How to Find Commercial Industrial Deals Like a Wholesaler with Darren Smith

Darren Smith: 00:00

You know, I like to just analyze every property that I sign up for all these commercial brokers, they'll send you properties that come out, analyze them, just like if you're buying a house, you know, get on every wholesalers list and analyze those deals, maybe the tour the property, you never know who you're going to meet, when you're, they're never going to talk to what you're gonna learn. Do the same thing on the commercial side. Just Just get out there, start talking with people walk properties, talk with owners, talk with brokers, and then pretend like you're actually going to do the deal, walk through the financials on every single one. I'm Neil and I'm Brittany, we are a family on a journey towards financial and location independence. Each week, we interview successful real estate entrepreneurs about their chosen investment strategy, and rated based on how much money it took to get started, how long it took to educate themselves, how passive it is, and whether or not they could do it from anywhere in the world. Welcome to the road to family freedom. All right, and now thought of us let's hit the road to family freedom.

Neil Henderson: 00:56

Greetings friends and families. I'm Neil Henderson and you're listening to the road to family Freedom podcast. Our guest this week is Darren Smith from sell my house to smith.com. He's a veteran real estate agent with over 18 years as a professional real estate investor. He's flipped, he's rented he's wholesaled hundreds of residential properties. Recently, he made the shift into commercial industrial properties. So in this episode, we're going to learn how he's bringing the lessons he learned from his high volume wholesaling operation to finding industrial properties. And we're going to hear the incredible story of how he earned a $500,000 wholesale fee on one property. Our interview with Darren Smith is coming up after a brief word from our sponsor.

Before we get to this week's show, we'd like to make you aware of something we are self storage investors, we buy existing self storage facilities and vacant buildings that can be converted to self storage in the Sunbelt. We buy them with cash and some with loans. And we use private lenders who become equity partners in our deals, these equity partners share in the cash flow in the profits when we sell when we find a deal that we're considering. We call the equity partners and offer them a share of the ownership secured by the property. So if you've ever driven by a self storage facility and thought I wonder who owns those things, and you have any interest in learning more about the storage business, we'd love to chat with you head on over to road to family freedom comm slash storage. That's road to family freedom, comm slash s t o r a g and set up a time to chat we look forward to speaking with well, Darren Smith, welcome to the road to family freedom.

Darren Smith: 02:35

Hey, thanks so much for having me on.

Neil Henderson: 02:36

Yeah, absolutely. So before we dig deeper into your background, I have to hear this story of how you assigned a property for over $500,000.

Darren Smith: 02:48

Yeah, that was I won't say one of my best that was definitely my best. So far to this point. Really, the story behind that is I've done hundreds of houses now we're wholesaled or flipped. And when I moved, I made a transition over to the commercial side. Really what I was finding, you could do a lot of the same things you transitioned over, and you just kind of had a zero. And so this was a property that I've been everything commercial takes significantly longer to do the timeline is just so much slower. And I've been talking to this owner of this property for over two years. And we worked out actually a partial seller finance deal. And it was one that I had intended to buy and hold. It was a 30,000 square foot manufacturing facility, really the area of the property, and I was going to buy it. And before I closed on, I was going to find a tenant to lease because it was basically vacant for all intents and purpose. My broker talked me into doing a for lease or sale contract when I put it out before I closed on it. And within a couple of days he had someone in his office who was a someone they've worked with many times who had some 1031 exchange money they needed to place and they they basically bought it they they went for my asking price, which was you know it was he said put a price on that would make you happy and I did and we worked out a deal and made it work. So I'm actually not closing on that property at all we're closing on in about a month. So I technically don't have that in the bank yet but but it's one where we're going to go to closing in Pennsylvania it's called a Novation. So I take my contract and I assign it to him and we Novated and at closing and I just get the spread. So I have a $1.3 million purchase price. So I'm assigning it for 1.85 And so I'll take commissions off of that to go to my broker who did a fantastic job. I love them. I highly recommend working with brokers because they'll they'll make you way more money than they cost you in the end. And that's how I saw I put that one together and everybody's happy. The sellers very happy he's getting everything he wanted. We have a great relationship, the buyers happy and of course I am as well.

Neil Henderson: 04:47

So the brokers is working as this as the seller, like a seller's agent for you correct?

Darren Smith: 04:54

That's exactly right. It would be the exact same as if I did own the building. He puts it up for lease or sale because I Have an equity interest in the property through my agreement of sale.

Neil Henderson: 05:04

Gotcha. All right. So you flipped, you've wholesale hundreds of residential properties. But as we're discussing, you've recently made the shift to commercial industrial properties. Can you talk about how that shift came about?

Darren Smith: 05:20

I can. And really, it's kind of like, just like how I got into residential, it's all kind of fortuitous meetings of people, I got into residential because I happened to, I got out of the army, I was working computers, I sat next to a guy who was big into flipping houses, and I say, big dump a couple of them and a couple of rentals, a couple flips, for me was huge at the time. But same thing happened with commercial, it was I had two friends, I had one friend who was doing some commercial, getting into it a little bit, small multifamily, some office. And then he had a friend who's doing it even at a bigger scale, you know, seven figure deals, some eight figure deals, and just hanging out with those people seem to come to learn like this, it's a whole new language, it's a whole world, something that you've once you, once you kind of get the bug on that you see, like, wow, I can take a lot of the same things that I've been doing on the residential side, apply them over to this space, where, while it may be not maybe it is definitely a more sophisticated type of investment, you really do have to know what you're doing, you have to learn the language, you have to operate at a higher level, I would say it's actually less competitive, there's way less people in the space. And so if you're able to operate at that level, and learn the skills needed, you know, a lot of times I'm the only person talking to the owners of these properties, bills, whereas we still are doing several houses a month flipping and wholesaling. And as many of your listeners probably know, if they're trying to buy houses right now, it is insanely competitive out there. And there's a stack of postcards on the desk, and you're one of five people they've met with that week to try and sell. And so that's what kind of made me do that transition. And while it's been slow, and it took a lot of learning now that I'm now that's kind of scaling up. It's just like doing houses, once you kind of it's been a lot of fun.

Neil Henderson: 07:01

What was you think the the key piece of knowledge that you had to learn that you didn't know before? That's allowed you to be successful with the on the commercial side?

Darren Smith: 07:12

Oh, I wish I wish I could answer that and just say there was there was one simple thing, because they're always looking for that that one key piece, if I had to tell somebody there, there may be flipped a couple houses in there, they kind of know the residential side really well. And I said, how would I make that transition over? It's a lot of the same things on the residential side of extra relationships. So for me, it was reaching out to brokers. So just calling brokers and talking about what it what it is, I'm trying to do, hey, you know, tell them any experience that you've had, tell them what you're what you're looking to accomplish, Hey, I've done a bunch of houses, I've done this, here's my experience, I really want to into commercial, you know, and I have one who took me under his wing right away, he literally gave me almost an entire day tour around the city that he does properties in that, you know, that he's been working in for 30 years, very experienced. And he showed me things and, and really just kind of opened my mind that way. So while there's books you can read, and you'll obviously have to just start analyzing deals, I like to just analyze every property, I sign up for all these commercial brokers, they'll send you properties that come out, analyze them, just like if you're buying a house, you know, get on every wholesalers list and analyze those deals, maybe you have a tour of the property, you never know who you're going to meet when you're there, you never know you're gonna talk to what you're gonna learn, do the same thing on the commercial side, just just get out there, start talking with people walk properties, talk with owners talk with brokers, and then pretend like you're actually going to do the deal, walk through the financials on every single one. So that when you do have one that, hey, this one that we recognize a deal. And you know, when when one comes across your desk, I just sent a bunch of mailers. And so I'm taking I'm analyzing a lot of properties right now. And on the industrial side, it's kept me really busy. But I've been able to do that, because I've been doing this for a couple years, and I can quickly someone calls me up within five to 10 minutes, I can kind of get a feel for Hey, is this a deal? Is this not a deal? And if I get one, that's a deal, I have one that I'm spending a lot of time on right now. Because because I really want this one. And I know that I may not have recognized that in the past. I know when I was just getting into wholesaling residential real estate, I would spend an hour on the phone or more with somebody who had zero chance of doing a deal with and I wasn't I didn't have enough knowledge and sales ability to even know what that looked like and that I was wasting my time. And so you're going to do that in the beginning. Except that, you know, I spent years doing that before I got better at it. So there's no one thing but if they just get into it, start talking to people meeting with people analyzing deals, they will learn what they need to do over time, just like they did with houses.

Neil Henderson: 09:39

Well, and it's you know, the main thing with with commercial is just primarily just the way it's value. It's an income producing property. So it's based on it's going to be revenue minus expenses divided by the cap rate, and you know, and that's really it's not the fluffy, you know, well that three two down the street sold for $250,000 Last month, you know, and the people don't like the drapes in this one, you know, it's, it's, that's one of things I like about it, it's a lot more, it's just a lot more concrete of the way the things are valued. You know, and you know that if you can increase, if you can increase the revenue or lower the expenses, you're going to increase the noi, and therefore, you're going to increase your cash flow, and you're gonna increase the value of the property. And I just I love, you know, I love the way that works.

Darren Smith: 10:27

Yeah, no, no, you're exactly right. These are very much based on cap rate. So so you can figure out, hey, I need a certain cap rates or return on my money. And that's how you know what the property's worth. That said, the things that make it that make it easy, can also make it a bit complicated, because if you move a Capri, I mean, just let's just take multifamily right now, I'm seeing four, it's really but five, six is regularly on the cap rates on these properties. Well, if you have a mobile home park going at six cap right now. And by the way, for your audience in a cap rate means for every, you're getting a 6% return your money. So if you're if the investment costs $100,000, that means you're getting $6,000 of net operating income, noi for you, that's a six cap, if you are getting an eight cap, it will be $8,000 of return on your $100,000 investment. So it's back to the mobile home parks, they're going at a six cap, Well, historically speaking, you know, twice that. So when that corrects, which the market always does, it goes up and down, you go from a six capital A 12. Cap, if you paid a million dollars that property, if your cap rate doubles, the value of property just cut in half. So now you have a property for $500,000. So the swings in the market can really be just as volatile, as you see in some of the cities right now, with residential properties, the other factors you really got to look into, I have properties right now where I, I would buy the property on a on a seven or eight cap, and it would be a great value for me, I have other properties, I wouldn't touch them at a at a 15 cap. And the difference really is the location of the property, age of the property, how long it's been maintained. The tenant in the property, how many years are left on their lease, if you have a mom and pop tenant with you know, it's on a 12 month, renewing lease, you know, maybe they've been there for three years, that's gonna work way less than if you have a national credit tenant or somebody who's been in there a long time a large company with with solid books and they have 510 years left of term left on their lease, you're going to accept a much lower return on your investment for that safety, then you would somebody who's definitely much, much more volatile at risk,

Neil Henderson: 12:29

again, you bring up a great point there, which is that cap rate is also a function of risk. It's not just it's not just return, you know, typically, the higher the cap rate, the higher the risk, obviously, people are gonna want to make more money for putting up their capital. And usually the lower the cap rate, the lower the risk, you know, and so that's why you, you know, what you're discussing here saying, you know, hey, if there's a property that's got a little riskier tenant, I'm going to want more money for what I'm, you know, for what I'm putting down, so the cap rates gonna go up.

Darren Smith: 13:01

That's exactly it. And I byla buildings, and one of the ways just with buying houses the way that you the way that you buy properties, you're saying, Oh my God, you're gonna be so nervous when you go talk to this property. So you don't know what you're talking about. You don't know that, how you value the building, those kind of things. If I had to give one piece of advice is just like when you walk into buy a house from somebody, stop thinking about all that stuff. Start thinking about how am I going to make this deal work? And what do I need? And how much can I pay and analyzing every little thing, you got to know that stuff, and you're gonna you're gonna get that eventually. But step back and just focus on what the seller wants. It's always about what the you know, how you're helping another person. And so if you walk into a home and you're you're a wholesaler, you're flipping and you're trying to buy it, the first 90% of your conversation. While yes, maybe it's talking about the house, hey, can you tell me a little about the house? You don't care about the house? At that point, what you care about is what your situation? Is there any motivation? Is there any pain you're trying to solve? Is there any opportunity there where maybe they want to move somewhere on industrial properties? Maybe it's, you know, what stage of life are they in? A lot of people that I work with are, you know, older men, and they're they've they've done well, they've been successful. They're looking to just get rid of that, that part of their life. Really, I made a bunch of money, I'm looking to retire. I'm, to be honest, happen. We're moving to Florida. And so they don't want to deal with that legacy property. So focus on that focus on what problem are you solving? How can you get them there? And a lot of times I've been able to negotiate either a better deal, because again, I'm helping them I'm making sure I solve their problem first. And I focus on the on the deal in the term second. And once I've solved that, like I said, we get a better price and it makes sense. Why am I paying full retail, or I can pay full retail I bought properties at full listing price, because I was able to maybe save them on taxes because the way we structured the deal or maybe I worked out some type of seller financing for a portion of it to where I was able to get in a little bit lighter, made the property a better value for me because I'm putting in less money To get a better, a better return, I also like having the seller stay in the property a little bit. Sometimes, again, not every time, but sometimes if it's a little bit more of a risky property, and the reason I like that is, it shows they have faith in that property too. If someone's saying, Hey, I'm only 20% of equity in this deal and pay me overtime, you know, they know they're not doing like a dump and run. You know, they know, hey, this does return, but the p&l is the profit and loss statements and review, they are accurate. And and you will make enough money to pay your bank and to pay me and still do. Okay, so that's one thing I like about it, but focus on the seller, that would be the one piece of advice that's going to get you through a lot of folks in your seller focus on if you if you have private lenders in the deal. How are you solving their problem? Don't go into that conversation with the private lender? What's the lowest rate I can get? Or what's the best term know? What are they trying to solve? How long do they need their money? What kind of returns? What are they doing now? What do they like and not like about what they're doing now, and find a way to structure what you need that fits their needs. First, if it fits their needs, and can also make it work yours great. If not, don't force a round peg in a square hole, you know, hey, tell him hey, we're just not a good fit right now, the way the things you're looking for a the price you're looking for on your building, or how fast you need to sell it, you know, not a good fit for me and how I buy. So you're borrowing money, hate the terms you're looking for, you need your money back in four months, that's just not a good fit for the the way, hey, let's stay in touch, maybe we'll find something how we can work together in future. But right now, I guarantee if you go in with that mentality of solving their problem, but not trying to force it, making sure you're solving a problem, you will end up with way more deals, and you want to put way more private money in the end, because people know you're looking out for their best interest first. And if you do that it's a win win. It's such

Neil Henderson: 16:46

a great point, solving their problem, you know, you're not trying to solve your problem, which is I want to buy this place at a good price that's going to, you know, make me money, you're trying to your first goal is to solve their problem, can you? You mentioned a few of them. But can you talk about some of the problems that you'll run into with a potential seller that, you know, gives you an opportunity to try and solve their problem?

Darren Smith: 17:13

Definitely. And I get asked a question a lot, sometimes by my wife like that, why would they agree to do that to those terms, or to whatever it is? And you know, what are some of the reasons and the reasons, honestly are as vast as there are people out there, everybody kind of has their own little thing they're looking for and their own their own pains or own opportunities. But some of the most common ones are, they have another opportunity looking to take advantage of a building, I'm under contract on an office building right now be closing that June 1 and the seller, they just retired recently, and they have their eyes set on this property down in Hilton Head, and they want to buy that house and they want to retire in the white spot to retire and they want to get in there. And so by me, helping them achieve that we were able to work out terms of work for both of us. Another one's more related to the property are this the condition of the property, maybe they've had it they they don't have enough money to maintain it well, over time needs a new roof meet needs just just fix up. So therefore it's rented much below what market value would bring. And they don't want to deal with the hassle that and I had that conversation I say hey, you know, Mr. Seller, Mrs. seller, you know, if you put in x number of dollars 10,000 50,000 Some of these buildings significantly more, you could instead of only making you know, X on it, you could make you know, this additional funds, and tell them their options, you know, talk about those options. Don't Don't leave that elephant in the room, you know, hey, why don't you list this property? Why don't you fix it up? Why don't if you just did this and raise the rents you make more money, they will tell you why they don't want to do that. And if they want to do that, they'll go do that. And that's fine, too. But yes, so another, another example would be fixing the property up if it needed, needed a lot of work. Maybe they're in some financial stress, a lot of people on multiple properties. So maybe they have one that's had a vacancy. And they're not going to tell you this right up front. Don't think you're gonna go in, hey, I'm desperate, I need to I need to sell this thing because I'm losing cash on this other one, I need to take it out here but they have a vacancy and another property will if they have a lot of equity in the one you're looking to buy and you can help them get that equity out very quickly. That saves them from financial distress in some other situation. But a lot of times I'll be honest, it's it's a different type of person you're talking to, in a lot of ways on the commercial side versus the housing side. We help a lot of people on the housing side who unfortunately they are in dire straits, but they just they have more than need, so to speak. You know they're facing a foreclosure. They inherited a house that's dilapidated. We buy a lot of houses from people who just don't want to go through the hassle of listening to the ruler and they want to quick easy sale. So we get some of those but more often they they have to sell for some reason or another. Whereas on the commercial side It's, it's significantly more I want to sell. It's not this distressed situation, it's a hey, I'm I'm making some changes I'm making. They, they're talking to their accountant, they're talking to their tax advisor and their attorneys. And, and we're planning this out in the most advantageous way for everybody, they have the time and the resources, you know, there's no stress, I get that. I do a lot of marketing, which we can touch on that too, on the industrial side. And one of the common things people come up and say, Hey, I, you know, I got your letter, or I got, you know, got your call. He just, you know, like, I don't have to sell this thing. Like, I'm happy with it. And my reply is, hey, that's fantastic. Like most property, the buyer, people who are absolutely happy with the property and don't need to sell. If I can, we can work out a win win, great. If we can't hit that's fine, too. And we'll just stay in touch and maybe in the future, that we can work together. But it's it's a, it's a more financially sophisticated person on the commercial side. So you have to be ready to have those conversations.

Neil Henderson: 20:57

It's again, it's about building rapport. You're not dealing with somebody who's typically distressed, maybe you're lucky enough to come across, you know, somebody who owns an industrial property that's looking to just unload it quickly. But a lot of times, they're doing fine. And it's just a matter of, like you said, coming up figuring out what it is, what their pain point is, with whatever it is they're doing, I've got a friend of mine right now who's buying a beachfront motel, you know, 2020, room, motel owned by this guy was like 82 years old. And he doesn't really want to sell. But he's, he's also, he's really paranoid about the Biden administration, raising capital gains taxes, maybe he's justifiably concerned, maybe not whatever, but like he wants to sell now. And he's already gone through one contract, and somebody wasn't able to perform, and it fell out of contract. So now his pain point is, I want to make sure you can perform. And so and so that's the kind of thing you need to suss out. When you're when you're having a conversation with somebody, if they tried to soul sell it, you know, previously and it fell out of contract, they're probably going to be a little concerned about someone not being able to form the second time they go into contract.

Darren Smith: 22:11

That's an excellent point. That's a perfect example of their pain point. They like there is security of the cell. And so those conversations are all based around how you're able to show property I bought recently, the guy called three references from other properties I'd bought before, I've never had somebody called one reference for I've had people ask for them. I've given references, but nobody's ever called this guy called all three of them. And they all thankfully spoke very highly of our transaction. But that was painful. He wanted to make sure that I was a legit person who could actually stand behind what I was doing. And sounds like your, your situation is the same thing. So you find out what that thing is. And you make you make sure you can solve it. One of the, the part of the language that we like to use before we talk numbers, before we get to anywhere where it's even turning on the terms and everything, you have to found all those things out. So the way we'll phrase it as a Mr. Seller, Mr. Starr, it sounds like, you know, you know, you're trying to accomplish this and this right. And so if we're able to solve for that, and that and get you here, if we could work out the terms like that, that's what you're looking to do. Is that Is that does that sound right? And you know, and they'll tell you yes or no. And they say, Well, you said, hey, that's great, I think we can solve those things. Is there anything else that that you would need to you know, make sure it's taken care of in the sale, or anybody else that you need to talk to just to make sure you have their buy in on this, you know, I want to make sure that we're solving all your problems that everybody has, nobody feels left out on this. And you're doing that because you're getting what we call deal killers, you're getting them all out in the open. The last thing you want to be doing is sitting here and saying, you think you have everything solved. And you're there, you're filling out the contract. And then all of a sudden they get they're like, oh, you know what, I really need to run this by my uncle Bob, you know, he's just he's bought some properties in the past, he knows what he's doing. And not that that's a problem. Like I'm happy talking with Uncle Bob. I love talking with Uncle Bob, the more policy the more the better, but like I can talk to whoever you need to but that has to be done before you get to where you're talking about all the terms if you get down to that final in you know where you're there and then now it's just sit there open that that's a bad situation to be in and you've probably lost a deal but you put yourself behind the eight ball a little bit at that point.

Neil Henderson: 24:24

Do you ever have sellers you know you're sending out marketing you know, saying hey, we want to buy your, your your warehouse you get the people who really just spawn Oh, how much money are we talking immediately, you know, right into right into, you know, what are we talking show throw it throw a number at me and maybe I'll talk to you and it's like didn't work that way.

Darren Smith: 24:44

You know, I love your questions. That's that is such a common one. Anybody who's buying houses, I'm sure has gotten that on more than one phone call for people looking. You know, what are you paying? What do you think? What do you pay me? And we all know there's there's a lot of factors that go into that. So on the commercial side, it's actually a little bit of an easier conversation to have. Because on houses, you know, everybody's hopped on Zillow, like, like, Oh, here's my Z estimate, or here, my neighbor down the street, you know, sold for $500,000. Forget the fact that it's 1000 square feet bigger when another bedroom and bath, they don't they don't see that they just know it's old. That's a whole other situation. On the commercial side. It's it's easier conversation, because realistically, you can't come up with that number, just like on the fly. And so what I'll do if I feel there's, I feel there's motivation and like, hey, this person actually wants to sell and they're not just fishing for a number. I'll go into a, you know, Mr. Sun, Mr. Seller, I predict question, I get that all the time. The way I buy properties is just me, you know, I own the company, it's my money. So I have to, I buy properties based off the income that they produce, I'm gonna buy them, I want to hold them. And so for me to figure out what that number looks like, what I have to do is get a little bit more information use so I can figure out what is, you know, what do we have here? What is the actual building? What am I able to rent it for? You know, what's my, what's my, my triple net rate on the on the building per square foot? You know, what can I actually get for it? And then what if any work is needed to get it in the condition or to get that price. So if you're, if you're looking to sell, and I mean, a lot of buildings, I think I can help you out where you go with answering a couple of questions. So we can kind of dive into that a little bit more, and see if we're a good fit for each other. So that's how I'd handle it. If I think there's some motivation. If I don't think I think it's kind of, you know, someone's truly just fishing, they're kind of some people are a little bit abrasive, let's be honest, they're they're trying to, you know, push you away a little bit and show that they're, you know, in the dominant position, I will actually just cut to a number pretty quickly. And I'll, I'll do something like, Hey, you know, I know the buildings in that area, they rent for about this per square foot, you know, you've run the numbers on your, as you said, you got a 20,000 square foot building, you know, looking for in this rate, I'll add a number on the cap rate, just because again, I'm trying to start the negotiations there. Because there again, kind of being a little bit forward on an aggregate, if that's, its use a nice word, I'll just throw out some number like that, like, and I'll say, Are we even in the ballpark on this one here? And go from there? And it really, yeah, I probably had a small chance of making it happen anyway. So I I've never bought a building from somebody that I didn't, I'll say at least, like in some way wasn't able to build rapport with wasn't able to have a relationship of some kind. So again, back to the beginning, learn, we're not to waste my time. I'm not saying I won't follow up those people not saying I won't try and help them. I'll definitely, you know, if things turn around, I'll go meet him. And we'll see if we can work out a deal. But that's how I answer the question on you know, just just give me an update, give me a number because it is very common.

Neil Henderson: 27:42

So let's talk about marketing. How are you taking what you've learned about marketing in the residential real estate world into marketing for commercial? Industrial?

Darren Smith: 27:54

Yeah, that's a that's a great No,

Neil Henderson: 27:56

no, that's a big I know, that's a very, very broad subject. But you know, we can sort of start there. And I'll dig in.

Darren Smith: 28:04

Well, it's, it's kind of broad, but actually, it got simpler on the, on the commercial side. And I say that because, I mean, my homeland company, we spent over a million dollars in marketing last five years. So we have tried everything you can think of in your wholesalers mind house out there, you know, the list of stuff. And so what I did was I said, what are some of the, I just want the core couple of things. And by the way, we we've adjusted our residential marketing to kind of follow this line as well, where we have narrowed in our focus, we, we used to have a dozen different marketing channels, we really have, I'll say three or four at this point, you know, the letters calling a little bit texting. And by the way, those are very narrow focus when I say no narrow, I mean, motivated leads, they're ones that have tax liens, you know, probate divorce, we don't do these, you know, 20 30,000 mailers a month stuff anymore. It's just not cost effective in this market, we found so we've really focused on our target, who we're hitting, and then how we're hitting, we're hitting them in less ways. And then I kind of carry that over on to the industrial side as well. So we do three things. I do mailers, and I'm sorry, really, I'll say three ways, because one is actually critical. I bought two vehicles, two buildings this way, for one is mailers, the other we do cold calling, so we pull data, but it's not this mass cold calling you think of where these auto dialers and stuff, it's one at a time we get the number, it's very, everything we're doing, we're doing it at a higher level. So it's more professional, it's more one on one basis, very much more customized and tailored on the industrial side. And then the third way I'll say is critical is referrals. The office building I mentioned earlier, was a referral, you know, people know and buying people, you know, hey, you're out there, you're looking to pick up properties. And so people will call you up brokers will call you up. This one was a property manager actually. He knew I own another building in that area. And he manages that property as well. And he called me up he said Just you know, so and so they're they're looking at selling and you know, I mean is that building i for years, it's a great property, you know it does has good returns, great tenants, maybe she's talking to talk to the owner and I did we met, we hit it off and I'm buying it. But back to the marketing, how I, how we do it is those three things mailing calling and referrals. And again, I set out the, the calling is more customized, it's us based person only, I have an amazing girl who makes our calls, one at a time, nice messages. And then she mailed them a letter if we don't reach them every single time. And then the mailers are, are much more customized as well, we use and I've tried all the different ones, I've tried just regular postcards and things like that, we use one now, it's an auto pen is how the marketing is done. And it's very straight to the point, it's, I think it's 300 characters or less is what I'm allowed to use. And I love that, because I'm not wasting people's time, I'm not sending these long form letters, but they actually do this auto pen where it takes a pen on the machine and it hand writes it out, it puts a stamp on it. It's a colored colored envelope. And I'm not trying to trick people into like opening this, I guess it does get a higher open rate for sure. But it's more the professionalism that I'm looking to present like, Hey, this is a I'm not spending 36 cents a postcard, I'm spending $1.70 per letter, you know, when I mail these things out, so the look and the feel of it is somebody's like, okay, maybe he's legit, let me It raises your status in their mind a little bit already, before they've picked up the phone to give you a ring.

Neil Henderson: 31:29

I've been I've been marketing for deals, as well, you know, we buy self storage, we've been also a marketing for some vacation rental in a coastal market recently. And it's it is, you know, you there is something to be said for, you know, just having handwritten what appears to be a handwritten envelope on the outside, it doesn't scream, someone's trying to sell me on something, you know, and so it people do open it. And I do occasionally talk to you know, self storage owners right now are, you know, are getting a lot of marketing, they're getting all kinds of stuff and, and everyone's all you'll get somebody going on, I get, you know, five of these letters a week, you know, and blah, blah, blah, and I'm like, Okay, well, I hear you, you know, but at some point you're, you are going to want to sell and, and you're going to probably grab one of those letters and call that person when you're interested in selling. And so, you know, I get it, it's frustrating. Just throw throw it away, if it frustrates you that much, you know, but at some point, you are going to be in the position where you know, I think I do want to sell I want to go live on Hilton Head, and you're going to pick up the phone and call that and so that's why you're getting those is someone you know, the whole idea is that you're trying to be top of mind when someone does finally decide, hey, it's time to sell.

Darren Smith: 32:49

That's exactly it. It's are you top of mind, are you the one that that stood out the most and not in an inflammatory way. Some people do that where they're like, you know, late notice and things like that. I don't don't want to do that kind of stand out. But if you stand out in a professional way, and I literally had that exactly said to me last week from a building, I'm now under contract, he called me up he said, Honestly, you couldn't have more perfect timing I just found out last week, the tenants are moving out in August and I moved to Florida, I live in Pennsylvania, you get another one move to Florida. And you know I don't want to deal with the headache of fixing up or releasing and so he said those exact words, a little additional piece that I put in mind that allows them to hold on to something longer to stay that top of mine is I have them I have my letters delivered to me unsealed are on a you know they're open. And my wife and I we will sit on the couch and we will put my business cards in every single one of my business card has my picture on it. And the reason I say I've mentioned the pictures, a lot of people have commented to me about that, like, Hey, I saw this guy here. And you know, here they can see who they're talking to. Again, it's another way of an extra layer of building rapport. And now they only have my picture. It's a very nice card I use mood, calm, Mo calm, I think they have really nice cards the way they look and feel. And I think the quantity order, they're 40 cents apiece, so they cost a little bit more, but it's worth it. I put that in there. Now they have something they can hold on to. So I get calls from people. That's why I love the industrial expressing people hold on to those mailers to hold on to those cards for a long time, stick it in a drawer and you're Top of Mind they'll they'll give you a call down the road and not you don't mail them again, not that we don't hit them every couple of months just to say hello. But a lot of times they'll they'll hold on to give you a call if you had that nice piece that we talked about that don't remember,

Neil Henderson: 34:39

who are you using to do the auto pen we

Darren Smith: 34:43

use for all our residential we use open letter marketing.com. And we use those for kind of the mass mailers. The reason I love that company. They were one of the first that I know of that allowed us to do a sequence I think up to six mailers and all All of them can be different. And they can be spaced I think between two to eight weeks apart each. And so that was one for me where data management is used to be one of the worst things that we had in our company, we had spreadsheets upon spreadsheets, you can't even imagine, we use a company now called R E, I sift, and they manage, we load all our spreadsheets in there. And my my lead manager doesn't now is my marketing manager does all that. And we can tell you everything about our data, you know, we can stack it, we can tell you which ones are vacant, absentee, all sorts of things about it. So before, when I was bad at data, I used open letter marketing, because I could get a list of let's just say a new divorce list, I could put that list into open letter marketing, hit hit, you know, by and I knew six mailers were going out over the next so many months to hit them on a regular basis, as opposed to me having to manually go do do that. So this auto pen feature is something that new that they have. And I really like it because it looks like a it's a sizable like a birthday card or greeting card. That's the shape and its actual card in it. That goes out and very, very nice job. I know, there's several other companies that do this, so I can't speak to them. I'm sure there's others that do like a long form letter. And if that's your what's your preference, if you really have a lot of information you want to get in, I think ballpoint marketing, that one comes to mind where you can do a long form, I've never used them, but just looking at their website, but I've been really happy with the letter marketing.

Neil Henderson: 36:26

You also mentioned that you keep your you keep your letter your copies short, is there a reason for that?

Darren Smith: 36:35

I do for me, you know that that credibility factors we talked about, like I've already set this thing up as a professional looking letter, it's handwritten, stamped, there's my picture. So I think I've already been recorded a couple ways. People are busy, especially, you know, commercial property owners, they get more mail, there's a lot of times they get their mail mailed to like a property manager or somebody that's not them directly. And so when they get their mail, they get a stack. I mean, they're, they're looking at, you know, 30 letters, 50 letters, and I wanted, I wanted something that kind of hit them. So when they open it up, it's handwritten four or five sentences. And, and then the main points that are, hey, who I am, so it doesn't matter. I'm a local industrial property investor, you're building it 123 Main Street, you know, fits right here, what I'm what I'm looking to buy, I'm the owner and principal. You know, so I, when you call me, I'm the one who would be buying your property. If you're at all looking to sell, give me a call, we'll see if we can fit and I I'm butchering the words there a little bit. But that's that's basically the gist of it, in a short to the point they want to know, you know, is this some call service is this something like and you know, I'm gonna call up and speak to somebody in the Philippines before I get routed back to you. Now, there's nothing wrong with that, but at the level that I'm dealing with, on on these, these deals are so valuable, and that people are, you know, they're busy, I want to talk to me, every time. So that's it. That's why I keep it short.

Neil Henderson: 37:57

We we've interviewed a self storage investor and wholesaler by the name of Fernando Angelucci, twice now, Episode 14. And then on Episode 76, one of the things Fernando said was with housing, you know, with residential real estate, you can have a Filipino, you know, call center answering those calls. But when you're dealing with these commercial properties, you really want to be building rapport, right off the bat. And so really needs to be you the one, you know, the firt, one of the first people they talk to, is going to be you. Because that and that rapport building is like you've said, You alluded to it, it's going to take months, you know, residential, you know, transaction can take place in, you know, a month, you can say, hey, we'll buy your house in two weeks, and you're good to go. residential, commercial real estate, it's not gonna work out that way. And it's, it's going to take months. And so are you is literally the number you know, that's on your mailer is it is making your phone ring.

Darren Smith: 39:04

It does. So I use a VoIP service. So it is a it's not my direct cell, but it rings straight to myself. And I'm the one that call them back. So all the mailers calls to come in to me, and even the cold caller I have, she's exceptional what she does, and she does my transaction manager as well. So if you know transaction management that's as being half a counselor you got you got to be good on the admin side. But you also have to be a counselor to walk some of these these home sellers through the emotional rollercoaster that they're going through sometimes. So she definitely has very high emotional quote intelligence and she can handle it by keep the the WooCommerce requirements for her to set a point for me are very low. It is Do you own the building? And would you consider sell? Have you thought about selling and that's it if she can get a yes to those two questions. Hey, you know, that's great. Darren, you know, is he's the one who buys all these properties. It sounds like you know might be a good fit and You know is a good time for him to give you a call back and see if you guys can work something out. And on the housing side, that's not even close to the amount of vetting or information that we get on the calls on that side, they can have 1015 minute phone calls, the information that they're looking to get out of these people to really dive in to make sure that it's worth the fit from Acquisition Manager. Because the volume is so much higher, there's dozens and dozens of leads in that per week. Whereas on the commercial side, it's very few. So I'm more than happy to jump on the phone with wants to talk to this unit for not a good fit. I literally learned something, every deal I get involved in every conversation I have, I'm always learning new things about an area and new ways to help somebody new new ways of structuring to do something. So for me, the whole thing is it's fun, fascinating. And you know, I love it. So just taking those causes, it's not a burden. At this point, I definitely want to get those with the minimal amount of interference between me and that that owner as possible.

Neil Henderson: 40:59

So let's go back to a question I was going to ask, which is Daddy of cold calling. I mean, you've got somebody who's doing it for you. But you know, for those people who are maybe looking to, you know, get into this, and they're they're terrified of that 1000 pound receiver and pick up the phone and calling a commercial owner directly. You know, how do those how do those calls go? You know, what do you what, how do you? How do you sort of get that open, you know, where they're not immediately, just like thanks for No thanks, click,

Darren Smith: 41:29

I can recall vividly those those first phone calls. And I can recall vividly the first time, my phone ringing when I did mailers, and just how scared I was, you know of that phone. On the commercial side, it is more and less scary at the same time. It's more scary, because you're doing something new, you're out of your element, a little bit more of you used to houses, you're dealing with people who are a bit more sophisticated. So you might feel intimidated, I'll be perfectly honest, at this point, I still, I have more of a trouble a little bit connecting with somebody who's I'll say a high level professional. Like, let's see, they're a doctor, my wife's a doctor. It's like connect with her. But like, like doctors, attorneys, people who operate you know, who wear like a suit to work. I struggled with that report. And so I will get nervous on a call even to this day talking with those people. But you just have to kind of be yourself and relax a little bit. But I'll say the reason it's easier on the commercial side talking with people is because you are talking to professionals, you are talking with somebody they're not. They know how to deal with life a little bit more, I guess would be the way to put it. So they're not calling you distressed and yelling at you. Why are you calling me? Or why do you mail me something I don't I don't have those conversations. They want to actually talk to you see if you're a good fit, you know, talk talk as talk as equals, if you can, again, build yourself up enough through either what you're sending them in an initial conversation. But how you start that call, maybe that's a good way to your would help your listeners is we just very quickly get to the point of who we are, and why recall. And right off the bat. They know that the worst thing that I get when I when a telemarketer calls me is, you know, hey, this is this is Joe calling. How are you doing today? Joe does not give up at you know anything about how I'm doing today? He's wasting my time with that question. You already like you feel your aggravation level raise right off the bat. So we don't waste people's time. It's, you know, hey, Mr. Seller, this is Darren, I'm calling I see you on the building there at 123 Main Street. I'm a local industrial estate developer just wonder if you'd ever considered selling your building immediately so they know everything about what this conversation is going to be and we can quickly get to a resolution, I'm not wasting your time just like my postcard don't waste people's time. I'm not wasting time. So with with that phone conversations, what am I my cold caller, she does the same thing. It's very quickly to the point not wasting a lot of times you'll get a what they call gatekeeper, you know, a secretary or something like that the same thing. It's a very similar conversation, just, you know, hey, you know, Hey, Bob, let's say Bob's a secretary, you know, I'm calling I see, you know, Mrs. Jones owns the property 123 Main Street, we're just want if we could have a quick conversation with her were local industrial developers, just to see if she ever might have considered selling. And that's it. It's a string to the point. And again, you're not wasting, honestly, the the gatekeepers, you know, as we call them, and tell me not to be derogatory, but you have to get through them to get to the actual person to talk to, they are every bit as important or more as the eventual person you're talking to, because you have to show them respect. And they are important in order to get to, to where you need to be in order to actually help that person if they're looking to sell. You know, we

Neil Henderson: 44:43

were often dealing with self storage. A lot of times you'll call you'll have some small facility and you call the facility and the actual owner will answer. That's what they do. They you know, every day they're sitting there answering the phone for their self storage facility. You know, and it's kind of an it can be a kind of uncomfortable conversation where you're trying to decide, is this a gatekeeper? Or is this the actual, you know, decision maker. And it was storage to you've had another sort of danger point, which is it could be the manager. And a lot of them managers don't want a facility to sell. Because, you know, life is good. They're able to kind of skate by doing what they're doing. And they know that if a place sells that they might be out of a job. And so a lot of times, you know, you're dealing with that kind of a little bit more recalcitrant. gatekeeper, I guess, is what I'm trying to say. I love what you're saying, which is just get to the point. You know, don't waste my time. Don't say, Hey, how you doing? You know? Good, you know, anyway, so with every episode, we always like to come away with people understanding how much how much money it takes to get into a chosen niche. When you bought your first industrial property, what was the purchase price, how much money did you have to come to the table with? How big was it?

Darren Smith: 46:02

So I'll tell you mine. But just like with houses, I mean, the numbers can vary wildly. seller financing can make a huge difference your location, with the partners, private lenders, there's 100 factors that go into this, the numbers on my first property, and I still own this one and love it, it was probably a bit of a big bite to take. For my first one. I don't know if it was intentional, but it worked out great. It was a 23,000 square foot warehouse, I bought it for $1.65 million. It had a tenants that had been in there for long term, but they only had less than three years left of term on their lease, fully expect them to renew. But that was one of the challenges with the property was the shorter lease term on it, and getting the bank financing. So I had to go through quite a few banks in order to work that out. But the numbers don't work. At that time, I was actually able to get a 30% seller financing as a second on that property. And then I went and got a 70% bank loan on the first now you couldn't do that right now in this market that those numbers just wouldn't happen. Thanks for requiring a minimum of 10% down. And that's on quality assets. So if you got a you know, an a quality asset, you're still gonna have to come to the table with 10% Plus closing costs. But in this case, I didn't. So I literally borrow the entire 1.6 5 million at great rates, still cash flowed, I had about a, I try and I try to for a 4% spread on my bank rate versus my cap rate. So if my bank rate, let's just say it's 4%, I won't be buying at an eight cap. That's where I like to be. This one was a little shy those but like three and a half, but the numbers still work. So my all in closing costs on that were about $60,000 I was what had to bring to closing to buy that property. And in the first year of ownership, now my taxes showed me 90,000 On through principle pay down in cash. So you know, you don't need to spend that money. But you know, it still counts as your you're paying down over time. But I say that, you know, I got in light on that, you know, normally that that wouldn't happen, that's not as common. And also see, when you run into problems and industrial, you don't want to go and buy a building like that. And you know, that'd be your last $60,000 sitting on the table. And I say that because in this case, I did not get paid rent on that property for the first seven months of ownership, it had a government tenant in it. And by the time we were able to switch everything over and paperwork through the government, which is used to be arduously slow. Now it's even 10 times slower than that, because I'm still dealing with some of the things it was seven months before they they paid me my first rent check, and they back paid. So I didn't lose any rent. But you know, I had to be able to float, what was a five figure mortgage payment plus expenses every month for that period of time, in order to get paid. And so for somebody looking to get into this, I mean, you really do want to have some reserves, I would start out you know, first off start out at a smaller building than that depends on what your your reserves are. But if you can get something for maybe the price of a house, maybe the small self storage, like you're talking about small bay industrial is a great one. It's not self storage is kind of like in the middle, where you're not reading the user's device or anything to contractors, you know, maybe they have like a furniture shop or something really fixed things. But they're the bays are usually you know, two 3000 square feet somewhere in that range. And you'll have you know, five to 10 days in a building. Again, these numbers can vary wildly, but something of that range where you spread out to risk a little bit more among your building. So if you have 10,000 square feet, and they're 2000 tenants, you have five tenants instead of 110 1000 square foot tenant. So you're collecting diversifying your risk a little bit. They're spreading it around. Yeah, just make sure you have some reserves. That is everything cost more than you think it does, and you always get paid later. Thank you. And the expenses come out sooner than you think you will. So I wish I could give some hard numbers but it's a little little tricky to do since every Property buries.

Neil Henderson: 50:00

Yeah, gotcha. So you mentioned, did you say you bought your first one in Lubbock?

Darren Smith: 50:07

No, no, this was near Letterkenny, Pennsylvania is where I bought that for us.

Neil Henderson: 50:12

Alright, so these are all the location of where you're buying these industrial properties is in Pennsylvania, correct?

Darren Smith: 50:18

That's correct. And I, I made a mistake early in my investing career, I've been investing since 2003. And it was all residential back then. And one of the big mistakes I made was, I got into an asset class, I didn't know it was mobile parks, and I got into it way far away, I had to hop a plane to get to my property, and I trust the people in the property, trust it. And it was bad luck, bad timing, bad decisions. So when I'm ever I'm getting into something new for me, if I'm gonna be doing myself, I like to be in an area where I can drive to. So I kind of, let's just say do 100 mile radius around where I'm at, I want to be able to drive there and three hours. So if there's, if I have a day, and there's a problem, I can get there and back, you know, in a work day, and take care of whatever business I need need to take care of. I also have a residential business in Colorado, I've had that for many years. And I have an amazing team out there, who runs that business for me, and they see my run my Pennsylvania residential business as well. So I love them. And we're just now getting into where we're starting to market out there for industrial properties as well. Because my Acquisition Manager, he operates at such a high level he can talk to, and I mean, this literally everybody from a a druggie in a house who needs you know, just looking to, you know, solve their life, basically, for them up to doctors, lawyers, very high end professionals. And so, because of that, I know, he's probably gonna do better than I am, in being able to help these commercial property owners get to a solution where we can help them out. And so we're just we're starting marketing that in that territory as well, which I'm very curious to see how it's gonna go. Because I know in Pennsylvania, it's much easier to buy houses in Colorado, Colorado is insane, is the only word I can get forward. When it comes to how competitive that market is. There's just almost no inventory. So I'm curious to see how it goes on the industrial side as far from a run to the same thing, or if it'll be a little bit looser. So we'll find out.

Neil Henderson: 52:11

Yeah, speaking of someone who has an uncle who just bought a house in downtown Denver, and it was a, it was a tough process. It was a really, really tough process. It's a crazy market. You were in Colorado Springs, when you built that team, you were on the ground, correct.

Darren Smith: 52:33

I was I was on the ground. My wife and I moved there for four years. We loved it, and built that business up. And we moved back to Pennsylvania just over three years ago now. And that was kind of one of those tipping point decisions, do I keep that business going? Or do I shut it down and build a new one here, and I decided to, to keep it going. Now, that said, it's it There's been ups and downs, I mean, that's a that's a crazy business. Wholesaling, flipping, as everybody knows, very highly capital intensive, you know, your, your monthly expenses are very high. And so that was a, that was a tough call, in some ways. But it was very easy. Because I built such a good reputation, I built a really solid investor list and private lender list, and I knew the area so well. And so because I built such a high amount of capital in my business from that perspective, I just had to keep it going. I talked about the ups and downs, I'm actually on my, I've had three acquisition managers, since I left, I hired a new one right before I left, train them up, I had alone for a short period and the one I have now about Acquisition Manager, I have a lead manager slash market manager and I have a transaction coordinator and all three of those people I can't speak highly enough of them, it's okay a lot of people that I've worked with over the years to get to the amazing team that I have right now. And I there's zero chance I'd be able to do half of what I do or even you know without them I wouldn't I wouldn't have that business out there for sure. They're all you know many times better in their roles than I was when I was doing everything which I'm sure a lot of your listeners are probably in that position where you you wear all the hats and that is a challenging spot to be so five one recommendation for them. If they were looking to offload a couple of things to free up some of their time you know, they have a nine to five they just you know everything is limited, I would say find the thing that you you'd like doing the least you know that you're just really not good at for a lot of people that is answering the phone you know taking those calls that are coming in and then work on that one person you know hire somebody hire somebody really good for that and focus you know, it's gonna take you probably six months to get them to the level that they need to be to be to be as good and you want to set very clear goals for them very clear requirements of what you see that job needs to be here's what I need to have happened I need to have all phone calls returned within X number of minutes I need to have this this number of live answer you know rate, I need follow ups, no overdue tasks for follow ups, like whatever it is your requirements are, make sure they are and then have them report them to you every week. And the reason I say that is I've made this mistake too many times where I hire somebody for a role. I give this nebulous, you know, lists of tasks and goals that we want to hit. There's no real metrics tied to them. And I let them kind of string along and string along string along. Whereas we have those tied to something concrete every week, they're reporting them to you how it is, it's a yes or no, it's a pass fail out, I do. And you will be honest, you will fire them a heck of a lot quicker, when you realize you'll realize quicker, things are not being done. And your marketing is so expensive, it is so challenging, right now, to make that phone ring. I mean, we're paying, in some cases, a couple $100, to have that phone ring one time with the seller. And so if you screw that up, that's a huge cost to your business, you got to make sure it's being done, right. So with any business, or with any role you're hiring for, please do those things. I encourage anybody, take your time, pour into that person, but don't be afraid to fire. If it's not meeting up the standards, don't make the same mistake I've done too many times and let it let it linger on, you know, find that right person, take the processes that you've learned from that first one, because you're going to screw it up a couple times when you hire documented out, we use blue, it's a plugin ello M. So it's video capture. So you can walk through the processes of what you're doing on the computer. And then we document that out in something called Asana. That's a project management. And we will put the, we'll make the video and we'll put the video link in and then give a quick description. But the reason you do that is because you weren't going to hire the wrong person, guaranteed, someone's gonna quit, someone's going to take a better job, you know, whatever's going to happen, you're not starting from scratch, you now have that documented of at least the basics of what they need to do. So you're, you know, now you have something to work with, with that next person. And you build on that, and you build on that and every role that you have,

Neil Henderson: 56:43

for anybody who's listening, go back and listen to that again, you know, because you're absolutely right, I'm a solopreneur. And, you know, you have to get into the habit of documenting and delegating. And what you described, there is exactly the process of what I've been doing, which is, you know, on least on the podcast front, you know, I document all the tasks, and I use Trello, which is, you know, similar to Asana, it's just a little project management thing. And I document everything I do, and everything, every podcast has a little checklist of what needs to happen, before I interview the person, what needs to happen the day interview the person what needs to happen, you know, once it's, you know, been done, you know, how do I interact with the editor, the marketing, you know, and all that. And, you know, and the other thing you talked about, which is, you know, fire quickly, hire slowly, fire quickly. And that can be tough for somebody who's used to doing things all by themselves,

Darren Smith: 57:38

very tough, very tough firing somebody, that's part one getting second, third, fourth chance, it usually doesn't improve. One of the things you can kind of use, besides your metrics, which are very, very key, you need to be tracking these metrics, but is what what's your gut feeling? Like? Do you feel like you're constantly having to like, check on them, ask them about things follow up with things to make sure they were done, if that's your constant feeling. And if they, if they cause you more thinking and stress than the problems they're solving, don't even think twice, move on. Like, you know, you have that feeling everybody I work with, like they make my life so much easier. I can I could fall off the you know, the planet for a week, you know, come back and everything would be better. And that is that's what you want, you know, somebody make your life easier.

Neil Henderson: 58:25

Gotcha. All right. Final question. And I know this is a hard one for you to answer because you've got your hands and a lot of different pies. But how much time is your just the industrial, commercial, real estate side, taking each week for you a guy who's you know, married with kids, things like that.

Darren Smith: 58:45

I do this full time I've I left my computer job five years ago that he laid off through some downsizing five years ago. And so I would say I work just as much as everybody else does, in a nine to five, I probably work I will say 35 hours a week in my business. And it's probably two thirds on the commercial side and about 1/3 on the on the residential side. That's only because I build up such an amazing team. Again, I stress that definitely couldn't do the volume that we're doing on both. Without that, because it takes it takes a lot of time we've built on the residential side where we do a lot of it virtually virtual wholesaling, and flipping is 95% of what we do now, on the on the houses, whereas on the commercial properties, a lot of times you do get to kind of meet that person in person, not always but to property from people that I've never met, you know, in person or seen on a video or anything, but most of the time, you know, it's a lot of driving around. I do a lot of property visits and walkthroughs and that's a that's a critical step when you're talking to millions of dollars, to be able to build that kind of rapport with somebody and have that trust that could be a self limiting belief. I had that belief by the way for years on houses. We have this mean person I need that'd be able to build that trust. So please don't take that as gospel, but it's what I, it's how I operate at the moment. And, you know, and how things work. And it's a lot of fun. I enjoy that part of it too. So maybe that's it too. I just like go walk around buildings and chat with people. So fun. Well, during

Neil Henderson: 1:00:15

Smith, thank you so much for sharing with us today. If any of our listeners want to find out more about you and maybe get in touch with you what would be the best way for them to do that?

Darren Smith: 1:00:25

I'd love to for any listeners to reach out happy to help with anything they're working on. Best way to reach me is Darren at sell my house to Smith, calm so var are eaten at sell my house to Smith, calm. That's my Colorado home buying business. And check out that website, too. We're very proud of that as well, to actually my awesome team we got there and look forward to hearing from you listen,

Neil Henderson: 1:00:49

well, during again. It's been really great chatting with you this morning.

Darren Smith: 1:00:53

Thank you, I appreciate having me up.

Neil Henderson: 1:00:55

Okay, that was Darren Smith from sell my house to Smith calm. It was great talking with him. So for me, the key lesson learned here was to focus on when you're talking to sellers focus on what the sellers problem is try and find out what how you can solve their problem. Your problem is you want to buy a property, maybe their property, they don't care about that. That's not their problem. Their problem is, you know, they're behind their mortgage payments, they're, you know, they're ready to retire and they want to move down to Florida. You know, they're worried about capital gains taxes, and they want to, you know, sell quickly, you know, before the Biden's ministration racism. So really, when you're, when you're talking to them, that's the rapport. You're trying to build rapport, but you're also trying to suss out, what are their pain points, what is the problem that they're trying to solve? And then you just come forward and say, how you think you can solve the problem. And if it's a win win for you both, then you're probably going to buy a property. So money, you know, he's, he's been in, in real estate for a long time. So you know, he talked a lot about this, with industrial properties. And in commercial property, it's a real crapshoot about what you're going to pay for a property, but he bought a property for 1.6 5 million, and he was able to get it with zero down. It was partial seller financing. He said, it'd be a little harder to do that nowadays with the lending requirements. But it is possible to get into these properties with zero down, either with seller financing, or, you know, it's asset based lending. So a lot of times you can come to the table and say, Listen, I've got investors, other people's money. So, knowledge, you know, he talked about, really, once he got wanted, decided he wanted to go to commercial, it really came down to just building relationships with commercial brokers, and just spending the time getting to know them, walking properties with them, and analyzing deals, every deal that came across his desk he analyzed, and I can't stress that enough how important that is to just get in the habit of even if you have no there's no way you're going to buy this property, analyze it, take the numbers, call brokers, get on their lists, and have them send you Offerman or memorandums you know, the hopefully have some detailed financial numbers. So you can plug them into, you know, whatever spreadsheet you're using to analyze deals, and just analyze them and, and work that muscle and get to the point where you can recognize, hey, this is a deal. I want this. And I can't stress that enough. That's such an important

Unknown Speaker: 1:03:47

task to add your your weekly routine time.

Neil Henderson: 1:03:51

This is a full time job for him. He said he spends about 35 hours a week, two thirds of that is on his commercial real estate endeavors and the other 1/3 is on the residential, wholesaling and flipping business back in Colorado Springs. So could he do this strategy from anywhere in the world? I would say yes and no, he very clearly he got burned previously investing long distance. So he really, he wants to invest, at least initially, when he's learning in an area that he knows someplace he can drive to. He lives in Pennsylvania, he's got a business in Colorado Springs, that's, that's running very well. But again, he built that team when he lived there and he knew that area. So to each his own, you know, I he obviously he's his got his reasons for not wanting to go to areas that he doesn't live in. I imagine that once he gets a little more experienced and industrial, he will probably start expanding. But for now, you know, I think he's smart to to stick locally. though. Okay, once again, that was Darren Smith from sell my house to smith.com. And we appreciate his time it was learned a ton from this one. I'm Neil Henderson. We're doing this all again next week. Let's hit the road. I. Hey, before you go, if you liked the show, we will be delighted if you head over to pod chaser and leave us an honest review. And do let us know why you liked the show how long you've been listening, and in particular, what you find really useful or entertaining. And let us know if there's anything you think we should change. Also, if you have specific questions about real estate investing, especially self storage to short term rentals, shoot us an email at info at roads to family freedom calm, and we'll be happy to answer your question on the show. We might even turn it into an entire episode. Thanks for listening. We're doing this all again next week. Until then, safe travels on your road to financial freedom.