From Farm Roots to Fortune: Turning Chaos into Commercial Gold with Joe Killinger
Key Takeaways
- Triple net properties can offer the closest thing to true passive income, but require strict due diligence and tenant vetting.
- Real estate agents should invest early to learn faster and build wealth alongside their clients.
- Success in commercial investing starts with action, listening, and understanding value creation, not hype or shortcuts.
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The REI Agent with Joe Killinger
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The Midwest Mindset Meets Million-Dollar Vision
In this high-impact episode of The REI Agent Podcast, co-host Mattias Clymer sits down with powerhouse commercial broker and investor Joe Killinger, a man whose journey from a tiny Nebraska farm town to running multimillion-dollar investment deals in Los Angeles is anything but ordinary.
With honesty, strategy, and humor, Joe shares not just the mechanics of his success, but the mindset shifts and street-smart lessons that every aspiring agent or investor needs to hear.
Joe’s passion for real estate was sparked early by his father’s auctioneer work. But it wasn’t until a bold move to LA that he truly carved out his place in the commercial sector.
From farmland to urban brokerage, he reminds us that "commercial real estate is a startup, and you've got to show up every single day like it's your business to build."
From Agent to Investor: The Power of the Dual Role
Joe didn’t just stop at brokerage.
He went further. Much further. Now a seasoned investor, he's actively raising funds for agents to invest in triple net properties, opening doors most agents never realize exist.
"I just think real estate agents should invest," Joe emphasizes. "This is how you build wealth and understand the business faster because your money is on the line."
He breaks down the fundamentals of residential versus commercial, giving listeners a clear roadmap of which side of the industry might suit their personality and long-term goals.
Whether you're drawn to relationships or numbers, Joe shows how empathy and analytics must walk hand-in-hand in either world.
Triple Net Properties: The Holy Grail of Passive Income
One of the most electrifying segments of this episode dives into Joe’s favorite investment strategy: triple net leases.
For agents burnt out on the grind, Joe outlines the stability, cash flow, and true passivity these properties offer.
"I went from phone calls every hour to one email a month saying your deposit’s in," he says with a laugh.
Yet Joe doesn't sugarcoat it.
He walks listeners through the due diligence process and the risks, from declining retailers to fraud-ridden property managers.
Real estate might feel passive, but "you always have to manage the managers."
Creative Value Adds and Common Pitfalls
Joe opens up about past investment mistakes, like the gorgeous but disastrous three-story walk-up with no elevator.
He also reveals clever strategies he’s used in multifamily, like charging extra for accent walls or carports, to dramatically increase value and net operating income.
"It’s all about adding value creatively," he advises. "Every dollar of additional income boosts the property’s value at the cap rate."
A Wake-Up Call to Aspiring Agents and Investors
This episode isn’t just about the wins.
It’s a warning and a wake-up call.
Joe pulls back the curtain on the false security of passive investing, exposing how poorly managed Airbnbs and how blind syndication trust can destroy portfolios.
"You better be watching it," Joe warns. "If you’re not managing the asset or the manager, you’re gambling."
He urges agents to stop playing small and leverage their licenses into massive wealth-building opportunities by getting educated, staying consistent, and never giving up.
Final Wisdom: Show Up, Shut Up, and Listen
As the episode winds down, Joe delivers what might be his most powerful advice:
"Never stop learning. Never stop listening. You’ve got two ears and one mouth. Use them in that ratio."
With stories that range from gritty to gold, Joe’s journey is a masterclass in building wealth with purpose, aligning hustle with heart, and realizing that real estate is not just a career.
It’s a lifestyle, a strategy, and a legacy.
Invest in the Life You Want
Joe Killinger’s story is more than inspiring. It’s proof.
Proof that no matter where you start, no matter how rural, unlikely, or unqualified you feel, you can build an empire with the right mindset, the right tools, and the courage to say yes to your own potential.
“If you’re not building the life you want, you’re building someone else’s.”
Stay tuned for more inspiring stories on The REI Agent podcast, your go-to source for insights, inspiration, and strategies from top agents and investors who are living their best lives through real estate.
For more content and episodes, visit reiagent.com.
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Transcript
Welcome to the REI Agent, a holistic approach to life through real estate. I'm Mattias, an agent and investor.
And I'm Erica, a licensed therapist.
Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing.
Tune in every week for interviews with real estate agents and investors.
Ready to level up?
Let's do it.
Welcome back to the REI Agent, Mattias here. There's been a lull in recordings and that won't be apparent for you because we post consistently, but I haven't recorded anything for like a good, almost two weeks, probably. So hopefully we're not rusty here or maybe I'm more enthused and ready to go and talk too much.
But in that time, we went camping at a state park, which was a lot of fun. We typically enjoy the camping life. It could be tough at times for sure, but we try to get out and get the kids some different unique experiences.
And camping has been something we've done three to four times or so a year on average, I would say. A lot more during COVID, for sure. And then also Erica went to visit her nephew, went to Kansas to her parents' house and her nephew was there.
So she got to meet her nephew and she really enjoyed it. That meant she was gone for about a week and I was home alone with the kids. And that is a challenge for sure.
We talk about this pretty openly. We don't, we never, when we got married, we never had the intent of having a more traditional household. It was never something that I was seeking or she was seeking.
But definitely as my real estate career and my personality type and stuff has evolved, I've definitely been probably more 70% of the work in the house, income earning work, where Erica has been more heavily involved, maybe 70% of the household stuff, even though she still works and I still help around the house. So that transition though, from her being 70% in charge of the household to me being 100% in charge of the household is a bit of shift. Figuring out what the kids are gonna eat for lunch, have to pack the lunches, all that kind of good stuff is definitely, can be a challenge.
But we got through it and I can tell that I have a better relationship with the kids for it. It's good to do that. I had been working to have a quarterly visit with, sorry, a trip with the kids, probably the oldest ones right now, that we would go somewhere and kind of spend a weekend or at least a night together without Erica just to kind of keep building that bond.
And that hasn't happened for a little bit, but this is definitely a very bonding experience for us. So we did have a lot of fun. Today we have Joe Killinger out of LA, commercial agent into investing as well.
He is, he was a great person to talk to. You know, he dabbled in residential sales as well a little bit. We talked a little bit about the differences between the two and maybe where somebody might gravitate towards if they're getting started in their career.
But yeah, it was a great conversation. And we kept kind of coming back to the, learning the new things, learning real estate as a whole is so important. Even if you are only looking to learn about the commercial side more to be an investor, there's a lot of value there.
And that's one of the big purposes of the show. I think it's trying to get a whole more holistic picture of real estate. If you're just a residential agent, there may be a lot of things that you're not familiar with on the investing or the commercial side of things, but it is such a great opportunity for us.
We talked a little bit about the 100% bonus depreciation coming back and how that can be a huge game changer for agents. He talks about starting a fund for his agents that is kind of like a 401k. And this is, think about like, if you're investing in a 401k, you're putting your stocks maybe, you're buying index funds maybe, or you're buying stocks and how much do you really understand about those industries that you're actually investing in as opposed to, they are actually investing in commercial properties and there's a fund of their agents that are buying into this to help make the deal go and they get a return based on it. Not only do they get a good return, they get an appreciating asset, but they also get some awesome tax write-offs especially with this 100% bonus depreciation.
So we as real estate professionals have a huge advantage there and it's definitely something people should consider. But yeah, anyway, Joe, it was a great person to talk to and we are on this journey together to continue learning. If you're listening to this podcast, you are learning more and more.
Hopefully every time you listen, you're learning something great and just as a friendly reminder to go ahead and subscribe on your favorite platform, give us a review, help us grow as a grower audience and share this great content with everybody. So without further ado, here is Joe Killinger. Welcome back to the REI Agent.
I'm here with Joe Killinger. How are you Joe? Not too bad.
How are you doing? I can't complain today. Thanks so much for being on the show.
I'm excited for this conversation we're gonna have. Tell me a little bit about how you got into the wild and wonderful world of real estate.
Yeah, I started off from the Midwest and my father, I grew up on a working farm, Wallback, Nebraska, a town of 281 people. So dating pool was pretty shallow as you can imagine, but my father got to be an auctioneer and he started off doing your typical sale barn stuff, livestock, and then he got into machinery and then he wanted to do real estate. And the real estate really was intriguing to me and I just loved the way, and this is mostly farmland of course back there because this is central Nebraska.
And so I really got into it and then when it was time for me to go off to college, I decided to get my real estate license and as you can imagine, I was 18, I looked like I was 12 and Wood Brothers Realty in Lincoln, Nebraska, I just went out there to interview and one of the, Pace Woods Jr., said, okay, we can give it a try and see how it goes. And I just fell in love with the business, and I was really learning how to do farmland there and residential. I didn't like residential, but it was just interesting learning.
The people were interesting and were so welcoming and I just loved the way to put deals together. Then I'm moving to Los Angeles, I ended up in the real estate auction business because it seemed familiar, turns out it was completely different than the way I grew up, of course. And I just loved the business and I eventually gravitated to doing some residential and then I'm like, well, this is definitely not for me.
And I got into commercial real estate, so I do brokerage and I do investing as well. Matter of fact, we are just starting to raise a small fund to help some of our agents in our office invest, so.
Oh, that's cool.
Yeah, it's fun. You know, there's a new law that's been proposed that used to be, and don't hold me on this for, was it 250,000 you had to have or a million net worth and 250? And then before you could invest.
Well, they're removing that, you just have to have experience in or a knowledge base in real estate for you to invest. So I think that's gonna really open up a lot of doors for a lot of people. And I just think real estate agents should invest.
And so this is the way we get our agents are gonna be able to invest right alongside of us. And so, yeah, I just love the industry. I love seeing young people get into the industry and really grow their business.
And that's what the joekillinger.co is really all about is helping people get into the business or that are in the business and have been struggling a bit, help them figure out their path.
I love it. Joe, I actually had not heard that, that they were changing that, the million net worth or was it 250,000? Is that, was that part of it?
It's proposed, it hasn't passed yet, so.
Not part of the beautiful bill, that's something separate.
I don't think so, I think it was something separate, yeah. Yeah, it was, and I only know, I heard it on the news and I'm like, oh man, that's gonna really open the door for our agents. And then our partner in our fund that we're raising is a real estate attorney.
And he goes, there's nothing on this yet. And then he emailed yesterday and goes, oh, it's proposed, it's not in stone yet. So, you wanna watch out for that.
Yeah, that's interesting. I actually heard maybe a year or so ago that they were thinking about, or people were expecting maybe the limit to increase because having a million net worth now is way different than it was.
Yeah, exactly.
So, yeah, the expectation was that probably the bar would be set higher, not decreased. But it does make sense that if you do have that experience, if you are, you know, seasoned in the space that you're wanting to invest, that you should be able to.
Absolutely, if you've got the background and understand how to do the due diligence, then yeah, you should be able to. Lord knows, I mean, how much do you know about crypto and how much do you know about the stock market if people are investing in that? You know, and I think real estate, you know, it's just, it's a better investment.
Yeah, yeah, I mean, doing a fund or doing a syndication is definitely something that I like to talk about in this podcast space, because I don't think a lot of agents know what those things are. And I think to better understand that and better understand the power of being a real estate professional and taking advantage of these big commercial deals, or, you know, a fraction of them, by investing in a fund or a syndication, that you are able to, you know, greatly offset your taxable income. And especially now that this part, I believe, has been passed with the big, beautiful bill of having the 100% bonus depreciation coming back.
And I also, with that, I could see a trend of Airbnbs going up again, because of the high income earners wanting to do that loophole of being able to 100% bonus depreciate that asset and offset their income, their earned income, not just their passive income. So it'll be interesting to see what that does in our markets.
Yeah, well, I just think it's gonna open up a lot of doors because, and I think, you know, as somebody that's really learning the business, if you invest, trust me, you learn a lot faster when it affects you. It's your money that's on the line. Boy, do you listen a lot better.
Yeah, absolutely. And you know, one of the biggest reasons I invested in a syndication to begin with was because I wanted to learn more about it. And I was like, you know, I need to put my money there.
If I wanna one day lead these, if I wanna do these, I need to experience it on the other side. And it's been an amazing experience. I did have a question for you about the residential versus commercial space.
And, you know, I've definitely heard that a number of times that there's just kind of like, I don't wanna deal with residential. And I think the residential people might be intimidated by the commercial. Can you maybe speak to that a little bit, break down what it is about the differences and maybe who would be better suited for both?
It depends. You know, I see, and I've had bad luck taking residential agents, converting them to commercial agents. They typically, you know, this is, you have to come from the investor mindset.
You know, where's the return at? And, you know, as a commercial real estate agent, you're looking at, you know, investor profile, understanding what your investor wants, understanding where you're gonna get that return for them. Maybe it's not here.
Maybe it's in another state. You have to understand, you know, each asset class. And if you're gonna focus on, which I always tell them to focus on one asset class, which makes it a lot easier, but there's just a lot more to it.
When I was doing residential, I learned homes on the West side of LA and then the finishes. And what I hated about it the most was every time I did a deal, I had to go find a new client. Whereas in commercial real estate, if I get with a good investor that's buying properties, I can now build a business because they're gonna be buying multiple properties every year or get in retail.
I've got, I do a lease or office, whatever it is, I'm gonna renew that lease in the next few years again too, if I stay in touch with them and, you know, stay in touch with them. And so it's just a real opportunity to really build a bigger business there. But personalities, I mean, I think you just have to be, for both of them, you just have to be an entrepreneur.
I think there's these TV shows that are on are probably doing the business a disservice because that's not the way it's really done. It's not. We're not going into a restaurant and talking on the speakerphone and negotiating a deal there that, you know, you're not making those kinds of decisions without contracts and yeah.
Otherwise there'd be a lot of lawsuits. But, you know, it's, both of them are incredible businesses. It just depends on, you know, commercial real estate is very analytical.
You have to understand how local, yeah. You have to really understand how to analyze properties, you know, break them down, you know, forecast. So it's just completely different.
And I started doing residential and it just wasn't for me. But it's not that I enjoy it, but I knew that I really wanted to build a bigger business. And I knew I could do that with commercial real estate.
And that's why, so I have Commercial Brokers International in Los Angeles. We have 21 agents and we also have an affiliate network that we do deals all around the country with.
Okay. Yeah. Well, I was gonna say, is it maybe, if you lean a little bit more on the analytical side versus the relational side, maybe that's where you could think about if you're looking to get into real estate, which way you wanna go, you have to have both.
Like, yeah.
Yeah, you do have to have both either way.
But if you're preferring to deal more with numbers and that kind of thing, maybe that's more commercial if you're a very analytical type person. And if you wanna deal more with people and emotions and anxiety and all that kind of stuff.
Oh, we still get that in commercial, trust me. I'm sure, I'm sure. But yeah, no, it's just, you pick your poison and commercial real estate, yes, it's more analytical, but you still have to be able to deal with the clients.
You have to understand empathy and how to understand where they're coming from. And it's gonna help you win negotiations, of course, because you understand where they're coming from, why they feel the way they do, listening, and that's very much so the same as residential. But commercial for me is just, we find that those people are typically a little bit more analytical.
And in commercial, we're in the office most days, whereas I walk into a residential office right now, there's hardly anybody in the office.
Yeah.
Yeah.
Yeah, maybe basing decisions off of numbers versus making decisions based off of emotions is maybe also a very broad, not perfect way to say the two different worlds, but it is fascinating. I've done some commercial, just have not, that part, we're in a small town, so it's not like that we have an immense amount of commercial property and not a ton of leases to sign, that kind of thing. So residential's been my game.
Well, I think commercial, there's a huge opportunity for the younger generation right now, because the average age of a commercial real estate agent is between 55 and 62, and so a lot of people are aging out. Now, younger generation, we're born with these things in our hands, right? Yeah.
You can do digital marketing, you know how to write a blog, you know, with AI, writing a blog, and AI is a tool the way it can really help you put your analytics together, put your packages together. I think it's a huge opportunity for the younger generation to get into commercial real estate and take over a marketplace, because if your competition is 60 years old and they just cold call and live off referrals, and you go in and you're putting content out and you're writing blogs about it, you're out networking in that market, you can take over that market pretty quickly.
Yeah.
I think there's a huge opportunity. I mean, it's, I look at getting started in commercial real estate, actually any real estate, it's just, it's a startup, and you have to have that mentality, you have to think, I'm gonna open my door at 8.30 in the morning, and I'm gonna close it when I'm done, and you know, and get everything done. It's gotta be, you know, you gotta focus on not just outbound leads like we've done in this business, in commercial real estate forever, you gotta focus on inbound leads now too, because the opportunity exists.
Whereas, well, not with all firms, but you wanna make sure if you're getting started, you find a firm that'll allow you to market yourself, so you can get inbound leads coming in, because those are gonna close, you're gonna close a lot more of those, and so inbound and outbound leads, writing blogs, getting an email program going, having a great CRM, having that great tool for both residential and commercial, critical, because that CRM is your data, that's your base for your business.
Yeah, yeah, and really learning how to actually use it.
Yeah, you know what, that's the thing. You gotta find one, and I was on Salesforce the other day, I'm like, good, I'd never been on that one before, and it was so confusing to me, but the person using mine was whipping through it, and she has all these tools she knows how to use, that just has increased her business significantly because she's using the right tools, and there's so many tools out there right now, and AI is growing, you're finding that there's just a lot more opportunity, and I mean, even with the robocalls right now, they're, you know, six months ago, you could tell it was AI, now, I mean, I just think where we're gonna be with this in the next year, you're not gonna be able to tell at all.
Yeah, it's pretty crazy.
Yeah, you can just sit at your desk and create your content where your system is dialing, and then when somebody answers, you just start talking, and so, yeah, it's really gonna revolutionize commercial real estate.
Yeah.
Which is due, by the way. I think we're well overdue.
I think the number one rule with CRMs is to have something that you use, actually use it, and it can be simple. Like, I think that there's a lot of advantages of some of these fancy tech. I'm using one now that is very robust, and I love playing around with automations and all the possibilities there, but at the end of the day, like, if you're not actually, you know, reaching out to people.
Actually, it doesn't have a spreadsheet or if you use, you know, the fanciest Salesforce system.
Yeah, you know, it is, you gotta get in action. You know, action gets the deals, and, you know, I talk to so many people that have been struggling for a long time, and I'm just, you sit down and you say, well, what are you doing? They're cold calling about 60 calls a day.
They're doing some networking. And I talk to them, I go, you're not doing an email program. You're not doing any kind of content creation.
You're not writing blogs. You're not, you know, they aren't doing any of that, and it's a shame because they have a great service. They just, you can have the best service in the world, but if nobody knows about it, you don't have a business.
Right.
You know?
It's totally true, yeah.
Yeah, or if you've got the worst service in the world, but you're a great marketer, you know, you still don't really have a business, but more people know about it.
We can probably both think of examples.
Yeah, yeah, for sure, right? Yeah, no, it's important. I put on the JoeKillinger.co under learn, I put together a booklet, it's all free, and it's your first 90 days in commercial real estate. And I just think it's important for these, for people in our industry to understand that there's, you just gotta keep activity going. There's plenty to do. Actually, I put another booklet up on there because when we launched this commercial brokerage company, Commercial Brokers International, we went through all, I put down all the mistakes we made, which was plenty, because we didn't, we were agents, and we decided to start our own company.
And we made a lot of mistakes. I put that up there too. So those are all free, you can go on there.
On the website, there's books that you can get that are all been suggested or recommended reading by other investors and agents. So it's all there and it's all free. I just, it's a platform for agents and investors to use.
And there's documents too. If you need documents for signup sheets, for tenant walkthroughs, all that stuff is on the website. Just print it off there if you want.
Awesome, well, thanks for that. We'll definitely have that in the show notes as well. But I was curious if you thought on this.
I mean, if let's say you are an agent that is wanting to get into multifamily, like wanting to invest in multifamily. Does it make sense to niche down as a multifamily specialist? And how do you think you walk that line of wanting to buy some of the opportunities that come across your table?
Yeah, if you wanna be a multifamily investor and you're a multifamily broker, you wanna just focus on the asset class because you can create a lot of opportunities. Now you have to be careful if you end up buying a property in your market and it doesn't get marketed properly, the owner might come back at you and say, hey, you bought my property and you didn't market it very well. So I need to get more money out of you.
And then you got a problem. But understanding your market is every, it's really no different between a broker and an investor. You wanna pick an area and know everything about that area and really be the best at it.
So if you're a broker and you're multifamily and you're in Virginia somewhere and you say, I'm gonna do multifamily. I want you to pick out an area, a couple miles of each way. And I want you to know everything about that area.
I want you to know how many properties are on the market right now. What's the average days on the market? What's the average list price?
What's the average sale price? What's the average size of the building? Parking, all of it, know everything about it.
And that plays through to the investors too. If you know all that, a lot of your due diligence is done upfront and it can save you a lot of headaches because when I bought multifamily properties in Los Angeles and in Dallas and a lot of the properties, well, 100% of the properties we bought in Texas were because the out-of-state owners were losing the properties. And because the property management companies were not, they were, I mean, I had one that I'm sitting there, we're in escrow on it.
I'm sitting there with a manager that's an onsite manager at the time. And she goes, are you gonna keep me on? And I said, well, no, we can't.
I said, what you're earning is double the industry in this market. And she goes, no, I'm not. And I showed her the numbers.
She goes, well, I'm getting half of that. She goes, the company is, the property management company is keeping the rest. And so, and we kept digging and we found out there was a handyman there that was working on another one of that property management's company, but living for free in that building.
And they had a assistance manager living on that property at a discounted rent. So, yeah, it was a mess. They were getting their ass handed to them.
And so we kept the maintenance guy, but not at a discount. And he worked on our property only. The manager got the salary that she was getting.
She stayed and got the salary that she was earning. And we didn't need the junior manager. For 70 some units, we didn't need all that staff.
And then we just brought in another part-time maintenance guy and cut all those expenses. So even when you become an investor, you wanna get out there and really boots on the ground and know what you're doing because people, I mean, there's another, we've got a horse of properties that we brokered where we started looking into books with our investor and there would be showing vacant units. When you go out to the property, the unit is occupied, but the onsite manager was collecting the rent for herself.
You know? Yeah, so. Yeah, yeah, hey, I'll let you in here for cash.
Matter of fact, a big discount. I know it's 1,200 a month. I'll give it to you for 900, but you just pay cash.
And yeah, and then there was like five people living in there too, so. Oh, man. Yeah, it's really being smart about your investment.
It just, it makes me leery when I hear people say passive investing. I just think that, I'm like, real estate? You know, you better be watching it.
You gotta manage the managers if you have them in place, right?
Yep, yep.
Yeah, that's crazy. Yeah, how are you seeing that multifamily market now? I know that we kind of went through a big, a really rough spot.
Are we through it? I mean, so, if people were not sure.
I think that we, again, this depends on the area. Now, in Dallas, there's so much inventory coming on the market. And stable, they're all stabilized.
You know, LA, it's pretty tough right now. Nobody's really, there's not a lot of activity. You know, people are thinking that there's gonna be a bunch of foreclosures, which we've been hearing about now for, what, two years, three years?
Right, right. Yeah, that's not, that's not really happening. But, and honestly, the fires that we had out here filled a lot of the buildings up.
So, you know, that changed that in this market. But as far as like, you know, Midwest, you're seeing multifamily starting to really pick up because a lot of the inventory that was, looked like it was being overbuilt is being absorbed. And so you're gonna start seeing more development start to happen again the way, look, in certain markets.
Some markets just have way too much inventory. But we're not actually in multifamily right now. We had a syndicator, and this is another thing to watch out for, a syndicator that came to us.
And he goes, I love your portfolio you have here in Dallas. I'd like to buy it. It's in an area I wanna be in.
It wasn't for sale. And he goes, well, what do you want for it? We told him, and he goes, okay.
Because we planned on demoing the building and adding more units and, you know, rebuilding and adding more units and then re-tenanting. But he wanted them, and it turns out he was a syndicator and the contractor. So he front loaded everything.
And I'm guessing all the work that he put in was pretty labor intensive. So he got his money, and I'm sure it's back to the bank now, all the profits. So you gotta really vet the people that you're investing with.
Yeah, yeah, there's a lot of people that were in hot waters and people are doing capital calls and stuff. And the main reason is people didn't project the interest rates going this high and they had short-term rich debt that changed drastically so their numbers didn't work anymore. And that's what I was referencing to when I said going through a rough patch.
But it's interesting to hear that you say that it's not really, you're not seeing them actually come into foreclosures, so.
Not many yet, there's some. I just asked for, so I have a ICON Capital Advisor, we have a commercial real estate mortgage company. And I asked for a list of foreclosures the other day, and he goes, there's not many for LA County.
And it was, there was less than 10 right now. And so that was shocking to me. That was for this month, but yeah.
Okay.
Yeah, I was surprised.
So then what asset classes are you focused mostly on?
Triple net right now. So we were doing property management, we weren't planning on selling the properties, right? But when this guy came in with his offer, like, okay, well, I'm saving a ton of headache and I'm getting the money that I want, I don't have to go through the development, so yeah, we'll sell.
And then we're like, well, now what do we do? Because multifamily was too high in Texas at the time. And so we bought some triple net stuff.
And that's really what our fund we're raising now is for triple nets. And single tenant property sales.
Yeah, for those that aren't aware, it's kind of the Holy Grail. You don't have to really take care of much when a triple net, I mean, you explain it better than I can.
Yeah, no, it's just, I went from phone ringing all the time to I get an email once a month going, your deposit's in. But it's again, you have to vet it out, know what you're doing. I really love the asset class and that's what our fund is for.
We're gonna start buying a stabilized triple net. And then our next fund will be more higher risk. Stuff with like three years left on the lease, four years left on the lease.
And then we'll re-tenant it with clients. My business partner and the CEO of our commercial brokerage company, George Pino, he does nothing but triple net deals around the country. I think he's done them in 39 states.
And so I think there's a big opportunity for us there. And a lot of people don't realize that the triple net deals are, they're the most liquid asset as far as real estate goes because you put it on the market, price it right and it'll sell pretty quickly.
That makes sense. I mean, it is very, yeah, it can be very stable. If you do have like a 10 year, 20 year lease on it.
And again, they're taking care of maintenance and taxes and insurance and all that, right?
Yep, yeah, we still stop in. I still stop in and check on the properties. And I was at one of the Jack in the Boxes that we own in Allen, Texas, which Allen, Texas is one of the fastest growing cities in the nation.
And the bathroom was dirty. So I called the owner and said, hey, your bathroom's dirty. And he goes, I've never had a owner of a property stop in before.
He goes, this is new for us. And so I went and met the manager and she said, I'm on it. And I've been back in there several times since, spotless.
Nice.
Yeah, and so even with the triple net deals, we stop in. It just doesn't, it's the money. But again, it's a due diligence.
You wanna be on a signalized intersection if possible, or at least you wanna be on an intersection. You wanna make sure there's a great traffic count, great walk score, what's your competition look like in the area? Are there any churches, schools, or synagogues, whatever it is in the area?
And you just, you gotta do your due diligence and buy right.
What would you say, how are the cap rates compared to multifamily typically on those kind of deals? And do you see the more work with the multifamily asset class having a higher return or is it about the same?
Higher return because you get the turnover in the multifamily. Every year you can take it up a little bit. Sure.
It'll drive it up a little bit faster, but the less work for the single tenant at least, and I'll take that all day every day. I mean, you still get your bumps every year, but just typically not like in multifamily.
Yeah. But I love both assets. And right, I mean, you bake in the rent increases into the lease upon initial signing.
Yeah.
Yeah, you could really think about, I don't know, I've heard it described as like a real estate investing pyramid. Like if you're looking at forming a base with maybe strongest cashflow or something like that, and then kind of moving up the pyramid. And if you are looking to have more freedom to be more passive, right, that might be the perfect solution to work towards.
Yeah, that's what we're gonna do with our funds or just build a, like you said, a pyramid. And we're gonna have the base that's gonna be the low risk. I mean, obviously there's still risk, but lower risk.
And then the next one will be higher risk. And then maybe the next one will be higher risk. I mean, we had one Del Taco out in Inland Empire, we've owned three times.
And our tenant wanted some money once, so we sold it. And then as it was a couple of years later and the lease was coming, getting close, I think there's three years left on it. We bought it back, renegotiated the lease with Del Taco.
They remodeled the property, then we flipped out of it, just kept going, kept coming back. And yeah, yeah, it was quite a deal. And, you know, but it's a great asset class in order to, we've got a Chase Bank right now that is dark, meaning that the Chase Bank closed down.
It closed down about two months after we bought it and we knew it was coming. But there were seven years left on the lease at the time. And that was a couple of years ago.
And we're gonna re-tenant it with either a new hamburger chain or chicken chain or a gas station wants it. So either way, I can take it and we'll get a buyout from the landlord, current landlord or tenant, and we'll take that money to redo the property and have a brand new lease with a brand new property on it. And higher rent, yeah.
Yeah, that's great. What would be the risks of triple net lease investing?
Rite Aid's a prime example right now. They're closing down across the board. You know, there's always that, that the business ends up closing down.
Or the area, you know, something happens in the area. You know, we're here in Los Angeles and the smash and grabs were, you know, they were getting hit pretty hard. And so we've got a, we had another pharmaceutical company end up closing down.
They just couldn't keep the doors open. So you really gotta make sure that you're looking at, you know, what's going on in the area. They've got that turned around now.
That was just at the peak of everything that was going on. But you've gotta really know what's happening and understand the tenant, understand the client and their financials. Because if you're gonna buy a triple net deal and you're buying with a franchisee that has three properties only, you gotta, that's pretty high risk.
You wanna have a hundred, you don't want them to own a hundred properties or more, or a, the franchisor owns it. And you can get a personal guarantee, that kind of stuff. Very, very powerful.
I mean, when you get with a national tenant that gives a personal guarantee, the cap rate is, you know, not that great. But there is a ton of security there.
Yeah. And I would imagine the depreciation's the same. Yeah.
So that's a benefit as well. Yeah, that's fascinating. It's definitely something I have not invested in yet, but something I definitely.
It's a little more expensive to get into, but, you know, and again, you've gotta know what you're buying. You know, we had one client that wanted this, in the middle of nowhere, Wyoming, wanted this kind of off-brand tire company. And it was kind of like the Econolubin II.
And we're like, why do you want that? It goes a cap rate. I just love that property.
I love that area. He goes, I know it's gonna be booming. He was right.
You know, everything built up around that property. I think he still owns it. You know, and that was like 10 years ago.
Wow. Yeah. Made a killing on that little property.
Yeah, that's awesome.
But he knew the area, you know, so.
Yeah, it definitely helps. And yeah, I think like, you know, you say it's more expensive and everything, but that's again kind of the, where I'm talking about like the investment pyramid, where you kind of, you know, are able to get into the higher asset classes as you go. But, you know, starting off maybe in the startup phase, like we talked about with sales, right?
I mean, you're grinding, you're, you know, maybe doing borrower deals where you're flipping a house and keeping it as a rental to make the numbers work better. Maybe you're doing, making that also into an Airbnb, which is also more labor intensive, but then can overcome the higher interest rates so that you can actually get some cashflow on it. And then over time you start getting equity and you maybe wanna roll that equity into something a little bit more sophisticated, a little more expensive, like that kind of deal or something a tier below that and you kind of keep working your way up.
Absolutely. You know, you wanna, when I was, I was interviewing a guy and he had, I think 30 Airbnbs around, I wanna say Illinois and Idaho. And I'm like, what's the plan when everything slows down?
This is right during COVID. Well, I'll just, I'll keep them. I'm like, yeah, but if you're not getting, keeping these homes filled out, cause he was taking one, leveraging it, buying another, leveraging it, buying another.
You know, you gotta be smart about how you do it. And they were just blowing and going. And it's just like the investors you saw over Twitter during COVID with, you know, the two, 3% interest rates and posted about how they bought yet another 200 units or 300 units.
And, you know, they're doing this every few weeks. And, you know, with Icon Capital, we got to see some of these guys numbers because they were looking for a loan. And I'm like, when interest rates go up, this isn't gonna work.
Yeah.
But you gotta start thinking about long-term because you have to refi, which you will in commercial. You know, it's gonna be, you've got a refi and you gotta put those numbers in there. So, but banks have been extending a lot of that stuff to make it work because they don't want to back on the books.
Yeah, the Airbnbs as well have been, you know, the people were often doing, using numbers before there was that boom. So like, you know, like we're analyzing based on this much occupancy, but now there's, you know, 100% more Airbnbs in the area. So like the occupancy numbers aren't gonna be near as good.
So I definitely, I was nervous about that market. We have a local resort, seeing if we'd, you know, see a flood of failed Airbnbs come. But yeah, so far it hasn't happened.
And, you know, this whole 100% bonus appreciation may increase the interest in buying them. However, that doesn't really solve the problem of high interest rates and maybe way less bookings or shopping is good. And people also didn't travel internationally when it was a little bit as much.
And so like they were wanting to go to a private Airbnb kind of thing, seemed better than a hotel. And so it's definitely a shifting market. And I think, yeah, it was, at least they would have it locked in on a 30 year mortgage probably, right?
That would be a benefit of that low interest rate time. But yeah, could definitely be having some people in hot waters because of those elements.
Yeah, it's anything with real estate. You always gotta be thinking of how can you make money? You know, when we were investing in multifamily, we would buy a property and we would do things like an accent wall.
So you'd have five different paints, paint colors that they could pick from and have like above there. If it was a fireplace, they had that wall, they'd wanna have a different color, a custom color in their apartment. You charge $15 a month extra for that.
Takes you an hour to paint it, $15 a month while they're there. That was a pretty good return. Carports we put in were a very good return because we were buying 400 unit properties and they didn't have any carports.
We'd put like a third of the number of units we would put up carports for them and then we'd charge extra for the carports. And in Texas, when it was that hot or snowing, very little snow, but occasionally it could, people wanted it. So that wasn't an extra because we could build those things for so cheap and rent them out and added a lot of value to the property.
You always have to be looking for ways to add value.
Yeah, absolutely, especially in the commercial game. I mean, that's, if you look at how cap rates, the magic of cap rates and that operating expense lower and the profits higher, it's pretty powerful. And that's how those syndications and the funds work, right?
I mean, that's why it's such a great win-win and such an awesome opportunity you're providing your agents. That's really cool.
It's fun, it's fun. It's just, I love to see, I always wish somebody did that for me because getting started was so difficult. And I bought my first property and I thought I overpaid for it.
But fortunately here in Southern California, we get a good amount of appreciation and we owned that property for 10 years and bought it for 275, sold it for just over 2 million. We just were in an area that was up and coming.
Sure.
And in that 10 years, it really took off. But then our second property was a three-story walk-up in Koreatown with no elevator. So there's a lesson for everybody.
Don't buy a three-story walk-up because nobody wants to haul groceries up those steps.
Yeah.
That was hard to keep up. I mean, the building was beautiful, but nobody wanted to carry groceries up three flights of stairs. So that was that.
We got out of that when we broke even, but that was, I think our ego got a little big because we did so well on the first one. Second one, about got our ass handed to us.
It's almost harder to have the grand slam at the first at-bat.
Yeah, it is. I was like, geez. We were lucky.
We were lucky. We got out.
Yeah. I did pretty well with the first flip I did. And kind of had that in the back of my head.
It's like, okay, you can't get too ahead of yourself now. You can't get the ego going that you're gonna print money no matter what you do. But, yeah.
Well, that's awesome. I'm curious if you have any golden nuggets you'd wanna share with the listeners that could be about commercial real estate, could be getting started in commercial real estate and real estate in general, investing, sales, anything that comes to mind.
Yeah, I think if you're getting into real estate, you need to come with an entrepreneurial attitude. What you're seeing on TV is not the reality of it. You've gotta come in and put the time and effort and never stop learning.
It's just, it's a great, great business, both residential and commercial. I do, I love commercial the most, but residential, I had fun in it. And you've got to just come with the right mindset.
And it's a business that you can really build for a great career and have a great career path. And a great family life too. You can do it right.
And there's so few industries that will allow you to make this kind of money. So early on in your career. I mean, I've got one agent started last September.
He's done four deals already. And so they're not big deals, but it's more than he was making in selling, doing retail. But he's doing everything that we're telling him to do.
He's doing the cold calls. He's doing the content creation. He's writing the blogs.
He's doing the show. He's doing the block program, which he's a retail agent. He's doing everything.
And then never stop learning. And you know what the biggest thing? Never stop listening.
You know, as a real estate, we're all salespeople, right? So we want to talk. So we say something and then somebody else started talking and we started talking over them.
If you listen and then respond, you're gonna hit rates gonna go up a lot higher, a lot faster.
Yeah, that can be such a good sales tactic as well to listen more than you're just talking.
Yeah, my dad always said, he goes, Joe, he goes, just shut up. He goes, you got two ears and one mouth. Keep that in mind, buddy.
Yes, dad.
With the theme of learning, I'm curious if you have any favorite books currently or ones that you think are just fundamental that everybody should read if they have any.
Yeah, I interviewed Chris Voss. He was the FBI lead negotiator, hostage negotiator. And he wrote a book, Don't Split the Difference.
And I think every salesperson should read that because it's all about negotiations and how empathy plays into it and listening. And it's just the whole gamut of it. And he's really great on YouTube as well.
So, but yeah, and actually the book is up on, it's under recommended reading in my website under joekillinger.co. You can go in and get the book there. It's a great read. It's not that thick.
He even has a TV show coming out now. So he's really on a roll.
Nice.
Yeah, check out Don't Split the Difference.
I think he also maybe did a masterclass. I think that's a subscription you can get where you can kind of go over the strategies as well in video format if that's of interest. Yeah, that's great.
And then I guess you've mentioned your website a couple of times. Is there anything else you want to plug, social media or anything like that?
Oh no, you can follow me on Instagram under @joekillinger, LinkedIn joekillinger, Twitter @joekillinger. It's pretty easy to find. Yeah, please give me a follow.
We're posting content about how to grow your business in real estate every day. And the YouTube channel under my name, we put out a video every Monday. We actually didn't this Monday because I'm working on something special for next week.
But it's under @joekillinger. You can go in and find it. And it's all about how to grow your real estate business for residential and commercial real estate agents.
So yeah, check those out.
Joe, thank you so much for doing that for the industry. And thanks so much for being on the show.
I appreciate you having me on. Very much appreciate it.
Thanks for listening to the REI Agent.
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