Creative Financing for Commercial Real Estate: How Investors Buy with Owner Financing | Edward Zulyevic

Edward Zulyevic (00:00)
Yeah, so it’s really about the debt that we can get with that property. Again, we’re all looking for a certain asset class, but I’m specifically looking for a specific person that owns that asset. And again, how long have they owned that property? Can I get into a conversation with them directly, grow that relationship to really dig into a

What do they need in their life? Whether that be some money now, some money later. They’re typically ⁓ asset rich. They own a lot of assets, but they’re strategy poor.

Michelle Kesil (02:11)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil and today I’m joined by someone I’m looking forward to chatting with, Edward Zulyevic of The Operative Group, who is a real estate broker as well as an investor focusing on commercial and industrial properties. So excited to have you here today, Edward.

Edward Zulyevic (02:35)
Thank you, Michelle. I appreciate the opportunity to join you here. Thank you so much.

Michelle Kesil (02:40)
So let’s dive in. First off, for those not familiar with you and your world, can you share what your main focus is?

Edward Zulyevic (02:50)
Yeah, main focus, ⁓ like you said, I’m the co-owner of The Operative Group here in Eugene, Oregon, and we have a small real estate team where we kind of specialize with investment properties. So we have a team of agents that are on our team and we’re primarily investors first with that thought process and that vision. So we train our agents to learn how to work with investors.

Michelle Kesil (03:16)
Awesome. And what do you feel are some of the main keys that allow your business to grow and run successfully?

Edward Zulyevic (03:26)
That’s a great question. ⁓

We’re really contrarian to kind of what the typical real estate brokerage model and investor model kind of looks like. We’re very much a lead generation first type business. So we generate a lot of leads, a lot of direct outbound, know, cold calling, Google PPC, Facebook ads. So a lot of outbound, including direct mail. So.

rather than waiting for business to come to us, we’re very aggressive in creating those leads for our agents, for our team, and for our investment business.

Michelle Kesil (04:03)
And how did you get into real estate investing?

Edward Zulyevic (04:07)
So it really started, we go back quite a number of years.

in the late 80s, I think, you know, was really that seed was planted with Carlton sheets. It was late night infomercials, know, 1988 or 1990 or so, you know, when I was in high school. And that was always something that sat on my mind. And it really wasn’t until the early 90s when I got married where that thought process kind of came to fruition and actually took some action on it.

Michelle Kesil (04:35)
And did you educate yourself on investing or you just tried and erred and made it happen? What did that journey look like?

Edward Zulyevic (05:32)
So there was for many years there that I educated myself initially and but it wasn’t until man I would say about eight years ago where I actually sought out some formal education in training. I realized that I couldn’t do this on my own. There was lots of clues and pieces of that puzzle per se that I couldn’t really I didn’t understand. You know had some pieces put together.

I explained it kind of like having a jigsaw puzzle where it’s upside down and you don’t have the picture to look at. You know, I mean, eventually you could connect all those pieces and have something that actually looked good, but I just wasn’t able to put those big sections together. And once I sought out some coaching and mentorship, those pieces just kind of came together and it really started to make sense at that point.

Michelle Kesil (06:20)
Awesome. And you mentioned your focus is commercial and industrial. Why specifically are those the asset class that you choose?

Edward Zulyevic (06:33)
So I started out with single family, like most investors here. And I just got really kind of tired of the people living in that asset, the restrictions that we have here on the West Coast. The landlord tenant laws are not very strong here. It’s really tough to get those cash flowing properties to make sense. And I realized the more I got into this and some of the assets that we picked up over the years that were commercial.

mobile home parks, even some multifamily, but it’s still mobile home parks really kind of opened my mind and turned that light bulb on. As far as, you know, owning an asset where you’re not renting the space where someone lives, it’s just you’re renting the land. that got me thinking more and more mobile home parks, self-storage commercial. If you have that asset that you can control, it’s a lot easier when someone else is not living in it. So that’s…

the mind shift that I had, you know, a number of years ago.

Michelle Kesil (07:27)
and what have been some of the biggest obstacles or challenges that you’ve overcome in your investing journey.

Edward Zulyevic (07:37)
Some of the biggest obstacles, you know, there’s always that property management obstacle, you know, that we all deal with. ⁓ We’ve some ups and downs with property management. It’s taken some time to find that right manager that can look after the asset that how you want it looked after and not have to deal with it yourself. You know, we all get into the mindset of like, just let me take care of it. And then the more you find yourself dug into that property management role.

and you have less time to build those relationships and find those people that you need to connect with that own those asset classes that you want to purchase. So letting go of that control.

Michelle Kesil (08:17)
Yeah. And what are you currently focusing on in terms of growing your investments? Are you looking to scale or continue to find new opportunities?

Edward Zulyevic (08:34)
Yeah, we’re always growing and scaling. The opportunities that we’re looking at now are, of course, commercial industrial storage, mobile home parks, RV, and outside the state. We’re looking at opportunities in the Midwest and always underwriting those and evaluating those deals. It takes a lot of work to…

find those opportunities and then build those connections in a way that makes sense for us with terms and financing and structuring those deals. It’s about that relationship first. So the distance can be always challenging when you’re trying to sit with a seller and figure out what they want to do. The travel and the negotiations can be challenging.

Michelle Kesil (09:23)
Definitely. Can you share what your lead generation process looks like? How do you find these commercial and industrial opportunities?

Edward Zulyevic (10:07)
Yeah, so there’s a number of ways ⁓ I deal with that. ⁓ PropStream is probably my number one tool. I do have some commercial brokers that I work with closely. ⁓ So we have ⁓ resources there. But primarily, I start my search with PropStream. So I typically look for the areas that I’m interested in that has the…

the dynamics that I’m looking for, right? Market growth, the influx of people, stability jobs. So I focus on those markets and then I dive into the asset classes that I’m interested in. From there, it basically turns into ⁓ a bunch of research on actually who owns those properties. And it’s more or less like hunting people. I mean, I mean that in a good way of…

You know, they own the asset class that we’re looking for, but who is that person? How long have they owned that? There’s a lot of research into that person. How long they’ve owned that property? Is there any debt associated with that property? What does the transactional history look like for their ownership? And where I think that person or that family might be in their investment journey. Are they one that wants to do a 1031 exchange? Do I see a lot of ownership with other similar properties?

They’re probably a very sophisticated investor where they want to take advantage of that tax deferment. So I search for people that are excluded from that criteria. Single owners that own maybe one or two properties. So PropStream is that core. And then I’ll dig in a little bit deeper with a little more granular research after I do kind of a broader blanket of research. If that makes sense.

Michelle Kesil (11:46)
Yeah, absolutely. And I know you mentioned creative financing and other creative solutions. Can you expand on what that looks like for you?

Edward Zulyevic (11:59)
Yeah, so it’s really about the debt that we can get with that property. Again, we’re all looking for a certain asset class, but I’m specifically looking for a specific person that owns that asset. And again, how long have they owned that property? Can I get into a conversation with them directly, grow that relationship to really dig into a

What do they need in their life? Whether that be some money now, some money later. They’re typically ⁓ asset rich. They own a lot of assets, but they’re strategy poor.

They don’t know how to get out of that situation. And I talk to these owners, not every day, but literally every week. They want that stack of money because they don’t know that there’s other possibilities.

When you can have that conversation and you really dig into what they need and how they need it, it really becomes, ⁓ they become your partner, right? They’re lending you the money to buy their own property. Some or all, it all depends on the situation. But there has to be that trust. There has to be that relationship because they want to know a few things about their money. They want to know that you have the ability to repay. They want to know that they have some collateral. They want some sort of return.

from that investment that you’re working on together and they need some customer service. They want to know that you’re going to guide them to the place that they need to be. So that’s really the core of the owner financing that the strategies that go, the tactic that we use, whether it be a master lease option or a lease with an option or a wrap or a partnership, whatever that looks like, those are just tools that you add on afterwards.

But the slow dance that we do with the owner can be from months to two years actually. So you have to be willing to play the long game because again, it’s a friendship that you’re developing and they are your partner. They are your financial partner in this deal.

Michelle Kesil (14:06)
Yeah, absolutely, relationships are everything in this space.

Edward Zulyevic (14:08)
Mm-hmm.

Michelle Kesil (14:12)
Are there any ways that you go about connecting with people or building relationships that you feel have made the biggest difference?

Edward Zulyevic (15:03)
Yeah, it’s really just getting face to face with people. And sometimes it can be quite scary. Literally, there was a property that I’d been working on for a number of years and just had a really hard time getting a hold of the owner. And eventually, you know, I send direct letter cards, know, seasonal cards, very personal, ⁓ one-off, handwritten type correspondence, duct mail. And I just literally at Christmas, had a Christmas card and I thought, man, I’m just going to drop it off at her house and knocked on a door and…

They were gone, but it was a cool story because the ring doorbell was there and the owner chimed in and said that they were at the office working and yep, she got my letters over the years. Just building a relationship like that, now that that person knows that, hey, there’s Ed. He’s the one that knocked on my door at Christmas and it’s always being top of mind.

which is important, you know, get face to face. Who do you know that can open that door for you? What are their relationships with other people? Who do you know? Who do you network with that can help you get there?

Michelle Kesil (16:12)
Are there any goals or opportunities that you’re excited about for this year?

Edward Zulyevic (16:21)
You know, I’m always excited for the opportunities that are just around the corner that we don’t know. You know, and really what I mean by that is in real estate, we hustle and we grind and we make these relationships and you send out mail and make phone calls and nurture relationships, but you just don’t know when the next one comes. So that’s always exciting. And my goal is always to expand that network of people that you know and…

continue to communicate with the owners that need other solutions. So those opportunities are always there and keep your head up and be positive and just always be of service, know, serve people and help them get to where they need to be. So there’s always opportunities out there. You just have to be constantly checking the boxes every day and doing what you need to do and be consistent, know, be really consistent in this business.

Because it can be easy to just get frustrated and give up. You have a dry spell of months or a year and, ⁓ heck, I’m done, you know? But just be consistent. Have faith that things are going to work out if you continue to give and help other people.

Michelle Kesil (17:29)
What advice would you give to an investor that’s earlier on in their journey?

Edward Zulyevic (17:35)
That’s a great question. The advice I would give to someone that’s early in that journey, don’t go at it alone. Find a mentor, find a group, find that circle of that sphere that you need to be in, know, the Facebook group, you guys’ group. ⁓ Don’t do it alone, right? That’s what you don’t know, that’s gonna hurt you. And I literally like, ⁓ I’d have no regrets.

but I did the same thing and I look back and I thought, man, you know, if I could have just had a different mindset, you know, 30 years ago, where would I be today? So, seek some help, you know, obviously educate yourself and read books and join groups, but you know, at some point, just pay for a coach, know, pay for them, let them guide you because they’ve been there.

where you haven’t been before. And I always kind of joke around, know, it’s people ask me, they’re like, oh, you, why do you pay for coach? And, you know, there’s a number of reasons, but you know, when they’re, holding your hand and you’re walking down the road of this investing journey and I see a mud puddle, like, I don’t know how deep it is. It just looks shallow, you know, but that’s when your coach comes in and says, Hey, you know what, don’t step on that. You’re to break your hip. I’ve been there. And then you learn and you grow.

I know it’s a crazy example, but it’s one that I think about a lot. You know, the consequences are sometimes what you don’t see.

Michelle Kesil (19:00)
Absolutely. That’s important too. Know your blind spots and get different perspectives.

Edward Zulyevic (19:05)
Yeah,

so true. Yeah.

Michelle Kesil (19:08)
Awesome. Well, before we begin to wrap up here, if someone wants to reach out, connect and learn more about what you are up to, where can people find you and connect?

Edward Zulyevic (19:22)
Yeah, you can simply go to theoperativegroup.com and you’ll find my calendar link there and my phone number and email address. You can also find me on Facebook. Just search my name, Ed Zulyevic Same with Instagram. Just search my name and I’ll come up. That’s the easiest way.

Michelle Kesil (19:42)
Perfect. Well, I appreciate your time and your story. Thank you so much for being here.

Edward Zulyevic (19:48)
Thanks, Michelle. I appreciate the opportunity. I had fun. Thank you.

Michelle Kesil (19:52)
And for those tuning into the show, if you got value, make sure you have subscribed. We’ve got more conversations with operators like Edward who are building real businesses and we will see you all on our next episode.