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Show Summary
In this conversation, Nick Jones, a commercial value-add investor, shares his journey into the QSR (Quick Service Restaurant) space, discussing the importance of relationships in real estate, his first deal experience, and the dynamics of investing in Florida versus other markets. He emphasizes the significance of well-located real estate and the role of tenant relationships in successful investments. Nick also highlights the wealth of knowledge available in the industry today and encourages new investors to build strong networks.
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Investor Fuel Show Transcript:
Nick Jones (00:00)
Well, nothing replaces well-located real estate. So if you have a phenomenal site that everyone wants to be at, you’re just the prettiest girl at the dance. And so that’s a really good place to be. That real estate is really hard to find because everyone’s looking for it. So that’s the baseline, right? If you control really quality real estate, you’re in the best position you can be in.Dylan Silver (00:14)
Hey folks, welcome back to the show. Today’s guest, Nick Jones is a commercial value add investor active across multiple segments from industrial parks to QSR’s Nick. Welcome to the show.Nick Jones (02:07)
Thanks Dylan, I’m excited to be here and have a conversation with you.Dylan Silver (02:11)
You know, the multifamily space commercial, anything I would say that are larger deals right now. And I was mentioning this to you before hopping on the show here does seem to be getting a lot of traction. know and listening to some of your other podcasts that you’re active in the QSR space, ⁓ quick service restaurants, right? That’s the acronym there. And I haven’t actually spoken to too many folks who are in this space simply because to me, it seems like a more challenging, somewhat riskierspace to be in and then you also have to find the tenants in these deals. How did you get specifically into the QSR space?
Nick Jones (02:50)
I originally got into the QSR space due to the relationships I had getting out of college. So I went to UCF, University of Central Florida, go Knights. And I was in the real estate program. So when I graduated, I graduated and went into brokerage. And a lot of the other guys and girls in my program got into brokerage as well. At some point I realized I wanted to be a developer and investor. I just really liked going into the extra detail that requires of that.So when I was a broker and we’d, sell a building or a piece of land, like I wanted to keep on talking to the guy that was buying it through his renovations. So eventually I started doing that on my own and my buddies who are, you know, brokers, whatnot, you know, they were the ones that said, well, you know, we have a tenant that is trying to expand in central Florida, which is where we’re located. And so if you find something that makes sense, you can work with them. And so, you know, then I’d go out and start to look for sites. And if I found something that a tenant wanted to go into, you know, I’d do a deal and
Once you start to understand the deal dynamic, there’s a basic framework for QSR or retail development and they all look pretty similar. It’s challenging at first. Definitely it’s very different than the multifamily space or some of the other types of real estate where you don’t have such a strong partner because in the QSR space and in retail in general, your partner who’s your tenant is one of the biggest factors of the whole deal.
Dylan Silver (04:06)
Right.Nick Jones (04:16)
And in, know, multifamily, you don’t have that. And, you know, a small bay industrial and hotels, you know, there’s no dominating partner that is going to be there for, know, 20 years, 15 years where in what we do, like, you know, if my tenants call, I’m answering, right? You know, they’re, they’re as big a part of the deal as I am as big a part of the deal as a lender is, you know, there’s just another person at the table.Dylan Silver (04:27)
Sure.When we talk about attracting those tenants, especially for folks who may be newer developers, is this as much about having those relationships ahead of time as it is the development itself or when you have the development in the area that is needed, the tenants come?
Nick Jones (04:58)
Well, nothing replaces well-located real estate. So if you have a phenomenal siteeveryone wants to be at, you’re just the prettiest girl at the dance. And so that’s a really good place to be. That real estate is really hard to find because everyone’s looking for it. So that’s the baseline, right? If you control really quality real estate, you’re in the best position you can be in.
Dylan Silver (06:00)
Yeah. ⁓Nick Jones (06:09)
Second to that is having strong tenant relationships.so that you can talk to them. And if they’re looking at opening five sites across ⁓ a region and there’s 10 locations they can pick from, if you have a possible previous relationship, they may pick yours to be one of those five rather than another site in another sub market. The relationships matter to them because they want to know that you’re going to reduce the friction of them opening a location. They don’t care about your zoning issues, your
utility issues, you know, any of that stuff, they just want to open locations and they want to do it as efficient as possible with as least headache as possible. And so the value of us to them is just that we try to reduce that friction and ⁓ make it a smooth process for to open more stores.
Dylan Silver (06:59)
Do you remember that first deal in the QSR space, how you found the property and then how you found the tenants?Nick Jones (07:07)
The first deal in the QSR space was my first deal. And I was talking to some of my friends who were in brokerage as well. And one of them, a gentleman who still is Billy Rodriguez, he’s at JLL in Orlando. I was talking with him just about ⁓ his tenant that was expanding across Florida called LaGranja. And they were looking in a sub market of Popka. We found a Taco Bell.that was out there that was, had closed down. So was a vacant QSR space and you know, they were interested in that market. So I went forward and tied it up. And at the time debt rates were phenomenal. So I worked with BB &T on that deal and I had floating rate at, 2.5%, 80 % loan to cost. So it was incredible debt, really high leverage. know, everything in the market was just on the, on the up ramp at that.
Dylan Silver (07:56)
Wow. Yeah.Nick Jones (08:01)
But negotiate with the ground on got a, you know, long-term lease, a 10 year lease. And all I had to do was replace the roof and the HVAC units. So it seems like now, you know, that’s just a walk in the park deal. But at the time, you know, I was cutting my teeth and it was probably still one of the hardest deals I’ve done because you know, your real estate is entrepreneurial. And so as you’re going through the process of, well, you know, I have to find my roof or I have to get, you know, different quotes that you have to figure out, you know, do you want to do a TPO roof or aDylan Silver (08:11)
Yeah.Yeah.
Nick Jones (08:30)
PVC roof or a modified bit. And then you have to determine, okay, well, after I the roof, I got to find HVAC vendor, got to open the permits, then close the permits out. Somewhat simple stuff in my mind now because I’ve done it so many times, but it was a lot of unknown, a lot of ⁓ challenges that I put on myself for it. But there was a lot of ⁓ positive momentum in the market in general at that time.Like I said, interest rates were low. know, people were really starting to investigate and we were coming out of the recession. And so it was just a good time to do it. And, know, I got, I made some right choices, but I also had some luck on my side as well.
Dylan Silver (09:09)
Which area of the country? Was this Florida?Nick Jones (09:11)
was Florida, central Florida.Dylan Silver (09:13)
Okay, so walk me through after that deal, were you like, okay, I love the QSR space now, I just had this huge accomplishment, this is gonna be where I’m gonna build a career in, or was this almost like, wow, that was a ton of effort? Let me see how this one goes before I do another one.Nick Jones (09:31)
So I’m still at the point in my career where I chalk effort up to, you know, growing my knowledge. And I think at some point everyone transitions where I say, okay, well now I want to have the effort part, you know, decrease and just be able to flow through, you know, what I’m working on. But every deal, you know, we’re still learning. And now we’re just doing, you know, the same types of deals, but bigger. So we’re still going through that process. But after that first one, it was just exciting to see, know, the restaurant open.You know, after it opened, went there with, ⁓ you know, our brokers, with our lender went and had lunch. And I’ve never been so excited to see, you know, a fast, you know, fast food restaurant open. And so, you know, I wanted to continue to grow and do more deals like that and diversify through those types of deals. So the next deal is we found a, a single tenant surf shop over near Disney that we cut up and converted into a three tenant strip center.
Dylan Silver (11:01)
Wow.Nick Jones (11:05)
And one of them being a restaurant Tijuana flats. And once again, I mean, that was a really challenging deal going through that process because you’re learning as you go while not trying to, you know, mess up. And, ⁓ it was really educational through those first few deals. I wouldn’t recommend anyone doing it on their own. I’d recommend, you know, going and working with the developer, either partnering with someone, ⁓ you know, it’s a little more experienced. Yes, I went down that direction. I went on my own.Dylan Silver (11:16)
Yeah, yeah.But you were doing it on your own.
Okay, okay. I wanna ask you a granular question about doing it on your own, if I may. So, somewhat selfishly even, I am an EXP realtor licensed in Texas and I’m looking at representing some commercial buyers. And this is my first time going about this. I would even say that on some level, not on some level, it’s just this is how it is.
as a realtor, there’s the commercial world and then there’s residential single family and they’re like in two totally different spheres. It seems like oil and water people don’t necessarily want them to mix, right? And that’s kind of the feedback that I’m getting, which I find interesting. Would you say, based on your experience that you can push forward through some of these obstacles or is that such a great risk? Like there’s maybe so much riding on it that you really do need to have.
someone there to hold your hand and guide you through the process based on your experience.
Nick Jones (12:32)
Well, things are very different now. I mean, just having chat GBT in your pocket, you know, makes everyone an expert. So when I was going through it, you know, I was reading books, I was doing, you know, real estate development books. I was doing like online seminars through ULI and ICSC. And that was really where I was, kind of trying to cut my teeth through, you know, other people’s knowledge. It seems that right now there’s so much material out there and so many people willing to share and, know, podcasts weren’t really a thing yet.And these podcasts, I listen to podcasts all the time because you just get people that are so raw and they’re, you know, spewing out really how that they’re doing things. And the amount of just shared knowledge in the industry right now is pretty incredible. So I think it’s different now where people can do it. I just think that you should caution and make sure that you’re thinking through all, you know, all the decisions. And you’re also working with people that, you know, you believe you can build a strong relationship with.
because everyone’s kind of looking out for each other’s back. You know, if it’s our contractor, our, you know, phase one environmental consultant, our surveyor, you know, all of us know that our mutual success rises, of us, you know, rises the tide. And so it’s finding a good team around you so that if you’re the person that is new, your team isn’t, and you’re just the one new person while everyone else has done this, you know, several times before. That’s another really good tactic to ensure success.
Dylan Silver (13:56)
It sounds like while although you may have been working through a lot of these issues on your own, you also had ⁓ momentum from the friends that you had from being in school and having experience in real estate in that regard. So in a way, although this was brand new to you, you also probably felt, correct me if I’m wrong, like I’ve got a support network of people in real estate, at least to bounce ideas ⁓ back and forth.Nick Jones (14:24)
Agreed. Yeah. At first, you know, kind of just try to find your way through at least, at least I did. you know, built relationships with people that, you know, some stuck and as they stuck, you know, they got deeper. As I look back now at probably the reasons for some of our success, it was selecting the right relationships and, ⁓ you know, having people that knew the long-term goal was to really be partners.and that we could all work together and that there was a lot of loyalty to that. So a lot of the people that I worked with, like I said, my engineers, architects,
lenders, ⁓ consultants, I’ve worked with, know, for eight to 10 years now, because, you know, we just kind of know how each other think and we have each other’s back, you know, through all of it. So, you know, earlier on, one of the things that I did, which, ⁓ you know, I wasn’t really conscious of it. It was just kind of the way that I
Dylan Silver (15:48)
Yeah.Nick Jones (16:02)
wanted to grow was I reached out to a lot of these people before I really had deals and was just chatting with them about, what they were doing, how we could work together. And brokerage gave me a good opportunity for that. Cause it was like a way in the door. can say, well, you know, we’re selling some land. So can I talk to this civil engineer and talk about, well, when we bring in a buyer for this land, what do you see having been done? And then when I became a developer, you know, I already had that relationship with that engineer that was built in. So it was a lot easier for me to make that transition.So I wouldn’t be a, yeah, so I just want to finish that thought. I wouldn’t be afraid to talk to people ahead of time and start to build those relationships like before you have the deal. Because then when the deal comes, you know, there’s time constraints, you’re starting to spend money. And so if you already have those relationships starting, it helps quite a bit.
Dylan Silver (16:31)
their relationships. ⁓I want to talk Florida and how a lot of investors that I see are looking across state lines. They’re looking at investing in Florida from outside of Florida. But then also you have investors who are saying we’re agnostic on area. If it’s a deal, if it underwrites, we’ll go there. Do you focus on Florida? Are you going across the country? And what’s your perspective on investors who invest commercially across multiple different markets?
Nick Jones (17:18)
I don’t see a downside to investing across multiple different markets, as long as you understand the risk variables of those investments. We grew our firm investing mostly in Florida because when we started to measure, you know, risk of our investments, which is kind of the name of our game, right? We’re all just measuring risk every single day and trying to make sure that we don’t get caught in an asymmetrical situation that we have a lot of downside being local in Florida.You know, we really know the municipalities. We know the demographics. You don’t have relationships of various vendors across the state. And so for us expanding across the state was a lot easier than just going outside the state right away. Also, what’s great about Florida, if I’m going to ⁓ give a little Florida pitch is that when you have an asset here, your buyer pool is really the majority of the world. You know, you have, we have buyers from
most countries in South America, Asia, Europe, the rest of the United States. It’s a very friendly business environment. And so that provides more liquidity when you want to exit your investment than an investment in another state. And us being in a very illiquid type of, you know, industry, real estate that makes a difference when you need to transact and create velocity of, you know, buying and selling or developing deals. So
I live in Florida and that was a lucky scenario, but I’ve really enjoyed investing in the state and I think it’s a positive state for real estate. And there’s a lot of growth, all the major national brands from tenants, developers, everyone’s in the state as well. But we have started to go outside of it with relationships. So we’ll follow tenants. We’re working with some tenants in the Southwest.
And so we’re expanding with them across the Southwest. And we made that jump because we had the tenant relationship. And so that was something that was really important to us because in retail, like I said before, your tenants are your biggest partner. And so if as a team, you’re going there, if things come up, you can kind of work on them together, unknowns. But we also, we are expanding in Arizona right now, yes.
Dylan Silver (19:11)
Okay.Are you active in air?
I’ve said this before that there’s something, there’s some similarity that I can’t quite put my, ⁓ put words on between Arizona and Florida. I don’t know what it is exactly, but everyone in Arizona seems to be having a great time. They seem to be relaxed. Florida, same thing. I kind of like in Arizona to like desert Florida, like similar vibe, but the desert. So I don’t know what it is, but that doesn’t surprise me that you’re active in Florida and Arizona.
Nick Jones (20:01)
Well, in Phoenix, it’s just a crazy market. mean, Phoenix just keeps on growing. They, they felt pretty hard in the recession, but since then it’s like, there’s just so much land there. You can just keep on going out further and further out. That Valley’s massive.Dylan Silver (20:15)
Yeah, it’s huge. mean, I haven’t done a deal in Arizona, but based on all the guests that I’ve had, it really, I think, ⁓ is an amazing opportunity. And like you said, there’s just tremendous growth out there. We are coming up on time here, though, Nick. Where can folks go if they’re interested in reaching out to you? Maybe they have a deal they’d like you to take a look at. How can how can folks get in contact with you or your team?Nick Jones (20:37)
So the best way it, well, there’s two ways. So first is you can go to our website and you can click on, you know, connect with us and send us an email. And, know, we love to chat about deals. We partner with, you know, other sponsors, general partners. ⁓ We bring in investors for each one of our deals. We syndicate them each individually and we just love to talk shop. So if there’s something that someone wants to talk to us about or questions, you know, we love to go over that. We also are very heavy on education.So we have a lot of material that all put out on LinkedIn or in blogs, ⁓ that just talk through our process, our structure, whether it be underwriting a deal, ⁓ underwriting a sponsor, just really systemizing some of the processes that people don’t really think about. And so that’s been a big push of us recently. So our website is alakai-capital. So it’s www.alakai, which is A-L-A-K-A-I
dash capital.com or I’m pretty active on LinkedIn. I love to connect with people on there as well. So you can find me on LinkedIn backslash Nick Jones, real estate and on either one, you know, we get back pretty quick.
Dylan Silver (21:50)
Nick, thank you so much for coming on the show here today.
