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Commercial Real Estate Investing [Cashflow through Double and Triple Net Leases] - YouTube
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there are all kinds of ways to invest in
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real estate we're probably most aware of
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how slipping thanks to the channels like
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HGTV what if there's an easier way to
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create stable and steady cash flow
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through commercial real estate
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specifically double net and Triple Net
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properties today I'll be covering why
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you should be investing in this asset
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class now hey guys I'm Kenny wolf CEO
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and founder of wolf investments I
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created a full time income from
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investing in real estate this has
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allowed me to be financially free into
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life on my own terms I created this
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channel to pass on that knowledge to you
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so you can do it too if you're new to
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the channel make sure you subscribe
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before you leave alright first question
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is what is commercial real estate so
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commercial real estate is any real
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estate that is leased out for profit so
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that includes office building triple net
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double net multi family farms lands
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ranch etc you guys get the idea got a
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piece of property it's part of your
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business plan is to make profit from
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that property so what does the triple
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net lease mean so a triple net lease
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means that the landlord owns a building
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your tenant pays for their rent their
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property taxes their insurance the daily
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upkeep you at the property if the toilet
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breaks they fix it it's a light bulb
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goes out they change it and then on top
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of that they also usually take care of
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the landscaping as well it snow removal
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items like that so as the landlord is
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really beautiful you're on a you know
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your eye on collecting your chest your
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job on a triple net leased property it's
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just a managed set tenants lease so
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you're worried about the how long that
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lease is and then you know are there
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baked in renewals what percentages
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increase on rent oh they're baked into
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that lease and then on when you're
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getting closer to renewal you know you
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can decide unless
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have an option to automatically extend
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it with those rent bumps if you're going
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to keep that ten in there or you have to
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go out and find a new one on a double
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nataly's we own 14 of these properties
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right now throughout the US Adamo double
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Bentley's most of our diplomat leaves
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the one that means that responsible for
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some of those items so in our case our
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worst case we're only responsible for
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the roof the structure the parking lot
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and sometimes the HVAC just depends on
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the lease so if you're investing in an
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asset class you've got to have someone
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it's not yourself a lawyer look through
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to see what you are responsible for on
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that lease all right so how does a
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commercial real estate fund work so how
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we do it up here is we create an entity
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investors come in to that entity and
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that's where their investment sits then
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and then that entity owns multiple
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commercial real estate properties so
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we've had two funds now both closed to
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new equity but those two funds first one
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owns seven stores the second fund were
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wrapping up the expenditure now that
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should be about eight possibly nine
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stores within that single fund the
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beautiful thing about that is that the
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investor sit in one entity an LLC LP
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depending on however your lawyer tells
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you to set it up and then there's
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they're spread out over multiple stores
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which is awesome right because when
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you're buying these triple net double
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net properties you don't really just
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want to buy one you got to buy multiple
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it's like buying a single-family home
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right you've got a you've got one tenant
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or fewer tenants in your building and so
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if one of those go vacant you've got to
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have multiple stores to make sure that
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you cover your mortgage on the one
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that's vacant right so that's how we do
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it that's how we dearest can rip
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investing in these commercial double net
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or triple net properties all right so
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how do you create stable study income
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from these triple net that will net
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properties pretty simple easy guys
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really easy format
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this is the way to really take out a lot
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of the operational headache through real
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estate is through these kind of assets
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you've got money coming in from your
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rent you've got to pay your mortgage and
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then what you left at the end is your is
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your net income cash flow to your pocket
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there is no operational expenses most of
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the time again you got to check out the
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least see what you're responsible for
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but usually it's very minimal so it's
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very easy math you take what your you
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know your rent is what's your interest
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rate on your mortgage you know your
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mortgage payment each month and that's
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your cash flow that comes in every
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single month depending on your depending
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on your tenant you know we look we we we
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chose dollar stores to go after as our
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tenants they're publicly traded
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companies that guarantee our leases that
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means the rent is going to come in and
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like clockwork so every month an ACH
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comes in mortgage goes out we've got a
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cash flow to do to distribute to our
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investors on a monthly basis it's a
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beautiful thing
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so does who guarantees your lease
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mattered absolutely guys ever almost
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everything hinges on your commercial
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property who is guaranteeing your lease
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and the length of that lease as well
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so if you've got you know Bank of
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America in there usually see those sell
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for four and a half maybe five and a
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half cap rates depending on location
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throughout the country
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it's your Starbucks go for five and a
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half
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you see some other retail some other
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dollar stores like that go from
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seven-and-a-half to almost up to nine
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nine percent cap rate so really varies
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on who guarantees your release now strip
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malls you're gonna see a little bit kind
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of varied of its who's the anchor tenant
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how many mom-and-pop owners do you have
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in there so we focus on solely publicly
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traded companies that guarantee our
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leases that way I can trust their
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financials and we know we're gonna get
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paid every single month it looks really
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bad for a publicly traded company to not
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pay their rent so that's what we focus
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on up here but again who guarantees your
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lease is absolutely a huge factor on the
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valuation of your commercial property so
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another question we get from time to
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time from investors is you know how do
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we operate these stores and we don't
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operate we are solely landlords we own
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the dirt the parking lot and the
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building bad state guys so which is a
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beautiful thing we don't have to mess
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with the day-to-day operational risk we
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let them you know these dollar stores or
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whoever your tenant is they do what they
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do best you can focus on your asset you
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focus on the leases make sure your rents
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coming in that very basic things very
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bit easy business model guys so we're
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just a landlord collecting rent this
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focusing on landlord friendly states
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really matter when you're investing in
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commercial triple net double net
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properties we tend to think no appear at
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Wolf Investments you're focused on you
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know rent collections things like that
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you really really cuts down your need to
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file out evictions and really kind of
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manage that lease on a monthly basis
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right so you're really not concerned
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with landlord friendly states because
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you're really hopefully never going to
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use that eviction process it can't
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happen
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it's very unlikely to happen and again
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this is a business the business
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transaction
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so you're probably not going get a lot
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of a lot of kickback from from a judge
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trying to you know enforce your lease so
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how do we choose what triple net and
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double net properties that we invest in
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I kind of alluded to it earlier but
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number one is that we focus on publicly
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traded companies that guarantee our
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leases so that you know so far we've got
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Dollar Tree Dollar General Elections
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Canada already have some of those as
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well we've looked at properties like
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advanced autopilot how to advance auto
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parts
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you know wouldn't mind doing a NAPA
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things like that right so that's what we
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tend to focus on up here it gives us
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more clarity on what their financial
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situation is can they pay the rent my
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game we're having it an awesome
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guarantor looks really bad for a
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publicly traded company not to pay the
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rent and then we also focus on assets
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that are that were essential in this
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Cove in the cove in nineteen biros issue
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that we've all had the past few months
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self you know we focus on these dollar
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stores they've stayed open every single
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day you know essential business they
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were hiring people as well it's also we
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also focus on we like that little niche
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because not all retail was created equal
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when I buy a big-box retailer today
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probably not
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I think Amazon's gonna take you know
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possibly take those down although Amazon
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now has their own you know physical
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bookstores you see those popping up as
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well so they've got Whole Foods so even
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Amazon understands that there is a need
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for people to go out drive quickly pick
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up what they want take it home you can't
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ship everything right so anyway so
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you're gonna so that that's what we
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focused on we've put in folks on these
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these dollar stores mostly because
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they're needed in these smaller towns
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that we're buying them in it's pretty
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tough framers on the ship quickly to
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those day those talents and also to in
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those smaller talents the next Walmart
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Target whatever they're going to is 30
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45 minutes away so if they need to run
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quickly to a store they go to one of
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these star stores it's kind of like the
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new general store in these smaller towns
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and these dollar generals family dollars
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are trees they've been expanding what
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they're ellington what they're offering
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now so you'll see it makes you can have
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some small produce section out there any
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things like that so definitely covers
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the basics of what folks need we've also
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looked at you know urgent care centers
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dialysis things like that advanced
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autoparts were you're gonna have to go
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to their go peruse your auto part that
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you need and then take it home so again
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not already tells bad guys we've also
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looked at some quick service restaurants
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we all seen that that's going to be a
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very needed asset class going forward
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things like that so just to be smart
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about it you know you know are you gonna
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buy a big electronics box store I
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wouldn't you know we also don't focus on
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smaller mom-and-pop a guarantor so if if
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we're buying if we're like an asset and
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it's got you know a whole bunch of small
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mom-and-pop up property or business
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owners in there as our tenants we tend
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to pass on it very very quickly because
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again it all matters who guarantees your
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lease we also look at well another big
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factor is you look at car count you also
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try to get their store sales if you can
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most cases you can so as those are the
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kind of high level items that we look
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for when we're buying these triple net
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and double net properties so what does
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asset management look like actually you
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buy one of these deals right as I
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mentioned the your tenant takes care of
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the vast majority if not all of daily
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upkeep up the property so what's your
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job that's an asset manager once you
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close this right so you know what that
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looks like for us up here is you know
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occasionally we'll get a letter from our
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tenant saying hey we need to fix this
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we've got to go verify that it actually
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is something that we need to fix if it
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is you run out not you personally
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remember work on your business not in it
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you have someone run out fix that repair
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it very quickly you want a happy tenant
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obviously they're you and them are in a
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business
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into action for a very long time in most
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cases on these leases so want to take
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care of them and really just watching
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the rent come in paying your mortgage on
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time and managing your the two big
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things that you need to focus on are you
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know your lease the timing of that one's
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that's coming to blood extensions that
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are baked in there what are the
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automatic rent increases that are on
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those extensions so that's one piece
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that you've got a relief keep aware of
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track another piece is on your loan is
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it time to refi you know we just refi
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one of our deals in Oklahoma Family
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Dollar that we bought there two years
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ago and the value appreciated thirty
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forty percent we also were able to cut
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our interest rate by about a point and a
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half which is a big deal so we were to
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pull cashed out our cash armoire
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instantly go up because of the drop in
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interest rate so it was it was a pretty
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awesome deal so how do we come across
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investing in strip Lynette and double
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net property so we've had wolf
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investments first focused on existing
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multifamily real estate to purchase here
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in dallas-fort worth we got started
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there about almost ten years ago now so
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about two and a half years ago I
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actually asked someone a colleague in
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the business Paul Peebles it's a shout
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out to you what do people do after
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multifamily right so a lot of folks
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seems there's this like national
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progression you go from single family
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work your way up to multifamily we
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jumped right into multifamily but again
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you know what's is there a natural
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progression beyond multifamily again it
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all matters what questions you ask guys
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make sure you ask the right questions to
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the right people and you get ideas like
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this so what Paul mentioned to me was
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triple net or double net properties is
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what he sees most folks do or they do
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medical office he told me in his words
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that they don't necessarily make more
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money but it's a lot less headache than
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owning an existing multifamily property
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because of the lower operational risk
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so on our acquisitions you know our
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investors are making a roughly 16
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percent a year before appreciation on
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their money about nine ten percent is
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that cash on cash and the remainder that
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five another five six percent is paying
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down that loan and then getting
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appreciation will be on top of that so
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it's slightly lower than what our
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typical multi-family asset does but we
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pay out monthly on this commercial
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triple net funds that we have going on
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guys so again it's a bit you're buying
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these for the stable steady income
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you're buying these because they're
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boring right this is the boring asset
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that you want that you go out you know
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say you've dropped 50k in it and you
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create say we hit ten percent a year
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you're getting five grand a year paid
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out monthly you know to cover your your
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your new Tesla three payment so anyways
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or whatever you want right guys so it's
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a way to create cash flow whether you
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want that to pay for your toys or to
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reinvest those funds and really kind of
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come use compound interest to your your
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benefit totally up to you okay guys so
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be prepared to have your mind blown
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right so here you again here's an
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awesome way to be super tax efficient
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this has happens when you marry an asset
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like multifamily with triple net and
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double net properties so and I'll tell
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you why sell multifamily assets at least
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for us at Wolf Investments we use Cox
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segregation it speeds up our
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depreciation so our investors most of
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the time get to write off 35 to 65
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percent of their initial investment in
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that first year I bet it's not a mistake
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guys 35 to 65 percent you get a
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write-off now can everybody use that in
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that first year most likely not in
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Triple Net properties we don't get as
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great of depreciation but we get very
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stable steady cash flow so if you have a
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multi-family asset here that is a lot of
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depreciation more depreciation than you
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can use in that first year or years
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going down the road it can offset the
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catch that we got kicking off these
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triple net properties it's beautiful
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guys so you have this awesome tax yield
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in multifamily
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and it's a big one so if you wanted to
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have to if you wanna you know shield
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other you know capital gains and
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cashflow from investments it's the
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perfect way to do it when you combine
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the two all right guys question of the
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day you guys answer this
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would you ever invest in a triple net or
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double net property leave your answers
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in the comment section below
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hey guys thanks for watching today if
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you're new to the channel make sure you
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subscribe hit the bell to get notified
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when new videos pop up we've got a new
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video launch every Thursday noon central
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see you next week
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