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Show Summary
In this episode of the Real Estate Pros podcast, Micah Johnson interviews Matthew Masoud, a commercial real estate investor specializing in strip centers. Matthew shares his journey from starting in multifamily properties to transitioning into commercial real estate, highlighting the benefits of investing in strip centers, including lower management intensity and the potential for higher returns. He discusses the importance of tenant selection, stabilization strategies, and the challenges faced in the commercial space. Matthew emphasizes the need for education and proactive action in real estate investing, encouraging listeners to take the leap into the industry.
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Investor Fuel Show Transcript:
Matthew Masoud (00:00)
Yeah. So I was trying to figure out what’s the lever in my business that really explodes the equity in the properties I bought. And that lever is the leases, is the tenants. You can buy a building and that’s, you know, half vacant or even if you clean it up, it doesn’t mean it’s worth more. These buildings are valued on a net operating income. So I need the building to make more money in order for my building to be worth more.Micah Johnson (01:53)
Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Micah Johnson. And today I’m joined by somebody I’ve been looking forward to chatting with. His name is Matthew Masoud, who’s been making serious moves in the commercial space, especially targeting strip centers. So Matthew, glad to have you, man. How you doing? I’m doing well, man. I’m doing well. I’m excited for you to join us. I think our listeners are gonna really take something away from how you’re approaching.Matthew Masoud (02:10)
Good, how are you?Micah Johnson (02:19)
what you’re doing right now in that commercial space and overall story that you’ve told me in our pre-talk. So let’s go ahead and dive in. So first off, for people who may not be familiar with your world, give us the short version of what’s your main focus these days.Matthew Masoud (02:34)
Yeah, so these days I’m primarily buying strip centers around the country based out of Southern California, but we’re open to buying all over the country. We buy strip centers that are half vacant, that are falling apart. And we come in, we clean them up, we occupy them with strong tenants. And then we go ahead and we exit the building, whether that’s through a healthy refinance or a sale.Micah Johnson (02:55)
Interesting. did you when you got into real estate first, how long have you been in and did you go right to this niche or how did you end up in this space?Matthew Masoud (03:03)
Right. So I’ve been in realestate for almost five years now. And when I first got started, it was about, um, multifamily. started with three units, um, in Cincinnati, Ohio, a hundred thousand dollars falling apart, cleaned it up, rented out, sold that one, um, a couple of months later for 190,000 and then 1031, that money and just kept moving. Mostly multifamily at the beginning, small duplexes, triplexes, quads. And then, um, once I built up a little multifamily portfolio, I was like, is this what I want to be doing?
And I, you know, I thought about it closely and decided that, um, retail industrial other, the commercial assets can offer similar returns, if not better and way less management intensive. So I got out of multifamily slowly asset by asset and 10 31 into retail assets shopping.
Micah Johnson (03:52)
Interesting. Now you’re one of the folks I’ve talked to that it’s kind of rare that you just come right into real estate and go directly into commercial. Most you tend to hear the story, they get started in single family mess around there and then jump over. So what do you think allowed you to come from not in real estate before, if you want to share about that, what you were doing before and then coming into it, what was that mindset to take action as it were?Matthew Masoud (04:17)
Yeah, so, youknow, growing up, was, you know, you’re going to college, you’re going to college, you’re going to college. Like that was kind of like, that’s the way you’re going to do it. You’re going to work. know, we came to this country in order to provide you an opportunity. The opportunity is the only realm of opportunity that they’re, they digested was getting a job, working. And then, you know, essentially being in the middle class was their success, but it wasn’t for me when I was in there. And then I was working grinding through the nine to five.
⁓ My plan was just originally, you know, work for 20, 30 years, buy a house a year, rent it out. I was thinking small, but I always kind of had real estate in my head as my early exit, but early exit, I thought it would be a lot later and I’d slowly be picking up units. But after graduating, I continued studying real estate. And then I realized that there there’s other opportunities to really grow and build a portfolio and scale something.
And then once the idea of value add kind of clicked into my head, you can buy assets, clean them up.
rent them for more and then sell them to an investor for much more than you purchased them for. Once that clicked for me, I was like, let’s find a deal, even if it’s a small deal. And I realized living in Southern California that I would have to buy outside of Southern California. So I purchased a property in Ohio, Cincinnati, Ohio, three units. I did fly out there and spend some time out there because everything went wrong, but that’s real estate. So I flew out there. I stayed there for almost a year. And then before coming back,
Micah Johnson (06:16)
Mmm.You
Matthew Masoud (06:31)
and just kept recycling that money. As the property would sell, I purchased more apartments and then more stabilized some stuff, keep it, sell other stuff. And then eventually I saw commercials as just a better way of doing real estate.Micah Johnson (06:44)
Interesting man. Yeah, commercial is a powerful tool. when you’re for the listener that’s thinking about commercial and even thinking about this particular space outside of apartments, getting into that retail, the shopping centers, when you’re looking at one now nationwide, one, what’s your mindset when you’re doing it? And what does a deal look like to you? What are those things you’re looking for that show you, okay, this has some interests and I want to dive deeper.Matthew Masoud (07:11)
Yeah, quite simply, I want to be able to buy something at a great price compared to the other real estate in the area. I want to be able to stabilize it and I want it to be worth significantly more than what I purchased it. It’s not dissimilar from doing value add in apartments. It’s not dissimilar from doing value add on house, but it’s specifically with shopping centers. There’s vacancy, the parking lots falling apart, the tenants, you you have really low quality tenants. Some tenants aren’t paying. You go in, you clean up the building in the area.bring the tenants more business, maybe bring up a monument sign, you want them to do better as well. So we put up monument signs, we put up lighting, we’re trying to bring traffic and people to this tenants. We want them to do really, really well. And then we share in the wealth. So we do that, we stabilize the building and then 12 to 24 months later, these assets are worth significantly more than when we purchased them. At that point, we’ll either do a bird type of cycle. If it’s something we want to hold and keep in a portfolio or it’s, or we sell, if it’s a lower quality, older asset that
we know may have some upcoming large expenses.
Micah Johnson (08:13)
Okay, so dig in to stabilize a little bit. For someone that may not know what that means, is really interested in this, when you say stabilize, what are you coming in to do? ⁓Matthew Masoud (08:24)
Yeah, so primarilywhen it comes to commercial, stabilization comes through the leases. So you need long leases with preferably credit tenants or even strong local tenants that have multiple locations. Businesses, think of your local nail salon, your local massage parlor, maybe a pizza hut or a subway. Those are the type of tenants that we have here. So the better quality of the tenants on the longer leases is what’s stabilizing the assets.
Micah Johnson (08:51)
And longer leases, when you say longer, how long are you shooting now? What’s a good lease for y’all?Matthew Masoud (08:56)
⁓them. Minimum is typically three. We like five year leases. If it’s a strong tenant with healthy rent increases, we’ll do a seven or a ten year lease.
Micah Johnson (09:06)
Awesome, man. That’s interesting. So is it, are these triple net leases? That’s the goal. ⁓Matthew Masoud (09:11)
Yeah, and that’s the key. That’s that’sthe biggest unlock between apartments and between commercials that these are triple net leases, the toilet in the Pizza Hut breaks, they’re not calling, they’re fixing the toilet themselves. They even reimburse me for property taxes and for insurance. So I’m what they pay in their base rent is what I should be able to put in my pocket minus my mortgage, all the insurance, the property tax, the repairs and maintenance gets reimbursed or paid by
Micah Johnson (09:37)
Man, yeah, that is powerful. If you’re getting all that back, you can run numbers a little bit tighter. There’s a way to get into these deals that makes it a lot better on the back end.Matthew Masoud (09:47)
Yeah, yeah. Now the biggest downside is stabilization takes longer. It takes longer to find these tenants compared to apartments. The repairs also tend to be bigger. A roof on a, you know, 13,000 square foot shopping center is going to cost a whole lot more than a roof on a 10 unit apartment building. And you also have these tenants coming in, they’re signing really long leases. So they also take their time and selecting the space. They’ll negotiate harder. You’re dealing with businesses, more professional transaction, but it is a longer time to stabilization. It’s been buying and being ready to exit.Micah Johnson (09:58)
Mm.How what’s the average time you’ve seen in your experience so far of how long it takes to get a tenant into the one of the units?
Matthew Masoud (11:00)
Yeah, I hateto say it depends, but some shopping centers have better traffic, some are better located, newer buildings. But typically we’ll see with aggressive marketing and an aggressive broker, we’ll typically see anywhere from two to six months to fill a vacancy versus on average in our apartments, I was doing about 30 days to refill.
Micah Johnson (11:14)
Who is it?and how far…
Matthew Masoud (11:22)
But they saw they signed longerleases. So on average, if you look at it over a 10 year period, the vacancy is actually very similar.
Micah Johnson (11:30)
Yeah, once you break it down for sure, for sure it starts to catch up. What are you doing? Let’s dig in a little bit more. You mentioned credit and a few things about the tenants that you look for. What is it to you that makes it shine like, okay, this seems like a strong tenant. I want to take a chance on them to let them rent this space.Matthew Masoud (11:49)
Yeah, I wanta tenant preferably that has multiple other locations. Maybe a franchise or that’s coming to open his 36 Starbucks. I would love him because you know, there’s a strong guarantor. ⁓ Sometimes you have maybe a sushi place that only has one location and is looking to open a second location. Or you have liquor stores, someone has nine, 10 liquor stores and they’re looking to open another one. All of that increases the credibility, especially once you get into the franchise or space.
and you start looking at the Pizza Hut and the Subways and the Blaze Kitchens and the Starbucks even as you could go to like more upper scale shopping centers. But I want someone that’s been around for a while and someone that makes me feel safe. They’re going to be there for the five years.
Micah Johnson (12:31)
And how much is the broker helping you with finding these? So I know a difference in single family is in that space, you’re not really using a realtor that much. Some do, me, but not everybody’s doing it. They’re more heavily involved. How much is that broker participating in that process with y’all?Matthew Masoud (12:48)
Yeah. So most retail landlords will just buy the shopping center, clean it up, put a broker on it. We take a much more active approach because these tenants are how we stabilize this building. I said the definition of stabilization is these leases. This is literally how we’re stabilizing the building. So we take a very aggressive approach towards finding these tenants. We’ll message on Instagram, local, let’s say we want a hair salon. Place used to be a hair salon has the plumbing to be a hair salon. So what we’ll do is we’ll start messaging local hair salons on Instagram.We’ll start sending them letters. We’ll start calling them even and saying, Hey, are you looking to expand or move? I was doing that earlier today. I was me, my VA, other, other people on my team were calling local salons and asking them they’re looking to move or expand in 2026. If they say they are, we share our location and we’ll see if it’s a good fit. So it’s a very aggressive style of leasing, but I’d say, you know, about half the leases we get are ours. The other half comes from the broker and we pay the broker very well, even for leases that we bring.
because they have to show the space, have to write the lease, they negotiate for us, we’ll bring them leads all the time.
Micah Johnson (13:52)
Man, that’s a powerful way to go on offense. I love that thought process. What triggered that for you to be like, okay, I’m gonna look at it here and then go find these people on social media to see if they wanna move.Matthew Masoud (14:04)
Yeah. Yeah. So I was trying to figure out what’s the lever in my business that really explodes the equity in the properties I bought. And that lever is the leases, is the tenants. You can buy a building and that’s, you know, half vacant or even if you clean it up, it doesn’t mean it’s worth more. These buildings are valued on a net operating income. So I need the building to make more money in order for my building to be worth more.So what I need to do is I need to go find these tenants that are going to, maybe they’re looking to expand out of their space. Maybe they’re looking to move.
So once I realized that the key to unlock equity in my buildings are the tenants, now it’s simply how can I hit that as hard as possible? So along with interviewing several different brokers and being very selective on the same end, I have a VA that’s constantly reaching out. I’m sending letters on the weekends. We’re calling these people. Like you said, it’s playing offense instead of just sitting there and hoping the broker that you hire is good. Because I’m gonna be frank with you, most brokers aren’t.
Micah Johnson (15:38)
Yeah, it’s, it’s funny. That’s not the first time I’ve heard that. And I’ve been in real estate since 2014. So it’s, ⁓ I’ve seen my fair share and it’s, it’s one thing, the guy that taught me real estate, said, Michael, there’s no competition. If you’ll just show up and work, if you’ll just show up and do your job, there’s no competition in this space because, I out through years of doing it now. It’s like, man, you’re absolutely right. You, the only competition is you showing up each day. If you can overcome that, sky’s the limit here.Matthew Masoud (15:51)
That’s right.Yeah. Yeah.
Micah Johnson (16:09)
Now in your journey so far, so you’ve been doing it for five years, got started right into commercial, made that adjustment once you realized you didn’t like the apartments, you wanted something different. What have been your challenges in this strip center space? What are the things that someone needs to look out for if they’re interested in doing it?Matthew Masoud (16:27)
Yeah. So number one, the buildings aren’t as expensive as you may think. A lot of people think commercial, they think big bucks, not necessarily. I bought commercial property at a very low price, as low as $200,000, $300,000 for a script center. We need to keep an eye out for is that sometimes repairs and expenses can add up. sometimes you have other expenses that aren’t in apartments that you have in commercial that you need to consider, like broker fees. Every tenant that broker brings in, you’re going to pay them six, eight, $10,000 for bringing you that tenant.sometimes roof and other repairs and electrical. You have larger electrical boxes with higher wattage. So those are things that you need to prepare yourself for when doing these assets. The other thing is that there’s not a lot of people in this space and not necessarily strip centers, just getting creative in other avenues of real estate, whether it’s strip centers or mobile home parks or self storage or all these different asset class, short-term rentals, midterm rentals. There’s all these different niches in real estate that you can make a whole lot of money in.
So go out there and figure out which one fits your personality best, which asset class fits your personality best. And they become an expert there. So I’ve decided to become an expert in strip malls and shopping centers. So that’s, that’s the branch of real estate that I went down. Now other branches can make a lot of money and pick your branch and at different parts of the cycle, different assets are better. So 2019, 2020, 2021, it was a great time to buy apartments. There was a big spread between
Micah Johnson (17:48)
Mmm.Matthew Masoud (17:53)
you what, what you paid for them and what the rents were going to be. And then a lot of people got into the space and now it’s really hard to find an apartment where you can get it at a real discount. So part of my reason for shifting asset classes, other than the tenants was about my ability to really get stuff at a discount, which I’ve had trouble doing in, in apartments.Micah Johnson (18:12)
And that’s not an uncommon story in that shift of the, the landlording part. And I think a lot of folks get into real estate looking for the more passive quote unquote income. And if you’re, when you’re dealing directly with someone living in your property, there’s very little passivity to that. is, there’s a lot of work involved in. In your world where you were trying to not have that quote unquote job, you’re trying to get out and make wealth really create more.that part doesn’t feel good, right? It’s not the part you got into it. And so what I love about your story is you didn’t get stuck. What was that motivator to, you know what, I am just gonna change. It’s okay to do that. I’m gonna find that other one. What in you was that driver? if someone else is kind of feeling stuck in their own niche right now and thinking, I need to get to another one, what was that mindset and shift for you?
Matthew Masoud (18:46)
Right.Yeah. So my location freedom is incredibly important to me. I want to be able to go where I want, live where I want, whether that’s in Southern California, whether that’s in Florida. I want to be able to do that. But in order to do that, you have to be able to create a system that can manage and take care of your real estate portfolio. And if you’re really good, a system that can grow your real estate portfolio for you. So you have to be able to create that system. Can you do it in apartments? Absolutely. But it is significantly harder to manage a
apartment portfolio long distance than it is to manage a commercial property long distance. So that desire to be, have to be able to live where I want and not have to live on Ohio just because I have 60, 80 units there. And obviously I can get to a point where I hire a property manager, but someone’s got to manage that property manager. Someone’s got to manage that maintenance person. So it never really goes away. No matter how much levels you try to go up, it never really goes away. So at the end of the day, which one gives me, know, if I want to build a large portfolio, which one’s going to be easier to do.
And that turned out to be commercial and especially because I hadn’t grown that, that large of a, an apartment portfolio. I was, I was at around 30 to 40 units. So pivoting wasn’t that hard because it was across six or seven assets. could just list them 10 31 and move to another one. And there’s another thing I want to touch on. It’s a way of taking risk while mitigating the risk. So it’s a strategy I like to use where before I take a next step, I find a job, a nine to five job.
in that next step in order to educate me on how to do it. So when I decided I wanted to get into apartments, I got a job as a property manager. When I decided I wanted to get into commercial, I became a commercial broker for several months, and I leased space for other landlords. So I use the nine to five as a tool to educate me and continue shifting and learning through those nine to five so then I can go out and execute in the real world on my own and actually build.
Micah Johnson (20:57)
That’s a powerful move, man. I like that because it’s, it’s thinking with the long game in mind. feel like a lot of folks get into real estate and they just want it all right now. Hit that home run deal that just sets them free forever. But there’s really not one of those. They’re having a plan for how you’re going to make those adjustments. I like that. I like that a lot because you’re, leveraging the knowledge and still getting paid to do it. So it’s not like you’re losing. You’re only gaining and putting that together.Matthew Masoud (21:25)
Exactly, exactly. And you’rebetween the hours of nine and five, you’re still being educated. And then between the hours of 5pm and 9pm, now you can go out and take action based on what you learned. The key part is, you know, you got to be flexible, you got to be okay with change and being proactive to go and apply for other roles. And then once you’re getting educated to, you know, have the confidence to go out and actually take action, actually make moves. Okay, what do I need to do today in order to buy my first property? What do need to do today in order to finish stabilizing this building and this building?
Micah Johnson (21:56)
Where would you tell someone to start who they’re in a nine to five right now, that’s not real estate related yet, right? They’re kind of at your early stage and they’re thinking about real estate. It’s in their mind. They’ve always liked it. What would you tell them to think about and to pay attention to in order to make that jump? ⁓Matthew Masoud (22:15)
Yeah. Number one, get educated. It’s a loteasier to get educated if it’s your job to get educated, but you can also get educated on your own. That’s not always possible for people that are earning well in very specialized fields. But if you could go out there and you could go work as a property manager, you could work as a real estate agent, you could work as an appraiser. All of these jobs that are in real estate, but they’re still jobs, you get educated. I know a guy that’s a very, very successful commercial real estate ⁓ investor, and he used to be a loan officer.
at a bank. there’s, there’s, you know, roles that you can get in there. You just have to get out there and apply and applying is just the numbers game. So you decide, Hey, and there are property managers out there that make 50, 60, 70, 80, a hundred grand. So you can replace your income with those roles, put together a straw, a strong resume with what skills you have that you feel like are applicable to property management or a brokerage or appraisal and go out there and send out hundreds and hundreds.
Micah Johnson (22:47)
Mm.Yeah. So if you’re, if you’re listening to this and you’re in that position where you’re wondering, Hey, how do I do this? What Matthew’s just presented is a great idea. There’s so often we think we just need to quit one and start another where it’s at a middle step in there. You are quitting one thing, but you’re picking up another job to teach you about the thing you’re fixing on business for yourself for and leveraging that time, knowledge and money right into it, which develops what I’ve learned is the most important thing in real estate, which is relationships.
Matthew Masoud (23:23)
Yeah.Micah Johnson (23:40)
Like it’s, hard. If you’re already doing the thing for work that makes you go meet the people, you don’t un-meet people.Matthew Masoud (23:47)
Right. Right. And if you are too busy and you are working professional, that’s not possible for you. You can still educate yourself. But now you’re five to nine at the beginning is educating yourself. And eventually that’ll be taken action. So you can still educate yourself even if you can’t do it as your full-time role, but either way you got to be proactive. Whether it’s going home and sitting on the computer and watching YouTube videos with a pen and paper or whether that’s doing it through your nine to five. Either way, you need to get yourself educated. And then you need to get yourself actually to take…Micah Johnson (24:15)
that next piece, because you can learn a lot, until you’re doing it, you’re not really using what you learn. Yeah, if someone’s going to…Matthew Masoud (24:18)
Yeah. Yeah. And that first one’s the hardest, eventhough it’s the smallest, it’s the hardest, that first one.
Micah Johnson (24:25)
If you, yeah, the first one’s, it’s the hardest it’s ever gonna be is that first time. Once you see the loop happen and you get to witness all parts of the process, then all of a sudden your mind puts it together. You’re looking at it from the outside. You’re like, okay, we can do this. Now that education wise, so let’s talk to that person that can’t switch jobs and wants to learn about strip center investing. Is there any YouTube channels that you recommend? Any videos for them to go check out?Matthew Masoud (24:30)
Yeah.Yeah.
Yep. That’s right.
Yeah.
Yeah.
Micah Johnson (24:55)
right after they finished listening to this.Matthew Masoud (24:55)
Yeah. Yeah. I’m a big fanof strip mall guy. He has a great Twitter page, even though I’m not, literally downloaded Twitter just for him and he goes and he just gives very, very specific niche advice that I can, that I usually can apply immediately. So I’ve been very grateful that he’s taking the time to post that stuff. I also have very small YouTube video where I are a YouTube channel where I go around and walk around my properties and talk about what I’m, what I’m doing there. ⁓ commercial deal junkie. So you could, you could go there and just kind of see me walking around my.
But at the end of the day, what I learned is that no one is going to teach you like doing a deal yourself. Even if you have to start really, really small, do a deal yourself. Like Micah said, if you go full cycle and you come to the exit and you get paid out and then you realize this is possible and you’re like, I can do this again, again, but make sure you’re educated. You make careful decisions, but you have to actually make decisions. You have to actually take action and not all of them are going to go well. I have deals where I thought I was going to make, you know, 60, 70, 80, a hundred grand that I made 10 on. I was lucky I broke even on.
So they’re not all gonna go well, but you need to be educated enough where you’re batting a lot more good deals than you are bad. And then just take action. That’s the part I keep calling back to, just do something, do it.
Micah Johnson (26:05)
It take math. There’s a quote about it. It’s a massive imperfect action. It doesn’t. And I think a lot of folks get stuck. There is no one likes messing up. It bothers me every time I do it, but it doesn’t make you stop. doesn’t. You keep pushing through it. And I love you mentioned strip mall guy. I follow strip mall guy on X for years now. He finally came out and you know who he is. He put his face on there, which is pretty cool. Recently. think his name is Trent, but you’re right, man. Like he drops.Matthew Masoud (26:11)
Right.Right.
Yeah, that’s right.
Micah Johnson (26:34)
dimes on X. He puts out some very good information. I read it. I don’t even do strip malls. I just love the way that he does it. Is it’s like, wow, this is somebody that’s pouring real value into the space. Who’s doing it at a really high level. And that’s, you don’t get that everywhere. So definitely if you’re thinking about this, go find people on social media that you can follow too. So sometimes action is just, that’s your first step, right? A lot of people is action your offer.Matthew Masoud (26:43)
Yeah. Yeah.Micah Johnson (27:04)
Not necessarily. If you don’t know what you’re doing, education is your action. Just don’t get stuck in that education phase.Okay, so I definitely want, we’ll have the link for Commercial Deal Junkie in the description after this. If someone wants to reach out to you in touch base and learn how you took action, get a little more information from you on that, or learn more about commercial deals and what you’re doing, what’s the best way for them to get ahold of you?
Matthew Masoud (27:33)
Yeah, I also have a school community where we actually go into more details and we’ll share deals and we’ll rate each other’s deals and things like that. ⁓ You can find that also under commercial deal junkie on school. And yeah, that’s a great place to share your deal. We’ll share ours, what stuff we learned in the area. It’s just a more private and intimate place for us to talk about a very complex topic.Micah Johnson (27:54)
Awesome, man. School’s a powerful platform for sure. A lot of my friends are on there as well. Great place to go learn and connect. So if you’re watching this, check out Commercial Deal Junkie School. If that’s what you’re into, check them out on YouTube. Matt, I really appreciate the talk, man. Enjoyed having you on. I appreciate your perspective, story, what you’re bringing to it. I think more people in the space need to be taking action like you’re doing. A young guy making moves out here and showing people it’s possible. You can level up your life.If you’ve enjoyed this episode, please again, check out Matt’s YouTube page, give him a follow, give us a subscribe here, like this episode. We have more coming up soon with investors just like Matthew who are making moves in the real estate space. Thank you so much for joining us. We’ll see you on the next episode. You’re welcome, man. Awesome. Okay. Let’s kill.
Matthew Masoud (28:42)
Thank you for having me, Mike.
