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Create Value Fast in Real Estate and Scale Without Traditional Bank Loans

By February 4, 2026Real Estate Pros Show

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Show Summary

In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Scott Tonges, a seasoned commercial real estate broker with 45 years of experience. Scott shares insights into his focus on small property investments, particularly shopping centers in Texas, and discusses his upcoming free course on real estate investing starting with just $2,500. He emphasizes the importance of creating value in real estate, understanding investment mechanics, and the operational relationship between landlords and tenants. Scott also highlights the significance of repackaging properties to attract buyers and shares his current goals in the real estate market.

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    Investor Fuel Show Transcript:

    Scott Tonges (00:00)
    If a realtor has a house for $400,000, that’s how he advertises it, he or she. But what you could do, if it falls in the FHA limits,

    You could, that’s a three, you can get in for three and a half percent. Well, that’s about what? I don’t know. $17,000 or so. So if you add this, if you advertise $17,000 down, that’s a lot more attractive than house for sale for $100,000. Cause a lot of people are still thinking, Oh, 25 % down. Where do I get a hundred grand? So repackaging things.

    is really the key

    Michelle Kesil (02:10)
    Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Scott Tonges, who is a commercial real estate broker and has 45 years of experience in every facet of investing real estate. excited to have you here today, Scott.

    Scott Tonges (02:22)
    commercial.

    Thanks, Michelle. It’s good to be with you. And appreciate you having me on.

    Michelle Kesil (02:36)
    Yeah, of course. So let’s dive in. First off, for those not familiar with you and your work, can you share what your main focus is?

    Scott Tonges (02:47)
    My main focus today is, ⁓ besides ⁓ private investment on ⁓ small properties, principally ⁓ shopping centers, strip centers ⁓ in Texas. That’s one of my key focuses. The other, I’m completing a course, a free course that should launch next week, getting technical issues out of the way. It’s called Start with $2,500 Real Estate Investing. While that sounds impossible, it’s very

    doable. I’ve done plenty myself, but it’s learning to do options and even lease options and things like that. what most people think when they get into commercial real estate or any kind of real estate, they’re thinking it’s got to be a 25 % down, you know, get a loan and move ahead and get an 8 % return. But I worked with a lot of, I call master investors and they do anything but that.

    while they were in the league of, you know, paying all cash for something and turning it around, turning properties around that are underperforming or maybe even in dire straits. But some are just underperforming. And I learned from them. And as one of my clients told me aboard his 12 million dollar Gulfstream jet, he said, what I do on a large scale, anyone can do on a small scale. And that that didn’t really resonate with me at the time. But after a period, I realized that these guys

    When you meet somebody that’s one of the fellows I worked with, Jerry Moore helped him buy a handful of centers, but he had a hundred shopping centers. And you wonder what are these guys doing that the average person doesn’t do because they’re kind of lucky to buy their first property and hope it works out. And what they understand how to do, and I finally learned how to do from them, was to create value and do it in short order and creating and understanding value.

    is really the key element to making serious money. And when I talked about the starting with $2,500 or less really is to create seed capital, which most people that’s kind of what a lot of people are, you know, how do I get the money? How do I find 50,000 or a hundred thousand dollars? Well, you can do it by understanding how value is created and what even a vacant building could be if you understand creating value in local markets.

    I’m working on putting together, I call myself a financial doctor for commercial property owners and their tenants because it really needs to involve the tenants because you can’t just go in and raise rents and not have ⁓ chaos. So anyway, I’ve worked on both ends to help the tenants make money and thereby then the landlord can raise the rents. As I said earlier, you can.

    If you raise somebody’s rent by $500 a month, but you can show them how to net $5,000 a month by marketing, which very few really know how to do, then that makes a big difference. So today I do my own private investment.

    I’ve got my free training course coming out by next week, then working with commercial property owners and helping them.

    improve operations and then for those who wish, I only work with a handful of people at a time, but ⁓ help them daisy chain to owning more properties. Because I did finally understand how these people were creating multi-property portfolios and there is a trick to it. I say the trick is really understanding value. having had a…

    Having broker spending, as I said, five years with each of the property types over the decades, I’ve really come to understand they’re all pretty much the same thing. Just a four line, fourth grade math formula is how you determine value on every property type. So that’s it. then so helping those people create multiple properties is part of the game. If they just want to improve an existing property, that’s doable too.

    but it’s a marriage between the, not a legal marriage, but an operational marriage between the tenants and the landlords.

    Michelle Kesil (07:57)
    Yeah, absolutely. And what do you feel are some of the main keys that have made the biggest difference in allowing your business to be able to continue to grow and to run smoothly?

    Scott Tonges (08:11)
    Well, I think understanding the mechanics of, as I said, it wasn’t until I had been involved in all the property types, and I spent eight years doing hotels, which I never want to own a hotel, but I learned that it’s all the same game and how the people that, know, Jerry Moore wound up with a hundred shopping centers. And I took one of my clients, Darby Souter, and we went from, I think he had about 170 apartments and he went to over 700.

    But on the side, I didn’t know this until later in our 25 year friendship that he had acquired 150 houses collectively in Houston and San Antonio. And knowing how these guys thought and how they did things, again, the 25 % down wasn’t the way to do it. They knew how to create value and do it quickly. And in the early stages, when you create value quickly, you can dispose of that and get that new

    value that you’ve created, ⁓ can use that and then do it again and then you repeat it and eventually you’re in the league that you’re writing checks for the same kind of value opportunity properties that you may have borrowed money on in the first place, ⁓ but eventually you’re writing checks. And I met those guys at that level, except for one Howard Ruby, but we were using ⁓ institutional money as our lending partners.

    life insurance companies mainly, but he did what Darby did with apartments on a large scale with high end apartments. And this was before anybody knew about Airbnb or anything. were doing short term rentals furnished to corporations. at the only time I’ve had a salary job in 49 years, I’ve had two years of salary. anyway, that wasn’t my favorite thing.

    Howard built a multi

    built a billion dollar company called R &B. And we dealt with apartments and commercial properties, but we did office buildings. And we did on a large scale, kind of an institutional grade scale of what Darby did on a small scale with apartments. as George told me, what I do on a large scale, anybody can do on a small scale. So between getting seed capital,

    And to do that well, you need to understand the key relatively simple components of investment real estate. And I taught investment real estate for five years to professionals for continuing ed here in Colorado. So, but it wasn’t until much later, even the last 10 years, that I really started to understand how the game was played on a big scale that somebody on a small scale could match. And that sort of evolved into the start with $2,500.

    real estate investing course that I launch next week.

    Michelle Kesil (11:48)
    Awesome. And as far as like your own investment journey, what has that looked like? What type of investments are you choosing?

    Scott Tonges (11:55)
    Well, I’ve done, I’ve

    done, I’ve, did houses for a long time. Actually, my first investment house was a, I spent, it was a troubled property, a nice property, a woman’s husband had passed away and, um, I spent $50 for some ads and I assigned that deal to a couple that wanted to buy it. And I made $11,500 on it, but on a $50 investment, that’s pretty good. And later I found it was easier.

    to do it with small commercial where you could like just a closed down fourplex. I had no money in it whatsoever. It was pre foreclosure and all. Don’t get me wrong. Every I’m not saying that you’ve got to look for trouble properties because if you ⁓ reposition or as I call it, ⁓ basically can repurpose how you. ⁓

    how you present things. They can be perfectly well operating properties, but how you present them to the market gives you an opportunity. I’ll give you an example of repackaging is what I call it.

    If a realtor has a house for $400,000, that’s how he advertises it, he or she. But what you could do, if it falls in the FHA limits,

    You could, that’s a three, you can get in for three and a half percent. Well, that’s about what? I don’t know. $17,000 or so. So if you add this, if you advertise $17,000 down, that’s a lot more attractive than house for sale for $100,000. Cause a lot of people are still thinking, Oh, 25 % down. Where do I get a hundred grand? So repackaging things.

    I know I did it with a office condominium in Phoenix.

    And at first it looked like a million seven deal, but by repackaging, and I didn’t do this as a broker, it was as an investor. I basically marked up a million six deal that the owner wanted to a million seven and I repackaged it. It was a 10,000 square foot building and I repackaged it for somebody that needed 5,000 square feet. And he could reduce his operating costs significantly on over half by leasing out the other half of the building.

    So that was just repackaging something that a broker and having been one for almost 50 years, they would have just said, you know, building for sale a million seven, you you figure it out, Mr. buyer. So repackaging is a way to deal with ⁓ properties that don’t have a big upside, but you repackage how attractive they are to a certain level of buyer. I think, I think knowing, knowing again, knowing what master investors do.

    And then bringing that down to, and I really think, honestly, think ⁓ home builders, not home builders, but home investors are really very clever. And a lot of those clever ideas that home investors do are applicable to the commercial world where a lot of these ideas are just unknown. The commercial world still in sort of the backwater of, ⁓ you know, unique ideas on how to approach investing.

    certainly my hat goes off to the real estate, the residential guys, I know I learned. My first deal was I stumbled through what I learned from Ron LeGrand, who I really appreciate. I just didn’t realize you didn’t have to come up to 25 % and run out of house. That’s a long-term thing. And what most investors do and what I teach people to do is quick turnover. Create value quickly.

    Get the equity out and do it again. And in time, you don’t need loans. if you stay on the small scale, can eventually write checks. And I met so many investors at that point. But still, what they did and how they got there ⁓ is a doable set of rules.

    Michelle Kesil (16:50)
    Yeah, absolutely. And what are you most focused on now when it comes to solving or scaling the next thing? I know you mentioned your course, but maybe when it comes to investments, are there any goals for scaling that right now?

    Scott Tonges (17:06)
    Well, looking at strip centers primarily. They don’t have to be in trouble. I prefer that, but they may be under rented. ⁓ working with repositioning those and creating equity quickly in them is pretty easy to do. so that’s kind of my focus. I’m really looking in mainly Houston and San Antonio.

    which I’m kind of familiar with though, you said San Antonio have grown in ways I probably wouldn’t recognize, but that’s it. ⁓ then helping ⁓ multi-tenant, ideally multi-tenant commercial property owners gain greater equity out of their properties by working in concert with their tenants. And marketing is really the bottom line of all that. ⁓ And kind of the direct response marketing

    is really the key

    for

    brick and mortar stores to gain more local business and then becoming remarkable sort of the Banana Republic idea and then building, helping them learn to build a cell because a lot of people that are selling businesses now don’t realize that all they’ve got is really selling off their inventory at wholesale because they really don’t understand what business buyers are looking for. So that’s sort of the third step in what the program, four-step program that I helped. ⁓

    retail clients through the landlords put together. And then finally a money model under the way of Alex Ormosi who did his book launch back in August and sold 2.9 million books on a Saturday. So he has something to show and a lot of brick and mortar stores really don’t understand that. So it’s really good to know. helping landlords and tenants ⁓ redo their

    financial operations and getting my course launched and that’s sort of it. So I’ve got a book that I’ve had for actually a few years old but it’s called Property Empire. There it is promoting my book, Property Empire, How to Build Wealth with Real Estate Using the Secrets of Master Investors. And if you go to ⁓ Amazon, it’s ⁓ just put in Property Empire, Tonges, T-O-N-G-E-S.

    and you can go right to it. in my free course that I launch next week, it’ll be available. You can read the first chapter at introduction. It’s both kind of business diary and what I learned and a lot of how-to and all real life situations and some of the master investors I learned from and what they did. And how to avoid risk was one of the biggest ones. I know dealing with the shopping center guy.

    They avoided risk. That was really the key. They knew how to do that. that again, it’s doable on any scale. So you just don’t want to buy a troubled property and then take over the same problem the guy you bought it from did. Even buying it cheap doesn’t work. You’ve got to minimize that risk. So that’s it. I’m still rebuilding my website right now so people can access this information and stuff. But if anybody has interest, my

    Direct email is ⁓ propertytrust.outlook.com, propertytrust.outlook.com. that’s kind of where to learn a little bit more. And most everything I do is really free, as I will be launching that course next week.

    Michelle Kesil (20:46)
    And who is like this course geared towards is a more geared towards investors property managers all of the above

    Scott Tonges (20:53)
    Well, really anybody who wants to understand real estate, investment real estate, on a level where you’re not exposed so much, the last place you want to go, especially as an early on investor, is a standard bank. ⁓ Hard money lenders are fine. Again, you need to know what you’re doing to make them comfortable. I think ⁓ understanding how to create value, and that’s not about

    just troubled properties, those are great opportunities. But you really need to understand how value is created and to do it quickly and as you can get in and out of those situations and sometimes you don’t need to buy them or own them, you can assign them and that’s where the start with $2,500 area ⁓ comes into play so people can earn the seed capital. But knowing what happens for the guy that you’re

    assigning that to, that’s really the key. I teach people how that’s done or how to interpret or understand and put on the market a property so they understand what they’re getting, not just distress apartment for sale, because then you’re just sort of leaving it up to them. And if you know a few steps to take to make that an attractive offer, repackaging it, as I say, then you’ve got something to work with. a of my, a lot of my

    buyers of things I repackaged that I never owned were attorneys. I’ve got three attorneys come to mind right now that had no problem paying five figure fees to me to get hold of what I had repackaged and help them understand what was available. So you’re not taking the advantage of anybody ever, whether it’s a seller or the in buyer.

    There’s a smart way to do all of that.

    Michelle Kesil (22:56)
    Yeah, definitely. Thank you for clarifying. So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you?

    Scott Tonges (23:07)
    I think since my website is under massive rehab, just email me at [email protected]. That’s [email protected]. It’s one word. And yes, there’s two T’s in there. Seems weird. But that’s probably the best way. And if you have an interest in, if you have deals or ⁓ if you ⁓ are interested in looking into the free course or getting the first chapter of the book free or

    anything like that, I’d be glad to get back with you. Just let me know what your interest is and I’ll lead you in the right direction. Hopefully everything that I was talking about, a new website, and all that will be up and running next week. that would be the best way to get started.

    Michelle Kesil (23:50)
    Perfect, well, appreciate your time and your story. Thank you for being here.

    Scott Tonges (23:54)
    my pleasure, Michelle, and thank you for the opportunity to join you. Really enjoyed it.

    Michelle Kesil (23:59)
    Great, and for the listeners tuning in, if you got value, make sure that you have subscribed. We have more conversations with operators like Scott who are building real businesses and we’ll see you on the next episode.

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