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Show Summary
In this conversation, Ryan Kindred shares his journey into commercial real estate, detailing his first deal and the transition to syndication. He discusses the importance of understanding the market, building relationships with investors, and the dynamics of syndication investments. Ryan emphasizes the potential for passive income through real estate and the diverse profiles of investors he engages with.
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Investor Fuel Show Transcript:
Ryan Kindred (00:00)
If you’d asked me in 2019, I was going to go as far as be the CEO of any company I worked for, but it was still going to be a W-2 job. I applied for a position within the company. To that point, I had gotten every role I’d ever applied to or applied myself to. In this particular case, I didn’t get the job. It occurred to me that, well, I’m not in control of my own destiny unless I make it that way.Dylan Silver (02:08)
Hey folks, welcome back to the show. Today’s guest, Ryan Kindred, is with Sable Capital and their commercial real estate syndicator based out of Texas. Ryan, welcome to the show.Ryan Kindred (02:23)
Thank you Dylan, thanks for having me. I appreciate you taking the time.Dylan Silver (02:27)
Absolutely, it’s great to have you on here. I’m a Texas licensed agent and I’ve also been personally interested in syndication deals. I have spoken with a number of syndicators so it’s great to have you on here. But before we hop into syndication, I do want to ask you, how did you get into real estate?Ryan Kindred (02:45)
Yeah, it’s actually back in 2019. So I’ve been working in the corporate world for 15 years now.If you’d asked me in 2019, I was going to go as far as be the CEO of any company I worked for, but it was still going to be a W-2 job. I applied for a position within the company. To that point, I had gotten every role I’d ever applied to or applied myself to. In this particular case, I didn’t get the job. It occurred to me that, well, I’m not in control of my own destiny unless I make it that way.
So I had recently gotten my MBA. So I knew a little bit about real estate and the opportunities that it afforded. So I started waking up a couple hours early every morning, studying YouTube university, reading any books I could get my hands on. Right. And eventually took the plunge and getting my first commercial property ⁓ down in Freeport, Texas. It was a huge leap of faith for me. Right. ⁓ That was definitely more than my house note. I was a spec by I didn’t have a tenant lined up.
or anything. was a single tenant office building. So I just, was like, you know what, if I’m going to do it, let’s just jump with both feet in. Right. And I knew that if I put myself in a corner, I would go ahead and find tenants. I’d make it cashflow and we’d survive. So that was my first adventure with commercial real estate. I skipped right over residential. You know, I had heard the horror stories of dealing with, you know, individuals or I guess,
residents that if you didn’t say single family it’s their livelihood right so you get into a lot of back and forth there’s a lot more management in my opinion and they you know they’re very personal about their their money increasing rents is much more difficult it’s not you’re not dealing with a business in that regard so i was always attracted to the commercial side for that reason
Dylan Silver (04:30)
Yeah.That first deal or set of deals, was it three, four plexes? Was that what you got?
Ryan Kindred (04:55)
No, the first deal was like 6,000 square foot,just office building, single storey on an acre. ⁓ I had been watching it for a while because I’d been checking LoopNet trying to figure out where I was going to make my first step. And the pictures on LoopNet were terrible. if anybody can learn something from that, it’s…
Dylan Silver (05:48)
Okay, okay.Ryan Kindred (06:07)
Don’t just go off of, what, Loopnet or any online, yeah.Listings are showing you I’d say always go check it out in person because pictures were taken on a rainy day. The building on the outside looked pretty, bad, pretty dirty for whatever reason. The pictures were dark and I show up to visit the property and come to find out it was in pristine condition. Like the inside was, was immaculate. It had been owner operated and owner built actually it was an architect firm that was being acquired. ⁓ so you just never know what opportunities there are until you just dive further down.
to the details is what I would…
Dylan Silver (06:44)
I’d like to geta little granular on that deal specifically. So it’s commercial office space, ⁓ large building. Which area of Texas was this in?
Ryan Kindred (06:55)
Can you repeat that?Dylan Silver (06:56)
Which area of Texas was that deal in?Ryan Kindred (06:59)
Southeast, Southeast Texas. So just probably, I don’t know, five miles from where I live.Dylan Silver (07:06)
And then when you’re looking at that deal versus other deals, was it something specific about that deal which piqued your interest?Ryan Kindred (07:15)
So probably the purchase price initially, right? And I knew the potential. So I looked in this region specifically because that’s where I worked, right? Chemical manufacturing company. I understand what the suppliers and vendors are looking for in the area. I know that they need storage space. They need office space.It’s a Mecca for chemical manufacturing, ⁓ major ⁓ facilities down here. So I knew that the risk was relatively low as far as finding somebody who would need that space. ⁓ I had to perform a spreadsheet that I’d run and simulate, you know, based on market rents. So talking with local brokers on what the typical rent rates are, whether it’s triple net or gross. ⁓
What are we looking at there? based on that, when the purchase price and the cap rate in the area, I knew what I’d buy before, but then talking with the seller.
they were kind of under duress too, I knew what they would probably let it go for as well. So it just became something that, yeah, the risk was not finding a tenant within a few months and having to front that mortgage on my own, right, and the utilities and all that. But I knew I had enough connections in the area to make that happen. So I had a bit of a foundation and a launching pad already.
Dylan Silver (08:46)
Now as far as being able to close on that deal, was this bank funded? Did you go through syndication yourself at that point in time? How did you end up taking that deal down?Ryan Kindred (08:56)
Yeah, so this one was purely bank funded. This is conventional loan on this. Now commercial loans are a little bit different than residential and private equity in the sense that typically there’s a five year balloon payment on it. So you’re gonna get whatever the going rate is, usually prime plus one and.whatever that is at the time, you kind of have to accept it and live with it. But you can typically with a local credit union or a bank, there’s not really a prepayment penalty that’s too severe. So if you needed to just block it down and then refinance a couple of years later, hopefully after you’ve stabilized it, you can do that. Right. So that was was conventional loan. The beauty of this deal and kind of what set things off was just that what I kind of alluded to with the refinancing. Right. So you.
you add the value of the property, get it cash flowing, you get it stabilized with the banks consider stabilized. And then I was able to refinance with private equity
for quite a bit more than I purchased the price of the property for obviously. So purchase price for.
Dylan Silver (10:40)
would like to askyou, maybe getting a little bit granular, give away some of the gold, but not all of it here, Ryan. When you’re taking out a bank loan for a commercial property like that, I’m sure it’s gonna be different at each institution that someone might request. But what’s generally the process? Of course, they’re vetting you, they’re also looking at the property itself. What else are they asking for? As someone myself who’s not familiar with how that process would be in…
Ryan Kindred (10:46)
Yeah.Yep, so I found it was best to meet them in person, honestly, because you build that relationship. And it is very true. Like they are evaluating you and interviewing you as an individual,
but also with your background. what’s your, what does your resume look like? How, what’s your history with investing? They’re going to want to see some tax returns. They’re going to want you to fill out a personal financial statement. That’s just a, you know, if anybody’s ever used Mint, think Mint is closed down now. So I use Monarch, but if you’ve ever built out your entire, all of your assets, all of your liabilities, your loans, stock, your brokerage accounts, and you package all of that together to get
your net worth, they want to know what that is. So those were a couple critical things. They’ll back check it against your tax returns usually back by the last three years, but then they’ll also want you to commit at least to putting all of your assets and reliably give your financial snapshot ⁓ on paper and basically hold you to that.
Dylan Silver (12:16)
What year did this first deal happen for you?Ryan Kindred (12:19)
It was in 2019.Dylan Silver (12:21)
2019, okay, so traditional bank loan 2019, fine deal on Loopnet, and you’re seeing, you know, proof of concept and how this can go down. Did you start to think about syndication following this deal? How did that come into play?Ryan Kindred (12:36)
So actually, I kept acquiring ⁓ more properties after that, just the conventional route. ⁓ Once this was cash flowing, I had a couple people that I met along the way that were interested in doing what I was doing, partnered with them.⁓ actually even my brother in law up in Ohio and Michigan partnered with him. So he wanted to get into it and I kind of told them how to, how we needed to approach it, but he took it. He took it and ran it up there in Ohio and Michigan. So we acquired some properties up there that, he manages and I helped him grow that. ⁓ but then down here required some more commercial properties, like a 10,000 square foot office warehouse facility that again, least out.
to be a single tenant and honestly it got to the point where I kind of had a proven concept but
with if it’s just me and maybe one or two other partners, you start to, see where your ceiling is as far as the size of the properties you can tackle and the magnitude, I guess, of impact you can make for yourself and for others. So what attracted me to the syndication side was, again, being able to tackle larger deals, but also involve more, hopefully involve more people that would like to benefit from
Dylan Silver (13:55)
Okay. ⁓Ryan Kindred (14:02)
the passive investment of real estate. allowing them to own some equity in a deal, take advantage of depreciation, get that quarterly dividend, that quarterly payment, see what real estate can deliver on, but then allow us to grow a portfolio as well and continue to offer those benefits.Dylan Silver (14:25)
We talked a little bit, Ryan, ⁓ before hopping on here about the areas of Texas that you invest in. When you’re looking for ⁓ people to invest in syndication, are these folks who are very much familiar with those areas? Are they folks from all across the country? Are they located majority in Texas? Is there an avatar or a profile of an investor or is it a diverse range that’s across the board?Ryan Kindred (14:51)
pretty diverse right now. I’d say diverse in background and avatar wisebecause you know it’s we when you start when you get started and you have to initially raise capital and if you don’t have
You know, either a partner or a KP or some relationship with somebody who has a broad network already. You have to build it from scratch. Right. And that’s, that’s what, what I had to do. so to do that, usually you’re going to family and friends. So it’s, I’m originally from Michigan, ⁓ extended families in Ohio, ⁓ my wife’s family is in Ohio. So we had a bigger network up there from growing up there a whole lives to where I can go reach out to them. They trust me already. Again, it’s family and friends. They know.
of what I’ve done so far, right, on my own. ⁓ So we already have kind of some momentum going there. And then locally, ⁓ being down here in the industry and knowing a lot of other engineers and ⁓ manufacturing professionals, it’s really just reaching out to them and explaining the opportunity of diversification either out of the stock market, out of your savings account, things like that, right? So.
Right now it’s a very broad ⁓ spectrum. think if we had any avatar, obviously it’s manufacturing professionals. We’re looking into the medical fields being so close to Houston and the medical mecca that that is. I think there’s opportunity there to just help people establish.
really our generational wealth, right? And gets, they can get excited about real estate as much as, as much as I am, as much as we are, that there’s, it’s a really big ocean, right? And if everyone’s looking for deals and we can partner up, I think that’s a great place to be.
Dylan Silver (17:11)
Yeah.I have a general question about syndications. When folks are investing in syndications themselves, are they able to identify which deals that they want to be a part of or is it, I’m putting money into the syndication fund and then the fund identifies which deals that we want to take down?
Ryan Kindred (17:42)
Yeah. So it can be either, right? In our case, we’ve only done deal specific.funding, so capital raising, we’ve considered and we will be looking into starting a fund, right? So a fund is just you’re contributing to a pool of money that we say, hey, on average, we’ll see a certain percent return on this fund, right? And it’s up to us to go find the right investments to make that happen.
with its deal specific, you’re kind of knowing what you’re signing up for right away. We were giving you the return metrics, what you can expect from the property, the business plan for that particular investment. So that’s more honed in on the investor knows exactly what they’re getting into and they can get behind a physical asset property that.
that is packaged for them right in front of them. If you invest in a fund, it’s not that there’s no bad thing about that, right? It’s just, it can be invested anywhere to get the return that is kind of preferred or promised to you, right, as the investor.
Dylan Silver (18:57)
Well, we are coming up on time here, Ryan. Thank you so much for really giving our audience a breakdown of syndications and then also your background. I think a lot of people will get value as well from that first deal and how you went about that. A lot of people, even myself, have looked at syndications and then also commercial deals as well. And there’s a market shift, I think, that favors that right now. Where can folks go if they’d like to reach out to Sable Capital or if they’d like to get in contact?Ryan Kindred (19:12)
Never.Sure, they can go to ⁓ sablecapitaltx.com.
and there’ll be a place there where they can join the newsletter or join the investor club, to set up. I mean, everyone that invests with us, I set up a personal one-on-one with them or they can schedule a one-on-one. I just want to, I like to understand what their investment goals are, ⁓ who they are, what they’re all about, what they want to get out of it and where they stand to kind of in their real estate investment ⁓ in their journey, right? So.
Go there, register, ⁓ you can email me directly. I know you have that email address you can share, but that’s just at [email protected].
Dylan Silver (20:16)
Ryan, thank you so much for coming on the show here today.
