How to Invest in Flex Space Commercial Real Estate

Tyler Jones & Scott Bernie (00:00)
don’t be greedy in business. And that’s that’s our whole ⁓ motto with me and Scott is is don’t be greedy in business and everybody’s gonna win. We we tell that to all of our investors, ⁓ we tell that to all the guys that we’re building for, all of our owners. And if you’re not greedy in business, especially in this business, you know, our thing that we say to all of our our investors and all of our owners is that we don’t want to build one for you.

We’re we’re not gonna get rich off this one. We wanna build the next 10 parks for you. So that’s that’s our ⁓ that’s how we go about business every day.

Issa Hanna (02:02)
Welcome back to the Real Estate Pro Show. I’m your host, Issa Hanna, and today I have Scott Bernie and Tyler Jones, two guys that are revolutionizing the way that commercial and flex spaces are being built and bringing landlords in from the multifamily class into a whole different asset class of investing.

So with that, Tyler, Scott, thank you guys for coming on. It’s an honor. welcome.

Tyler Jones & Scott Bernie (02:25)
Yes, sir. Thanks for having us.

Issa Hanna (02:27)
⁓ thank you for coming on the show. super excited to talk to you guys. So ⁓ for people at home who don’t know what flex spaces are, don’t know what this newest asset class is that you guys are introducing to investors, can you all run down the business a little bit for them so they can understand it better?

Tyler Jones & Scott Bernie (02:43)
Yes, sir, absolutely. So flex space is large metal building warehouse ⁓ space that’s split up into smaller units. So we’ll build a 12,000 square foot unit ⁓ metal building and split it up into 1,500 square foot spaces. ⁓ most of the time they’re spec’d out with one office and a bathroom. ⁓ can be spec’d to, you know, whatever the tenant needs, build the suit. but typically

It’s a twelve by twelve office with a bathroom and warehouse space. So the people that that we’re leasing these to are your HVAC guys, plumbers, ⁓ chiropractors, dance studios, sports courts, ⁓ baseball teams, softball teams, basketball teams. literally you go from one end of the spectrum to the other. We have doctors ⁓ that move in these things. So it’s a really versatile asset class. ⁓ likes to

said it’s relatively new. ⁓ and we have a lot of guys from other asset classes that are coming into this just because of the the RI is so good.

Issa Hanna (03:48)
And and what a great idea. And for people at home, when you say flex, ⁓ all those broad spectrums of of different professions that are renting from them and moving into these places, that’s what we mean by flex. It’s it’s flexible use. You can use it for ⁓ you know, an array of different types of businesses, and it’s more affordable in a lot of instances. And from when we were talking before, y’all have found a way to make it even more affordable for people in the building and even the renting. So

can y’all shed some light on on how you’ve been able to do that?

Tyler Jones & Scott Bernie (04:18)
Yeah, so as a company we found bottlenecks and ⁓ you know, Tyler and I both come from a construction background and that’s kinda urged and partnered up. But you know, timelines and and having

else’s court kind of slows that down where we vertically integrated. So about 70% of our subs are all in-house, owned by Tyler and I. So, you know, we’re able to control cost. We’re able to control timelines. And, you know, we don’t have that middleman in there. So we act as the GC and our construction companies are doing the work. And it just allows us a whole lot more economical model and everybody wins and then.

Issa Hanna (04:53)
Definitely. So you guys are taking your multiple construction companies, ⁓ buying the materials, buying everything under one umbrella, and and by doing that ⁓ and using your own companies, you guys are able to to make construction costs a lot lower, i.e., you guys can rent to people ⁓ you know, at a at a better price. So what what a great business model. I mean ⁓ how’d this idea start?

Tyler Jones & Scott Bernie (06:06)
So I started in the metal building industry ⁓ almost 20 years ago. ⁓ we did metal buildings and concrete, ⁓ residential buildings, hay barns, arenas, barn dominiums. so we’ve been we’ve been doing that forever. And in 2019, we built our first flex development in Van Austin, Texas. And it was off a major thoroughfare. ⁓ we we kind of got a name for building flex in our area.

⁓ since then ⁓ we try to make all the conferences, ⁓ all the trade shows, anything having to do with flex, we’re the two guys in the cowboy hats. We we really stand out in ⁓ in the crowd of suits ⁓ with the cowboy hats, but it it’s done well for us, man. And ⁓ since then, since 2019, ⁓ we’ve built ⁓ seven developments for others. ⁓ we currently have five.

under construction right now and we own three of our own. ⁓ one park in Greenville, Texas, one in McKinney, Texas, and then one in Midland, Texas.

Issa Hanna (07:11)
Wow, beautiful. And then your partnership, it it seems like it works so well. ⁓ can you guys shed a little bit of light on on what role is whose and who does what for us?

Tyler Jones & Scott Bernie (07:20)
Yeah, so like I said, we’re both have construction backgrounds. ⁓ both our dads were in construction ⁓ growing up, so we grew up doing this. ⁓ me and Scott met 15 years ago through mutual friends, ⁓ became buddies. ⁓ he was in my wedding, I was in his. ⁓ and he’s always sprayed the spray foam in our metal buildings for the last 10 years. So through that.

And just through ⁓ building it, him spraying some of these parks, me building them, ⁓ we got to looking and we bought our first piece of property together in Midland ⁓ to do our first development, ⁓ I guess two years ago now. ⁓ so it’s it’s done good. ⁓ like I said, I’m I’m more of the estimator. ⁓ I do a a lot of the estimating, a lot of the the on-site GC work and Scott.

We we also we share the the GC site work, ⁓ but he’s more the financial guy. he runs all of our proformas, ⁓ all of the back office ⁓ stuff. He he’s the money guy. So I always kind of make the joke that where we got started in Flexpace is that my construction company funds my real estate habit. And you know, different asset classes, multifamily, storage, that kind of thing.

I I traded land for a little while and loved that, but I just love the return in this asset class. I like the asset class as a whole. It’s just pretty bomb proof as far as, you know, whenever you have COVID an event like COVID happen and then brick and mortar offices got hammered, well your your plumbers still gotta go out. Your trades folks are still needed everywhere. And so this was just kind of the golden goose for us. That’s kind of what brought Tyler and I together. I mean, we worked together on a lot of the sites, we had a lot of background, but

We both kind of fell in love with this and and a lot of that’s just, you know, the the love for real estate and the asset class.

Issa Hanna (09:11)
Man man, I love that. And you guys, like I said, ⁓ seem like a great, great partnership. Fifteen years ⁓ in each other’s weddings, making money together. almost like you’ve become brothers, you know. So ⁓ pretty that that’s cool, man. Definitely. I I applaud that. And for people at home, if you’re looking to partner with people, you gotta partner with people that bring something to the table with you that you could trust, that could be in your wedding. You know, these are the type of people

that that you want to get into business with. And we got two people right in front of us right now that that are perfect examples of that. So ⁓ with that

Tyler Jones & Scott Bernie (09:47)
lot

more done whenever you can compound that with a partner. Tyler and I have both in growing our businesses, we saw what, you know, the some partnerships that maybe didn’t work out and we knew how to rewire that for our partnership together.

Issa Hanna (10:33)
Definitely when things go wrong, like a partnership, you learn a lot, you know, and it’s not just things going wrong in a partnership. every investor, every lender, anybody in the real estate field has a story, has a has a real estate nightmare, an investment nightmare. do you guys care to share one with us?

Tyler Jones & Scott Bernie (10:51)
Yeah, well ⁓ I so I started out in you know just as far as an investment nightmare goes, some self-storage that you can buy in the wrong place and then end up being a hobo hotel. So there are there are definitely some issues there, you know, and then if you have the wrong partner, as far as the nightmare there goes, your whole life it’s it’s just like a marriage. I mean, I’m I’m pretty well married to Tyler as far as all my financials, that kind of stuff. And so if you pick the wrong partner, it’s a nightmare from

From the word go. There’s always somebody out there that, you know, hey, let’s partner up on this. Well, 90% of the time it’s because those guys need you more than you need them. And and you’re not mutually beneficial. You’re not able to compound what you guys can do together. It’s somebody leeches off, you know, one other. And that’s not always the case, but where where we avoid the nightmare is if we can do 10 times more together than we can do apart, then everybody wins.

Issa Hanna (11:46)
Definitely that goes, you know.

Tyler Jones & Scott Bernie (11:48)
Greedy in Yeah, don’t be greedy in business. And that’s that’s our whole ⁓ motto with me and Scott is is don’t be greedy in business and everybody’s gonna win. We we tell that to all of our investors, ⁓ we tell that to all the guys that we’re building for, all of our owners. And if you’re not greedy in business, especially in this business, you know, our thing that we say to all of our our investors and all of our owners is that we don’t want to build one for you.

We’re we’re not gonna get rich off this one. We wanna build the next 10 parks for you. So that’s that’s our ⁓ that’s how we go about business every day. So long term relationships will pay off way more than having to answer every phone call and every single lead. When you have customers that you do everything that they build, that you don’t have to sell that much.

Issa Hanna (12:31)
Definitely, you sell yourself. And if you’re somebody who holds themselves to integrity, who picks up those phone calls is accessible, who who isn’t greedy, like Tyler said, you know, people remember that a lot more than you know, going after a lead, all that kind of stuff. So ⁓ you know, word of mouth is the best advertisement, and and the only way you’re gonna get that kind of advertisement is was when you do what you guys do, and that’s hold yourself and do business with.

the utmost integrity. So once again, I’d love to applaud you guys for that. Now, you know, let’s say five years down the line I have you guys back on the show. ⁓ where am I gonna see Scott and Tyler? You know what are what are the goals?

Tyler Jones & Scott Bernie (13:14)
Our five year goal is a hundred million in assets. ⁓ and we would like to package those assets in a bundle and ⁓ with an exit and ⁓ then keep going. So, you know, after that it’s like if the wheel’s not broken, why why fix it? ⁓ but five year goal is have a hundred million in assets built that we own ⁓ and then exit and then keep going.

Issa Hanna (13:43)
Great, great five year plan. And I know you guys are gonna get it done. ⁓ one thing I find is the construction guys, you know, you guys do great in the real estate. When you guys decide to get into it, ⁓ all the knowledge that you guys have of just building stuff from the ground up. you you you can see a lot more, you can foresee a lot more than the normal guy off the street. So that’s just one thing I wanna say about construction guys at home. If you guys are at home, you’re scared to get into real estate.

a lot of guys I talked to started off in construction and they always do the best. So ⁓ with that

Tyler Jones & Scott Bernie (14:18)
It gives us a little leg up over the competition. ⁓ just because the the guys that come from the financial world that that get into flex or the guys that come from just straight real estate that get into flex, we have a little leg up on because of our construction knowledge.

Issa Hanna (15:14)
Definitely. I mean, if you guys understand how the pipes are coming from the street ⁓ into the, you know, into the the piece of land and all that stuff, you you know a lot more about the inner workings of the building than anybody else, ⁓ any realtor, any any financial guy. So I couldn’t agree more with that, you guys. ⁓ and with that, people that are at home watching this are construction guys, they’re just, you know, they want to get into real estate. ⁓ one thing that I always tell everybody.

Business relationships are key. we touched on a little bit with the dealing with integrity, but what advice would y’all have to a young guy coming up on how to establish business relationships and then grow their network?

Tyler Jones & Scott Bernie (15:52)
I think, you know, just growing hammered to me was do what you say you’re gonna do, show up when you say you’re gonna do it, and do the best job possible before you leave. I think Tyler and I have built our reputation on the guys that are gonna do things right. And, you know, even if our backs up against the wall, we’re gonna show up, we’re gonna answer the phone. Sometimes those problem customers, you see your phone ring and you that’s the last call you wanna answer. But the best thing you can do is just bite the bullet. There’s always a solution to the problem. Giving up.

is not the solution to the problem and that ruins your reputation and your name going forward within construction. It’s you know, there are a lot of those calls that we don’t want to answer, those nightmares that we don’t want to have to figure out, but everything’s figure outable. You know, so it’s just get up every morning with the drive to go do better and do what you say you’re gonna do when you say you’re gonna do it. And on the the relationship side, you know

The way we make relationships with these guys ⁓ when we go to a conference and when we go to a networking event is just be a homie. that’s our that’s our number one thing is as long as you can go in and and be a friend, make a friend with these guys, ⁓ they want to do business with people they like. that’s in all trades. that’s my number one sales tactic in metal buildings, concrete, flex developments.

Everything I do that if you can make a friend, you can sell them anything you want.

Issa Hanna (17:17)
Definitely in our game, you’re selling yourself. there’s a lot of people that could do the job, you know. So ⁓ they actually choose you for you and what you bring. So, man, guys, great advice, great advice. Now, ⁓ people are in North Texas, people are all around the world, you know, they they see this and they hear you guys are getting excited about the vertical integration, how you guys are able to build cheaper, the you know, construction companies, they want to get a hold of you guys. ⁓ how could they do that?

Tyler Jones & Scott Bernie (17:44)
Yeah, so we we’ve got a website buildwithlegacy.com ⁓ that’s got all of our contact info on there. It’s got ⁓ our ⁓ past developments that we’ve done, ⁓ future developments we got going. ⁓ we build all over the ⁓ southern United States. we’re working in Knoxville, Tennessee now, ⁓ fix start in South Carolina, Florida. we’re everywhere. So ⁓ buildwithlegacy.com

⁓ my email is [email protected] and then same thing [email protected] So ⁓ we’re on a three or four new client zooms a week ⁓ doing consulting, doing development deals. So we’d love to hear from any anybody. Yeah, you can reach out on any of the socials with Tyler or ⁓ LinkedIn, Facebook, Instagram, ⁓ and then legacy development partners on Facebook and Instagram as well.

Issa Hanna (18:38)
Amazing. Make sure to check them out, you guys. If you want somebody who’s gonna do your job right, do it with integrity. ⁓ because they like to put their stamp of approval on every job. Check ⁓ Tyler and Scott out, ⁓ because they could really help. Tyler and Scott, thank you guys so much for coming on. I’m all out of time for today. ⁓ I’d love to invite you guys back on ⁓ later down the road if you guys are interested. Yeah.

Tyler Jones & Scott Bernie (19:01)
Absolutely. Yes, sir. Thanks for having us. We appreciate your time today.

Issa Hanna (19:04)
No, man, it was a pleasure having you guys. It was a pleasure learning about ⁓ the new the new asset class you guys are bringing to the table or or or you know getting people as they say hip to. So ⁓ that’s pretty cool. Thank you guys. it was a great talking to guys. ⁓ and to the viewers at home, if you guys enjoyed my conversation with Tyler and Scott and want to see more just like this, make sure to hit like and subscribe. I talk to people every day that can bring us different knowledge on every aspect.

of the real estate industry. Until next time, the real estate pros are out.