How to Buy Your First Commercial Property | SBA Loans, Lease Terms & Red Flags

Kirk Atamian (00:00)
Don’t pay this fee. Well, my friend’s the agent, the loan agent. I was like, well, you can go directly to this lender. You know who the lender is because it says on the paperwork. And I tell lenders, we all make money. I have no trouble with that. But there’s fair and there’s taking advantage of a client who doesn’t know any better.

Cody Crabb (01:48)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb and joining me today is Kirk Atamian of Kirk Atamian Commercial Real Estate in Fresno, California. Kirk helps business owners and first time buyers navigate commercial real estate. And today we’re talking about what it takes to buy your first commercial property the right way. ⁓ Thanks so much for joining us today, Kirk.

Kirk Atamian (02:06)
Now very excited to talk about this. I love this subject.

Cody Crabb (02:09)
Yeah, so I guess I always like to start with the origin story. So how did you get into this in the first place? Did you start in real estate? Did you start with the businesses? Tell us more about that.

Kirk Atamian (02:19)
So my background was, this probably way before people remember, I used to install phones and cars before they were even portable, before I was a phone installer. So I grew the business to a bunch of stores and what happened was I’d end up realizing, hey, I’m paying rent every month, I should buy the stores. So I ended up buying the stores and then in 2015 or so the market just changed. I semi-retired but I owned the stores. And in that meantime,

Cody Crabb (02:25)
⁓ wow.

Hmm.

Kirk Atamian (02:47)
I worked with one person who was a client, but he also $200 million in commercial real estate. So I worked with him and I went under his wing. And about five years ago, I went out on my own and just kind of going after the same people that I was 20 years earlier.

Cody Crabb (03:03)
Hmm. And so just to clarify, what kind of people are those? Like you say, just like you, but.

Kirk Atamian (03:07)
⁓

Business owners who are paying rent and who want to expand need a bigger location, need a second location. And traditionally they just call the name on the door and who has it listed and there’s no negotiating. They don’t know the ins and outs of it. And I’ve done so many negotiations throughout my career. It was super easy to get into this field and I had the connections which made a big difference too. Now I went from

being their client to representing my client to the other brokerages. So it was a semi easy to get my foot in the door, but it was still tough because commercial real estate is a good old boys club and you got to have connections or you can’t get past the first person on the phone.

Cody Crabb (03:51)
Yeah, so I’d love to hear kind of how you started building those connections. In what ways did you, I mean, we’re talking car phone era, so this might not be as applicable. It might be a little different now, but can you give us like, how did you start to build that network and what do you see now being the best way to build a network?

Kirk Atamian (03:59)
Yeah.

So this is how I got my first building is literally exactly what I’m doing now. And at the end of the story, go to me. So a guy comes in my store who bought a phone and said, you need your own building. And I’m literally like 23 years old. was all, I can’t afford a building. He said, I’ll take care of everything. Can you come up with $20,000 down? Which was possible. And he literally fell me a building in a small hometown in Madera. And I gave the guy 20. He got me an owner carry on the deal.

greatest thing ever, was all, wow, this is great. I was paying 10 % interest, which at that time I was just happy to get into it. And looking back, it’s a good and bad on the interest rate. Three years later, I refinanced this to seven. And then I realized when I got more stores, if I could own the building, I have something at the end, because I knew it wasn’t gonna last forever.

Cody Crabb (04:43)
Yeah.

Kirk Atamian (05:44)
So I ended up buying, I think, four more buildings and having my stores in them.

And the craziest part of this whole thing is I ended up being a commercial agent because I love this, but I had a piece of property I sold. It took two years to rezone it. An agent represented me. I didn’t hear from him for two years. I dealt with city zoning, everything. And he knocked on the door literally a week before I closed and asked for a $72,000 commission check. at that point I said, I can do this better than other people can. I have a big ego, so I just felt like, hey.

I can do it good and that’s how started. And to make the whole story rounded, the guy who got me my first building, he literally has the office suite next to my office. So we’re literally in competition, but he’s 85 now, so he feeds me a lot of work, but it is around, we end up back together.

Cody Crabb (06:30)
Yeah

Yeah,

that’s cool. Yeah, that’s a full circle there. All right, so I guess my curiosity is so ⁓ who’s listening to this who should really be ⁓ thinking about doing this? So let’s say, what position would you be in in a business owner where this would start to make sense?

Kirk Atamian (06:55)
So there’s a couple key people I work with. There’s really three real key person. The good thing is about, I work with Remax Commercial, so we are obligated to only office, only retail. So my first client is someone who’s looking to do investing. They saved up some money. They want to buy an investment property. Usually it’s in the $500,000 range, so it’s not a big investment property. And we find something that gives them a good return.

and they usually handle the maintenance themselves and the small stuff. Then we step up to a business owner who’s been in business for a while, but he’s paying rent kind of like I was, and he needs a bigger building or a second location. And then we go out to the lease or buy. And then I do a lot of tenant representative too, besides landlord, rep, I do that. And then we go into the bigger investors who know what they want and…

It’s more of a management project management role is they pretty much have an idea of Kirk. It fits in this category, this list. Find it for me. And we move forward with them. And then the last is we get into some development. So the really large ones is we find the land, we build it like we got a 280,000 foot warehouse for building on one property. And then I go to lease it at the end. So we kind of scale everywhere. Obviously.

The bigger the project is, more financially rewarding it is for me.

Cody Crabb (08:18)
Yeah, of course, yeah. So, all right. ⁓ What is it that you kind of look at first? You’re helping someone look at a deal to see if it fits them. Like, what is it that you’re seeing? Do you just look at numbers? Are there other things that you take into account as well?

Kirk Atamian (08:32)
Well, the very first thing is I vent the personnel because everybody has a dream and there’s nothing wrong with that, but it’s gotta be realistic. If you have bad credit, you gotta work on your credit first. If you have no down payment, you gotta work on it. If you tell me you wanna open up a coffee shop next to Starbucks and only charge a dollar a cup of coffee, I’d be realistic. So I do vent them very hard on my clients.

Cody Crabb (08:54)
Mm-hmm.

Kirk Atamian (08:57)
where I ask them for a business plan. I ask them, how are you gonna be able to do this? To make sure, because the last thing we’re gonna do is spend three months, six months, and they get the property, but then they don’t make it. So I do a very, very strong venting, and some people do get very upset, well, I just wanna see it. And then we get people who say, well, in two years, I wanna buy a property. Can you show me properties now? And honestly, I stay away from that because…

Two years, everything can change. I could be gone, you could be gone. So I would say I’m pretty hard nosed about this what we want, but my clients who work with me, they like that because they know it’s to the point, and that’s why I do commercial, not residential. There’s no emotions in it. It’s strictly numbers. Is it gonna work for you? And then, and there’s a lot to leasing that people don’t understand. People think, there’s a building for lease, how much is it? You know, there’s zoning, there’s…

Cody Crabb (09:26)
Yeah.

Kirk Atamian (09:50)
Does somebody have exclusivity in the center? Is there enough parking for what you want? There’s so many negotiating the lease. There’s so many terms and things that go beyond.

Cody Crabb (10:00)
Okay, yeah, think it sounds like it comes with some unique challenges. ⁓ It’s a lot of times ⁓ in real estate investing, as I’m sure you know, ⁓ it very much depends on what you’re investing in and where you’re investing in it, and you will have some kind of unique challenges. So you mentioned a couple of things like zoning and parking and things like that. Are there any other things that are kind of unique to this type of investment, and what are those?

Kirk Atamian (10:59)
So if you buy an investment property and it has a lease on it already, you have to kind of what kind of lease is because people have to understand or don’t understand. There’s like different types of leases. You have triple net where the tenant pays a base rent plus the taxes, insurance and common area. There’s gross like an office space where you pay one price, you get electricity, internet, everything. And then kind of in between what we call modified gross.

You might not pay property taxes and insurance, but you will pay this. But if you’re taking over someone’s existing lease, who you buy a company that has a lease on it, you have to see what those terms are. Like we recently, I’ll go into a quick story. About a year and a half ago, my dad’s funeral, little old lady comes up to me and says, Kirk, do you sell, I heard you sell real estate. I go, I do. She goes, I have a house I want to sell. I said, well, I don’t do houses, I can recommend.

Okay, it’s in Pacific Grove and if you’re outside of California, that’s like the high end of Monterey. I was like, well, wait a second, I’m not gonna say no to this. So we researched it. Yeah, exactly. We researched it and I was like, man, this is probably a two and a half million dollar house. So I teamed up with a residential agent. said, hey, it’s not my specialty, but I need her name, Susan Cardenas. I’ll give her a shout out because she killed it.

Cody Crabb (11:59)
You flip that ground. What did you say? Yeah

Kirk Atamian (12:15)
We went, we met it, we said we’re gonna put it on and this lady was so nice, she said, and that’s about a two hour trip for us. She said, I want you guys local, I don’t want nobody over there to handle it. So she took charge, Susan took charge of the project and literally we got a $250,000 offer within the first four hours all cashed seven days on the property. Which, this is where it gets good. You would think, okay, and the lady’s never been to the house, she goes once a year.

to this house, she’s 85, she doesn’t drive. Well, she goes, I don’t want to pay taxes on the house, what do I do with the money? And we, I said, well, there’s something called a 1031 exchange, we’ll buy something, and then you get the income off that, which is great. We ended up buying a Starbucks, which has 110 page lease. You’re talking about reviewing the lease and everything. But when you get into buying a Starbucks, you have pretty much going on their rules. can’t, there’s no bullying, you know.

Cody Crabb (13:00)
Yeah.

Kirk Atamian (13:07)
I sold Armahammer, Bacon, showed solar building, a Fortune 100 company. They pretty much tell you what you’re to do. but so one sale later led into another sale and now she owns a Starbucks and now at 85 years old, she wants to build a 50 diners in a hometown. Yeah. And she knows the numbers. She’s not every month we go over the statement, the income statement, what they spent and it keeps a sharp. But I guess what I say is that you never know where the next lead will go.

Cody Crabb (13:23)
Wow, not stopping, that’s awesome.

Kirk Atamian (13:36)
And I have so many stories like this where somebody will call me and say, so and so recommended me. I’m like, that guy’s been three years telling me he’s gonna buy a property he never does. And this guy buys a $4 million property in five days from me. And I’m all, holy mackerel. So you never say no to leads because they are good ones. I mean, you never know.

Cody Crabb (13:50)
Yeah.

Yeah, I wondered, have you ever had kind of, ⁓ in a network, like I tend to see like leads get passed back and forth a lot. Like if someone’s like, ⁓ I heard about this place in Michigan and you just have a friend in Michigan and you might pass it along to them. But have you ever been the recipient of something like that? Like a referral within the real estate community and how did that work out?

Kirk Atamian (14:18)
So, our state is limited, because I will say the Central Valley is not really a hot spot for out of state investment. Even though it is, your money goes so far in the Central Valley, but they usually, when they come from our state, they’re looking either Southern Cal or Northern Cal. But I do a lot of referrals from residential agents who have a client who want to get their first property, and I do a lot of work with residential. And we have a special program for residential agents where

If we do a deal 50-50, I handle the wholesale, they handle the client, they learn with me, we split any compensation 50-50. Moving forward, they come to the second deal, they do all the work, I just make sure everything’s correct, I’m in the backend now and they’re in the front, and they keep 75 and 25. And on the third deal, I tell them, you do everything, if you need me, call me and you keep 100%.

And we’ve had a couple people on the second deal. No one’s made it to the third deal. residential agents have a lot of stuff, but there is a lot of misleading stuff too. And like you said, it’s a good old boys club, so you might not get the call back. And I’d to go over two SBA loans, because that’s pretty big if we have time.

Cody Crabb (15:29)
Yeah.

Yeah, let’s do it.

Kirk Atamian (16:11)
Okay, SBA, Small Business Administration is great for helping clients or investors buy a building. You have to operate 51%, so you have to be an owner-operator. But you can get down with less than 10 % into a building. A little higher interest rate, but in three years you can refinance it. But it goes off prime plus, so if the prime drops, you’re saving. Prime goes up, you’re going up. But it gives you the opportunity to get into

building for less than 10%. The sad part about this is there’s a lot of companies who say that SBA lenders but the middle people. We have somebody from down south that’s hit in the Central Valley and I didn’t recognize it until the client brought me the term sheet. Well, on the $600,000 loan, they charged me a $30,000 application fee and that like totally blew me away. And then I had another client who paid it and it just blew me away. I saw

Cody Crabb (17:00)
my gosh. Yeah, that’s pretty wild. Yeah.

Kirk Atamian (17:07)
Don’t pay this fee. Well, my friend’s the agent, the loan agent. I was like, well, you can go directly to this lender. You know who the lender is because it says on the paperwork. And I tell lenders, we all make money. I have no trouble with that. But there’s fair and there’s taking advantage of a client who doesn’t know any better.

And that’s where it starts. So we actually started in the Central Valley, the own thing, which has nothing to do with me personally. But I brought the SBA lenders here to work with.

loan companies and to real estate residential agents so they can learn the difference. You know how to deal directly with an SBA lender who’s making the decision not somebody who has to send it to somebody to send it to somebody. So yeah SBA is a great program it’s not the cheapest but it’s like any real estate investment if you get your foot in the door it’s good to make money. It’s hard for real estate not to make money unless you over leverage yourself.

Cody Crabb (17:39)
Hmm.

Yeah, okay, yeah, thanks for breaking that down for us. think when we get really specific like this, I think that’s when it starts to get really helpful, because we’ve all heard little pieces of advice here and there, but when you get into someone that really knows about one thing really well, that’s when you start to learn. All right, so let’s say someone is, well, let me put it this way. Do you see yourself growing or expanding this? Do you have any, where do you see the business in a year or so?

Kirk Atamian (18:28)
So I’m probably the hardest person to work with because I’m OCD on everything. So I have three offices. I run all three by myself. I team up with other agents in general, but ⁓ I don’t want no agents on my team because I feel right now I’m pretty busy. ⁓ The last three years, I’ve been a top five nationwide, my team, which is me and an assistant.

Cody Crabb (18:33)
⁓ huh.

Kirk Atamian (18:54)
So I like to handle everything on the front end and pretty much I like go crazy on my assistant on the back end, Sat Winder, who just got her license. But it’s, I feel like I don’t want to expand more that I can handle because I can honestly say I do more. I have 20 listings right now with some brokerages don’t even have 20 listings and our sales do more than a lot of small brokerages do altogether. So I have to have enough for I can control everything.

We opened two more offices. So we can cover Fresno County, Madera County and Tulare County with three different offices. I travel back and forth. I love what I do. I work seven days a week, but I don’t think there’ll ever be a point where I bring on additional agents. I like working with outside agents better because I feel they’re more hungry. They want the deal done than doing it in-house.

Cody Crabb (19:45)
Okay, well this has been really helpful I think. ⁓ If people want to work with you, learn from you, ⁓ who should they be first of all? Who’s the ideal person to get in touch with you? ⁓ also where do they need to be geographically so they can get an idea of what kind of area you’re in?

Kirk Atamian (20:02)
So basically my area is pretty much from Bakersfield all the way to Stockton, central California. Primary is in the 559 area code, but we do reach out. I do have connections all over the United States with different departments. So we have a lot of investors who invest out of state because it’s actually better deals than investing in California right now. So if someone comes to me and says, got two million bucks in California, it’s not great. And Tennessee.

you’re buying something amazing for $2 million. But I’m on Instagram. I’m also on LinkedIn and it’s on both of them is my name, K-I-R-K-A-T-A-M-I-A. And I do a lot of short videos about commercial real estate, different terms, what to look for. It’d be great to follow me. But I’m also open. I get probably 25 messages a day from people asking quick questions about, hey, I have a friend who wants to do this. So I’m very open to those.

Cody Crabb (20:51)
Wow.

Kirk Atamian (20:55)
I get back to them every day. I literally start my day at five and end my day at eight o’clock every day, Saturday and Sundays. I cut it down a little bit, but I truly, truly love this. It’s been very financially rewarding for me. So I just feel like I’m passing it back on.

Cody Crabb (21:10)
Yeah, you wanna pay it forward for people that are into it. Yeah, well thank you, that’s a really generous offer. I would ask anyone that is kind of somewhat interested in this specific space within real estate to try that out, because you don’t get offers like that too often. ⁓ He’s just like, yeah, go ahead and ask, it’s fine. ⁓ Well cool, thank you again so much for all your time and for offering to do that for our guests and for our listeners.

Kirk Atamian (21:13)
Yes.

Cody Crabb (21:34)
And listeners, thank you for joining us today too. If you liked what you heard, go ahead and like and subscribe and comment and all the things. until the next episode, we will see you later and Kirk, thanks one more time for joining us. See ya.

Kirk Atamian (21:46)
Thank you very much, we’ll see you very later, bye.