# From $0 to a $75M Portfolio: How Agents Build Commercial Real Estate Wealth > Published: 2026-06-02 | Category: podcast-episode How real estate agents can roll commissions into commercial deals, use syndications and tax write-offs, and build lasting wealth with Tyler Cauble. ## Content # How Real Estate Agents Can Turn Commissions Into Commercial Real Estate Wealth Most real estate agents spend their careers selling properties they never own. They guide clients through the biggest financial decisions of their lives, collect a commission, and then start the hunt for the next deal all over again. But what if your commissions could become the seed capital for a portfolio that pays you long after the closing table is cleared? That is exactly the path Tyler Cauble walked. A commercial real estate investor, broker, and host of the Commercial Real Estate Investor Podcast based in Nashville, Tyler flipped a nine-story office building for a $2.2 million profit, is developing a 350-unit self-storage facility, and now manages roughly $75 million in assets through his investment arm, Hamilton Development. The remarkable part of his story is not the size of the portfolio. It is the starting point: zero dollars. In this episode of the REI Agent podcast, Tyler breaks down how agents can use the license and relationships they already have to build real ownership, why he started by rolling commissions into deals, and the practical structures that make commercial investing accessible to everyday agents. > "I literally started with $0. I was like the guy rolling my commission in from purchasing a deal so that I can have some sort of equity stake when we first started." — Tyler Cauble ## What Actually Separates a Great Commercial Agent From a Great Residential Agent? The instinct for many agents is to assume that commercial real estate is just residential with bigger numbers. Tyler learned the hard way that the two are, in his words, "night and day different." Early in his career, when his development firm's residential agent moved to California, Tyler was handed a $1.2 million listing simply because he had a license. After two months of open houses every single weekend, the deal went nowhere and was passed to someone else. Within three months of handing it off, it sold. The difference comes down to temperament and approach. Residential sales reward people who love the human side of the business, the problem solving, the emotional vision of what a family's life will look like in a home. "The residential agents that crush it are the ones that are incredible at dealing with people," Tyler explained, agents with a passion for paint colors, finishes, and storytelling. Commercial, by contrast, is a numbers game. As Tyler put it, "It's a hard corner. You get 20,000 views per day with cars driving by. It's 2,000 square feet. Either you like it or you don't. The numbers work or they don't. Let's move on." For residential agents considering the leap, the takeaway is encouraging rather than discouraging. The skills do not have to transfer perfectly. What matters is recognizing that commercial demands a more analytical, deal-driven mindset, and being honest about whether you are willing to operate that way. ## What Is a Syndication, and Why Does It Fit Agents So Well? One of the most powerful vehicles Tyler uses is the syndication, and it is one most residential agents have never had explained to them clearly. A syndication is simply a deal structure that lets you pool capital from multiple investors. "It's like Shark Tank style," Tyler said. "I'm looking to raise a million dollars. How much do you want to commit?" The defining feature is passivity for the investor: in a syndication, the investors agree to the deal up front, contribute capital, and then the operator runs everything. They cannot dictate the day-to-day, which is exactly what makes it low-hassle compared with owning a rental property and fielding calls about broken toilets. For agents who want exposure to real estate without becoming landlords, this structure solves a real problem. Tyler distinguished between two common types: a 506(c) syndication, which can be publicly advertised but is open only to accredited investors (those Instagram real estate ads you have seen), and a 506(b) "friends and family" syndication, which requires a pre-existing relationship but is how most of his own deals get done. To qualify as an accredited investor, he noted the general thresholds of roughly $200,000 in annual income individually, $300,000 married, or a net worth above $1 million excluding your primary home, while stressing that these rules should always be confirmed with an accountant. The returns can be compelling. Tyler said his deals typically target an 18% to 22% annualized cash-on-cash return, or a two-times equity multiple over a five-year hold. "Over a five-year period, if you give me $100,000 we're aiming to give you back $200,000," he explained. He is candid that he dislikes IRR as a headline metric because it can be manipulated based on the timing of distributions, preferring the simpler cash-on-cash framing: give me a dollar, get two back. ## How Can Agents Use the Tax Code to Supercharge Returns? This is where commercial investing becomes genuinely transformative for full-time agents, and it is a benefit most never realize they are eligible for. Because agents can qualify for the "real estate professional" tax designation, the depreciation generated by commercial properties can be used to offset active commission income, not just passive income. A doctor investing the same dollars could only shelter passive rental income. An agent with the right designation can write off ordinary commissions. Tyler gave a concrete personal example: "I invested $50,000 into a syndication in the first year. I got $67,000 of a write-off." On top of the tax benefit, he was still collecting distributions and earning a 9%-plus return on the investment. The scale of these write-offs on larger deals is even more striking. On a flex-space project he is currently building, a roughly $2.4 million deal raising about $1,018,000, investors are positioned to write off around $770,000 in the first year, roughly 77% of the capital they contributed, because the structure allows depreciation of nearly $2 million in the first year. This is the differentiator Tyler returns to again and again. The combination of cash flow and aggressive first-year depreciation is something residential investing rarely matches, and it is uniquely valuable to high-earning agents who currently have no shelter for their commission income and no retirement plan beyond a 401(k) they find "boring." ## How Did Tyler Net $2.2 Million on a Single Building? The nine-story office building flip is the headline number, but the story behind it is a masterclass in relationships and opportunism. Tyler found the deal through an Instagram post. He simply announced he was driving through Chattanooga on his way to tour properties in Atlanta and asked if anyone knew of off-market opportunities. A follower screenshotted the post, sent it to a friend, and within a week or two Tyler had a nine-story, 40,000-square-foot building under contract. The numbers tell the rest. The seller had picked up the building out of a distressed COVID-era situation for around $1.2 to $1.5 million with no other bidders. Tyler bought it for $1.8 million, and when his bank pulled out a week before closing despite prior approval, he negotiated seller financing to keep the deal alive. He raised about $400,000 from investors and spent roughly $600,000 on demolition, carrying costs, and planning to convert it into 35 micro apartments. Then a contractor made an unsolicited offer. Tyler, not eager to sell, threw out $4.5 million expecting a negotiation. The contractor said, "Deal, send over the contract." With an additional $100,000 in non-refundable extension fees, Tyler walked away with about $4.6 million on roughly a $2.4 million investment. The lessons for agents are layered: deals come from putting yourself in front of people, creative financing can rescue a deal when traditional lending fails, and sometimes the best exit appears when you least expect it. It is also a reminder that profit in commercial real estate is often made at the buy. ## What Is the Smartest Way for an Agent to Do Their First Commercial Deal? Tyler's advice for a first deal is refreshingly counterintuitive. He does not recommend obsessing over which asset class to chase. Instead, he recommends finding the right person. "For your first deal, I wouldn't even necessarily recommend picking a specific asset class," he said. "I would recommend picking a client that you know very well, a partner, a friend that actively invests in commercial real estate and partnering with them." The goal is to learn the underwriting, due diligence, and lease-up process from someone who has done it before, rather than paying for that education through expensive mistakes. He frames the value you bring through a simple model: in any commercial deal, you need two of three things, which are knowledge, money, or connections. If you lack the knowledge but have connections and a willingness to do the work, you can contribute sweat equity, finding tenants, knocking on doors, and managing the lease-up. Agents are uniquely positioned here because their entire business is relationships and deal flow, which is often the hardest piece for cash-rich, knowledge-rich investors to supply. As Tyler memorably put it, "You'd rather have a slice of a watermelon than an entire grape." A small piece of a great deal you learned from beats a whole deal you botched alone. He also offered pointed advice on how to approach mentors without being a drain on their time. Do your research, respect their schedule, make the meeting convenient for them, and offer genuine value rather than asking to "pick their brain." That small consideration, he said, tells an experienced investor everything about how seriously you take the opportunity. ## Why Self-Storage, and What Makes It Such a Durable Asset Class? Tyler's favorite current project is a 350-unit self-storage facility that he expects to cash flow about $30,000 a month split between him and a single partner. The economics are extraordinary because of how he structured and built it. The conversion cost only about $1.6 million, roughly $40 per square foot, compared to the $150 per foot it might cost to build a home today, and he had acquired the building itself at an almost unbelievable $3 per foot. Beyond the numbers, Tyler loves self-storage for its resilience. It is low in management intensity, allowing a third-party company to run it, and remarkably recession-resistant. He pointed to delinquency rates near 0.1% even through severe downturns, because at roughly $100 a month, most tenants simply keep paying rather than going through the hassle of hauling their belongings elsewhere. He did add a note of caution: the asset class became crowded as investors fled compressed multifamily cap rates, pushing self-storage cap rates from the 15% to 18% range of a decade ago down to 6% to 8% today. The opportunity is still there, but discipline on the buy matters more than ever. Ultimately, Tyler describes himself as a generalist who invests deeply in a few neighborhoods rather than chasing whatever asset is trendy. His view is that there is no single "best" asset class. "You can be successful in any aspect of commercial real estate," he said. "It just depends on the deals that you find, the work that you're going to put into it." Investors made fortunes in office when everyone declared it dead, and in grocery-anchored retail when Amazon was supposedly killing it. The profit, as Tyler sees it, comes from finding the gap others miss and executing well. ## The Real Goal: Building Freedom Beyond the Next Closing If there is a single thread running through Tyler's story, it is that a real estate license is a launchpad, not a ceiling. Agents earn good commissions, but most, as Tyler bluntly noted, "don't have a business, we have a job." Stop working, and the income stops. Investing your commissions into ownership, partnering with clients who are already buying and building, and leaning on your unique strength in relationships is how you replace that income and build something that works for you passively. He has watched people replace their living expenses through commercial real estate in a five-to-ten-year window when they commit to it. His golden nuggets are worth repeating: roll your commissions into your first deal as equity, partner with the clients you already serve, and leverage whichever of money, knowledge, or connections you bring to the table. And invest in your education first, whether through a partner, classes, or the hundreds of free videos available, because in commercial real estate, what you don't know can cost you tens or hundreds of thousands of dollars. If this conversation sparked ideas about turning your commissions into lasting wealth, listen to the full episode of the REI Agent podcast for the complete breakdown. And when you are ready to map your own path from agent to investor, REI Agent Advisor at advisor.reiagent.com is built to help you take that next step with confidence. Keep building the life you want.
Full Episode Transcript Welcome back to the REI Agent. My guest today is Tyler Cobble, a commercial real estate investor, broker, and host of the CRE Investor Podcast based in Nashville, Tennessee. Tyler has flipped a nine-story building for a $2.2 million profit, is currently developing a 350-unit self-storage facility, and is one of the few people in real estate who can speak to both the broker and the investor side of commercial deals simultaneously. Tyler, welcome to the show. Matias, thanks for having me, man. Excited to be here to dive into this and really about the story of going from the brokerage side into the investment side and leveraging both to make both businesses better. So thanks for having me. Yeah, you're a perfect fit for the show. I think that it's funny how often people in the business don't, in the sales side of things, don't actually invest themselves. So what got you started in real estate? I dropped out of college. That's how a lot of the greats get started in real estate, right? I dropped out of college, worked as a project manager for my grandfather's construction company. I figured I was just always going to take that over one day. But about three months into moving back to Nashville and working with him, I got a job offer from a boutique development firm here in town, unsolicited really. It was a developer I'd actually sold Cutco knives to when I graduated high school for a summer job. He heard I was back in town and offered me the gig to come in and be his in-house leasing agent. They had some retail, some industrial space, some office space. They wanted somebody in-house full-time working on those assets. So that's what I did, man. I got my start there and learned the business from the ground up. So knocking on doors, cold calling, building up a book of business. I got to sit in on all the development meetings every week. It was a really unique opportunity and learned how to put together my own deals from there. In 2018, about four and a half years after I started, I went off and did my own thing. So we've grown the Cobble Group now, which is our commercial estate brokerage and advisory firms. We advise a lot of family offices on building their portfolios. We do some investment sales now. We handle leasing for properties that we manage or own as well. So we don't really do any third-party leasing anymore. Then I've got Hamilton Development, which is our investment arm. That today currently has about $75 million in assets under management. Like you mentioned, everything from a nine story office tower that we flipped in downtown Chattanooga. So we just opened up a 48 key boutique hotel. We've got the self-storage going on. I'm working on some flex space. So a little bit of everything, man. Wow. Yeah, that's awesome. And I apologize. I think you said that you were doing commercial stuff from the beginning, but then you said door knocking as well. So were you ever in residential sales or was this pretty much solely commercial from day one? I wasn't. I mean, it was solely commercial from day one, aside from a brief step, because the development firm that I was working for was building custom homes as well. They had an in-house residential agent that was handling those, but at one point he decided to move to California. So they looked at me and they said, you've got your real estate license. You've got some experience now. You go sell these houses. What was a $1.2 million house? I was like, well, yeah, I'm not going to turn down that commission. Very quickly learned that residential and commercial are night and day different. I had zero skill set around the residential side of things. And after, I kid you not, probably two months of straight open houses every single weekend, we gave it to somebody else to handle. Yeah, it is two different animals for sure. What would you say differentiates a good commercial agent from a good residential agent? If somebody had their license, maybe was doing mostly residential, wanted to join your group, what would you look for to see if they were going to be a good fit for commercial? Yeah, that's a great question. Typically, we work with a lot of residential agents and investors that want to transition into the commercial space. And largely what I see, more often than not, they're the people that look at things from a much more traditional business perspective. The residential agents that crush it are the ones that are incredible at dealing with people. They love problem solving and helping people. And they've got a passion for exploring paint colors and the finishes and building the vision of what your family's life is going to look like. That's what it takes to be good in residential sales. I don't have any of that, man. I'm like, dude, it's a hard corner. You get 20,000 views per day with cars driving by. It's 2000 square feet. Either you like it or you don't. The numbers work or they don't. Let's move on. It's just a very different numbers approach. Yeah, that makes sense. You broke down some of the different facets you're in now. I would assume that the investment one is kind of operating through syndication structures where with the nine-story commercial building, you're building the self-storage. Is that all through syndication structure? Yeah, not all of it, but a pretty decent amount of it. I started buying real estate in 2019. So you can do the math basically from then until now, we've built up to $75 million in assets. I didn't have the cash to do that. I wish I did. That would have been a great thing. I literally started with $0. I was like the guy rolling my commission in from purchasing a deal so that I can have some sort of equity stake when we first started. A lot of it has grown through syndication. And then just over the years, having had successful syndications, successful deals, successful brokerage, whatever, I've been fortunate enough to start building my own portfolio of assets that I own solely by myself. The 350-unit self-storage facility is just me and a buddy. We own a 50-50. That's going to be one of the best projects I've ever done. I own my own office. I own a parking lot across the street from a bar, which has been a fun new venture because it's a totally different thing. We didn't even have to do a building. It's a little all over the place. The hotel, we syndicated that. I've got 40 investors in that deal that helped me make it happen. If people listening now aren't familiar with what that kind of structure is, can you give us a bird's eye view, a bird's understanding of what a syndication is? And actually, while we're at it, we can explain why it's maybe a good fit for somebody that is a real estate agent and is looking to invest but doesn't really want to have maybe some of the headaches that could come with traditional rental property. Yeah. No, of course. Syndication is great. You can syndicate literally anything. It's just a type of deal structure. It allows you to go out, basically pass the hat and say, hey, Mr. Investor, I'm looking to raise a million dollars. It's like Shark Tank style, right? I'm looking to raise a million dollars. How much do you want to commit? Okay, 50 grand. We'll go over to you, Mrs. Investor. How much do you want to invest? $150,000. You're able to raise capital from a variety of different investors. The difference between a syndication and just a true partnership, just saying, oh, we have an operating agreement in an LLC, is whether or not somebody that is an investor in the deal has a say in the day to day. If I'm raising the capital, I'm doing a syndication, my partners are silent. They agree to the deal on the front end, they gave me the money, and then I run it. They can't say, actually, I don't like that paint color, you need to change it. No, I'm running this deal, you just invest it with me. Whereas in a traditional partnership, yes, you could go and raise capital from investors, but everybody has to be actively involved in making that deal happen. Right. That's a blessing and a curse. If you have a really good operator, it's great. You can trust that that person is running the deal smoothly. They should be providing updates along the way to make sure that the plan is being executed properly. Again, with that low hassle, you think of, I want to own a real estate and I want to buy a rental property. I don't want to have somebody calling me with broken toilets or whatever, all that kind of stuff. Yeah. There's still some possible headache. It's not fully passive. With these kinds of deals, it is just, yeah, you're putting the money in, you're looking over a deal that is projected to give you a 7%, 8%, 10%, 12% return on your cash. Then there's a strategy for what they're going to do with it. For example, in the nine-story commercial building that you renovated, that could have been set up that way where you could see how you could make the value higher with cap rates and then do a refinance to get everybody's capital out after a certain amount of time. If you're holding it long-term, then maybe they still have some sort of ownership. Their preferred returns would be less. If they were getting 10% at the beginning, they may get a lot less after that, but they've had all their capital back. Then it gets a lot more complicated when you get into things like the IRR, where it's kind of like, what is your money power? You could probably explain this better than I can, but what is the power of your money over time? If you get your money back really fast and you made X amount of money on top of it, your IRR would be better. You explain that. Yeah. I mean, pretty much, IRRs are incredibly complicated. I don't know anybody that could actually calculate them on a calculator. You have to use a spreadsheet. Basically, if I give you $100,000 in year one, and it's a 25% return, if I give you $50,000 in year one and $50,000 in year two, it's technically like a 12.5% IRR. You're basically halving it because of the amount of time that's going on. It gets really complex because you're talking about the timing of when these distributions are made. I actually don't like IRRs. A lot of investors, professional investors, will lean on that as one of their go-to metrics. I'm not a fan of it because you could actually juice it based on when you make the distributions to make it look better than it actually is. Typically, what I'm going for is the annualized cash on cash return, which is over, let's say you hold a deal for five years, is the average return that you get every year for five years, including the sale of the property. We're typically aiming for an 18% to 22% annualized cash on cash return. Basically, 20% on our money every year or a two times equity multiple. Over a five-year period, if you give me $100,000 we're aiming to give you back $200,000. We're basically doubling your money. That's a lot easier for maybe you're less sophisticated, not necessarily institutional or professional investors to understand. If I give you a dollar, you give me two back. Okay, I get that. Yeah. No, totally. It's crazy that those kinds of deals are out there. The returns you were just talking about sound fantastic. Depending on your market, if you're buying a traditional rental, it's going to be hard to see that kind of returns, especially if you're getting property management on top of it. There, of course, are risks. I want to talk about another benefit quick before we get into those. That would be the possibility for accelerated appreciation. If you are a real estate professional, let's say you earn $300,000 a year in commission and you are then designated as a... I'm blanking on the term now. Real estate professional. Yep. Real estate professional, but also an accredited investor. Okay, yeah. Invest in these kinds of things. You can then also realize that if there's depreciation on these properties, then you can take that depreciation off your income, whereas a doctor could not because it would only be able to be something they could take off of their passive income. Any kind of rent that came in, they could offset that. But with real estate professional designation, you can actually get your commissions written off. Just to put that in a little bit easier terms, I invested $50,000 into a syndication in the first year. I got $67,000 of a write-off. So that was a pretty awesome deal, including then I was getting distributions and making 9% plus return on that investment. Yeah, it can be very powerful. I mean, we're doing a deal right now, FlexSpace, that we're building. It's going to be about a $2.4 million deal all in. We're raising about $1,018,000. And the first year, we're able to write off about $770,000, give or take. So when you think about that, 77% of the money that the investors are giving in year one, they get to take off their tax returns because we can depreciate $1.98 million. So it's pretty astounding to be able to take advantage of the tax benefits. That's one of the biggest differentiators for commercial real estate investors that you can't necessarily take advantage of on the residential side, or it may not necessarily make sense to take advantage of on the residential side. 100%. And so in some ways, I almost see the syndications as a possibility for somebody to think about, let's say I'm moving from corporate America and I'm going to become a real estate agent and I'm seeing some success with it, whatever. This is almost like a 401k. You know what I mean? This is almost like, sure, but it's better because you're likely to get real estate, get that money back. You're probably going to get a better return. You're going to get that money back in five years or whatever the plan is. So it's pretty powerful. I try to preach that a lot because I don't think a lot of agents understand those kinds of structures, especially on the residential side. I think agents, being a residential agent, being a commercial agent is great because you can make some pretty phenomenal commissions. But at the end of the day, you don't have a retirement plan. You have to invest in real estate or build up a 401k, but that's boring to me. Invest in what you know. Start investing in real estate because one, it makes you a more trustworthy agent. I mean, how can you honestly walk somebody through the... I've always thought about this because there's so many agents out there that they work with investors that have never invested themselves. And I'm like, how can you properly walk somebody through the entire process if you've never done it yourself? How can you properly advise them? And you really can't, in my opinion, because you just don't know what all is entailed. And two, you've got to build your retirement. You've got to start finding a way to replace your income because at the end of the day, most of us don't have a business. We have a job. Because if we stop working, if you go to the hospital for a month, God forbid, you're not going to have any commissions coming in. So, what's going to passively work for you in the meantime? And that's why everybody should be building up their real estate portfolios. 100%. I have a book that will be... It's finished through editing and everything that's coming out that walks through what... If I were to be 18 again or something and just start real estate right away and just be this young, hungry guy, building up that portfolio as you go, house hacking, however you have to do it to start, you have to have a place to live. So, if you can maybe have a career somewhere, start transitioning over to real estate, buy a house before you get out of that career altogether, house hack it so that your expenses are next to nothing, or maybe even getting some cash flow on top of it. It's definitely possible. And then save for the next one and start building up that portfolio. If you can keep your rent covering your living expenses and grow with that, you're going to be in a much better position with whatever the market throws at you. This business can be hot and cold. I just had a huge dry spell and I've been doing this for 13 years and it was like, what is happening? It happens, man. That's the thing. It doesn't matter how good of a broker you are, every now and then it's going to come back around. A lot of agents are seeing that today. The past six months, 12 months have not been easy. It doesn't matter if you're in residential or commercial, it's been a very different world. As long as you practice the fundamentals, you have a process and a system that you follow every single day, then at least you can keep the lights on during those downturns. You don't have to be one of those agents that gets out when the market shifts. Exactly. You can just rest so much easier if you have that. That's a lofty goal. To be 100% covered of your expenses, that's a lofty goal. That's going to be hard for a lot of people to do. But to have that as a pie in the sky thing you're working towards, it's going to do two things. It's going to keep your living expenses down and it's going to be putting money into things that are growing. To be an accredited investor, to get into the syndications, you do have to make a good amount of money annually. Is it 200 or 300 individual? I can't remember what the difference is. You should always double check these things with an accountant. It depends on what kind of syndication you're doing. There's two different types of syndications. There's a 506B and a 506C. A C is accredited investors only. When you see a real estate investment being advertised on Instagram, that's a 506C. They're only taking accredited investors. They're allowed to market. 506B is typically what we do. It's called the friends and family syndication. You have to have a pre-existing relationship with me in order to get access to any of my deals. Two different approaches. To be considered an accredited investor, I think it's $200,000 a year. If you're single, $300,000. If you're married and or a net worth greater than a million dollars, it doesn't include your personal home. There's a bunch of rules to it, but yeah, I would go with those up. Yeah, definitely double check on that. If you're building up a portfolio as you go, eventually you're going to have that million dollars outside of your primary residency. It affords you to get into these opportunities as well. The book is basically a roadmap of how to live both worlds. It is more of a residential sales type thing. Let's go back to your commercial building. You close a nine-story commercial building and netted 2.2 million. Walk us through that deal from acquisition to disposition and what the key decision points were along the way. Yeah, that was a wild one. We found it through an Instagram post. I just posted on Instagram that I was driving through Chattanooga on my way to Atlanta to tour some properties down there and wanted to see if anybody knew of any off-market properties we should take a look at. One of my followers screenshotted it, sent it to his buddy who reached out. We had lunch. We went and looked at three properties and then we had that one under contract a week or two later. It was a nine-story office building. This group had bought it out of a distressed foreclosure or just a distressed sales situation during COVID. Nobody else showed up to bid on it. I think they bought it for 1.2 or 1.5 million. It was just nothing. This is a 40,000 square foot building, nine stories. We bought it for 1.8. Bank, of course, pulled out the week before, even though they already approved it. Fortunately, we were able to negotiate seller financing. But we seller financed it. I raised $400,000 give or take from investors. We got in there. We spent about $600,000 putting all of our plans together, carrying the property, doing demo on the building and getting it ready for our build out. We were going to convert it into 35 micro apartments, which we were pretty excited about. Then the contractor actually made us an offer. I didn't really want to sell it. We had some OZ like opportunity zone fund capital in this deal. We were planning on holding it for 10 years so we could take advantage of the OZ benefits. When the contractor asked us if we would consider selling, I said, not really. Make us an offer. He said, give me a number. Keep in mind, we bought it for 1.8. We put about $600,000 into it. I said, all right, $4.5 million. He goes, deal, send over the contract. I was like, damn it. I didn't say a high enough number. He shouldn't have accepted it that easily. Anyway, we go under contract. He starts doing his work. The due diligence on his end takes a lot longer. He ends up extending by another month, actually several months. We ended up charging another $100,000 not applicable to the purchase price in order to extend that. We ended up walking away with about $4.6 million on about a $2.4 million investment. It was a pretty great little deal. Yeah, that's awesome. There's definitely speed of turning the capital over. I've struggled with that. Looking at a flip or something like that, do I try to turn around and sell it really fast and not make as much profit but then don't have to do all the work, all that kind of stuff? I've done a couple of those but I can see how, especially when you throw in the opportunity zone stuff, how that would be challenging. But on paper, it's a pretty big win. That's pretty awesome. Yeah, absolutely. For a residential agent who wants to start investing in commercial real estate, is there a certain asset class you'd recommend starting with? What does a first deal typically look like? Yeah. For your first deal, I wouldn't even necessarily recommend picking a specific asset class. I would recommend picking a client that you know very well, a partner, a friend that actively invests in commercial real estate and partnering with them on a deal that they're interested in doing for your first one. Whether that's you're bringing some capital to the table, you're bringing some investors to the table, you're bringing a tenant or maybe you've got a client that bought a house from you that owns a business that needs to go somewhere. Bring something like that to the table and learn from somebody that's done it before because the last thing that you want to do is go spend more money on an education doing a property like this. Because like I said earlier, when I got into the residential side, just on the brokerage side, night and day different, I was unsuccessful in selling a $1.2 million house. It's very, very different. Make it easier on yourself. Do your first one, two, three deals with somebody that has done it before. See how they do it. Look at how they do the underwriting, how they go to due diligence, how they manage a lease up and manage the property and then go off and do it on your own. That's by far the best way to do it. That's what I did. I still do that to this day. I don't do every single deal by myself. Some I do now because I've got the money. But for the most part, I'm going out. Even when I did the hotel, I brought somebody in that had 30 years of hotel experience. That way, I knew I wasn't the only guy sitting at the table that had to learn about hotels and operating this hotel. He already knew it. I got to lean on him. It just makes it so much easier. You'd rather have a slice of a watermelon than an entire grape. It allows you to scale so much faster. You talked earlier about people being able to replace their living expenses through these real estate investments and it being lofty. It is. It's not easy to build up a portfolio that will actually replace your income. But I have seen people do it in commercial real estate in about a five to 10 year period, depending on how committed they are to making it happen. It's entirely possible. There you go. This is a follow-up question to that. If you're a newbie, what value can you bring? Let's say you also have a ton of money. What kind of value can you do? What kind of grit, what kind of hustle can somebody do to really provide true value and not be annoying to somebody who does have experience? Look, you basically have to have two of three things in any commercial deal. It's knowledge, money, or connections. You can have money and connections. You can have knowledge and money. You can have money and connections or whichever combination I left out there. You don't have to have all three. If you don't have the knowledge, but you've got money and connections, you're good. Let's say that you've got connections and you don't really have the knowledge, but you're willing to put the work in. You can limp along on that side by saying, I'll put all the work in. I will be there. I'll put the sweat equity in. I will go out. I'll make sure that the space is cleaned up, that we get it leased up, that we find the right tenants. I'll knock on doors to make it happen. You got to have some sort of hustle in that side of things for sure. That's typically what I recommend to people. You got to have two of those three. If you have one, it's not enough. Unless it's money. Then you can do whatever you want. Even if you have money, you still have to have connections to the people that are going out and finding these deals. That's going to be one of my golden nuggets for later, which is, when you're going through this process, find the right people that will help get you to the next level of where you want to go. Connections is honestly the strongest piece. Maybe there's ways that a new person could assist, maybe a commercial broker. If they do get licensed, they could maybe open up a commercial space, just run flyers. I don't know if you even do flyers often in the commercial, but do something, some legwork maybe to start providing some value and maybe that will help you learn, get that knowledge aspect as well. I think that whenever somebody's starting, experienced people do want to pass on the knowledge. They do want to have the mentors. There is some goodwill that comes from that. I think that's definitely something that is out there, but I think it's also good to not take that for granted and to try to really provide as much value as you can if you are something new trying to get into the space. That's right. You want to be somebody that's coachable. You want to be somebody that's not in the way. I'm busy. I have people that reach out to me that want to pick my brain all the time. It's the worst thing that you could ever possibly say to somebody. I don't want to meet up with you just so you can pick my brain. That's work for me. I've got things that I've got to do. It's not because I don't want to help other people. Just make it more convenient for me. I just opened up a hotel. I'm there pretty much every day making sure that the team is doing things right, that we're getting the systems and processes right. I've had multiple meetings there because people have reached out and said, hey, I want to learn about this. Can I swing by the hotel and talk to you? Yes, I'll be there. Come by whenever. We've got coffee. Just make it easy. If you want to take somebody out to coffee and pick their brain, again, I would highly recommend you never do that. If you do that, buy the coffee, buy the lunch. I can't tell you how many meetings I've had where I walked away. I don't need somebody to spend $5 on my coffee. I'm more than capable of doing that on my own. It's a gesture, a cultural gesture, if you will, that tells me a lot about how you value this opportunity to sit down and for me to teach you. Again, it's $5, but I think about that with every person that's ever done it. No, 100%. Just the scheduling of that, of when that's going to work, that is just annoying in itself. Maybe it's also because I'm terrible at schedules, but just to think through and find that out. Okay, when can I do lunch? Do you even know what I do for lunch? I usually work out over lunch. This is a huge ask. I hate lunch meetings. Yeah, you can come spot me. You can come spot me over lunch. How about that? 100%. That would be way better. Maybe there's a good question, a good leading question. I find what you do very interesting. I would love to get into this space. What's a convenient way for us to have a conversation for you? Yeah, I love that. That's a super easy way to put it. Also, just do your research. If this is actually somebody that you want to be sitting down and talking to, go listen to Matias' podcast. I'm sure he has told you guys some about his personal story before. Maybe he loves dogs. Well, cool. Can I send your dog some treats and in exchange, get five minutes of your time? Awesome. Little things like that go a long way because it means one, that tells that person that this isn't just like, oh, I googled commercial real estate in Nashville. I found this guy's name and I'm reaching out. It tells me you're actually serious about this. You've listened to the content that we've created and put out. You know a little bit about what I'm doing already. I don't have to catch you up from ground zero. One of the most annoying things ever, because I've talked about this so much on the podcast, on YouTube, on the blog, in interviews, is how I got started. It's always good when you're going on a podcast to, of course, give the audience a background. When somebody is sitting down with you and the first thing that they ask you is, how did you get your start in commercial real estate? I'm like, man, you've done nothing. You've done no research. You haven't prepared for this at all. Yeah, that makes sense. It shows that they're not truly valuing your time because that would be readily available. Let's get into the self-storage facility that you're building. It's 350 units. What made you choose self-storage and what are some of the biggest surprises that you've encountered so far in the development process? This is a great deal. It's probably the best deal that I'll ever do. At the end of the day, I've got one partner in it and he and I will cash flow $30,000 a month once it's up and running. $15,000 each. There's not a lot of deals that you will ever be able to do that in your lifetime. There's several reasons as to why we were able to structure it that way. One, it's a property that I bought back in 2022. We did a 1031 exchange from a deal that we did into this property and did a tenants in common so that we could structure it properly and then use that money to build the space out. We structured the lease that's already on the property as 10% of net profits. We don't have to pay any rent for 20 years outside of what's coming out of our net profits. It makes it a lot easier for us in that respect. It's phenomenal. I love self-storage as an asset class. You have to be very careful with it because everybody and their grandmother started flocking to that when multifamily had cap rates compressed as low as they became. I got started 13 years ago as well. Back then when we were looking at self-storage deals, you could get deals at 15% to 18% cap rates. Nobody wanted to be in that industry at all. Now you're talking about 6%, 7%, maybe 8% cap rates. It's crazy how much the values got up because of the demand. We did the research. One, it was low capitally intensive. It cost us $1.6 million to build this out. I had bought the building for $3 a foot. That's a whole different story. We could go on another tangent for that, but it was very, very cheap. It cost us $1.6 million to build it out for 350 units. It's like $40 a foot. It costs you $150 to build a home today. That's one of the reasons why we're able to cash flow so much. We have 350 units at whatever that cost per unit is and they're going to throw off $100 a month. That really starts to add up. It's also lower management intensity. We can hire a third party management company. I don't have to get involved in it at all. It's consistent. Throughout the pandemic, one of the worst recessions that we've seen, especially that hit as quickly as it ever did in terms of just rapid problems. Of course, 2008 was very similar, but you saw a 0.1% delinquency rate in self-storage deals because it's $100 a month. For most people, they're just going to say, well, I'll just keep paying $100 a month. It's not worth my time to go over there, pull a trailer, pull all of this stuff out and put it into my house. I don't have anywhere else I'm going to put it, but I don't want to get rid of it yet. That's just a great asset class. It's a building that you're converting, not building outside storage units from the ground up. That makes more sense about the numbers. That's awesome. I was going to say, the first thought I had was it became extremely popular. It was probably the number one thing after everybody got into Airbnbs. Obviously, there's blood in the water with the apartments, but self-storage has been huge. What other types of asset classes are you thinking are exciting or maybe people don't pay enough attention to or it doesn't have the sexy craze right now? I'm different because I'm a generalist. I'll do a little bit of anything. There's basically three neighborhoods that I actively invest in. That's East Nashville, Madison, which is just on the other side of East Nashville, and South Chattanooga. I get to know the neighborhoods really well. We just deliver whatever we feel is necessary in those neighborhoods. Because of that, I've got 1.5 million square feet of industrial space. I've got several hundred thousand of retail. I've got some office buildings. I've got a boutique hotel. We've got some restaurants. We do a little bit of everything. To me, it's honestly what's going to keep me entertained with my entrepreneurial ADD. Everybody always asks, what asset class is best? What's going to make me the most money? It completely depends on how you decide to approach any asset and the work that you're willing to put into it. There are guys that since 2021 have been buying nothing but office and are making an absolute killing. There were people back in 2014 when everybody said that retail was dead because of Amazon. They were buying up grocery anchored shopping centers. Today, those properties are worth two to three times what they bought them for. You can be successful in any aspect of commercial real estate. It just depends on the deals that you find, the work that you're going to put into it. Yeah. That's really well said. Because ultimately, oftentimes the profit is in the buy and the purchase. If you buy a bad deal in the best, most popular Instagram asset class, it's not going to perform well. If you buy a good deal in one of the ones that people... Everybody thought offices were going away, right? That was one that people thought was a dying asset class. Like you just said, there's people that are doing really well with it. I'm sitting in a 30,000 square foot office building that I bought in 2019 at 40% occupancy. So going into 2020, we're not even half occupied. And we've sat at like 92% occupancy ever since we bought it. We renovated it. We did it right. We approached the market in the way that I saw that there was a gap. And the building's done great. That's awesome. Yeah. What pitfalls would you say if somebody is looking to get into commercial? It's a pretty general question, but is there any major pitfalls they should be aware of? I'm going to give you a general answer. You don't know what you don't know. That is the biggest thing. You don't know what you don't know. I had no idea what I was getting into trying to run open houses or how you're supposed to properly do any of that. I didn't know. And so because of that, I couldn't do it right. Now, of course, the second we handed it off to a third party residential agent, I think it was sold within three months. So you don't know what you don't know. There's a lot of tricks to the trade. And so that's why I always say, find a partner for your first deal. You are going to learn an immense amount. Invest in your education. Go out and take the classes. There's not really a commercial estate brokerage licensing thing. We have the same license as residential agents. Go watch the YouTube videos. Shameless plug. I've got over 700 videos on commercial real estate on my YouTube channel now. They're free. Go watch those. Learn the foundational aspects of commercial real estate before you ever jump into it. Because if you make a mistake, it can cost tens, if not hundreds of thousands of dollars. Now on the flip side, once you know what you're doing, give yourself three to five years to ramp up into it. You can go and you can make $2.2 million on a flip. The scalability, the sheer amount of volume and income that you can make in commercial, residential can't rival that. Right. But you've got to make sure that you're doing it right. It's the two sides of what cap rates valuation is. It can go amazing. You do some calculations about 300 doors and if you up the rent by $25 a door, it doesn't seem like much. But then you look at the value from a cap rate standpoint, it goes up drastically. But what you're alluding to as well is there's the dark side of that. If you're not operating things well, if rent goes down, then there's the opposite effect that can make it lose a lot of value. Or even if something that's completely out of your hands happens. If you underwrote a 6% cap rate exit on a 300 unit apartment complex and interest rates went up like they did in 2022, and now you're having to underwrite a 6.5% or a 7% exit, that will completely devalue your property. You might lose money on the sale. You want to make sure that you have plan A, B, C, D through Z to figure this deal out. Yeah. I heard a lot of people had insurance problems. Insurance skyrocketed and people weren't really expecting that or backing that in either. Hindsight is 20-20. That's right. Yeah. This is awesome. We could talk, I'm sure, for a long time. But I do want to ask you about golden nuggets and you've already shared a lot and you mentioned one already. But what else do you have for us? Yeah. I'll go a little bit more in detail on that. Number one, roll your commissions into your first deal. Because you are a real estate agent, you have a license. You can get paid commissions. You are more than capable of representing yourself as the buyer group or you and your partners. Get paid a commission. Roll that in as equity on your first deal. That's what I did on my first one. I still do that to this day. Partner with your clients. Y'all are working with people that are buying homes all the time. If somebody can afford a home, chances are good they're making some money. And I'll talk to residential agents all the time and say, hey, I've got a client that owns this business and they just bought a home. They're relocating everybody to Nashville. Do you have any locations for them? You can also partner with them to go and help them buy a location. And then leverage your strengths. Like we mentioned earlier, you've got to have money, knowledge or connections. The people with money and knowledge are more than capable of doing these deals. But if they're not able to go out and find them, or if they don't want to put the work into finding them, maybe they're sipping Coronas on the beach all the time because they're at that point in their lives. They don't want to put that work in. You have a unique skill set to be able to go out and find deals and help them put this stuff together. That's great. That's very true. I love it. What about a book? Do you have any books you recommend as a fundamental read that everybody should pick up if they haven't read it already, or one you're just currently enjoying? I'm going to cheat and give you two. One is building a story brand. This has nothing to do with real estate. This is business in general. But the residential agents are... And this is something that we don't necessarily have to compete with on the commercial side. As a residential agent, your marketing is everything. Your storytelling is a huge component of that because you have so much competition out there. Building a story brand is great because it'll walk you through how to actually create a brand out of your story so that people remember that. And then the second one, which is my favorite book, I always recommend this, is Blue Ocean Strategy. It started off as a white paper for the Harvard Business Review, and they ended up writing an entire book on it. But the Blue Ocean Strategy essentially says, hey, the Red Ocean is where all the sharks are fighting over all the food and the blood in the water. Why don't you go find your blue ocean where you have no competition? You're not having to fight with other people over scraps, and you can really create your own destiny. And that was one of the most influential books that I've ever read in my life. I love Blue Ocean Strategy. Okay. Those are great. Yes. Thanks. That second one may have come up before, but I don't know if the first one has. So those are great recommendations. Thank you. It's certainly not as commonly mentioned as Rich Dad, Poor Dad. Everybody knows that one already. Tyler, you mentioned you have a podcast of where you operate, etc. How can people follow you? What socials are you on and what your handles are, websites, that kind of stuff? How can people find you? Yeah, absolutely. If you're on the podcast right now, you can find me at the Commercial Real Estate Investor Podcast. Got a big, pretty picture of my face on the thumbnail. The one thing that I like to plug is YouTube. Like I said, we've got over 700 videos on the channel. It's just my name, at Tyler Cobble. Tons of free content, tons of stuff for you to go dive into, and really learn how to get started in commercial real estate. Awesome. Well, Tyler, hey, thanks so much for being on the show. It was a lot of fun talking to you. Thank you, Matias. This was great. Thanks for listening to the REI Agent. If you enjoyed this episode, hit subscribe to catch new shows every week. Visit REIAgent.com for more content. Until next time, keep building the life you want. All content in this show is not investment advice or mental health therapy. It is intended for entertainment purposes only.
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