Why Now Is The Time To Buy Commercial Real Estate Before The Next Market Peak

Blaine Strickland (00:00)
it’s gone almost straight up, which means the largest brokerage firm in the world is making more money than they ever have. And that can only happen because they’re transactions, because they are the, they’re not the,

They’re not the canary in the coal mine. They’re the 800 pound canary in the coal mine. And so we’re in an ascension. And what that means is that if you ever wanted to buy low and sell high, now is the time. Because if you believe that these cycles repeat themselves over 10 years, now is the time to get in.

Scott Bursey (01:57)
I’m your host Scott Bursey. Today we’re cranking up the engine to maximize velocity. We’ve got a tight enough deal flowing joining us. Someone who doesn’t just look for a deal, but is obsessed with getting one more deal. He’s Blaine Strickland and he’s bringing the rocket fuel of deal acquisition. If you want to know how to scale your sourcing and never leave money on the table, this episode is for you. Blaine.

Welcome to the show.

Blaine Strickland (02:25)
Thanks, Scott. I appreciate the opportunity.

Scott Bursey (02:27)
It’s great to have you here. And for our listeners who may not be familiar with your journey, please tell us how did your career begin and what is your main focus now?

Blaine Strickland (02:35)
Okay, I’ve been in the industry for over four decades, so let me see if I can speed through that journey quickly. ⁓ I grew up on Air Force bases. My dad was a fighter pilot. ⁓ He retired from the Air Force in central Florida when he was 44 years old and went directly in the commercial real estate business. At that point, was early in my college career. I transferred to the University of Florida, which was nearby because it had a real estate program.

I sort of thought like, well, I guess if that’s what he’s doing, then I’ll try to do that too. ⁓ And so upon graduation, I entered the appraisal world. Back in those days when you got a degree in real estate, the only honorable thing to do is to become an appraiser. So I did. And then I was the first guy hired when CBRE came to Tampa, Florida in the early, early 80s. I spent 10 years with CB, half of that as a producer, as a broker, and half of it as a brokerage manager. So…

I got to see two sides of that play. ⁓ As a manager, I was responsible for training, hiring, training, retaining salespeople. That came to an end in the great savings and loan crisis, if you remember those days in the late 80s. CB ⁓ closed some of their offices. Mine was one of those. And so with that, I decided to become a developer.

I was in central Florida. It’s been a fast growth market. Development was a way that I had made a lot of commission income, so I decided I wanted to be a developer. I spent 10 years with really big firms getting to work on big projects and learn the trade. And then I spent 10 years working for my own account as a developer. When that came to an end, I turned my attention to being a coach. And so really for the last 15 years, I’ve been a coach. What I think makes me valuable as a coach today is that I’ve had exposure to so many different elements

in the industry that I can help many people. I’m familiar with almost anything that could come up in their world, and that makes me valuable to them for, if nothing else, empathy. ⁓ Specifically as it relates to investments, when I ⁓ left the big companies, I found that I had enough money, as I like to say, to buy a duplex and live in half of it, but I didn’t want to do that. I wanted to operate in the

of the market that I understood where I had been working on these development projects. The only way I could do that was to syndicate deals. I had to raise money with other people. And so I had an opportunity to raise quite a bit of money, pair it with quite a bit of debt, and we were able to do a number of projects over about a 10-year period. And ⁓ even that experience ⁓ continues to help me with my coaching today.

Scott Bursey (05:08)
really caught my attention about you Blaine was the way that you’ve been able to implement lean systematic processes to turn deal acquisition into a predictable machine. That’s the kind of scalability our listeners need to hear about.

Blaine Strickland (06:10)
Yeah, what happened to me when I ⁓ made this decision to move from broker to buyer, if you will, that’s the way I like to say it, ⁓ is that I really didn’t know anything about the syndication business. had never bought an LP interest even to look at an OM, if you will. Now as a broker, I was familiar with selling investment properties, but my whole goal was to get the project sold. So I wasn’t thinking about how the buyer was structuring it. It was just like, look, Jack, do you want to close today or tomorrow?

So when I became a principal, then I had to think about how I was going to raise money. The way that I did it is that I used my salesperson techniques where I had a database and I called on prospects on a rolling basis. I created just a duplicate of that and began to call on investment prospects on a rolling basis. And so the way I always thought about what I was doing is that I was grooming my equity pool.

because I was so tightly associated with them and I was asking direct questions like, so Scott, if I were to find something that fits, are you able to move quickly, yes or no? And if so, how much might you be able to invest in any given opportunity? So what that did was cause me to understand what my equity pool was and then I governed myself accordingly. In other words, if the project was $10 million and I knew that I had to ⁓ invest $5 million of equity, then I would be thinking about

when I turn to my investor pool and ask them to participate in a systematic way, because I’m a systems guy, could I pull that off? And that approach worked for me. I never failed to raise the equity that I needed for the deals that I wanted to do.

Scott Bursey (07:49)
On that note, I guess, what is the single biggest advantage of the one more deal acquisition model in today’s market?

Blaine Strickland (07:57)
Well, when I think about this equity pool idea, so for me that was 45 people. I would just like it would in sales, you call on someone, you say, how’s it going? What’s new? How can I help you? Okay, nothing really happening at the moment. Great, no problem. I would schedule that person for a follow-up call in 45 days, 90 days, whatever I believe was best. And then I was just obedient to my CRM, which is it’s time to check back with this person.

So what I would tell those people is, look, here’s what’s going to happen. If I find one, I’m going to put it under contract myself. I’m going to use that money, my pursuit money, to put the deal under contract myself. But then I’m going to turn to the equity pool, and I’m going to need you to move quickly. And that’s not some strange obligation. We have to outbid the rest of the world. We have to outbid everybody else. We have to be more nimble. We have to be just as powerful as any other potential buyer, because the seller doesn’t care. The seller wants to.

execute their business plan which is to sell as quickly as possible for the most money possible and we have to win that sweepstakes. So I think the strength of my system was that I always had people ready to go. When I created the opportunity and I sent out effectively the sentinel message which is now is the moment, I can only give you a few days to say yes or no to me.

then this is, I need you to perform in this very narrow box. And so my whole goal was to groom them to be able to ⁓ participate. The sort of pivotal question in my day as a syndicator was, ⁓ great, I’ll be back in four days, four business days, and you’re either going to sign the documents and give me a check, or you’re going to give me the notebook back.

And so that’s the way that I, and that was not a harmful question, it was not an offensive question, it was in a contrarian position, it’s what I had groomed them for. And so occasionally people would say, you know, I reviewed it but this is not for me. I would say, great, you’re still in the pool, we’ll get you next time. Great, if you’re in, then I need you to do the following things in a timely manner because we have to perform under a contract that’s already in motion.

Scott Bursey (10:01)
That focus on efficiency is key blame. We all know time is money.

Blaine Strickland (10:41)
Yeah, what I would do is, and this is, ⁓ you mentioned publications. I’ve written two books. The third book is called Evolve, Moving from Broker to Buyer. And it’s unlike the first two books in which I’m acting essentially as your coach, this is really almost a biography. If you wanted to walk in my footsteps, this is how I did it over a period of time. so the idea was that I teach now that I think you have to have some bundle of pursuit dollars. I would use my pursuit dollars

to put the property under contract and begin the due diligence process. And as soon as I believed that the deal was going to go forward, and prior to the time period when the deposit would become non-refundable, I raised all the money in that period. I was so systematic that I raised it and kept it in a separate escrow account so that when it came time to go non-refundable on the money that I had put in, and let me just push pause for a second.

I collected the money from my investors and put it in an escrow account, and that money could only be touched in one of two occasions. Either we closed, and so I pushed the money across the table at the closing table and then was able to come back and say, Scott, here’s your deed, here’s your share, or we didn’t close within a certain period of time and the money would be refunded. So I was not using investor money for due diligence, for deposits, for lawyer fees, any of that. I was paying all that myself.

which just heightened the idea that I had to cause my system to work effectively because as an example, if I did not have all the equity that I needed for the deal prior to going hard, I released the contract. Now I never got put in that position, but that’s what I would have done. There was one deal that we were stymied by a wayward politician who ⁓ decided to vote differently than what we had been told. And so we did not get the approval that we needed.

And as a result, I gave back all of that equity that I had stored up, and I lost all the pursuit money that I had committed with ⁓ no ability to escape or be reimbursed by the seller. Pretty painful moment, but that kept my equity pool confident that I was keeping them safe. And so when they got their money back, their attitude was, gosh, I’m so sorry that happened. When is the next one? Which is the best.

medicine there is under that circumstance.

Scott Bursey (13:02)
and you speak of giving back, please give us the play-by-play on your coaching as it stands now.

Blaine Strickland (13:07)
So I primarily work with commercial estate agents who are top producers. We are a small company of three people. We’ve been around for 15 years. We help people in a lot of different stages. Some are asset focused. They focus only on industrial or retail or whatever it might be. Some focus geographically. Some do both. Many of them, the reason I wrote the book, Evolve, Moving from Broker to Buyer, have had, because they’re top performers,

They have had a lot of success and they have discretionary funds to invest. I think what really spurred me to create this element of our coaching moving from broker to buyer, Scott, was that somebody said to me one time, oh yeah, I invest in real estate. In fact, have like 17 different, I’m invested in 17 different properties. And I’m like, oh really, tell me about that. Well, all 17 were LP,

units that he had bought and he said basically I just keep all that information and I give the box full of statements and whatever I get to my accountant and he figures out my position and I said gosh for someone with your level of expertise I would really like to see you focus on becoming a principal and running the show being the decision-maker as opposed to the LP and he goes what’s funny you say that because what happens is my buddies say to me hey what are you investing in and then they say I’ll buy a share along with you

And then when we get that occasional capital call, they don’t call the principal and say, why is this happening? They call me. Like, I got them into the deal somehow, and now I’m responsible for what’s going on at the property level. So I said, there’s another world. And with that, ⁓ we created this idea that you can buy commercial real estate and be in the principal role, the managing member role, if you will, the quarterback, if you will, as opposed to simply a recipient of the occasional LP proceeds.

Scott Bursey (14:52)
In regards to commercial real estate, where do you see the biggest opportunity now, Blaine?

Blaine Strickland (15:38)
Well, it’s pretty clear, Scott, that ⁓ first of all, commercial real estate is a cyclical asset. And unlike maybe other types of investment, that cadence over the last eight decades has proven to be about a 10-year cycle. In other words, trough, recovery, ascension, peak, oversupply, back to the trough. Well, that cycle has lasted about 10 years on average for the last eight decades.

That cycle has shrugged off war, pandemics.

market play, all kinds of market activities. And so it’s clear that we’re in an ascension right now. If your listeners were interested, they could go and as an example, just study the stock price of publicly traded CBRE and just look and see what their performance has been over last 18 months. And

it’s gone almost straight up, which means the largest brokerage firm in the world is making more money than they ever have. And that can only happen because they’re transactions, because they are the, they’re not the,

They’re not the canary in the coal mine. They’re the 800 pound canary in the coal mine. And so we’re in an ascension. And what that means is that if you ever wanted to buy low and sell high, now is the time. Because if you believe that these cycles repeat themselves over 10 years, now is the time to get in.

You have three or four years of run up. That’s when you would likely sell, preferably sell, and then ride the wave back down until it’s time to go back in. So if you could have anything you wanted and time your investments perfectly, now is the time to go in.

Scott Bursey (17:06)
That’s some rocket fuel for our listeners. Blaine, very interested to know this. What’s the one metric in your deal sourcing funnel that you monitor most closely?

Blaine Strickland (17:24)
There are a number of pundits in the commercial real estate world. One of the ones I recommend for maybe beginners if they want to think about commercial real estate, if you go to greenstreet.com, they are commercial real estate advisors and you just scroll down on their website, they have a graph there which is called Commercial Property Price Index, CPPI.

And what it does is it takes all the different elements of commercial real estate and aggregated into one point. And what they asking themselves is the price of these assets higher or lower than it was yesterday. And so as a result, they create this wave, this sine wave ⁓ if you can believe that. And so ⁓ if I ⁓ created a graph like that, I’m going to just do it real quick on a little piece of paper and I’ll show you exactly what I’m talking about Scott. Sorry.

I’ll just show it to you really, really quickly.

Let’s just say, can you see that okay Scott? Is that too blurry? So this is value and this is time. And if I said, Scott, it’s a cyclical industry. Where do you think we are? Take this pen and put a dot where you think we are in the marketplace. And my point is no matter where you put a dot, there’s always an action to be taken. So if you think we’re near the top, then you should run to the market and sell. There’s an old adage

Scott Bursey (18:23)
Yes. No, that’s fine.

Blaine Strickland (18:47)
that came out of the stock market many, many years ago and it said there are four mistakes and every investor is exposed to four mistakes. Buy too early, buy too late, sell too early, sell too late. And so the idea is if you put that lens on and said where are we in the market, then what should I do? The second piece of that puzzle is that Scott, every investor is going to make at least one mistake because we are not prudent. We cannot do it perfectly.

So if I said to you, Scott, we ascending, you should buy. And you like, no, no, no, I don’t think I want to do that. And I said, why? And you say, well, I need more proof. And I saying, okay, so you are a late adopter. You want to see more evidence that we there. So you could be making the mistake of buying too late. Now again, you will make a mistake. So the idea is to try to be – to crystallize your thinking about where we are and what we playing for. To say it differently, if I said to you, okay, so

let’s see if we can find something to buy. find it. And then you said, Blaine, what is the business plan? And I said, we’re going to hold it until we believe the market has peaked. And then we want to make sure that we sell it before it peaks. We may sell too early. But if we sell too early, we live to fight another day. If we sell too late, we get to go shoots and ladders all the way back down to the trough. So the single metric that I look for is where do I think we are in the cycle? And fortunately, commercial real estate has

fairly predictive in terms of how the cycle works.

Scott Bursey (20:16)
It really has been and given all your experience, Blaine, what is some advice that you could leave with our listeners here today?

Blaine Strickland (20:23)
Well, you and I talked about this earlier, which is I think every syndicator, every managing member, every quarterback, every GP, however you see yourself comes out of some discipline. In other words, maybe you were a CPA, maybe you were a contractor. I work with one client who is an architect and it’s funny, he’s like, I’m tired of drawing things for other people. I want to own my own real estate. So wherever you come from, you bring some skills. Let’s say you are an attorney, then you would say, oh, I have that ability to create the legal documents that we need.

If you’re a broker, then I believe you come with two benefits. Number one, you are attuned to the marketplace. And all brokers will say, I believe that if you ask them, how did you find the property that you ended up buying? What they would say is, I finally, as I was driving around in my known territory, the area of the market that I know the best, I changed my lenses. And I asked, instead of who would buy that property, the question became, if a million dollars fell from the sky, which property would I buy? And so,

that’s often how they begin to identify the opportunity. Secondly, if they’ve had some experience and success as a commercial real estate agent, they’ve bumped into people that have funds. And so the opportunity would be to say something like, hey Scott, you and I have transacted several deals together, but from time to time I find things that I want to buy from my own account. Would you like to be in that deal with me? And so there’s almost a natural ability to start to aggregate capital.

even if it’s informal. So I think those are the two big benefits that come from being a commercial real estate agent. If you are not that, one of the things that you might want to do is find someone like that that you can talk to and pair up with.

Scott Bursey (22:01)
This has been an absolute master class. And for those of our listeners that want to follow your journey or collaborate with you, what is the best way that they can reach you?

Blaine Strickland (22:11)
Well, so I’m wearing the colors today, One More Deal. And so if you go to OneMoreDeal, all one word, .net, that will take you right to our website. We call it net instead of com because we tend to work with the same people over and over. We think of it as our tribe, if you will. We have an annual meeting of just our tribe, sort of like you do. Ours is much smaller.

So if you interested in being aware of what we do, being aware of the books, being part of the tribe, the easy way to do that is to go to onemoredeal.net. There are several places where you can click in. We have an intake process. You meet with Melody. She is our Chief Resource Officer. She gets you pointed in the right direction which may even be outside our company. So that is the best way to do it.

Scott Bursey (22:53)
Awesome, awesome. Thank you for that. And listeners, as Blaine highlighted today, stop looking for the perfect deal. Start building a perfect system to find all the deals. Blaine, thank you so much for joining us today.

Blaine Strickland (23:07)
Happy to do it, Scott. Thank you.

Scott Bursey (23:09)
And to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got a lineup of exceptional guests, just like Blaine Strickland, who are making huge moves in the market. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.