As someone who wants to spin up money very quickly, they want to give it to you and you double it in three years, four years, five years. It’s high risk, high reward. It’s probably like the apartment syndications we’ve seen in the last few years, things like that. We all know the economics of single family have gotten harder today. That doesn’t mean there aren’t deals to be had because there are, but instead of finding deals, you have to create them. In single family, you’re chasing distress of some sort, death, divorce, foreclosure, bankruptcy, something like that. And you want that house, hopefully helping that individual move on to getting them out of the trouble that they’re in. When you go after the speculative deals, if you nail it, the value creation can be 2X, 3×5. It just the sky’s the limit.

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What’s going on guys? Drew, thank you so much for taking the time and bringing your 10 years of experience onto the podcast. So I appreciate it. I am curious, we talked a little bit before the podcast, you went from single family to industrial space. What’s been the biggest difference that you’ve noticed since getting out of single family and into industrial?

Yeah, it’s a great question, man. And honestly, it’s been kind of a challenging pivot just for me personally because my head and my heart were always in single family. That’s what I made my investment portfolio on. And I think the pivot from single family to commercial was kind of gradual. I started dabbling in commercial while still having a foot in single family. I think the hardest part of the pivot is really convincing yourself that it’s not any more difficult than single family. I think it’s just more unrelatable. We all live in a house or we know someone who lives in a house or it’s where we live. So it’s very relatable. But you go to the commercial side and you start adding zeros to that purchase price and it’ll stress you out if you’re not cautious. But it’s a different flavor of investing, but it’s definitely not any harder.

Yeah. How did you get into real estate in the first place?

Yeah, good question. So I used to practice medicine as a pharmacist and then in hospital admin and things like that and wife stayed home with the kids. And so I just started buying rentals on the side just as a kind of a security blanket. And it was never supposed to replace my W2, but it just grew and it grew. And slowly over time, I got tired of cranking widgets for somebody else and decided to just take care of business for myself. And so pivoted full-time into real estate back in 22 and haven’t really looked back since.

That’s awesome. And what was life like for you before getting into real estate investing versus now?

Yeah, I mean before I was just a working professional. I had my advanced degrees and was all academics and kind of had the golden handcuffs on, but I just didn’t realize it. I don’t have a circle of entrepreneurs around me and my family weren’t investors. So I knew I was kind of out of my element at work, but I couldn’t really tell you why. So it took me a while to get used to, or at least develop my mindset around why am I discontent and why am I slamming my head against a wall every day? So it was kind of a long drawn out process till I started buying and investing. But man, once I got hooked, we were off to the races.

That’s awesome. And then for the people listening, what does your business look like today?

So today it’s wildly different. I think the first five of my 10 years, I was laser focused on single family, but I had a hand in everything, rentals, flips, wholesaling, land contracts, I mean, you name it, any creative, anything that we’ve done, single family, multifamily, all of it, which is nice because there’s multiple streams of income. But I think what I’ve learned is that is really a recipe for maybe security because you’re diversified, but you’re going to be mediocre at everything. You’re not going to be incredible at one thing. And so I think what’s changed maybe in the last five years we’ve started supplementing some of the commercial, but the last really two years I’ve let go of all the other stuff, running the local Ria, just lots of extra things in my life. And the theory is let’s go an inch wide and a mile deep on one thing and that is industrial commercial real estate. So our business today is my partner and myself. We’re fifty fifty. We own I think collectively somewhere around 20 million together and we’ve started bringing on JV partners and the next evolution of that is today we actually launched our industrial fund. So that’s the next great adventure.

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What are you looking for for investors for the fund in a sense of like who’s your target person that you want in the fund?

Yeah, that’s a great question. And so my theory is that there are two types of investors out there who want to invest in other people’s deals. And the first, who is not our target, is someone who wants to spin up money very quickly. They want to give it to you and you double it in three years, four years, five years. It’s high risk, high reward. It’s probably like the apartment syndications we’ve seen in the last few years, things like that. Nothing wrong with those. There are some good deals out there. There have been some rough ones. But on the flip side, our target is an investor who likes a much more moderate risk profile. They want mailbox money. They want to own assets alongside us for the very long term because my partner and I, we’re driven by passive income. I don’t want to flip an apartment or a industrial building every year, every two years, every three years to create my income. I want to buy it. I want to own it with you. You send your money, you get distributions next month. It’s immediate because these are stabilized, unsexy, slow buy and hold real estate. Yeah,

That’s awesome. What was the main problem that you were trying to solve? It could have been in the business or just personally from switching when you switched from single family to industrial.

It’s a great question. And again, I have a lot of love for single family. I’m keeping the rentals that I have. I’m just not actively growing that portfolio because it still works so well. We all know that economics of single family have gotten harder today. That doesn’t mean there aren’t deals to be had because there are, but instead of finding deals, you have to create them. And the biggest change for me is my partner, he’s never done residential. He’s only done commercial and we learn a lot together, but he’s really shown me the power of if you buy a single family house, it’s only ever going to be worth the comps of the houses around it, the one across the street, next door, all of that. And maybe you put granite in yours and not … But if it’s a $300,000 house, it’s a $300,000 house, end of story. Whereas if you buy a warehouse, retail center, office building, apartment complex, as long as you can improve the financial performance of it, that’s where you create that value. And a million dollar building can turn into a $2 million building in a matter of months just by knowing how to lease it and run it more efficiently. And that’s really the mindset shift I had to make.

Well, why do you think so many investors maybe not overlook industrial once they’re in single family, but when do you think they evolve to industrial? What do you think that timeline typically looks like or what usually has to happen for someone to switch over?

Yeah, it’s a really good question. I think it’s probably very different for everybody. If you’re smart like my partner, he went straight to it because he began with the end in mind. He knew that he didn’t want to take phone calls at three in the morning because someone flushed a diaper. So he knew that it was going to be retail or office or industrial. I think it’s also super important to get in the right room with people who have done these big deals because it is a completely different strategy from single family where I had no one to show me or explain to me the power of forced appreciation and the way that you can create insane amounts of value. But just to give you an example, it took me 10 years to build the rental portfolio I have now. It has taken me about 18 months to build the same value of a portfolio in the industrial side and that’s because we know how to create value and it can just grow and scale so much more rapidly.

What do you think the most common misconception is about industrial from a single family investor mindset?

I think people think it’s intimidating and it’s unrelatable. I spent years and years and years making beautiful bathrooms and remodeling kitchens and all that stuff shows so well on social media and TV and so it’s fun to look at. The reality is that my big metal box of an industrial building is not sexy. It’s not flashy. It doesn’t even get a fraction of the clicks on social media because people don’t understand it and they don’t understand the economics behind it and it’s not glorious. And so it seems to be kind of this unsung hero that only a few of us really know about because everyone’s just so enamored with what they see and what they know. It is one of those things I think you have to be very intentionally curious about and then go figure it out because it’s not on everyone’s highlight reels these days.

Yeah. And I’m sure finding the deals are way different than single family. How are you finding what are the top two strategies you’re using right now to find the deals that you’re getting?

Yeah, that’s the right question because I think what we at Clear Sky Commercial do uniquely well is source deals. We have five lead channels. I’ll speak to two of them. The two main ones are either deals from brokers, which is maybe 20% of our acquisitions, but the majority of it actually is direct to seller marketing, lots of mail. I mean, we probably spend five to 10 grand every single month on direct mail. We do a little bit of cold calling, a little cold emailing here and there, but it’s a lot of the same stuff I used to do in the single family space on the industrial side and it works, but there’s a lot of differences and nuances to it. You got to be ready to pivot and handle it in a very different way because your seller is a completely different audience.

Yeah. I’d assume your seller is more educated, more, not to say higher class, but a higher class, if you will, individual. I feel like it would be a very different conversation. Obviously we all know the single family pain points of why they’re selling. Why are most of these guys selling? Is it because they bought it like they bought it bad or what are most of their pain points to get rid of an industrial building that could make so much money?

Yeah, that is the right question and that’s the mindset you got to get around when you make the pivot because in single family, you’re chasing distress of some sort, death, divorce, foreclosure, bankruptcy, something like that. And you want that house and you’re hopefully helping that individual move on to getting them out of the trouble that they’re in. And industrial depends on what your strategy is and what your risk tolerance is, but you have to remember we’re trying to find industrial properties or commercial properties that are not distressed. I’m not seeking distress in the industrial world, because if I do, I might buy a million dollar building and have to put another $400,000 in it, that’s a lot of speculation. We will buy maybe one speculative deal, but out of every five or six or seven well established deals. So the avatar of the seller that we tend to talk to is generally people who owned a building, owned the business, sold the business, and now they’re 70, 80 years old and they’re getting their affairs in order or they sold the business today and they’re accidental landlord, they don’t want to be a part of it. It’s very rare, at least in this moment that we are chasing any form of distress. And so I could rant on that a lot more, but it’s a very different approach and the conversations are completely different.

Yeah, I can definitely see that. That makes a lot of sense. In single family, there’s a lot of big players and there’s a lot of people that do it on the weekends or with a W2. Is it similar in industrial? What separates the top operators from everyone else in your experience?

Man, it’s a great question and I think everyone’s goals are really different. Here at the front end of what I think will be a long run business for us, Tyler and I, my partner and I, are looking to set up passive cashflow investments. We want to stack, we have a very specific number of passive income that we need to hit. Once we’re there and we’ve got a little more cushion, we might go after some more speculative deals. When you go after the speculative deals, if you nail it, the value creation can be 2X, 3x. I mean, the sky’s the limit. And so it’s tough to say which operators are better, which ones are not. I think it all kind of depends on what you’re after and whether or not you’re hitting your own measures of success. And so I think you need to know why you’re getting into it and what are the benchmarks you need to be hitting to find your own success. Because once you get into commercial, it’s kind of the Wild West. In residential, all the realtors operate a certain way. There’s all the handbooks, the documents look the same. You get to commercial and it’s lawyers and different insurance policies. And it’s not that you’re making it up as you go, but it doesn’t have industry standard approach that you see on the residential side. And so I’m kind of getting off into a tangent, but I think you really need to know what your goals are and what you want out of it. And then every operator winds up being very, very different because the template for success is just different for every little niche and different market.

Yeah. I mean, speaking of success, obviously that word intrigues me quite a bit just because everyone’s got their own, like you said, definition for it, their own way of measuring it and striving for it. As of this moment right now, how do you define the word success? How do you measure it and how do you strive for it every day?

In my personal life or in the context of my investment business?

I mean, you touched on it a little bit with investment, so maybe both, but personal side as well.

Yeah. I mean, I guess on the personal side, I want to maintain good relationships with my four kids and be on the same page with my wife and I want to pour into time at church and really just love my neighbor. Money aside, if I accomplish those things by the time they put me in the dirt, then that’s success. When it comes to the investment world, it’s very metric driven. So for example, with the launch of our fund, the intent is for it to own 25 million in assets and so we’ll have to raise eight to nine million and we will raise it in small chunks every quarter as we get new contracts in. And so right now we’ve got a $3 million purchase in South Bend and we’re raising 1.3 million for, and in the next four weeks, we’ll need to have that locked up and completed. So for us, there are benchmarks on the way to what will be probably a two-year project for this $25 million worth of acquisitions. And so for us, success along that way is of course hitting the end goal, but making sure that we’re delivering for our investors every step of the way. Because now that we’re bringing on other people’s capital, there’s a right and a wrong way to do that. And I want to make sure that my next on the guillotine to protect my investors. So there’s a lot of different measures of success, I could say 0.2 success, but that’s kind of where my head’s at right now as we launch the fund.

Yeah, 100%. I love it. What would you say is the most common mistake that you see investors make in this space that you think could be really easily avoidable?

Yeah. The biggest mistake I see even I think from some that have found success is not being incredibly succinct with your buy box criteria, what you buy, what you don’t buy. So for us, we are relentless about it. If you were to go to our website, clearskycommercial.com, there’s a place where you can see our buy box and there are nine check boxes. Every property that comes our way has to have a yes in six of the nine for us to even look at it. And it’s ceiling heights and the age of the business and the size of the building and things like that. I think it’s real easy in real estate. You can get off the rails and seek the shiny objects that look like they’ll make money. And my experience so far says, define your criteria and stick to it relentlessly. If you have to redefine your criteria because it’s wrong, that’s fine, but redefine it and now stick to that. And I see a lot of operators not do that and pick up squirrely deals because they thought it would be a good idea.

Yeah, definitely see that a lot. If you were going to start over from scratch today, the business goes away, your rental properties that you have go away. You get to keep all the knowledge that you’ve learned over the years, but all the businesses to go away. What would you focus on first? What would be the first thing that you do to rebuild what you have now?

Yeah, it’s a great question. So I retain my knowledge, but everything else is gone. Yeah?

Yep.

Okay. So for me, I think people undervalue the power of their W2. I know we all want to get out of our job. We want to live on cashflow, we want to do our own thing and that is admirable and I’m doing that. I’m very blessed to have done that. But if I’m starting from scratch, I have a family to provide for and there is no shame in taking care of your family. So I would start with my W2 and let it be rocket fuel for everything that I need to build from there. It’s not that I would skip single family. If single family’s your jam and that’s where your highest and best use of your time and energies is, then I would pour into that. For me, it’s not that I’ve graduated from it, but I have an understanding of the next thing or my unique ability is now in industrial. So I would go right back to work marketing, probably cold calling and cold emailing because it’s dirt cheap and it’s free and just start building relationships, conversations, start building my investment pool over again. But again, I would make sure that my family and my life are taken care of first and pursue the other things and let the other things grow until they replace W2 again.

I love that. I haven’t had one person say that, so that’s super intriguing. I like that. Who has been the biggest influence to you in this space?

Wow, that is a great question. At this point, I definitely have a couple of mentors that have been good, but they weren’t there early. And 10 years ago, yeah we had the starts of podcasts and YouTube was there, but it wasn’t the infrastructure and all the training and everything that we had. So I started the local Ria group, which just mushroomed. It was a free group. We wound up having like a hundred people every month. It was just nuts. I know that’s not a single person, but that was a body of people where we could just hang out and riff on stuff and talk about where we’re stuck. A lot of my private money came from that group. Every problem that I came up against, there was someone there that could point me the right direction. So I could point to a couple of key people since then that have been instrumental. But I would say, man, if you’re not plugged in locally in your local market and I’m not talking masterminds across the country and I’m not talking about chat groups online, like get with people and spend time, lunch, Ria, whatever it is, that’s been the most impact for me.

That’s awesome. If someone is interested in potentially joining your fund or learning more about what you’re doing, where’s the best place for them to reach out to you? Where’s the best place for them to find you?

Yeah, absolutely. So you can follow me on Instagram. It’s @theflyinginvestor because I fly paramotors and do all sorts of other crazy stuff. So @theflyinginvestor, or you can find my name on Facebook, our website, clearskycommercial.com also shows you all sorts of things and you could reach out to us there. Awesome.

Drew, thank you so much for taking the time. Been a pleasure, everyone. Thanks for watching and we’ll see you next time.

Yeah, thanks for having me.