Overcoming Challenges to Build a Thriving Real Estate Firm

Dylan Silver (00:00.61)
Hey folks, welcome back to the show. I’m your host Dylan Silver and today on the show I have Carla Magee in Tempe, Arizona and she is the owner of MHG Commercial. Carla, welcome to the show. Did I get your intro right? I wanted to make sure I did everything good on that end.

Carla Magee (00:15.078)
Thank you for having me.

Carla Magee (00:19.61)
You did great. I am a co-owner and the chief operating officer for MHG commercial.

Dylan Silver (00:26.73)
Okay, fantastic. So let’s start off at the top. How did you get into the real estate space? Was it in your blood? Was it divine intervention? How did you get into the real estate space?

Carla Magee (00:37.699)
Well, I entrepreneurship was always in my blood. One of my mom’s favorite stories is when I was about eight years old, know, everybody else was selling lemonade and I was like, 10 cents is chump change. So I came home with a huge cigar box full of money and my mom was like, how much lemonade did you sell? And I didn’t, I had cut all of her flowers and sold bouquets of flowers to create.

a higher price point and she was like, I knew then that you could only work for yourself. So, I later as an adult got a finance degree from the University of Washington, go dogs, and went to work for Boeing and Microsoft and did all the good corporate stuff and realized that I did not like being in a cubicle. And my ex husband at the time and I were

Dylan Silver (01:11.949)
Wow.

Carla Magee (01:34.292)
buying some of our own real estate and kind of like flipping it and just as like a side hustle. And I didn’t like my realtor at the time. like she was fine, but she wasn’t understanding what I was looking for as an investor. And so as I had my kids and my priorities changed, I was like, you know, I bet I could turn this into a career. And so that’s how I kind of got started in real estate.

Dylan Silver (01:59.48)
I’ve had a couple of guests say something similar. saw someone else who I was effectively working with or they were working for me and I was like, if they can do that, I’m definitely able to do this. And so I want to back up a bit here because you mentioned finance background, Boeing, you mentioned Microsoft. Interesting background, right? Boeing in particular, I have a question about Boeing. So Boeing for

Carla Magee (02:08.536)
Right? Yeah. Yeah.

Dylan Silver (02:24.088)
for me is a aviation company, it’s also a defense contractor. And so they do quite a lot of work. They’ve been in the news with everything that’s been going on. So when you were working for Boeing, was this something that you were super passionate about at the time, or was it you’re out of school, finance, and you’re like, well, this is how I’m gonna start my career?

Carla Magee (02:44.279)
I was a third generation Boeing worker. So growing up, yeah, in the Seattle area, there’s a lot more now than there was even once I kind of entered into the workforce, but it was always just kind of a given. Like you just went to go work for Boeing. Like they have great benefits and great pay and all the things, you my parents told me to go look for 401k and, you know, everything else. And so I actually graduated.

Dylan Silver (02:47.783)
wow.

Carla Magee (03:12.541)
with honors and a lot of accolades. And so I had quite a few offers, but I did Boeing because that’s just what I was supposed to do. I liked the job. I worked in commercial and on the defense side doing a few different programs, but ultimately I wasn’t passionate enough about it to go commute at 3.30 in the morning every day with the rest of the world.

Dylan Silver (03:23.351)
Yeah.

Dylan Silver (03:39.758)
Yeah, that’s a very early time frame. is definitely, talk about the defense side of things, that is definitely a defense timeline, 3.30 in the morning. So you go from there, is Microsoft then the next stop?

Carla Magee (03:42.697)
Yeah.

Carla Magee (03:49.107)
Yeah.

Carla Magee (03:53.757)
Microsoft was the next stop just because, I had had my first daughter and the driving force behind leaving Boeing was there was no autonomy. It’s a very archaic system and very manufacturing. I didn’t even work on the plane. I wasn’t a mechanic. I was just supporting it. And they wouldn’t give me any grace. They would let me work from home to do overtime, but not…

to try and pare down my commute or I had a nanny at home, I could work from home and there was nothing they were willing to give. And so that was ultimately what led me to that. So I thought, well, if I go into IT, they’re a little bit more flexible. Like, of course, I you work from home, you’re literally working from computers. And they did, there was more flexibility there.

Dylan Silver (04:47.96)
So at that point, Microsoft, you’re also then eventually looking at your own personal investment property, working with people in the real estate space. And was it at that point in time, seeing this individual saying like, well, I could do this, that you decided, hey, how can I make a career out of this?

Carla Magee (04:54.962)
Mm-hmm.

Carla Magee (05:06.131)
Kind of, so when I left Microsoft, I was a contractor for Microsoft, which is very common at Microsoft to not actually be an employee of but to be contracted by them. And I had my second daughter. And so I trained my replacement. And because I was a contractor, my replacement was doing a fine job. And they said I didn’t need to come back from maternity leave. And that’s when I was like, you know what, this is ridiculous. There’s one employment in life that can’t

Dylan Silver (05:09.943)
Okay.

Carla Magee (05:35.045)
let me go and that’s me. And so that’s really when I was like, this is the time. So I want to like reinvent myself and do something that I’m passionate about and this is the perfect opportunity to do that.

Dylan Silver (05:48.526)
So at that point, what was your first move into the real estate space?

Carla Magee (05:54.278)
Well, the first move is to get your license. So I had to go get licensed. went to work for or with a gal I had known previously here in Arizona. I had done some stuff in like Portland, Oregon, like we moved around a lot. But so I had dabbled in like some houses. And for the most part, since my girls were so little, it was really part time, which was also a good fit to write like they were small. I could just kind of do a house here and there.

and flip houses and then as investors I worked with learned that I knew what they were looking for in terms of ARV and know what ROI they were looking for, then word started to get around. Then we moved here to Arizona and a gal that I knew previously from when I had lived here before had started her own brokerage was just starting it and she specialized in multifamily properties. And so I was like,

Dylan Silver (06:51.438)
Okay.

Carla Magee (06:53.338)
That’s a good fit. That’s a lot of investment. And some of them you flip and some of them you hold on to and you have to understand everything. And I remember she had said, as she was talking me into coming over, she was like, here’s some of the systems we use to analyze the investment. She was, it’s not like we have finance degrees. I was like, well, I actually have a finance degree. And she was like, then you’re golden. And so it grew from there and small multifamily turned into big multifamily.

Dylan Silver (07:11.96)
to have a finance degree.

Carla Magee (07:22.146)
I switched brokerages so that I could do all of commercial and not just have to solely rely on multifamily for income. And because some commercial brokerages, that’s how they work. A lot of them do. You can only sell one asset class. And so I went to work for one where I could just do whatever I wanted.

Dylan Silver (07:42.444)
In hearing your story, Karlo, what sticks out to me is there was a kind of a set path. You talked about third generation Boeing, finance, sounds like heavy education. I come from a family where that’s the case. And it honestly takes a lot of courage and a lot of like going against the grain to go to your own thing. Cause sometimes, I don’t know if you have this experience, Karlo, but I have people who are like, where did you even get this idea? Like real estate, like where did this even come from?

Carla Magee (07:55.343)
Mm-hmm.

Dylan Silver (08:09.76)
And I had a similar thing. was like, well, if other people can do it, I feel like I can do it. I don’t feel like they’re that much different range of skill sets. know, I was in sales at the time. And so moving from sales to sales seemed natural. But what was probably the underlying factor for me, and I wonder if you can relate to this, is I just liked networking. Like, some people feel drained by that. And I’m the opposite. like, I love meeting new people. Like, I’m on this show here with you.

talking before we hopped on, we were talking about how great Arizonians are. And so did you have that as well? Did you have that like natural, that networking drive to go out and meet people and that really spurred your desire to go be in this space, in the commercial space?

Carla Magee (08:43.139)
Yeah.

Carla Magee (08:55.178)
Yeah, so I had a professor in college who one day just looked at me, I don’t know if it was with frustration or what, and he was like, he said, you are a social butterfly. He was like, you need to find a career where you can go be a social butterfly. And I was like, Mr. I forget his professor’s name. I was like, if I could find a career where I can be a social butterfly for a living, I will be a millionaire.

Dylan Silver (09:24.654)
That’s exactly how it happens. I can imagine, always, this is such an interesting topic to discuss. This is probably a whole other podcast outside of real estate. But when people talk about going from a very stable, consistent income, W to like Boeing, defense, like we’re talking the biggest, yeah. To then going out and eat what you kill, commission lifestyle, but also,

Carla Magee (09:25.163)
It has not been far off since. Yeah.

Carla Magee (09:34.395)
Ha

Carla Magee (09:42.226)
Right. Who leaves Boeing? Yeah.

Dylan Silver (09:51.917)
having to grow within that business, it’s almost like how could someone do both? But what I’ve found is that there’s a lot of people who see, just like you see, just like I see, that there’s an opportunity there and that that’s exactly how great real estate people think. It’s like, you know in your head there’s a problem, I’m gonna solve it, and also markets change, seasons change, environments change, so you might not have the same strategy that you do five years ago today or today, five years in the future.

Carla Magee (10:01.068)
Yeah.

Dylan Silver (10:20.046)
Honestly, from my money’s worth, the people who are the best level real estate operators have to change. They can’t have the same strategy for 10, 15 years.

Carla Magee (10:29.409)
Right, you have to keep adapting and growing. And you know what’s funny is when I left Boeing, when I sat my manager down and said, I’m giving you notice and he looks at me and he goes, you can’t quit Boeing. And I was like, I actually can watch me. So it really is a mindset of like, I locked into a career, I locked into a massive corporation that offers you

anything you could ever want, right? They have free education, they have great pay, they have great benefits, unlimited potential in terms of growth, as long as you’re a hustler. It just wasn’t good enough, it wasn’t enough.

Dylan Silver (11:08.002)
You know, for me, and I don’t know if you can relate to this, I was, I didn’t wake up at 3.30 in the morning, but I was doing early days and late nights selling cars. And I just sensed like, even if I got wealthy from this, that my wellbeing stayed working all of the time here. And I would see people who were 20 years ahead of me. And I was like, I don’t really, I don’t really want to be in their shoes. So it was like a pivotal moment for me.

Carla Magee (11:33.321)
Right?

Dylan Silver (11:36.086)
I’m 31 now is a younger person then do I want this to be my life and even if it meant like hey this might this might backfire I was like I have to for myself I have to go and see what’s out there and thank God that I did but pivoting here Carla so you at this point commercial brokerage you’re allowed to basically wear multiple hats you don’t just have to be in one lane multifamily finance background so you’ve carved out a niche for yourself how did that scale what was the next

steps like for you and what was the growth process like?

Carla Magee (12:09.961)
Well, so I met my business partner now at the time, he was just some random cowboy I met at a networking event shocker. And he was talking and I had previously talked with the other brokerage about partnering with residential agents, that I think that there’s a niche there and a need where there’s this in Arizona, there’s like 90,000.

Dylan Silver (12:18.691)
There you go.

Carla Magee (12:38.15)
licensed agents, like it’s massive. It’s very, there’s a lot of agents here. And I’m like, they get one off clients, right? You know, they move here, everybody loves Arizona and they’re like, now we want to move our businesses here. So they don’t know who else to call. So they call their previous realtor and are like, do you know anyone or can you do this? In the state of Arizona, there’s no commercial license designation. So they are able to, they should not.

Dylan Silver (12:40.59)
Mm-hmm.

Carla Magee (13:07.624)
Your E &O, your error and emissions insurance won’t cover you if something goes sideways. There’s a lot of reasons why you shouldn’t dabble in real estate areas that you have not worked in before. And I was like, there has to be a need, like build their trust. Like we don’t want their client that you can sell them all the houses you want. We just want to help with this one commercial need. And she told me that was a stupid idea. So I meet this cowboy at a networking event. His name is Aaron Dutcher. And he is like, hey, I need a multifamily person. I’m like,

You know, I want to be able to do other things and you know, it’s going pretty well there. And so but then I started referring him my other commercial business as I was trying to work with partnering with agents and I had heard him talk at the networking event about partnering with residential agents. I like, how’s that working for you? He’s like, it’s great. You know, it’s a it’s a huge referral source, you know, kind of went into it. So eventually I woke up one day and was like, you know, I should ask that cowboy out to coffee because

He is doing what I think is a great idea and what we should be doing. And I’m referring him to my other commercial business because I can’t do it. What if I went and worked over there and was able to do all of it? And so that’s where that next step progressed. And then, like I said, now we’re business partners. have since one of the niches I work with is a lot of residential agents, which in the residential real estate field are predominantly women.

Dylan Silver (14:23.022)
Okay.

Carla Magee (14:35.558)
So I relate to them very well. And then I focus a lot on women-owned businesses, female ownership, stuff like that, because we’re still very underrepresented in that space. And in the commercial real estate space, this is a very male-dominated space of real estate. And it can be very intimidating to someone who doesn’t do a ton of commercial transactions like we do.

to try and have that conversation. you being patronized? Are you being taken advantage of? Like you just don’t know. And so I’m like, partner with me. I will represent you. can, know, woman to woman, you can trust me. Those guys can be sharks. I know how to swim with sharks.

Dylan Silver (15:19.726)
That’s a great pitch. I’m sold. So you have the Cowboy Partner. Is this when the infancy of MHG commercial?

Carla Magee (15:21.337)
Yeah.

Carla Magee (15:30.201)
Yeah, he had just started it like a few years prior. I came on about five years ago.

Dylan Silver (15:33.942)
Okay. And so I’m imagining at this point in time, doing lots of different type of deals, not just locked into multifamily with MHG commercial when you were partnering with him, was it still lots of different kind of deals or were you narrowing in on a specific area?

Carla Magee (15:50.756)
No, I was starting to be able to do all the deals. The beauty of here at MHG is, you know, there’s about 20 of us, there was about 10 at the time. And between all of us, the wealth of knowledge that is there, know, Aaron, my business partner has been doing this since 1999 in various capacities. We have David Pierce as an associate broker who…

has also been doing it since the late 90s. He’s a wealth of knowledge and then the other agents too. It’s like, so if I don’t have the answer, one of us in the office does. One of the things I tell our clients is I was like, the beauty of hiring me is you’re basically getting 10 brains for the price of one.

Dylan Silver (16:34.946)
I’m sold again, how do we partner? So at this point, partnering business, are you at that point a first time business owner on this scale? Was this your first time being in business as an owner on this scale?

Carla Magee (16:49.088)
Yeah, yes. So I’ve done a variety of small businesses. I’ve always had my own LLC because we flipped houses and stuff like that. But now being a business partner with MHG Commercial, yes. And now we are scaling our business even more this year. I started the property management division. So we’re doing commercial property management. We launched in March. And so we’re working towards that as a goal as well. So we just…

We just keep growing.

Dylan Silver (17:19.886)
Let’s talk about commercial property management here for a second. Let’s dive into this. So I’ve had a lot of flippers on the podcast, short term rental, midterm rental, long term rental, right? These folks will have property managers and people are familiar with that. When we think of commercial property managers, there’s so many different areas that can go into this space. And me as someone who’s just ignorant on it, I’m really not sure of all the different avatars of commercial property management that exist out there. Some of the things that I think about

Carla Magee (17:22.348)
Okay.

Carla Magee (17:30.177)
Mm-hmm.

Dylan Silver (17:49.002)
are of course the first one comes to mind is like apartments right but then you also have commercial spaces office spaces and so on and so forth what are the different avenues for commercial property management

Carla Magee (17:59.413)
Well, so you’re almost there because commercial has all different asset types, right? Like with multifamily, for example, that wouldn’t be an ideal fit for us because that is a bunch of residential leases. You just have 100 or 200 of them. But there’s federal and state guidelines about tenant rights and things like that. And it’s pretty much a boilerplate lease that every tenant signs. In commercial, so I’m talking offices,

industrial, retail spaces, all the like. Every lease is different. Some of them are one year, some of them are 20 years, some of them are triple net, some of them are modified growth, some of them, with what they include, have to really understand what the lease says to see what you are responsible for as the owner and as the tenant, and as the property manager, what…

is provided by the owner. Some of our properties are as easy as just collecting the check and sending the owner their portion. And then some of them are as complicated as what we will call full service. Most office spaces are full service. Like when you lease an office, your internet’s included, your power’s included, you just kind of pay a flat rate. And then some will like the retail spaces if you have five tenants.

What’s their proportionate share of what they pay towards the common area maintenance costs. So it really depends on the lease and then on the asset class.

Dylan Silver (19:37.134)
So both retail and office space, different strategies, right? And so are you, what’s your perspective on performance-based retail leases when they pay a percentage of their profits to the property manager or landlord in the form of a lease?

Carla Magee (19:58.569)
So that’s really common in retail, especially if you look at like the mall structure. What that typically means is that the landlord is telling you that they will provide foot traffic, right? for whatever reason, maybe they’re a great location, or maybe they work really hard on marketing, whatever that means, that I will provide you enough foot traffic that if you generate for even numbers of million dollars in sales, we want…

a percentage over your million dollars in gross sales. So if you got $1,000,005 in sales, you’ll owe 10 % of the $5. So my thought on it is, and what I advise my clients, is show me where your foot traffic comes from. Show me your marketing, show me your traffic counts, show me your foot counts, show me the average sales of the other retailers in your space. Are they going over those maximums? Then great, because

depending on what space they were in before, a million dollars in sales is phenomenal and going over that is well worth paying them a percentage of that.

Dylan Silver (21:05.74)
Yeah, have to see the numbers, right? So in managing all these different types of leases, right? So I’m imagining just as an outsider looking in, it gets complicated, right? So you have a different type of lease for each individual tenant within a building. You have multiple buildings. We’re talking systems on systems on systems. And so when you were getting started, I’m imagining the tools that are out there to manage this have changed to today and are still changing.

Carla Magee (21:17.2)
there.

Carla Magee (21:25.852)
Mm-hmm.

Dylan Silver (21:35.202)
How are you seeing from a, of course no one has a crystal ball collar, when we talk about the future, how are you seeing technology change and adapt to enable folks in your position as property managers to better able interface with their tenants?

Carla Magee (21:51.823)
So I think that technology is phenomenal, right? We do have a lot of systems in place because we have to be able to understand each lease and provide the tenant with what the landlord should be providing and vice versa. One of the ways we utilize some of the current technologies and still maintain that personal connection with tenants, owners, everybody else is we’ll use AI.

call it ChatGPT, whatever, to compare leases. So we will tell ChatGPT, take this lease, which is the one we just wrote, and compare it to the LOI, for example. And the LOI is a letter of intent. That’s what we submit to the owner for a tenant to say, hey, on a high level, this is what we’re looking for. And then if once we all agree, we can get back a 95-page lease, which could literally take you two days to read. So we, yeah.

Dylan Silver (22:24.46)
Hmm.

Dylan Silver (22:47.438)
to read,

Carla Magee (22:49.214)
So and not let alone redline or anything else. So one of the things we utilize with technology is tell chat GPT compare these two documents and look for the terms in the LOI that should be in the lease. So that took away, you let’s make sure what we already agreed on is in here and see what the verbiage is. So that took away, you know, a quarter of what I was looking for. Okay, great. Check, check, check. Okay, compare this lease to our boilerplate lease.

compare the force majeure clause to this force majeure clause so that we can start using that technology to pull out specific things that we’re looking for versus reading through pages and page to just find one clause that we’re looking for.

Dylan Silver (23:32.59)
pages.

Yeah, and then you’re dealing with human error and so on and so forth. can imagine, honestly, I actually can’t imagine how people manage these leases beforehand, which brings me to another area here, Carlos. So when we’re talking about at scale managing commercial properties, and then we’re also talking about other activities within the commercial space, managing commercial properties alone, especially at scale seems like a massive undertaking. And so…

Carla Magee (23:37.698)
Yeah.

Carla Magee (24:02.551)
It has been.

Dylan Silver (24:04.29)
So how does one or does MHG pair that with other endeavors, investing and so on and so forth? And how does a company find time to be excellent at both?

Carla Magee (24:16.642)
People, I mean, we have really phenomenal people on our team. We’re very selective about who works with us. For example, the property manager that we’ve hired, she has 30 years in property management, about 15 of that is commercial. So she is who manages all the leases, she uses our databases and our software systems to set prompts and…

calendar times and things like that to follow up when she needs to renew leases, stuff like that. The way we handle all the incoming leads for sales or for tenant representation or landlord representation is then a different database to which then we hand off the leads to the appropriate associate for that. We have junior associates that kind of get

some things that need a little less hand holding and then we have higher level associates that can take on multi-million dollar properties. We have people that are really good at selling land. So if this is a land lead, it’s gonna go to this person to understand if there’s any rezoning or anything of that nature. So we rely on our people very heavily, but we only have the best people.

Dylan Silver (25:35.928)
This is a testament to what an effective team can do, because I’m just thinking about how many areas just in that short discussion we just had there you talked about in the commercial real estate space. They could each be their own separate business. And there’s people I’ve talked to who have that. But to do everything in one house is really like one stop shopping in a sense. there any areas of Arizona that you focus on? know that you’re in the Tempe area.

Carla Magee (25:40.855)
Mm-hmm.

Carla Magee (25:51.777)
Yeah.

Carla Magee (25:58.615)
Mm-hmm.

Dylan Silver (26:04.512)
or is it all spread out over Arizona?

Carla Magee (26:07.584)
So our office is in Tempe. We actually just bought this office, the partners and I did. It’s fantastic. It’s gorgeous. But we primarily are in what we call the Valley of Arizona. So if you’re not from Arizona, the Valley is massive. about, you know, if you consider distance and time, you can spend like two hours going from corner to corner. It’s about 7 million people. We also

work in Tucson, which is a large city in, you know, call it southern Arizona, and then some of the northern areas like Flagstaff, some of the mountain areas, Basin. So we really work in all of Arizona, but one of the things we have also worked with is partnerships in other states. So we’re able to offer our clients their needs in other states as well, so that as they trust us with all of their real estate investing, that we can take it all over the country for them.

Dylan Silver (27:04.61)
even more reason why I’ve got to get out to Arizona now. Selfishly, I’ve spoken with so many people in the real estate space on the medical side that I’m thinking like, I’m thinking too small. I’m thinking about single family residential fix and flips. How do I put together a syndication? How do I buy an IV drip studio? How do these things happen? And so this conversation piques my interest even more here, Carla. But I digress and we are coming up on time here.

Carla Magee (27:08.661)
Come say hi.

Carla Magee (27:18.942)
Mm-hmm.

Carla Magee (27:31.41)
Yeah.

Dylan Silver (27:34.082)
Where can folks go to get a hold of you?

Carla Magee (27:37.086)
So there’s a multiple of ways I’m on Instagram. I’m commercial Carla. And then I share a lot of like tips and knowledge on my Instagram. do a lot of videos about commercial real estate investing, what financing looks like, what the, you know, Phoenix area looks like. I work really hard on that to provide value to people so that in their scrolling, they’re, you know, finding videos where they can actually learn items. You can find us at mhgcommercial.com.

And then MHG commercial also has its own Instagram and social media.

Dylan Silver (28:11.918)
Carla, thank you so much for coming on the show today, for helping educate us about commercial property management space and so many other topics. you for coming on here today, Carla.

Carla Magee (28:22.236)
Thank you for having me.