Working Capital The Real Estate Podcast

Commercial Real Estate Spotlight with Mike Bull|EP18

Sep 2, 2020

In This Episode

Michael Bull, CCIM, founder and CEO of Bull Realty, is an active commercial real estate advisor. He is a licensed broker in nine southeast states and has assisted clients with over 6 billion dollars of transactions over his 30-year career.

Mr. Bull founded Bull Realty in 1998 initially with two primary missions: to provide a company of brokers known for integrity and to provide the best disposition marketing in the nation. Now Michael and his brokers provide disposition, acquisition, project leasing, tenant representation and advisory services in all major property sectors. Michael personally leads a team focused on office investment sales.

You may know Michael as the host of America’s Commercial Real Estate Show. The popular weekly show began broadcasting in 2010 and today is heard by millions of people around the country. Michael and other respected industry analysts, economists and leading market participants share market intelligence, forecasts and success strategies.

In this episode, Mike discusses commercial real estate, the process of finding properties, how COVID-19 affects the real estate market, his thoughts on capital markets, debt markets, and much more!

Quotes:

  • “We‘re confident that we can provide as good or better services than anyone in the world and that’s a good feeling.”
  • “When you’re an agent, you really already own your own business.”
  • “Make sure you put in a lot of hours realize you’re starting your own new business and you’re competing with people that are good at what they do.”
  • “I felt like I had to start my own company and so I did. 

Resources and Links:

Mike’s website https://www.bullrealty.com/

Mike’s podcast https://commercialrealestateshow.com/

https://www.commercialagentsuccess.com/

 

Transcript

Jesse (1s):

Welcome to the Working Capital The Real Estate Podcast my name’s Jesse Fragale. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment or raising your first fund joined me and let’s build that portfolio one square foot at a time. All right, ladies and gentlemen, I have mr. Michael Bull on the show today. Michael is the founder and CEO of Bull Realty. He is an active commercial real estate adviser. He’s a licensed broker and nine count of nine Southeast States and has assisted clients over $6 billion in transactions over, I believe Mike just said 35 years are, you may know him from America’s commercial real estate show.

Jesse (42s):

That’s where, where I first heard him and the popular weekly Show began broadcasting in 2010. It’s crazy to believe now the podcasting world, and today is hurt by millions around the country. Mike, how’s it going today?

Mike (54s):

Great. Jesse has been a fantastic day. Thanks. How’s it going there?

Jesse (58s):

You know what? I can’t complain in the, weather’s getting a little nicer and a, you are starting to see people getting back to, you know, quote unquote normal.

Mike (1m 6s):

Yeah, yeah. That’s what we need to get through this COVID stuff to get back to the normal life.

Jesse (1m 10s):

Absolutely. Well, listen, Mike, thanks again for coming on the show, I thought a, you know, you’d be able to provide, you know, such a unique perspective, given the fact that unlike most of the guest’s that we’ve had on the Show you come from from the brokerage world and specifically commercial real estate. So maybe what we could do here is a talk a little bit about, you know, how you got into, into this crazy real estate game to begin with a, what drew you to it. And it, what was that a, what was that experience like?

Mike (1m 41s):

Well, when I was in school, I needed to work. I was going to college at night and a friend of mine told me about an opportunity to work for an apartment rental company. For the hardest thing we had to do is take out the trash once a day. And I said, that sounds good. And the, so I applied got the job and they taught me how to manage apartments and a, we, we a about stress departments and we turn them around. And about a year and a half, I kind of outgrew that company. They quit buying properties and another property management company hired me to run that one. And when I was 19 and a half, so I started running that one. I grow up, I tripled the size of that company in property management and a mainly apartments as what we managed.

Mike (2m 23s):

And then he got my license at 19 or 20 to a, a, I started selling apartments mainly at 19. My first cell is a 20 unit apartment building. And then finally I realized I was making more selling apartments an hour a week, and I was managing apartments 50 hours a week. So I quit managing them, went into full time brokerage at 22 and, and then never stopped then. And I think what drew it to me is a ministered intoxicating business. I mean, we help people make money or save money. They love us for it, and we make money doing it. You, we’re not trapped in an office all day. We have different clients, different properties, and, you know, we can use our ingenuity in our training to add value to people as it’s a lot of fun.

Jesse (3m 10s):

Yeah, for sure. Well, it’s a, it’s kind of interesting. You kind of did the commercial real estate thing and, you know, number of people, a, you know, they think about commercial real estate. Most of the time they know what it is. They kind of a have an idea, you know, it’s those offices, it’s those retail fronts, you know, what was the thinking for you? Was it just that you found yourself on the commercial space and the property management, or was there a point where you, you kinda made a decision to go into commercial rather than residential real estate?

Mike (3m 39s):

Well, residential, I found a was more, I didn’t see how I could add it as much more value than the next lady or guy, you know, in residential, you put the house in the multi list and maybe you do a few things. And I know residential agents are probably going now that he’s wrong, but I just didn’t feel like I could, I had too many competitors. I couldn’t outperform them, but I found in commercial real estate and I just need, there’s a lot of skills you need to really hone two, two, and a lot of value. And, and it’s a more logical to me. You know, if someone tells me and I’m going to buy a house, cause the, a trim colors, they are wrong. I don’t know I had the eye that I can’t handle that.

Mike (4m 21s):

But if you tell me you don’t like the return or something logical, I can manage through that and, and, and help you see otherwise or help you find what you need. So I just found its a lot more logical and, and also its a lot more repeat business, write you saw somebody a deal and, and as soon as they do they buy or sell are like Michael what’s next, you know? Ah, so I’ve just always liked it. The only times I did sell a few houses when I was young, every time something crazy weird happened, just I just hated it. And then I only did it for a few friends or close clients that, that really bagged me and that it Commercial is just more fun, more valuable to me.

Jesse (5m 7s):

So you’re your 20 to you get into a, the commercial side and you talk to your first deal. If a, if I heard you correct was at 20 unit apartment building, what’s that the space that you ended up staying in or did you, did you kind of specialize in another area over your career?

Mike (5m 25s):

Yeah, so in the beginning, that’s what I focused on. I mean it sold some shopping centers, strip centers, some small commercial buildings, but a mainly did multifamily and they had a really large market share, especially in the, in town, Atlanta market for many, many years. And then I’m a 22 years ago. I started Bull Realty I led a few guys, join us and finding and started realizing that if I had enough brokers, I can have all the best resources and tools that, that my competitors had. And then they also realize that if I had, you know, brought on three guys, the MAs will bring you down 20 as far as helping them and training and supporting them. So, you know, now we have a thing, 37 brokers and 12 staff and a, you know, we’re, we have enough people to really have great tools and resources and, and research and you know, so we can weave feel confident that we can provide as good or better services than any one in the world.

Mike (6m 24s):

And that’s a good feeling.

Jesse (6m 27s):

So what was it for you that, you know, there’s a lot of people that are, that are agents that get into the industry, but not everybody starts their own brokerage and, and certainly not everybody grows it to the size that, that you have. What kind of led you from just being a broker that, you know, we know the industry, you can make great money, just being a solo artist. You can be a great dad, great mate, make great money, just a partnering butt. What led your decision to actually start a brokerage and, and run it like a business?

Mike (6m 52s):

Well, Jesse, that’s the interesting, because if I looked back at it and I had have known what I know today after 22 years, I probably would not have done it because your you’re exactly right. When you’re an agent, you really already own your own business. And one of the time, the reason I did it was I’m the big shops, umm, with the national flags and they were all over me to join them. And I needed to be with a, a company with a name known for a commercial real estate. And I interviewed with them. But, but my friends at the big shops when they sold apartments, I just didn’t think if I’m the seller of the property, if I’m the client, it’s not the way I’d want my property sold.

Mike (7m 38s):

So I just didn’t really want to be associated with, with the, the integrity and the marketing process that was going on there. So I felt like I had to start my own company. And, and so I did and, and I just wanted to be known for two things, one integrity to the best disposition marketing and the country. So if at the time I just figured that there’s a better way to do it. I don’t want to be known for that. And I didn’t want to have to live with the reputation of anyone else at some of these companies. You know, you’ve, you’ve heard there is some bad people or at some of these companies, there’s a lot of really great people and, and sometimes you get associated with the worst part of, of your company in not the best.

Mike (8m 24s):

And so that was the reason. But again, I think if I looked back out or just created my team and, and, and stayed independent and not have to, you know, be concerned, I think we, we were entrepreneurs because we don’t want to have a bunch of employees sometimes. Right. And we are sales people cause we enjoy that and we’re not good. Manager’s luckily had to have a good manager. I’m not that good. If a manager I’m a good sales guy, a good coach, or you know, that, that, that’s how it gets started

Jesse (8m 50s):

Right on. So I’ve actually, I find it interesting. So my partner who I actually invest with, he is a, he’s a broker as well. And he works in the multifamily space. I work in the, a, in the office market and I always tell him, he’s he has a, a, a unique area in that multifamily. I’m not sure if you’ve had the same experience that the majors The, the flagship companies, there’s a large institutions. Usually they have every other area covered industrial retail office. I find the multifamily is still up for independent shops in a, in a much bigger way. And I think part of that, and maybe you have other insight on this. I feel part of that is the clientele is just, you know, they’re not people you’re going to email, it’s not a CFO. You’re going to your going to call.

Jesse (9m 31s):

It’s a, oftentimes, you know, the guys are still doing mailers, there’s still doing, you know, a snail mail, a w what are your thoughts on that? And, and multifamily just as an asset class in general.

Mike (9m 42s):

Yeah. Well, I think it depends on the size properties, you know, that you’re working on, like, you know, we just took out an $80 million complex and that was a very institutional kind of a kind of sale and, and contact. And then, then we saw some, some small properties that, or your 10 or 20 unit buildings and, you know, there’s a different group of buyers. And then, you know, all in between, we just worked on a deal as a 135 million, a apartment complex. So we find that there’s different process for these different size of deals.

Mike (10m 22s):

So it really depends on the size of the deal and who that, who the price, the best prospect, our, what I like to do as a broker is customize the marketing for the client, the property and the market, and, and make sure that we’re accomplishing the goal that the property owner wants. And usually that’s maximizing value is sometimes it’s speed. Sometimes it it’s confidentiality. And sometimes as you know, that we’ve taken property’s to the top 10 buyer’s in the country. And, and one time we had a project where we were asked to identify the top five office buyer’s in the country and rate them and go to one at a time where the project, where we are, you know, we describe the basic size of the portfolio, the basic cap rate range, tenant profile, or are you interested?

Mike (11m 15s):

And the CA will take it to, you will give you a five days if you, by great, and then will go number to so all the way from, you know, some of the properties is we Mark it, we’ll put it on 200 websites, 17 marketing systems, seven email blasts, fully cooperate with every agent in the world. So I think, you know, you wanna put it in my opinion, in a, to customize the marketing for each client in each situation.

Jesse (11m 40s):

Yeah. So for those listening, whether, you know, somebody wants to break into a commercial real estate or wether it’s an investor that wants to a better handle on understanding what commercial brokers do. I always get people a little bit confused if don’t know our space by, you know, the fact that we don’t really use the MLS a, you know, that the way we do commissions is oftentimes different than residential. Maybe you could speak a little bit about, you know, what the process is, you know, when you are looking for properties and in your market, how compensation, you know, typically works. I know for every market and every deal, it can be different, but what what’s been your experience in, you know, perhaps the Atlanta market.

Mike (12m 18s):

Yeah. So the first part of your question about, you know, if you’re an investor looking for the property’s a couple tips or one is really learn the market area in the size of the projects, you’re looking at, learn the sales comps, understand the rent, comps, understand what things are going for, and then build relationships with the brokers that are in that market. Let them know, honestly, your ability, your experience level, umm, and that you will act quickly. And another thing I would let them know is that if you, then they do bring you something that’s not openly on the market, that you would protect the reasonable fee that you keep the opportunity confidential a and you know, building a relationship with that broker to if you’ve got that, you know, so sometimes it’s brokers, we have the seller.

Mike (13m 12s):

Yeah. I want to sell, no, I don’t want to list it. And you know, and if, if you’ve built that relationship with that broker, umm, to protect you and then I know your reasonable on your expectations, you, or maybe they bring you to that off market opportunity. So those will be a couple tips, their on the fees, as you said, they’d kind of run the gamut. We’ve had fees from 10% to 1% at 50 basis points, a flat fee. So, you know, when you start getting to the larger price ranges, those there’s, they start coming down then. But it’s funny that you mentioned that and, and because as you know, it is a big question. Sometimes we’ll get a call from a, an agent who sells residential and they’re starting to do some multifamily in this now is that the commission is not 10%.

Mike (13m 59s):

No, it’s not. Yeah. It’s not a

Jesse (14m 4s):

Well it’s and it’s also the question we get his, oftentimes who’s paying the fee and you know what I tell them a, you know, one broker has protected the other ones or not. They were like, wait, what do you mean? Th the seller’s not paying both of us. So, no, he’s not. They’re, they’re kind of confused by that, but its kind of like you just said, if, if you are an investor in your establishing in a relationship with a, with an agent that you know that your going to tell him that or her, if your purchasing something that you will protect them in lieu of a cooperating fee from the, from the seller.

Mike (14m 38s):

Yeah. I think that’s what you want to do. And, and when I was at go ahead. No, no, go ahead. Yeah. This is to say that that’s a great thing to do. You know, when, when I used to have a lot of multifamily listings personally, as an agent, you know, I really only worked with a buyer on other properties that I didn’t have listed if I hadn’t an exclusive and a buyer’s broker fee, they run the writing Mike fee because I just wasn’t going to take the time as needed that type of commitment because I was just too busy marketing, exclusive listings. So,

Jesse (15m 12s):

You know yeah, yeah. It’s definitely, it’s definitely tough. There’s a fine line. I, you know, In in our world on cut to the office side. Why, you know, you try to get exclusivity a with a client. Ah, but you know, in my market, I’m in Toronto, we’re at a, you know, two and a half, a 2% vacancy in a while, you know, a pre COVID, but pretty much nothing has changed. Right. We haven’t had the data to really update us. So at that type of vacancy, you know, there are people that are still of the mind and I’m going to hire five different brokers and a they’ll do that. They’ll do five times the job for me, which as you know, does not, does not really pan out. It’s usually doing what they’re doing one fifth of the job.

Mike (15m 50s):

Well I think if you’re a user, a attended or a user for real estate, you’re, The, that’s the ultimate time to hire in an exclusive broker. That is if you’re at, if your never going to hire. So as a broker, if your a tenant looking for a space at the time, you should do it in my opinion.

Jesse (16m 7s):

Yeah. And that’s often the time’s you see people running around with, with more than one person thinking they are going to get a different amount of a, a different pool of deals. Then what I always tell clients, you know, I am not of the mind to not be open in my business. I’ll tell them, listen, CVRE Jones, Lang LaSalle, Cushman were all going to have the same access to the same information, roughly, you know, you’re going to get the odd and an off market deals, but you tried, you sell them, you know, what you can do for them, what, you know, what you’re going to do on the transaction and that you are going to be working exclusively with them. So yeah, it’s it. I find it can be challenging, but you know, I guess the elephant in the room right now, we are in a very, very interesting time right now, given the kind of forced shutdown on the economy.

Jesse (16m 50s):

I, you know, I guess just to start on the brokerage end, how has that impacted, you know, brokerage in general, you know, what have you seen, you know, specifically with your team, but even maybe across the board and in your area?

Mike (17m 3s):

Well, and started deal started canceling in March in our market and, and the Southeast. And think we had just in March and April, we have 20 for sales transactions canceled a, we had several get delayed, umm, are listing activity. States are strong, are gross. Numbers are down to 28% from the year before are listed, like a said, we are still a pretty strong, we starting to see a thong. We just had a $14 million office building going to contract or under LOI yesterday, we just had a sixth and a half, a million dollar apartment deal going to a contract to close immediately and a $40 million office deal or under LOI.

Mike (17m 53s):

So we’re starting to see a thought and it seems like there’s, there’s light at the end of the tunnel that, and the things will get going again. But it’s certainly been, been a pause and for people to kind of figure out, Hey, what’s going on? What’s the impact here?

Jesse (18m 7s):

Yeah. I, I found its, you know what, we’ve seen the same thing. We’ve had volume go down, but it’s just, like I mentioned before, what the vacancy rates, we haven’t really seen. We don’t have the data, but we haven’t really seen a change necessarily on vacancy rates. And then further to that, we haven’t really seen the majority of sellers a w you know, rush to cell. And then the majority of buyers, they’re not finding the deals they thought they would have found. And we have this kind of frozen market right now.

Mike (18m 37s):

Yeah. Well, it’s interesting. And, and, and you think if you’re a seller and you’ve got a property that’s performed well through COVID, I think it’s a fantastic time to sell because you’ve got something to say, you’ve got to be a property that they perform well through COVID than that’s a good sign.

Jesse (18m 54s):

Yeah. I heard somebody say, you know, when people ask you five years from now, 10 years from now, you know, what your, you know, what you’re story was during COVID in how you kind of survived it economically or otherwise, you know, we’re living through it right now. So it kind of, you know, made you think about making, making choices right now that you look back at and, and be happy with I’m in terms of the asset classes specifically, you know, in your market, you know, obviously you kind of running anywhere for retail hotels to two a, you know, self storage, w what’s your take on, on the performance of, of the different asset classes. And, you know, obviously we don’t have a crystal ball, but you know, what do you think the, the short term future is for those asset classes?

Mike (19m 37s):

Well, I think The office, we’ll, I’ll start with industrial, you know, the industrial that is taken advantage of I’m the internet is, has obviously done really well. So the large industrial properties have done well. So for the most part, industrial, and in some cases could be a winner and, and all this, some of the single-tenant net lease properties. Mmm. You know, the drugstore is the kind of a necessity a retail are in properties has, has done well. The self storage has done pretty well. The mobile home or a manufactured housing has done pretty well, a government leased buildings, office buildings, so that we, we have a big focus they’re, they’ve done well, a, some of the medical office buildings with tenants that have performed well through COVID that we have a bigger presence there, they are doing well, the, a office, some of those properties are, are doing well.

Mike (20m 39s):

The jury’s still out a little bit, their, as you know, what’s going to be, the future trends are on office use and in square footage and you, they are tenants going to go from central business district to a cheaper rants in the, in the suburbs. And, but we’re starting to see activity there where some sellers are like, okay, I think it’s okay to talk about selling. And we certainly got a large amount of buyers was a, a lot of dry powder looking for, for office buildings. And then, you know, retail has obviously been hit. It was already taking a hit. So there’s been a lot of, a lot of turmoil there.

Mike (21m 22s):

And so, and in the, in the retails, kind of what has been like for awhile, it’s like, you’ve got some really good retail properties forming well, and cross the street. You can have one that’s not. So I think that there’s still gonna be some problems there. I think the nice thing about retail though, is a lot of that real estate’s good real estate. It’s well located. It’s got utilities, it’s cleared, you know, so you got a lot of change in use and we’re selling a lot of that type where, you know, people coming in and redeveloping and, and tearing down some of these buildings and putting them hotels or a multifamily, or what have you. And then I think a, you know, we have a hospitality division, which is a, it’s really taking a huge hit.

Mike (22m 3s):

And they were where already doing a lot of notes, sales and, and, and, and working with lenders to take some properties out. And, and, and there’s some really good deals for the hotel buyers that, that they know what their doing in that space. A, because it’s gonna be probably a couple years before that sector gets strong again, like is like, it wasn’t January. So there’s some really good byes for a hotel buyer’s. So I think there’s going to be a lot of transaction, and there’s gonna be a lot of hits for lenders and borrowers. They’re two.

Jesse (22m 38s):

Yeah. Hotel is its, you know, I had a client that basically a flipped us, a lead for a sec, a sale have a hotel. And I just sent it somebody in my office that does that. And I was just like, Oh man, what a time to celebrate Now. But I’ve found that the sellers of hotels are basically, you know, they’re saying if they wanna sell, they want to sell, you know, regardless of if its this time or not, I think a lot of them are just trying to cash out.

Mike (23m 3s):

Well, Jesse, you’re like this. When I was a young agent, there was a Vester that I wanted to buy a single tenant net lease national credit stuff, you know, low cap rate, hardly any appreciation in the real estate over time. And I told one of these all come in and do more of a local tenant where have annual escalations in the rent and, and have a, a more future value in the real estate when the lease ends. And he stopped me and said, Michael, he’s still, let me tell you something. If so, do you think Cadillac’s are a good car at the time? They were not. I said no. And he said, you know, they’re super like getting new Cadillacs every year. And, and what he was trying to say is When when a client wants something shut up and help him get what they have a plan and just help them do it, don’t try to change their plan and give them advice, but, but help them do it.

Mike (23m 52s):

They want to do,

Jesse (23m 53s):

You know, it’s a great point. You really don’t know what the, a, you know, I’d tell other agents young, like myself or younger, you know, you don’t know the financial situation oftentimes of, of your, your clients. And, and often, you know, you don’t know whether it’s sale of real estate or business. You don’t know what, from a tax perspective, if they’re doing something novel in, you know, that is something that they oftentimes don’t disclose Northern, should they, should they have two, but, you know, it’s a good point. I’m in terms of you, you know, the investing strategy for, ya know, we talked a little bit about those, those areas you have, you know, from retail to office, actually just on the note on office, I think your, you make a good point with where the trends are gonna go in the office, because I think people here think office, and really, maybe they don’t necessarily think about kind of the business’s that drive the, the country and where these businesses live, basically in how they operate.

Jesse (24m 47s):

And what I’ve found is that we had a push, not dissimilar to retail diminishing, but a push for working at home for coworking, for, for higher density. And I think this, if anything is probably accelerated that, but also I think it’s also shown companies that are working from home is not just, you know, this perfect drug that fixes all the problems with your employee’s. So I think your, you kind of alluded too, you know, are company is going to get leaner, but then also are they going to take more space given that we’re probably gonna come down, come back to work with regulations and regulatory requirements for, for distance. And that will have to translate on either less people in the office are taking on more space.

Mike (25m 29s):

Yeah, I agree. I think that we’ll find out and I think there’s also, you know, a culture, a productivity, you know, recruiting and retention, you know, that that will come into play as well for, for getting back in the office. And I think, you know, ultimately we’re, we’re social animals and, you know, to have that life outside your home and, and that those acquaintances, friends and associates can be a very enjoyable part of your life and two to lose that, you know, isn’t for everyone.

Jesse (26m 4s):

Yeah. Well, that’s a, that’s a good point. One of the partners in our a and R firm said, this was a believer last month. He said, you know, working from home is great when there’s nothing to do. You know, we just had our golf courses open two weeks ago. A, you know, patios are probably slowly going to start. Opening parks have started opening. So, you know, it’s a quasi patio for people that want to crack a beer in a, in a, in a plastic cup. So now that all of that is kind of coming out that Thursday where your employees are 80, 90% of them are Working, you know, perhaps maybe a, maybe not all of them are on the Thursday, what the sun and a, and the beer in hand.

Mike (26m 41s):

Yeah. It at the home environment can be a tough one to be productive sometimes. So you gotta be interesting to see what happens

Jesse (26m 48s):

Right on. So we’ve got about a five, 10 minutes left here. I thought I’d talk a little bit about what your seeing in the market, as it relates to tenants that are struggling to pay their rent. And then further down, down that downstream with that, or I guess, upstream, or that the, the landlord that are struggling to make payments on their mortgages, you know, what are you seeing from your clients?

Mike (27m 11s):

Well, from the medical office, a clients we’re seeing real strong rental payments, you know, 97, 98%, umm, on the regular office tenants, you know, depending on the clients, we’re seeing things from 85 to 92% of collections. So far a retail, we’re seeing some low numbers depending on the client, a 21% are or worse. I’ve, I’ve had a retail property. And a, and I think in March, no one paid April and known pay. And I started getting sermons, starting to trickle in, in April in the PPP lens came out.

Mike (27m 56s):

So I think retails, you know, taking a hit on collection’s for sure. And a, an industrial thing, their, their, their most, their collections are fine. Multifamily. I think it’s been interesting because the collection’s for multifamily has been, I think, stronger than people thought they might be. And, and then I think what we’re hearing from some of the clients as well, that’s good, but is that from government stimulus, you know, is that from unemployment and an unemployment being increased In from the, from the PPP, is it, is it from all of that and what’s going to happen, you know, when that runs out. And so I think there’s still some questions from a lot of investors what’s gonna happen in, in residential, but I expect that residential will do do fine.

Mike (28m 43s):

And then we, we, we all have to live somewhere, right?

Jesse (28m 47s):

Yeah. I think if, ah, if the alternative is that they’re not using this stimulus, are those types of payments for rent. I mean, that’s probably a worst case scenario. At least it’s going to something essential, you know, clothing, food, a a, a place over their head. It’s, you know, we’ve, we’ve experienced pretty much the same thing. I found that, you know, like the news, the news does what it does, a, you know, they’re, they’re all about headlines. I found it interesting. I was listening to podcasts. I don’t know if this is a hundred percent accurate, but I think they said during a, during the beginning of the crisis that, Oh, you know, something like one third of a business’s and, and people haven’t paid a paid the rent and that people didn’t know was in the average year, about 25% don’t pay on the first to the month.

Jesse (29m 29s):

So they were, they were kinda marketing and off. And, and I think on what we’ve seen pretty much to echo your point is that in the various asset classes, we’ve seen a variety of different percentages. And I found on our multifamily side, yeah, we’ve, we’ve gotten, I think 98, 97, 98% of rent’s in business has been, umm, on the office side has been somewhat interesting because it’s, if you have a business that is more retail, ask a in their clientele, we’ve seen them, you know, talked to landlords, a boat, working out deferral programs. And you know, some landlords not sure about the Atlanta market with the vacancy was like that was before the crisis.

Jesse (30m 12s):

But you know, our landlord’s are pretty conservative and they’ll, they’ll be kicking and screaming before they work on anything. So they need to usually see the book’s and they want quite a bit of detail from the tenant before they are going to be doing any deferrals. Is that the same for, for your market?

Mike (30m 27s):

Yeah. And I think that that’s appropriate to do and, and you gotta watch your, your, your carve-outs and your lender requirements as well before you, when you start letting tenants not pay or, or adjusting leases, think you gotta, you gotta be careful with that and make sure it’s not just a sport. Hey, ask every landlord for a break. I remember a, one of my client’s telling me in a way in, or not in 2010, he said, Michael, did you get a break from, or from your landlord for your business and said, no, he’s the one on. I said, well, I don’t need one. We’re doing well. He said, so if you should ask for it, I’m like, no, I’m not.

Jesse (31m 8s):

Yeah. That, that, I dunno, that kind of thinking is it’s crazy to me too. I had a, I had somebody asked me the exact same thing, apartment we own. And they said, you know, have you gotten a majority of your rents? You know what, actually, we have a, have you talked to your, your bank different? And I’m like, why they were going to tack it onto the end of the mortgage, I’m going to pay interest on it. So if you can make it work, that’s the whole, you know, if we all can try our best to do our part, you know, hopefully we can get out of this relatively unscaved in the long term.

Mike (31m 38s):

Yeah. And like I mentioned before, you know, saying that you, that you did well through, COVID a, instead of becoming a blip in your performance history, it becomes a star. Yeah,

Jesse (31m 51s):

Yeah, yeah. It’s, it’s something that you can point to as a, you know, job well done. You know what, I guess what I’d like to end off your I’d love to get your take on the capital market’s or I guess specifically the debt markets right now, a, you know, both Canada and the U S we’ve seen, we haven’t seen rates this low in quite some time. I think partly a comparison I often here is, is from Oh seven or eight, you know, where there was a downturn and downturn and there was deals, or there were deals. People don’t remember that rates weren’t as low as they are today and getting financing wasn’t as easy as it is today. So w what are your thoughts right now on, on debt and opportunities in that space?

Mike (32m 32s):

Yeah, it seems like the debt market is changing almost daily right now. And certainly week a week. I think you got to look at the date that we’re speaking today. And, you know, I think we’re starting to see a thought. We were a Fannie and Freddie are starting to two to be their doing loans. And some CMBS starting to come back a little bit, showing some signs of life. And some of the live companies still conservative is usually usual, but doing some loans, private equity is his, is out in force. I think there’s a, so there’s Sloan’s to be, and I think yet to be careful on a, putting together a transaction that’s contingent on today, more so than ever, and, and make sure that a is, that can happen.

Mike (33m 20s):

But I think we’re starting to see, thing’s throw out in, and to your point about the difference between now a non absolutely their, the banks are in better condition. The loan to value ratios are lower. Consumers have more savings and swimmers have more value in their homes. Their, the regulators are giving the, the lenders a break and not putting them in bad Box’s to give the florals to two borrowers. And there’s a lot of jobs powder out there to two come in and go in and acquire properties. And then The, and as you mentioned, they’re really low interest rates. So I think, you know, this downturn that, that we have, it can be pretty short, lived with elated to, you know, the window of opportunity, if you will, for investors to come in and get deals, because there’s just so much dry powder out there and all those other situations and the economy, hopefully it turns around butt, but the jury’s out on that too.

Mike (34m 19s):

I mean, we’ve had a worldwide epidemic here, so, you know, the overall impact on the economy could, could take a while so interesting times.

Jesse (34m 31s):

Yeah, for sure. I think I’ve heard every letter to describe the, a, the recovery. So, I mean, we’ve got the V that you have the WWE, I’ve heard the zigzag and the most recently that’s the second wave happens and I’m, well, you know, that, I think that’s great in terms of kinda ending off your Mike. If, if he had a young, a guy or gal that, you know, trying to get into the industry, whether that, you know, they are looking in the commercial real estate space as a firm, a brokerage perspective are looking, you know, getting in from investing. Is there a, is there anything that, you know, that had helped you in the past that you could pass on to our listeners?

Mike (35m 6s):

Well, I think on the brokerage side is if you’re going to do that, make sure that you’ve got the right training, that you’ve got the right, the right vacation for you. Right. And if you’re, if you’re going and, and you’re taking, making sure that your mindset is right, I think if you’re taking care of your client’s and you put yourself in your clients shoes too, provide the best services possible, and you have the motivation to be an entrepreneur and do all sorts of training, you know, you think all the skills that, that we have to have is a broker or a C in the underwriting analysis of the business development. I’m the negotiation entrepreneurship, you know, riding a, you know, doing podcasts in a row.

Mike (35m 55s):

I remember the photography and, and just everything I had to learn. And I think if you, if you go at it with a lot of Gusto in your, in the beginning, you asked, make sure you put it in a lot of ours. You realize you’re starting your own new business. And you’re competing with people who were good at what they do and make sure you’ve got the right focus on, on The. But I think the timing is good to start. I think if the market’s really, really hot, it’s almost harder to win market share. And a, we found our company grows more on us in a down market or a market niche Collibra. And when, when clients are looking really much closer, what the broker actually does, we tend to do to win more and, and, and, and build our business more.

Mike (36m 35s):

But for them, for an investor, I think its obviously a good time, especially if you think about buying on the cycle’s and I think it’s a good time to be an investor in the market and, and just build those relationships, make sure you’ve got your, your equity together and you know, where you’re going to finance these properties and you’re communicating clearly with, with the brokers and yeah, I think it’s a great time to be in acquisition mode.

Jesse (37m 3s):

All right. On Mike, where can our listeners check you out in terms of podcasts or you know, online for any other Resources

Mike (37m 11s):

Yeah, so my real commercial brokerage firm, you’re each ma Bull realty.com on my show. America’s commercial real estate show its on all Podcast sites, but you can reach that website, see our He show.com. And then for my Commercial agent training videos, its Commercial agent success.com and then my contact information is on, on all of those sites. Unlike some websites, we, they can never find a phone number on there

Jesse (37m 41s):

That drives me crazy. You can get you just get the email that says type in your, your question here

Mike (37m 47s):

For them that they never respond to it. Absolutely. Absolutely.

Jesse (37m 51s):

Okay. Great. My guest today has been Michael Bull Mike thanks for coming on. You

Mike (37m 55s):

Jesse and Jordan,

Jesse (37m 59s):

They were listening to the Working Capital Podcast. My goal is to help individuals break into real estate investing as well as educate experienced investors. If you enjoyed the show, please share with a friend subscribe and give us a rating on iTunes. It really helps us. If you have any questions, want to learn more or like me to cover a specific topic on the show, please reach out to me via instagram@jforgalsorheadtowwwdotjessefragale.com. My name is Jesse Fragale and I’ll see you back here for the next episode or the Working Capital The Real Estate Podcast

Mike (38m 30s):

Yes.