Beating 1031 Timelines, Smarter Buyer Lists, and Lease Terms That Protect Cash Flow

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Show Summary

In this conversation, the speaker shares insights into the real estate market, focusing on commercial properties and the challenges faced by young investors. They discuss the importance of having proper representation in real estate transactions, the current state of the commercial market, and valuable lessons learned throughout their career. The conversation emphasizes the need for experience and knowledge in navigating property deals and the evolving landscape of commercial real estate.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Tav Tabacchi on LinkedIn
    • Tav Tabacchi’s Phone no.: (720)-218-6594
    • Tav Tabacchi’s Email Address: [email protected]

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  TAV TABACCHI (00:00)
  Commercial MLS and I went, yeah, I did that, but I did something else. And that is you can get the databases ⁓ and look at what I did was who ⁓ had bought ⁓ the shopping centers in the last five years under $5 million. Ours was going to be 3.6 million. So, I got a list of those people. I put a brochure and a financial statement in there, mailed it to like 50 people.

  And within three weeks, I got an offer for this center.

  Kristen (00:32)
  Wow.

  Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Tav Tabacchi, who is a realtor out of Denver, Colorado. We’re going to talk about a lot of stuff here. He has some high-ticket properties he’s helping investors with. So, I’m excited to get into it. Thanks for being here.

  TAV TABACCHI (02:21)
  Good morning, Kristen.

  Kristen (02:23)
  Good morning. So, I mean, you’ve built a really impressive career, but I want to go back to the beginning. How did you get into this industry? How’d you get started?

  TAV TABACCHI (02:32)
  ⁓ I used to be ⁓ in the food business. I was a corporate executive and then I bought my own company. And after five years of that, I sold it. And a friend of mine from my business school said, hey, you want to do some real estate deals, commercial real estate. And I said, that sounds like a scary business. And he says, no, I’ll help you. We’ll do it. And so we…

  Kristen (02:35)
  Okay.

  TAV TABACCHI (02:58)
  Got two other guys and we bought a foreclosed shopping center and that worked out really well so we just kept going from there.

  Kristen (03:08)
  Wow, so the first deal went really well. I feel like that’s rare.

  TAV TABACCHI (03:12)
  yeah, yeah, it was ⁓ amazing. So yeah, like you said, yes, you don’t know if you’re going to be lucky or not.

  Kristen (03:16)
  Yeah.

  Right? Well, that’s amazing.

  So, your kind of just hopped into the industry. How did it? Because you already have an entrepreneurial background. I imagine you already had the skill set to really like jump into this.

  TAV TABACCHI (03:33)
  Right, right, but knowing commercial real estate at that point, I didn’t really know much and made me nervous because ⁓ I’ve been, like I said, a corporate executive and I was like, okay, let’s see. But I’m a quick learner, I threw myself into it. My partner had been doing it for 20 years, so he knew a lot of stuff. ⁓

  Kristen (03:49)
  Yeah.

  Amazing. Yeah.

  I think it’s really important to have mentors and people to help you and networking groups, stuff like that. Can you talk about how that helped you early on in your career?

  TAV TABACCHI (04:09)
  absolutely. Because there was so much stuff, you know, there’s a lot of things that you need to know, like what numbers are the banks looking for? Because real estate is different than business acquisitions. You know, in business you do EBITDA all the time. You talk about that. Well, that’s not what you do in real estate. You know, you take ⁓ your gross income and then you multiply that to find out the value of the property and you don’t do the EBITDA part.

  that confuses people. So, but it’s, but it’s, you know, the usual standard thing. And once you do that, and that was one of them, then learning about like leasing to retail customers and how leases worked and opportunities. And then when we were going to sell it, I listed the property and I did a structured approach to listing it. People were like, well, you just threw it on the, you know,

  Kristen (04:38)
  Right, exactly.

  TAV TABACCHI (05:53)
  commercial MLS and I went, yeah, I did that, but I did something else. And that is you can get the databases ⁓ and look at what I did was who ⁓ had bought ⁓ the shopping centers in the last five years under $5 million. Ours was going to be 3.6 million. So, I got a list of those people. I put a brochure and a financial statement in there, mailed it to like 50 people.

  And within three weeks, I got an offer for this center.

  Kristen (06:26)
  Wow.

  TAV TABACCHI (06:27)
  I know. And it was a really good offer, but my partners turned it down. ⁓ They said that was too easy. ⁓ So they drove.

  Kristen (06:29)
  Yeah.

  ⁓ no. Yeah. That’s funny.

  yeah, no, keep going. Yeah.

  TAV TABACCHI (06:42)
  And so it was funny because I’m like, wait a minute, it’s a hundred thousand dollars difference from what we wanted. We were asking three six and this guy offered three five and they’re like, well, no, that you did that in a month. There must be better buyers out there. And I’m like, no, because I’m smarter. See, I did it that way. And so then we fiddle around and then we finally, after six months, got somebody at three six.

  Kristen (06:56)
  you

  TAV TABACCHI (07:10)
  But the moral of the story is sometimes you can know the shortcuts, but sometimes you need to beat up your partners and tell them how hard you’re working.

  Kristen (07:19)
  Yeah,
  right, exactly. ⁓ No, I think that’s a really good point though. There are ways to kind of game the system and to kind of make it easier on yourself. I think that a lot of people have this idea that you have to work really, really hard to get success, which isn’t untrue, but there are ways to make it easier on yourself. And I’d love for you to talk about that a little bit.

  TAV TABACCHI (07:46)
  Yeah. And, uh, now, yeah, it’s not like somebody taught me that I knew it because of some of the groups I was attending. had a, we have a couple of groups. One of them, was a member of this thing called Mile High Exchangers. And we talked about exchanging properties and doing stuff like that every week. I had another group, called Denver, uh, Commercial Realtors. It’s called Demcar. And I went to that meeting.

  And that was once a month. So was all the top guys in the industry. So I could learn from them. And I loved it because when they made presentations on the brochures and the properties they had, I could then ask them questions because I was green, didn’t know a lot. So face-to-face meetings like this, you can learn a lot. And now people don’t want to do that anymore, but it hurts your learning. You have to learn from somebody.

  Kristen (08:30)
  Mm-hmm.

  TAV TABACCHI (08:42)
  which means you probably have to join a big firm or something like that, learn from those guys. But if you’re not gonna join a firm, then it’s gonna be a slow process.

  Kristen (08:51)
  Yeah, you have to learn everything from scratch. ⁓ How do you go about building your network?

  TAV TABACCHI (08:59)
  ⁓ basically through people I know. I know a lot of people. I’ve been in Denver now for 40 years and a lot of people know me and I just call people up that I have in my database. I’ve got like 2500 names. So I just start calling people, ask them what’s going on and stuff like that. See if they’re doing anything in real estate. And a lot of times I might say I’m not, but

  Hey, I got a friend that’s looking for some help. Can you go help him? I have my account; I have my accountant do that once. Unfortunately, he threatened me though. He said I had to get the deal done or else because his client had sold something and he was in a 1031 exchange. And so we had 45 days to identify the ⁓ replacement property and he wanted to do office building, which I was like, perfect.

  Kristen (09:45)
  Bye.

  Yeah.

  TAV TABACCHI (09:56)
  I know all about that. I found them three buildings right away. you ⁓ like two of them, but they sold or got under contract within like a week. So he missed those. We had to go back and buy the one that he wasn’t crazy about. But as my accountant told me, he better make this deal happen. So through long and short of it, we had all kinds of little bumps along the road, but I made it happen.

  Kristen (09:58)
  you

  okay.

  Yeah. Yeah, absolutely.

  And it seems like you’re really good at identifying properties. What, like, how do you even go about that? What are the things you look for?

  TAV TABACCHI (11:09)
  Well, I’ll take that one for example. He wanted to be in the say $800,000 range for properties. And so, you know, we have tools that we search. We also have a feature here in Denver where I can send out a broadcast email to all the other brokers on the system. So, you know, the other one’s a passive way like the MLS kind of thing. But we can send emails out so I can send a brochure.

  Kristen (11:34)
  you

  TAV TABACCHI (11:38)
  tell them exactly what I’m looking for. And ⁓ I get people call me because they know me. They know I’m a serious guy and we’re going to get a deal done. So I call up and say, hey, I got a property for you. And actually that one ⁓ came from another broker ⁓ who was a residential broker. And it’s a long story, but she happened to know the people selling it and all that. So I worked with her a little bit.

  Kristen (11:48)
  Yeah.

  Yeah.

  TAV TABACCHI (12:06)
  that I found out she didn’t really know anything so I did the rest of the So because she did, she did. She didn’t have a deal with these people because they were big guys who have bought this pool of assets. And this was just one of the items in the pool. And they thought I was a new young broker and they could boss me around. I straightened them out on that.

  Kristen (12:09)
  Yeah, some great projects like that.

  Yeah, right, they learned. So you work

  with a lot of investors. Tell me what that’s like and kind of maybe some things that you see over and over that maybe younger investors make a mistake in thinking it goes a certain way.

  TAV TABACCHI (12:46)
  One of the biggest problems, everybody thinks that, ⁓ can just have you find a property for me, but I’m not going to sign any paperwork and have you actually represent me. Well, in Colorado, that’s against the law. Brokers are required to get a listing agreement with their clients. it’s really, like, why would I spend all this time finding things for you? And then you’re just going to try and go around me.

  Kristen (12:58)
  Mmm.

  wow, yeah.

  TAV TABACCHI (13:15)
  and try and save some money. And it’s like, uh, I’ve had a guy, he started, um, uh, the, uh, you know, that jumping craze that came around from kids were going to these places and they had these trampolines. And, uh, so I had a, one of my guys at this other firm called me and said, Hey, I got a client that’s going to start one of these. And he’s found a building and he wants you to do the deal for him. And I said, okay.

  Kristen (13:17)
  Right.

  TAV TABACCHI (13:44)
  So I called him up and he found the building. I knew the building a little bit. And, uh, but he thought he knew everything about how to do a deal because he owned two RV parks. And I’m like, no, no, no, no, you don’t understand. You’re going to find out. And like, one of the things he didn’t know was when they gave us the lease for the building, they used a 5 % inflator. So, you know, the rent would go up 5 % every year.

  Kristen (13:53)
  you

  TAV TABACCHI (14:14)
  And I said, where’d get that number? says, well, that’s, we thought that was a real number. said, no, the market is everybody uses the social security. It’s called deflator, which usually runs around two and a half percent. said, that’s a national thing. All the big firms use it. We’re not giving you 5%. It’s going to be two and a half percent. And he went, well, fine. Okay. Well, but on a 40,000 foot building,

  That was a lot of money over five years. And my client was like, wow. You saved me a lot of money there. was like, see, so you think you knew everything and that’s not the way it always works. Some small little thing like that turns out to be a big number. And that’s, and that’s why you need experienced people who know these kinds of things. And, know, also I could talk to the, ⁓ the landlord. So he would not try and just keep doing that.

  Kristen (14:51)
  Yeah.

  Absolutely.

  TAV TABACCHI (15:53)
  He was extremely difficult to deal with on everything else.

  Kristen (15:57)
  That’s awesome and I’d love for you to talk about just like the opportunity with commercial in general right now what you’re seeing.

  TAV TABACCHI (16:06)
  Well, so offices like a total mess. You know, there’s the vacancies are just unbelievable out here. ⁓ we have like downtown, I think we’re at a 40 % vacancy and all the office buildings, which is like, you know, terrible. So what we’re seeing is that, ⁓ they’re owned by, you know, pension funds, people like that.

  Kristen (16:22)
  Wow.

  TAV TABACCHI (16:34)
  Some they’ll keep, they’re gonna keep others to just like get rid of it. And so some buildings are trading for $50 a square foot. Put that into perspective to build that today, would probably be minimum $150 a foot, maybe $200 a foot. So $50 a foot’s cheap, but if you don’t have a purpose there or something you can do in it, it’s not gonna work. And then what…

  Kristen (16:50)
  Wow.

  Right.

  TAV TABACCHI (17:02)
  is coming up there’s two big office buildings downtown that sold and they’re going to put condos in them maybe keep a little bit of office and then they’re going to have some retail ⁓ on a ground floor so they’re going to have like a restaurant and maybe a couple shops and things like that so it’s turning into a mixed use project but the big thing is you need the city to go along with it because you have to change the zoning on that

  Kristen (17:30)
  right.

  TAV TABACCHI (17:31)
  to MX and the city knows that these guys are in trouble. So they’ve got to go along with this stuff to keep tax revenue up, keep the central core vibrant. And even here, I live near the Denver Tech Center, is a little bit southeast of Denver by a few miles. And we’ve had a few buildings trade here and one of them is just going to be all residential.

  And it’s like, I think it’s a 60,000 foot building. So I convert that to apartments or condos. forget which one you’re going to do. But sometimes it works, sometimes it doesn’t. And everybody says, that’s a great idea. It’s like, well, but there are a lot of challenges in that area. OK, if you look, if you walk in a building and you look up at the ceiling, what’s the ceiling height? Well, older buildings, ⁓ raised, the, ⁓

  Kristen (18:13)
  Yeah.

  TAV TABACCHI (18:30)
  ceiling is like eight feet, then there’s a plenum above it of two feet. So from concrete base to concrete above is 10 feet. That’s all you got to work with. So to make it and you have to run them water and sewer for apartments. So suddenly you don’t have that because all that in an office building is where the elevators are, that central core.

  Kristen (18:39)
  Mm. Yeah.

  right.

  TAV TABACCHI (18:56)
  out in the space or the office and there are no bathrooms and things that except that have been the exception. So you had so today the buildings are being built are usually 12 feet between concrete slabs. So it gives you you could have a 10 foot ceiling in an office condo and have your two feet to run all your utilities and stuff. But that all costs money. So so $50 a foot you can make it work.

  Kristen (19:18)
  Yeah. Right.

  Yeah.

  TAV TABACCHI (19:25)
  But the older buildings, it’s going to be a lot more exciting. People were talking about doing things like have congregate housing where it’d be like almost like a dormitory for younger people. And so they don’t have to run all that plumbing and you’d have centralized utilities and things. And it’s like, well, some people will think that was okay and a of people won’t. yeah, like student housing kind of thing.

  Kristen (19:38)
  Yep. Totally.

  Yeah.

  Right.

  TAV TABACCHI (19:55)
  If you have younger people, Gen Z people that would think that was cool, you could do that.

  Kristen (19:59)
  Yeah,

  rent is so high just across the board now that that could be something really appealing.

  TAV TABACCHI (20:07)
  Right. And there’s, we have plenty of buildings, whether they’re going to sell for 50 a foot or not, it’s going to be interesting. But it’s like every week I see, I get surprised. I see, I saw three buildings still this week and I just couldn’t believe it. was where the old world trade center was. And I was shocked because they’re a prime area right downtown there at the state Capitol and city hall. So that is prime, prime space. And of you got, um, uh,

  Kristen (20:14)
  Yeah.

  TAV TABACCHI (20:37)
  buses and subways, but light rail, things like that nearby. So that’s a primary to be in. But those take a lot of money to do. Those buildings are 100,000 square feet each. So that’s ⁓ $5 million per building to start plus construction costs and all that.

  Kristen (20:53)
  Okay, yeah.

  Yeah, it’s expensive. ⁓ Well, this has been awesome. You’ve given a lot of good information about the market and kind of how to navigate it. I would love to kind of wrap this up with if there’s, you know, piece of advice that you wish you learned earlier in your career.

  TAV TABACCHI (21:18)
  Um, that’s interesting. There’s so many things. One of them was, I’ll tell you what one of them was. So my partner that brought me into the business. So I relied on him. Then I found out that I knew started knowing more than he did about the business. So don’t get intimidated by your partners and think that they know everything. Because as you go out and like me, I went.

  Kristen (21:23)
  Bye.

  Great. Yeah.

  TAV TABACCHI (21:48)
  real estate school and got into all these groups and I started learning really fast and so I actually learned more about some of these and how to get deals done. And one big thing today is so you have a building say you’re representing an office building somebody wants to come in and they want a year’s free rent and it’s like no we’re not going to do that but we’ll give you 12 months rent that would be spread out over the five years.

  Because landlords, unless you’re a big landlord, you can’t afford them because you get expenses and stuff. So what I’ve done is, you know, give them like two or three months the first year and then split up the 12 months on the other four years. So you have cash flow coming in. And the one thing in the commercial world is five years is a big number. Most commercial loans are for five years. So this today in 2025,

  Kristen (22:23)
  Yeah.

  TAV TABACCHI (22:45)
  Most of the loans are written in 2020, which is good and bad because 2020 had lower interest rates than now, but interest rates are higher. But the same thing going forward, you write a loan now, it’s going to come due in 2030. And if it does, your building should be 100 % leased up and have good rents. So we always want the rents to go up at the end of a lease because that’s when you’re going to refinance the building. Then you want the highest rates at that point.

  Kristen (22:52)
  Yeah.

  Yeah.

  Well, I think that’s… Yeah.

  TAV TABACCHI (23:15)
  That was.

  So

  that’s a real good thing to learn. My partner saw me that one.

  Kristen (23:21)
  Yeah,

  no, I mean that’s really good practical advice. And I think, I mean, I think that’s really good advice about not underestimating yourself. And I think a lot of people kind of have imposter syndrome or feel like, you know, other people must know more than them, but it is possible to actually know the information and to actually even surpass people who have been in it maybe a little longer than you.

  TAV TABACCHI (23:38)
  Mm-hmm.

  Well, and if you have a skill of doing deals, that’s a great skill to have. Because all these things need somebody who can get the deal done and not just walk away and go, well, we can’t get that done. It’s like my family who were union negotiators taught me, lock the door, nobody’s leaving until we get this deal done.

  Kristen (23:52)
  Absolutely.

  Right.

  Yeah. Love that. Well, okay. Well, thank you so much for being here today. Tell everyone where to find you.

  TAV TABACCHI (24:16)
  You can find me at my phone number is 720-218-6594 or my email is my first name, TAV5280, which is the number of feet in a mile, since we’re the mile high city. So, [email protected].

  Kristen (24:35)
  Amazing! Well, I really encourage everyone to take advantage of that. Reach out to Tav if you have any questions or want to work with him.
  This has been great. Thank you for being here.

  TAV TABACCHI (24:46)
  Great, thanks for having me, Kristen.

  Kristen (24:48)
  Yeah, and thank you everyone for listening. Hope you learned a lot, got some inspiration for your own business and we’ll see you back next time. Bye.