, like trust them until they prove you otherwise. It's good. And it's very hard to have your defenses all the time and kind of just, it's okay, just go with the flow. People show their true selves very quickly.

Yeah, you have a choice, right? You can be a skeptic all the time and be very wary of people. And maybe that means no one ever lets you down, but I don't know. I think I would rather live on the other side where 9 out of 10 people are going to prove to be honest and truthful, but that means I'm going to get roasted from time to time and I just need to be a little more conscious on how to watch for some of that. Well, thank you so much, Drew.

We really appreciate you for coming on the show. Mo, thanks for having me. I really appreciate it. Well, thank you, Drew. Again, I hope you all enjoyed this episode focused on commercial real estate and specifically triple net leases.

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