Blue Ocean Real Estate: How Cherif Medawar Finds Overlooked High-Cash-Flow Assets

Cherif Medawar (www.cmrei.com) (00:00)
I have found that the strategy and the type of asset that’s almost always overlooked is the single tenant buildings. Single tenant buildings are those standalone buildings where you can get them under contract vacant, line up a national tenant to go in them, and even if you call, I don’t know, 50 tenants, all you need is one to come in, and when they come in, like a clinic, an auto zone, maybe a quick service restaurant, like a Jack in the Box or something, they will lease 10 to 15 years.

Scott Bursey (01:59)
Welcome back to the Real Estate Pros Podcast Powered by Investor Fuel. I’m your host, Scott Bursey. And today we are shifting gears and going global for a masterclass in high ticket, high yielding investing. guest Cherif Medawar of CMREI is a legendary wealth builder who has constructed a multi $100 million portfolio with a unique footprint that strategically stretches across multiple regions, including the market of Puerto Rico. Cherif.

Cherif Medawar (www.cmrei.com) (02:05)
Okay. ⁓

Scott Bursey (02:28)
is bringing the pure high octane fuel of international vision, sophisticated

asset structuring, and big picture strategy. If you’re ready to break through regional ceilings and think institutionally, buckle up pros. Cherif, welcome to the show.

Cherif Medawar (www.cmrei.com) (02:44)
Thank you, Scott. Appreciate it.

Scott Bursey (02:45)
For our listeners who may not be familiar with your journey, please give us the front row seat of how your career ignited and where you’re pouring your fuel now.

Cherif Medawar (www.cmrei.com) (02:53)
Thank you. Well, I started actually, I wanted to be a hotel general manager. So was working at the Century Plaza Hotel in Los Angeles, a very well known hotel that’s a five star, five diamond. And I was literally working around the clock. My shift was supposed to be eight hours. I ended up being 16, 20 hours a day. I worked around the clock from front desk to full and beverage. was a management trainee and a very wealthy gentleman in the name of Edmond Beisari, a billionaire at the time in the early eighties.

noticed me and came to me one day and he said, Cherif, I’ve been seeing you working from department to department. Every time I fly in to stay here in the hotel, you’re always with a smile. You work hard. People respect you. You’re so young. Why don’t you come and work for me? And I was very surprised. I said, ⁓ to do what? And he said, I have properties around the world and I don’t want to travel as much. I’ll tell you what to say. I’ll tell you what to do. You come and work for me and we can do a lot of things.

I remember I got scared instead of getting excited. I said, well, thank you, sir, but I don’t know residential real estate. I don’t know what to do. Commercial international real estate. And he held me by the shoulder and said, Cherif, you’re at the right place at the right time. Just say yes. So I looked at him and I said, you know what? I have faith in God. I have faith in myself and I have, I should have faith in others. I said, yes, let’s do it. And to make a long story short, I worked for him intensive eight years of my life in my early twenties.

Then I left him and he told me, know what, Cherif, what you learned here now, go help 10 other people and like pay it forward. And when I left him, I had a lot of knowledge, but no extra money. It’s not like I saved a lot of money. And what I did is I just went to Southern California and started doing deals and it started growing. And I did hotel business on the side. So while I was growing in the hotel business with Hilton hotels, I started growing my real estate portfolio. Two years later, I left.

the actual hotel business and grew my real estate into becoming the largest owner of historic properties in this ⁓ US territory of Puerto Rico in old San Juan where the cruise ships arrive. I’ve done a lot of these in the US, in California, in Florida, I developed properties. I’ve done in Texas, I’m doing it now in Georgia. So I’ve been very active, it’s fun, it’s exciting and it’s like the game goes on, the background changes wherever you’re doing it and you get better as you get…

more experienced and more familiar with the game.

Scott Bursey (05:57)
Cherif, that’s an incredible story. Now that we’ve covered your amazing background, let’s jump straight into some large scale investing strategy. What is CMREI’s greatest operational advantage when managing assets across diverse regions like the US mainland and Puerto Rico?

Cherif Medawar (www.cmrei.com) (06:01)
Thank you.

The greatest strengths, I would say there are five things. The people that are involved, I have a great team that have been developed with me. Every single person has been with me 10 years plus, except ⁓ my CPA is my nephew. He joined three years ago and he’s developing very fast. And I suspect he will be with me for decades. the people, number two is the projects that we have. We always have cash flowing properties. We have properties that are really handpicked.

I usually use a region specific location to work hard on like Old San Juan. have at one point we had 41 commercial buildings. ⁓ In my real estate fund, we were focusing in San Francisco. My development focusing in North Port Ford. We focus on areas and that’s really a big ⁓ positioning that we have. Our unique selling proposition is we take an area, we master it, we have a big impact on it and

in lot of places we sell and a lot of other places we just hold on for the cash flow. And also the performance, I mean, it just compounds on itself. You get a loan, it keeps getting paid down. The property replacement cost alone keeps going up. So after a few years, usually after about seven to 10 years, you can refinance cash out all the money you put in and for the rest of your life is an infinite rate of returns. ⁓

And then the last thing is the profits. We constantly focus on the net operating income. How can we increase rent? How can we reduce expenses? And we’re doing refinancing now, cashing out money, reducing expenses and investing the difference on some other cash flowing buildings.

Scott Bursey (07:41)
That ability to operate across different legal and economic landscapes is a huge force multiplier. know, local expertise combined with a big picture view is non-negotiable for true scale.

Cherif Medawar (www.cmrei.com) (07:54)
Yes, very true.

Scott Bursey (07:54)
Now let’s

rev up the engines here a little bit. What is the biggest operational friction point or hurdle when integrating in offshore territory like Puerto Rico into an existing US based portfolio?

Cherif Medawar (www.cmrei.com) (08:07)
The challenge is of course traveling back and forth because I took residence in Puerto Rico legally so I have to spend six months plus in Puerto Rico which is not a problem. I enjoy it a great deal. But sometimes, okay, I have some other things going back and forth so I have to take back to back flights. Like I’m in Puerto Rico now and my office in Puerto Rico, have in-house team. I have in-house attorney, in-house CPA, in-house. This is tremendous. So it’s the challenge also sometimes it’s the different laws.

Like in US, you can do 1031 exchanges. In Puerto Rico, no, you can do certain things. But then there are some other tax advantages in Puerto Rico you don’t get in the US. So I became an expert in the differences and how to maximize the opportunities in each and minimize the downsides of each. So I have to constantly stay in the know of things with updates of incentives and penalties and license and permits, et cetera. Those are the challenges.

But since the team is so good, it makes my life easier.

Scott Bursey (09:04)
That’s awesome. And Cherif, for a pro with available capital right now, what is the most overlooked or undervalued asset class or strategy in the market?

Cherif Medawar (www.cmrei.com) (09:13)
have found that the strategy and the type of asset that’s almost always overlooked is the single tenant buildings. Single tenant buildings are those standalone buildings where you can get them under contract vacant, line up a national tenant to go in them, and even if you call, I don’t know, 50 tenants, all you need is one to come in, and when they come in, like a clinic, an auto zone, maybe a quick service restaurant, like a Jack in the Box or something, they will lease to 15 years.

So you work once,

you can give them some tenant improvement money and when they lease that building, it’s triple net. They pay the lease net of tax, insurance, maintenance. There is nothing to manage. It’s the corporate guarantee and it makes the value of the property jump, sometimes double, sometimes time and half. And then that’s it, you’re done. You can turn around and sell it or you can keep it. So it’s an immediate and instant increase in equity and beautiful cash flow and very easy to get good loans against them.

because the tenants pay direct deposits and the bank take that portion and you get the rest. It’s a great way to make it happen no matter what’s going on in the account.

Scott Bursey (10:52)
Cherif, if I’m hearing you correctly, you have to look where others aren’t.

Cherif Medawar (www.cmrei.com) (10:56)
Totally, it’s blue ocean. Blue ocean, I have no company. It’s not a bloody ocean like apartment buildings or I don’t know, what is it, storage facilities and stuff. No, this is not for everybody.

Scott Bursey (11:06)
Finding those pockets of high leverage opportunity is how wealth is accelerated. And speaking of that, what is the five to 10 year plan for your operation?

Cherif Medawar (www.cmrei.com) (11:16)
So my five to 10 year plan is actually to pay off all the debt. There is very little debt left, but we want to pay off all the debt and just have credit lines. That’s one part of it. So credit lines, so you tap it when you find deals that you can cash flow or flip or something as in buy and sell. And the other part is to create an estate plan and a legacy so my loved ones can continue operating the portfolio and not live off all the cash flow, but only parts of it and be able to borrow through

a structure that is very well controlled so the money can compound. I’m setting it up in Nevada eventually through Trust Account and that structure is a legacy structure for 365 years, believe it or not.

Scott Bursey (11:57)
That’s a massive injection of value right there. And Cherif, beyond global interest rate shifts, what specific geopolitical or economic factor are you watching most closely that could impact cross border real estate investing?

Cherif Medawar (www.cmrei.com) (12:01)
Yes.

So I really seldom if ever look at the national numbers or international actions and all this. Being in the US, I focus specifically on a property and a specific market. So actually I have a formula I’ve used for years. Focus on a market, focus on a type, understand the values and go get the best possible price. Then put that value, refinance, cash out your money. Now, if the interest rate went up, I’m gonna pay less for the building.

If the interest rate went down, I’m going to pay a little bit more for the building. But the evergreen formula is the same because the formula is based on finding a building vacant, bringing a big tenant, adding value. we’re a hotel that’s underutilized, running low occupancy, not maximizing average daily rates, taking it, adding value. And part of the process is to do creative financing to ease your way into the property. You don’t have to buy the property.

and put a big down payment, try to get a small loan because the property is not performing. I do options, I do lease options, I come in, improve the value, and then I exercise my option to buy. And then I work the best possible deal with the bank. And I make it easy for the sellers. I look for a win-win. And every now and then somebody’s not playing fair. They want to win-kill. And guess what? I’m the one slaying the dragon, my friend, because I know what I’m doing. And if they want to mess with it, I just walk away, or I’m going to just go full force.

and try to change it to my advantage without a win-win. It’s just the name of the game.

Scott Bursey (13:37)
It most certainly is, and that’s a winning formula. That’s why you’re staying ahead of the curve, Cherif. And I must ask, I know our listeners are going to be very, very interested to hear this from you. With a portfolio valued over $100 million, what is the most critical metric or principle you use daily to decide where to deploy your next significant capital allocation?

Cherif Medawar (www.cmrei.com) (13:43)
I do my best, I try.

Yes.

It’s always the net operating income. So I have actually avoided since mid 2024, I’ve avoided construction, the construction cost, the labor and all what is involved with that has been so crazy. It just destroyed many real estate funds that are private funds.

I had my own challenges in San Francisco with a lot of changes with the permitting and the cost of construction. So that has been something I avoid.

And my focus is always net operating income. So we take properties that are cash flowing and we say, can we take this cash flow to another level? Now I’m not talking apartment buildings that I’m going to charge them more rent and all this. I’m talking about, let’s say, taking apartment building and separating the units upstairs into condos, separate deeds, sell half of it, pay off the other half downstairs, and then work on good cash flow. Maybe charge them not the maximum rent, a little bit less and stay steady cash flow.

taking these single tenant buildings or maybe even mixed use buildings and saying, this tenant is paying 2000, this one is paying 2300, but they should be paying 4000. How come the owner is not charging much? I go talk to the owner and the owner says, ah, you know what, since COVID, I didn’t wanna mess with them, they’re paying me, I don’t wanna deal with it, I’ve owned the building 30 years. Okay, you wanna sell it? I’ll tell you what, I’ll give you so much cash upfront, you carry the financing, so you have no taxes to pay right now.

Because when you sell and carry the financing, you don’t have to pay taxes. It’s unrealized gains. And I’ll give you more cash flow than you’re realizing now from the building. You will have no property tax to pay, no insurance to pay, no tenants to deal with. I’ll make your life so easy, make mine easy. And when I educate them, it’s not a sales pitch to them. It’s an educational positioning. Here’s what’s in it for you. Do you want to work with me? I was…

doing a deal like this and the gentleman said to me, oh my gosh, it’s fantastic. I’ll carry the note for you at 5 % interest. What? The interest now is 7%. But he felt like, if you pay me this, you give me 300,000 upfront, I’ll carry 800,000. It’s a win-win and take the building, you fix it, you talk to the tenants, I don’t wanna deal with them. So I’ll go and easily now work with the tenants. Can I get you to the 5,000 a month or 4,000 a month on each side and I’ll take the back, remodeled and do something else.

That’s the type of deals I like. It’s a win-win and I don’t have to do a lot of construction and rehab and deal with the city for so much stuff that is just so difficult nowadays.

Scott Bursey (17:07)
You just moved the needle for a lot of pros. And with all your expertise, can you give us some pure gold, some final words of wisdom, Cherif?

Cherif Medawar (www.cmrei.com) (17:16)
What is the most important thing is actually number one, the price you’re gonna get versus the value you have. You know, like the old adage, price is long forgotten if you have good quality, right? So you get good quality building, meaning a good location, great potential, and work the numbers to get it there quickly and very carefully so you don’t actually take forever and spend more than is necessary.

Number two is how do you structure the financing? How can you do a win-win creative way to get into the deal? If the seller wants to sell and you’re the buyer you want to buy, it’s just a conversation. And it’s the what if, can we do it this way or that way or that way? So you’re only limited by your knowledge, your creativity, and your ability to communicate with the other person. So this is so important. Some people have no ability to build rapport. They come in very…

hard with what they want, thinking, like positioning, like it’s like gonna be a tough thing and they harden up. The idea is to me, be creative, be joyful, be playful, because it keeps you flexible to be outside any problem. Because problems will happen, challenges, the seller wants this, the buyer wants to pay this. How do you actually find that actual balance where it’s a win-win, a little compromise here, a little compromise there, and that takes a little effort.

understanding the market, the people you’re dealing with and what you can do. So hopefully that helps people that are listening.

Scott Bursey (18:42)
it certainly is going to. Cherif, you brought the fuel today. For those of our listeners that wanted to keep this conversation moving or collaborate with you, what’s the best way for them to reach you?

Cherif Medawar (www.cmrei.com) (18:47)
I think.

Well, my website www.cmrei.com, think it’s right here under my name, CMREI Cherif Medawar RealEstateInvesting.com. I have programs where I teach people how to identify the single tenant buildings, how to talk to brokers. ⁓ Actually, they can even do program with me where I can show them the proof of funds so they can actually be taken seriously, put the property on their contract. We give them.

a list of national tenants they can call and what to tell the national tenants and then we can get on a conference call and I help them close the deal and they can assign it to me if they don’t want it. They can keep it. I will pay them a lot of assignment fee. have over a thousand video success stories on YouTube. I don’t know of any other company that has a thousand video success stories on YouTube through the years. And ⁓ CMRI also we help people set up their own private funds. have in-house attorney that work for

for the SEC, so people very inexpensively, they can set up their own private fund. Not this indication where you buy one asset in one structure costing you $30,000. No, a ⁓ fund, a real estate fund is a type of structure that can meet your fund. You can buy an apartment building, you can buy a hotel, and it has no expiration date. It’s the only structure by the SEC that does not have to expire. So you set up once and you can work for life and create a legacy.

extremely powerful structures. I think I’ve cracked the code at the highest level because of the billionaire I started with and the great attorneys that have worked for me and the teachings I’ve done through the years. I’ve learned as much as I taught.

Scott Bursey (20:25)
Cherif, you certainly have cracked the code. And thank you for joining us today, my friend.

Cherif Medawar (www.cmrei.com) (20:29)
Thank you.

Thank you, sir. Much appreciated.

Scott Bursey (20:31)
And to our listeners, we appreciate you. If you got value from today’s episode, please subscribe. We’ll be fueling your tanks with a lineup of elite guests, just like Cherif Medawar, who are out there accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.