Conquer the Commercial Real Estate Landscape with These Expert Insights

Stephen S. (00:03.011)
Welcome to the real estate pros podcast and welcome back if you are joining us again Here on the real estate pros podcast. We interview the nation’s leading entrepreneurs in real estate and service providers So welcome back to the show. I’m here with Joseph Huang today and today we’re going to be talking about commercial Real estate and how retail is not equal

At Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs 2 5X their businesses to allow them to build the businesses they’ve always wanted, to allow them to live the lives they’ve always dreamed of. And we’re going to welcome Joseph here to the show. Thanks so much for being here with us today.

Joseph Huang (00:46.049)
Thanks for having me here, Sevan. Good day.

Stephen S. (00:48.419)
Absolutely, Good day to you. So I know so you have a really incredible background of problem solving. You were an IT engineer and have now been full time doing real estate investing, started with single family and multifamily properties over 15 years ago. And now you are the commercial tycoon who knows everything there is to know about about big deals. So

Tell us a little bit about how you got into this space and what you’re excited about now, Joseph.

Joseph Huang (01:20.98)
I’m not sure about being a tycoon, we’re always learning, we’re always growing, right? And that’s the mindset that, that’s why we’re here, right? We’re here to share, we’re here to learn and collaborate. But yeah, I got into commercial real estate about, gosh, more than seven years ago. Started with, you know, single family homes and rentals and whatnot, multi-family. Then I learned about the concept of triple net leases and that really intrigued me.

Stephen S. (01:24.771)
You

Joseph Huang (01:47.532)
to get into investing into retail shopping centers, but not just all retail, as you said, know, retail, not all retail created equal, right? We have to buy it right. You got to buy it in a great location, good demographics. And it was really important that, you know, we have the right mindset, the right, you know, the right education before we dive into, you know, just buying any sort of retail shopping center. So,

So I started just investing as limited partners in the beginning and just kind of learning the trade, learning how other operators look for deals, how they structure the deals. And over the years I decided, well, why not do it ourselves too? Why not also join up with others where we can scale up and buy centers as a group.

Stephen S. (02:38.283)
Absolutely. right now you’re a part of Synergize Ventures. You’re the founder of Synergize Ventures. And so what do you mainly focus on with Synergize nowadays with your investing?

Joseph Huang (02:56.074)
Well, we formed Synergize for one most important reason, which is to add value, right? The word synergy is you can do more, you can achieve more with having others with you, right? And so in multifamily, well, in single family, I could buy property alone, but in bigger deals like commercial real estate, if you want to buy a bigger deal, you got to be able to work with others, right? You got to be able to collaborate.

Stephen S. (03:09.027)
You bet.

Joseph Huang (03:23.409)
with other partners to make the deal work. So we formed that as the company with the mission of adding value, to create values, to buying not so much fully distressed property, sometimes it could be distressed property. We look for centers that is at least 50 % occupancy, maybe even 80, somewhat stabilized. But what we look for are nuggets. We are looking for hair on the deal issues.

that we can solve, right? It could be that maybe the previous seller or the landlord had it for over, you know, 15 years, 20 years, and they just really haven’t done a whole lot to the center, you know? There’s vacancy there. It’s dilapidated. It’s, you know, it’s just dated. It just needs a little bit of love. And we go in, basically, and, you know, lease it up, right? Fix it up, you know, address some of the deferred maintenance, you know,

maybe HVAC, maybe roofing, maybe the parking lot. All these need to be inspected during our due diligence and we need to be able to buy it right, buy it at a great price, but having a good right business plan to be able to lease it up and renovate it.

Stephen S. (04:39.797)
Now you mentioned there too that you have a team and so your main goal in founding Synergize was to add value. But why is it that for maybe the investor that’s been focused on single family and maybe some multi-family, some smaller multi-family deals, why is it that you have to have other people involved when you start getting into commercial?

Why is that so important?

Joseph Huang (05:11.025)
No, that’s a great question. For deals the size of 5 million, 10 million, unless you have that kind of cash lying around, most people will not be able to buy deals like that. And so it’s important that you understand how to use other people money. And with that, that’s a huge responsibility as a general partner to syndicate deals. You got to be able to follow SEC regulations. You got to make sure that

you know, you’re not going to be a bad actor and you take people money away, right? It’s important that you follow this kind of rule. So it’s a good story of other people’s funds. It’s important that, you know, we have the right mindset about a buy it right at the lowest possible price. And then, you know, be able to give the returns that we target for. We try to be as conservative as we can on underwriting.

with the goal in mind to deliver if it’s possible.

Stephen S. (06:14.667)
Now with a commercial deal, I would assume that it takes a lot longer than doing a smaller single family deal, multi-family deal. But tell me little bit more about that process, the underwriting, everything. How long does it take for once you find a deal for it to actually, you have the money to go buy it then the deal’s done. How long does that typically take?

Joseph Huang (06:40.004)
You know, typically for due diligence, it could be 60 days, really, and then maybe another 45 days to close. Oftentimes on bigger deals, you may need to amend it and you may need to extend it. And so on an average, think based on the previous five to six years of closing deals, I would say it range anywhere from two to three months, maybe even maximum as long as six months, actually, mainly because there could be issues with

with due diligence, could be issues with lending and sometimes it could be raising money too, right? If the deal is big enough and you need additional time, there may be a lot of back and forth on renegotiating on the terms with the seller when you find things that was unexpected. It could be discrepancy within the OM, right? What was published in the market material may not always necessarily align with what you find when you actually

look to the financial the last three years, right? There hasn’t ever been a case where we’ve been, know, everything was completely exact on the OM. And so oftentimes we actually have to go back and read read readjust the price, right? Or get some sort of seller credit. And sometimes that can take time to renegotiate with the seller. And so I would say on an average two to five months, you know, sometimes

You can be lucky and close it sooner. We’ve closed on deal on auction and that actually would be the quickest one, right? You know, getting in on a deal on auction, you only have 30 days to close. And so typically, you know, if you look for a deal that may be going on auction in a month, you really only have that month to examine all the paperwork, examine all the reports and then place your bid. And if you win it, you have basically 30 days or less to close on that deal. So…

Stephen S. (08:12.928)
Really.

Stephen S. (08:34.678)
Mmm.

Joseph Huang (08:35.03)
With the exception of auction, would say on an average for us, two to five months to close on a deal for commercial.

Stephen S. (08:42.499)
And so in that in that two to five month time process You know, what are what are some mistakes that you’re seeing newer people to the commercial space make when they’re getting in? Maybe it’s their first deal first couple of deals What are some of those pitfalls and mistakes that you see people making when they go into buy a property or or or or do a deal there?

Joseph Huang (09:05.739)
Yeah, there’s definitely a lot of pitfall, a lot of hair on the deal that you got to make sure that you are aware of. First and foremost, I would say make sure that you have a transactional attorney, not just any attorney, making sure that when you’re signing on to a purchase sales agreement, you know, that you have vetted, you have worked with, you know, an attorney that will protect you as a buyer.

But if you’re doing it for first time, it’s probably important that you partner with someone first rather than try to buy yourself, even if the deals seem great. Working with someone who has experience in that asset class, probably by far the most important thing to do. But yeah, building a team is going to be important, right? Buying it right, buying it in a good location. Making sure that you do your due diligence, right? Looking at the sub-market there, understanding the demographics.

understanding the for retail the accessibility right whether there are ways for cars to get in and out that’s very important but you know the number one rule in real estate is location right second rule is still location and so is the third right location location location as they say but that’s not just about where it’s situated but how is it situated with other you know shopping center for example visibility becomes an important thing too so

Due diligence is very absolutely important, but it’s also about the numbers, right? So when you do due diligence, you gotta make sure that the financial makes sense, right? You’re buying it at the right price. And then understanding due diligence, you know, what are the hair on the deal? What are the issues that you need to be aware of that you’re able to fix? And what are those costs? So these are just very, some of the many things that you have to understand. There are so many mistakes that people have to

made by rushing into the deal and not really understanding these pitfalls that you can avoid from the very beginning through the process of due diligence.

Stephen S. (11:07.523)
Certainly. Now, so how important is it to have a good team when you do what you do? You mentioned that having a team has been crucial for your success, but how important is that in general to have people that you trust to handle their individual piece within what you’ve got going on through that process?

Joseph Huang (11:30.864)
or it’s absolutely important to have the right partner. And with the right partner, it’s also important you write it down. It’s also important that you have an operating agreement. And so with all the partners that I’ve worked with, whether they’re limited partners or general partners, we have this operating agreement that we vet through, that we make sure that both attorneys, whether they have their own attorney or not, that they also vet through it. They have a good understanding of what the expectations are.

of the other partner, right? Whether they’re getting in as a limited partner in the syndication deal, and I’m a general partner, they need to understand what that operating agreement is and making sure that it is vetted through and is detailed and not generalized that later could be a misunderstood. And that’s where a partnership can break up. So yeah, building a team, having the right partners is absolutely important in making sure that you’re right. It also could be the reason why a deal can fail.

too, right? So.

Stephen S. (12:30.349)
Sure. Yeah. Yeah. I mean, just like a business.

Joseph Huang (12:32.483)
all about relationship. Promotional real estate, just like anything else, it’s about relationship. And when that relationship fails, many things can fail in a deal, especially in commercial real estate.

Stephen S. (12:44.707)
And with any relationship, they’re always typically centered, good relationships at least, are always centered on trust. how do you, how much trust do you have to build in order to get where you are today? And how do you do that?

Joseph Huang (12:52.343)
Absolutely.

Joseph Huang (13:01.564)
Yeah, mean, the relationship takes time, know, spending time with them, know, doing deal with them, understanding their track record, you know, communicating, you know, my track record with others, right? Demonstrating what you’ve been able to do in the past, that definitely helps too. But building rapport, right? There’s no other way than spending time with them and talking with them to understand that. And sometimes you do have to take in that leap of faith.

And you may discover later that the expectation you have with that person may not be aligned with you later. And until you actually work that out, you wouldn’t really know until you get in on something, whether it’s a venture or a partnership or just something that you do with. It just takes time, I think, to build that trust, really, just like anything else, marriage, friendship.

It does take time.

Stephen S. (14:04.931)
In that time process though, what are some things people can do to build trust?

Joseph Huang (14:12.472)
Yeah, obviously, you know, doing things together, right, whether it’s a partnership through a business or, you know, getting together, do coffee and just, you know, really talking, right, really understanding what their values are, their goals are, what their mindset, you know, does it align with you, right? And if you can quickly identify that, you know, maybe it’s not the right fit, you know, to be a partner, maybe it’s just being a friend and that’s okay.

But you your mindset really needs to align in terms of your mission, your goals, and your values. Those things you have to align, I think, for you to be able to work together, to build that trust, especially in real estate.

Stephen S. (14:54.541)
Yeah, no, absolutely. I completely agree with you on there. So it sounds like you’re a very principled person that has core values and you actually know what those are. Would I be correct in that guess?

Joseph Huang (15:08.181)
Absolutely.

Stephen S. (15:10.133)
And so how important are core values to you when you’re working a deal with vetting a business partner just in general? How important are core values to you?

Joseph Huang (15:21.048)
Core value is absolutely important, right? mean, integrity, work ethic, these are just some of the few things that I look for in partnering with others. But past experience does help too, and if they don’t have that, it’s on me to do the best I can based on my judgment of them, and vice versa as well too. I got to demonstrate from past experience and also existing relationship what I’m able to bring in.

to the table and what my values are in terms of integrity, terms of being able to work through issues of many relationships that I’ve been a do in the past.

Stephen S. (16:06.785)
Yeah, 100%. Yeah, I love your principle in that way because I’m the same exact way to your point. said, know, there are some people you might even be friends with because like you align on certain other values, but the way they handle money, you probably wouldn’t ever give them a dollar or loan them five bucks. You know, much less do a multi-million dollar deal, right?

Joseph Huang (16:21.163)
Bye.

Right, yeah. Yeah, I mean, like your family members, right? You love them, right? And you trust them too, but you may not trust them with your money and they may not necessarily want to invest with you. You love them for who they are, you know, and the fact that your family, you’re part of the same blood and part of all that, but maybe in principle with investment, maybe there’s no alignment there. You you don’t have that. And so mindset becomes very important too, right?

Stephen S. (16:30.549)
Yeah sure

Stephen S. (16:37.622)
Right.

Joseph Huang (16:52.566)
when you’re partnering up. So yeah, there’s a big difference for sure, you know, in that type of core values, especially in real estate.

Stephen S. (17:01.439)
Absolutely. So I want to I want to move back towards something we we sort of touched on and then kind of went over just in the conversation. But you’ve you’ve said a couple of times in previous to us actually getting on the show live as well as you mentioned at that time in the beginning about how retail is not equal. Can you can you dive a little bit deeper into what you mean by that when it comes to your world?

Joseph Huang (17:28.093)
Right, no, mean, there’s a lot of changes going on right now with retail. There’s lot of changes going on with the whole economy, right? mean, we’re in flux right now, right? The market’s crashing and whatnot. But in retail, you know, I mean, I was buying retail when everyone was afraid of retail, right? When the pandemic hit, you know, we didn’t have a whole lot of competition. But even then, we had to be careful about what type of retail we want to buy, right?

you know, not all shopping centers or malls are great investment, right? Location becomes very important, right? Big boxes, you know, I those are kind of risky, you know, risky type of retail that, you know, might be great if you can find a great tenant, right? Single tenant, big boxes, you know, would be harder to lease up than something like a strip center that has multi-tenant mix, right?

more leasable spaces. So we tend to focus more on shopping center not only in a great area, great location, car count, tertiary market compared to primary. There’s a huge difference. And so not all retail are created equal, mainly due to location, tenant mix, and also sizes as well too. A shopping center in a tertiary market, like in a small town of Kansas, it’s not going to be the same thing.

like a very same shopping center size in somewhere like Dallas. So location becomes important, but also tenant mix as well too. And the size that is available to lease up is going to be different too. So it’s definitely situational. And so that’s why I really truly believe that when you’re buying retail, it really comes down to all those factors you have to consider when investing in the commercial real estate.

in these different markets.

Stephen S. (19:24.257)
Yeah, definitely. So you mentioned you didn’t have a whole lot of competition and you’ve consistently been someone willing to run towards risk when other people are running away towards it. And I was going to ask, interestingly enough, because you’ve been doing this as long as you have that you’ve seen retail go through the whole shift from online to or from traditional

traditional brick and mortar to online, like all of the different things that have happened there. So why is it that you think that you weren’t adverse to the risk of retail while everybody else was running away from it?

Joseph Huang (20:06.705)
Well, when we were looking at a shopping center in Virginia, it’s called Timberlake Station, we were looking at this 82,000 square feet center that used to be a grocery. But it didn’t include grocery, but it was shadow anchored by a much larger grocer, which was Kroger, and still there literally across the street. And so even though we’re buying a property without a grocer, the fact that it’s shadow anchored

That’s actually good enough because it’s already bringing in cars to a nearby shopping center. So we’re right next to it, right? We have a gym, we have a flooring company. Family Dollar at the time was struggling a little bit, but when the pandemic hit, all of a sudden their sales went up. All of sudden people shop more at Harbor Freight, right? We had a Papa John.

We had a tropical smoothie, is a two drive to right in front. And then we have all these other vacancy that we need to lease up, but it was still 80 % lease up. And so our risk was reduced because it pays for the loan, it’s a cash flow, and we still have the opportunity to lease up the other vacancy while still have these junior anchor like Harbor Freight, like the flooring company, which,

also did phenomenally well because a lot of people were still working on their home and they didn’t need flooring supply. And so we renegotiated at least, you know, from a two year, they were going to be up, they did a full, you know, 15 year once we got in to do the renovations and address a lot of full maintenance that the previous landlord did not do, right? And then in that process, you know, we were also putting in a workout, any time gym. Now that one was probably the biggest hit on the deal for us because

you know, hey, everyone stopped doing a gym during the pandemic. And here we are, we have a user that, you know, need to build a gym. And that took us some time to actually eventually fill it up. But a year or two later, it opened and after the pandemic was over, everyone came back. And now, you know, it’s probably one of the top gyms, it’s probably the busiest, largest gym in that market in Lynchburg, Virginia.

Stephen S. (22:33.123)
No kidding.

Joseph Huang (22:33.685)
And it’s all because we understood our risks, but we also had the talent mix to thrive in a very challenging time. Especially with, know, we’re doing the pandemic, people are still shopping at these sort of Amazon-proof type of business services like a Harbor Freight or like a Family Dollar, right? So, yeah.

Stephen S. (22:57.89)
Right.

Stephen S. (23:01.955)
So now is your ultimate goal to hold on for dear life once you have a deal? What does your traditional exit strategy look like?

Joseph Huang (23:14.039)
Yeah, we typically hold it for three to five years. But in the case of say, for the Timberlake Station deal, our investor actually had an opportunity to exit after about less than two years and have a great return on that investment. And we were able to move them over to another great deal that was missing a grocery store, but two years from

from that standpoint, we end up bringing a Hispanic grocer to that center and they realize even a bigger return on that deal. And so we kind of provide a different exit strategy for our investors, depending on whether we can execute the business plan faster than initially planned. Case in point, we close on 132,000 square feet center anchored by Kaiser Penamente, which is one of the largest.

healthcare out there is about 70 % occupied. We bought it 16 months ago with seller financing and we’re about to be 100 % filling up four big spaces with a combination of grocery, medical, and then co-working space with the REACH’s co-working space, they call it HQ, and we’re about to have grand opening there. And then the last lease we’re working on is with the county.

Stephen S. (24:35.491)
Mm-hmm.

Joseph Huang (24:41.131)
to bring in these office spaces for the DA basically. And so they’re pretty excited about it. That’s a 15 year lease right there. That lease alone is with a lease, I would say $4.5 million. And so just in a short 16 months, we’ve been able to add over 10 million in value to that property, to that center, through leasing really.

very little renovation that was needed in this property.

Stephen S. (25:13.347)
Man.

Joseph Huang (25:13.995)
So that’s the power of retail is that there’s so much value you can add just to lease up. Because the lease is, especially in the long term, unlike multifamily, a lot of these leases are short term. They start out as one year and then it’s month and month after that. Now granted, can lease up, you can rent out spaces much quicker than retail. But once you lock into a long term lease, a five year, 10 year lease,

Stephen S. (25:21.208)
Yeah.

Joseph Huang (25:41.534)
these leases are worth money and so the value created can be passed on to the next buyer and so when you sell it, it’s really about the performance of that retail and that’s what makes it so great, this particular asset class. And same thing with triple net leases, the full industrial as well too, it’s really about the triple net leases, the ability to reduce expenses, to passing a lot of that to the tenant pro reda share.

Stephen S. (26:10.691)
So if you had to go back to the beginning when you first got started with commercial real estate and put yourself back in those shoes with everything that you know today and you were able to just start from scratch, what would you do differently and what would you do the same?

Joseph Huang (26:33.052)
Hmm.

You know, I don’t know if I would change much. I think I would have started sooner if I could and I would have gone bigger. You know, like we’re looking at larger deal now. We have a $20 million deal, a grocery anchor, nicer quality. But you you got to start somewhere, right? And I don’t think, unless you have the cash and unless you have…

you know, investors already entrusting you and you just started it and you can go ahead and just start buying 20… I don’t know if most people can actually do that. So don’t know if I would change much in terms of my journey. I definitely really enjoyed it. Definitely there were a lot of challenges. There were a lot of lessons learned. I think if I could change anything at all, I would have started sooner. I would have maybe get the education and partner up with people sooner and more often.

but also vetting them too as well too. I I’ve been lucky, you know, partnering up with people who have mentored me, who have helped me, but eventually, you know, making the step to do it for myself too. But getting the help, joining up with a mastermind definitely would help. I would have loved to join in mastermind even earlier on, maybe even more so that you can get that learning, so that you have that support system, that network.

To build upon so if I were changing at all I would have done more in that in terms of you know joining into a mastermind much sooner and You know just looking at deals maybe more often, you know Success is a it’s a numbers game, right? It’s about a massive action that you take so doing more of anything I think would lead you to a greater chance of success so

Joseph Huang (28:30.449)
You know, and everyone’s journey is going to be different, you know. It may take you six months, it may take you two years, but if you just keep at it and if you partner with the right people with the right mindset, I think anyone really could be successful in commercial real estate. You know, it’s not going to be the exact path, but you know, if the goal is there, you’ll get there.

Stephen S. (28:51.893)
Yeah, love that. And it’s just so everybody is clear, just so we’re clear on it. Joseph said it, not me. He said the thing about Masterminds and that’s why at Investor Fuel, not an ad, but an ad, we help investors service providers and real estate entrepreneurs, due to 5X their businesses, right? So that’s really cool. So tell me a little bit more about that, like just how important, like once you joined a Mastermind, like how important was that for your growth as well, once you finally like made that decision too?

Joseph Huang (29:06.385)
Right.

Yep, agree.

Joseph Huang (29:22.519)
yeah, the Mastermind makes a tremendous difference because not only does it build your belief system and your confidence and your ability to understand you can do the deal, you see all walks of life doing it, like, that guy can do it, or that woman can do it, like why can’t I? I think that’s probably the biggest thing that it did for me is that it really built your belief system, but…

More than that also, it’s about accountability too. When you join a mastermind group, it’s almost like joining the gym. Obviously, you can work out on your own. you know what? All parts of those that can do that, and I know there are plenty of people who can do commercial wheels, even on their own. For me, it’s about accountability. It’s also about the motivation and the network. And while you can do a lot of on your own,

Stephen S. (29:57.389)
Sure.

Joseph Huang (30:17.524)
You may make a lot of mistakes and sometimes those mistakes can cost you greatly. That’s it. That could be the end of your career. why do that? Why reinvent the wheel when you can join up with others and learn from them and really expedite your growth? If I had the time, I would have started way earlier. And if I didn’t have a mastermind, sure, I would have still done it anyway.

But if you have the ability to join a mastermind to expedite your growth and your chance success, it’s all worth the investment to do that. So I would highly recommend you join a mastermind. But not just any. You want to make sure you’ve vetted through to say anything else. Do your due diligence as well. Vet the folks that’s in there and really understand if it aligns to your goals and plan in what you’re trying to achieve.

Stephen S. (31:14.881)
Yeah, I’m gonna I’m gonna have to send you a check for the For the for the plug for us here later on for the advertisement on why people should join a master yeah, that’s funny. That’s awesome. But no, think you’re a hundred percent, right? It’s about being able to shorten the learning curve get around people that are Further ahead than you that aren’t just they’re beating their chest saying look at how big my business is But actually want you to also be able to have the same results, right?

Joseph Huang (31:24.397)
Yeah.

Stephen S. (31:39.871)
And so, you know, it’s amazing because maybe maybe it’s just me, but I don’t remember my parents ever talking about groups like this. You know, like what we’re talking about 35, 40 years ago where you could just join a group and cut off half the learning curve. It really used to be like you had to go and find someone and work for free and do all these types of things to hopefully cut your learning curve off. So by the time you were 50, you might be able to learn all the stuff you can go and do, know, to hopefully make some money. Right. So really.

Joseph Huang (31:47.371)
Mm-hmm.

Joseph Huang (31:51.361)
All right.

Stephen S. (32:09.877)
or the connections, right? And so I think what you’re talking about there specifically is great just in terms of helping people to grow. So I know we are going a little over our time here though, and I want to be respectful of that for you.

Joseph Huang (32:19.201)
3.

Stephen S. (32:24.803)
Man, I’m really really grateful that you were able to hop on with us today Joseph and I hope everyone that you’ve enjoyed today’s show and Just before we go if anyone wants to learn more about you Joseph or what you’re working on Maybe it’s if you want to say who you might be looking for as far as partners on future deals Where should people go to find you and and learn more about you?

Joseph Huang (32:39.125)
Okay.

Joseph Huang (32:49.354)
Yeah, you can just email me at jhsynagyventures.com and hopefully you can provide that contact with synergysventures.com and there’s a lot of projects there that we’re working on. We’re looking for folks that want to invest with us and understand that there’s a lot of opportunities out there, but not just…

in the asset class, in retail, in self-storage, as well as small bay. We have experienced that as well. We’re also looking at multi-families. we’re a pretty diverse group and looking to partner with others that align with core values and what they’re trying to target for in terms of real estate.

Stephen S. (33:40.203)
You bet. Awesome. Well, and if you do go ahead and reach out to him, just make sure to let him know that Cowboy sent you over if you do hear it. So that way he knows it came from us. So I’m trying to get all the credit I can over here. But well, everyone, I hope you enjoyed today’s show and we will see you on the next episode. Joseph, thanks so much for being here. We’ll see you next time.

Joseph Huang (33:58.279)
Alright, thank you. Have a good one. Take care. Thanks.