George Pino  0:00  

You know, even though someone may have a good chunk of change, you know, I spoke to someone earlier today, they said that they had $500,000 that they wanted to invest. And when I told him well, maximum price is about million five that we can find. And realistically with that service coverage ratios and the rents and the cap rates where they are right now, probably about 1,000,002. He was shocked, you know, he thought he could buy a two and a half million dollar property going out and it’s just not there at that point. So, you know, we do have sales though, that are you know, less than that and when and we’ll you know, we have sales 20 $30 million, as well for some of the larger investment stuff.

Announcer  0:39  

Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.

J Darrin Gross  0:58  

Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals provide their experience and insight to help you grow your real estate portfolio. 

Today’s interview is sponsored by Building Insurance and Risk when you invest in real estate. It pays to work with a real estate investor protection specialist to protect yourself and your investment from catastrophic loss. The experts had building insurance and risk focus on real estate investor protection. They provide you with multiple insurance coverage offers and a side by side coverage comparison. To learn more, go to Building Insurance Risk.com. 

Today, my guest is George Pino. George is the CEO of Commercial Brokers International, a full service commercial real estate firm, headquartered in Los Angeles, California, with over 27 affiliate offices around the US. And in just a minute, we’re going to speak with George bout Keys to Getting Started Investing in Commercial Real Estate in 2023. 

But first a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest, George Pino. Welcome to CRE PN Radio.

George Pino  2:44  

Thank you for having me. I’m excited to be here.

J Darrin Gross  2:48  

Well, I’m looking forward to our conversation. But before we get started, if you could take just a minute, and share with listeners a little bit about your background. Sure.

George Pino  2:58  

You know, I’ve actually been in real estate for my entire career, I went right out of college, I’ve been in doing, I’ve been lucky enough to be able to do it full time successfully for over 30 years. And, you know, in 2005, my business partner and I, we broke off and we opened up our own company, we’ve been situated in Los Angeles in the Brentwood neighborhood of Los Angeles since then. So we’re 18 years running. A few years ago, we created an affiliate network for our offices. Now we have 27 affiliates around the country, and a couple others also internationally through France, London, South Africa, Bangladesh, Canada. So we were really, when we designed the company we wrote wanted to be a company that addressed the concerns that we saw with investors with our clients that a lot of commercial real estate companies didn’t do. You know, a lot of commercial companies back in the day, they would just try and look after transactions were more of a relationship based and as well as myself. So for us, it’s really about what’s best for the client.

J Darrin Gross  4:08  

Awesome. Well, I appreciate you sharing that. And when we jump in here real quick. So we are recording this in July of 2023. The current state of the market is how would you describe the current state of the commercial real estate market? frothy?

George Pino  4:33  

You know, I think that and the reason why I chose the word frothy, is you know, I grew up around oceans. So you know, when you see the turbulence in the ocean, you know, the right by the beach, it’s kind of frothy, but if you go out a little bit it can be clear if you start delving in and going into the water. So I think a lot of people are seeing the froth and not really looking underneath and what’s happening. So you know, there’s a lot of changes going on a lot of things. You know, a lot of people were talking about adaptive reuse, of course. the office market is pretty soft numbers just came out a couple of weeks ago that they’re about 60% of occupancy based upon pre COVID levels. And it stabilized for the first time at 60%. For the last two quarters, it hasn’t gotten really gone up hasn’t really gone down any incredible amounts. So a lot of concern on that. So a lot of talk has been about adaptive reuse on those office buildings. And from there, though, you know, we’re seeing other markets, though, that are just on fire, you know, I do a lot of investment properties with single tenant net lease, I’m still pretty active in it, we’ve seen a drop down probably about 30% of transactional volume over year over year, and last year was really good. But, you know, that is also starting to pick back up. I think a lot of there’s a lot of concerns with interest rates, what was happening. And right now, you know, we are probably looking at my guesstimate is that we are going to have at least one more increase. Luckily, for commercial real estate, it doesn’t necessarily, you know, we’re using the loans use different metrics to for their interest rates. So it doesn’t affect us as quickly as it does on the residential side. So but I am seeing that, and I think that we’re looking at probably one more increasing than the next, but we’re seeing a lot of people hold back. And then when you look at certain sub markets, we’re also seeing a lot of issues where, because of new laws going into place, people are pulling back, you know, for instance, there’s what was called in Los Angeles, the mansion tax, and this was supposed to raise 600 to a billion dollars in additional tax for, it was a very high tax rate that was put on for properties that were $5 million or more. The interesting part is, you know, since its implementation over two months, it’s only raised about 15 point 5 million. So a lot less than they anticipated, because a lot of the owners have actually pulled back. So we’re seeing a lot of properties off market or not as much on market. So there’s less supply, which, you know, if the laws of economics apply, eventually, when supply demand still stays the same pricing should go up or in a declining market, we stay stable.

J Darrin Gross  7:16  

Yeah. Now, the it’s interesting how, you know, the public policy seems to be almost blind, to the effect of the policy on the market. The assumption is, is that everything will continue as is and not recognizing when you create pain, the natural reaction is to avoid the pain. And, you know, I but I do, I do believe like, you know, the tax code, often the the tax code is, is introduced in a way to to create behavior wanted behavior, you know, if you give a tax credit, you’re hoping to stimulate investment kind of thing. But I it is interesting, the I find that a lot of times at the state level, the kind of the blind, not understanding what they’re going to the yang of the Yang, or whatever you want to say kind of thing, but yeah,

George Pino  8:08  

absolutely. It ultimately will get passed through to the tenants and will then will pass through to, you know, to their clients. So, you know, it’s really not. Yeah, as they positioned it, we’re only we’re only going after the money of the PEEP rich people.

J Darrin Gross  8:25  

Right, right. Right. Right. Right. Yeah. Oops, I missed. So, historically, you know, there have always been benefits recognized for investing in real estate, cashflow, depreciation, equity build, and, and more recently, I think kind of like a hedge against inflation people recognize or be invested in, in a hard asset as opposed to holding cash. What in today with just like you describe the market as being frothy? How do you see or what are the I guess the questions? Are investors questioning the benefits, given the high interest rates? You know, and like you said, the legal climate as an insurance broker, I know the insurance, increasing the insurance cost. You know, and and all of that, are you seeing are these the these things affecting the the investor interest? Are they are they the direct effects, or are they kind of aside you know, a not necessarily a focus but a part of the puzzle as far as what’s, how it’s affect how the market has been affected?

George Pino  9:50  

Well, I think it really depends on who and the type of investor that we’re looking at a lot of the mom and pops they, it causes them to put the brakes on, but I think as astute investors are Esther’s who have done this for many years, and understand that, you know, the markets are cyclical, they understand that it’s not so much of a pause or so but more part of the bigger picture, how do we make it and structure the transaction so that it all fits with what the expectations are, for the immediate future, the near future and down the road for long term, what you’re planning is for the disposition of the property. And that’s really the puzzle piece. So a lot of people don’t even look at that, you know, as far as you know, they just look at today, what am I getting return wise today, but not looking at necessarily the value add opportunities that that property or that type of asset may play in the future, and then also down the road? 1015 years, a lot, especially the long term holds a lot of people just don’t plan for that.

J Darrin Gross  10:50  

And I’m glad you brought that up. Because I think that is a fundamental distinction between, say, a market investor in a stock market investor, as opposed to a real estate investor, at least the the, I’d say the the really significantly successful investors, I know, it’s something they’ve been doing forever, and they plan to do forever. It’s not like the new shiny object kind of investment, like, you know, they they heard somebody else made a bunch of money, so they want him kind of thing. And so you mentioned kind of the the viewpoint, you know, immediate near and, you know, down the road. Is as commercial real estate goes? Is there a horizon that you’d typically guide your your clients to, or prospective investors to look, you know, how far in the future do you do you suggest they consider looking?

George Pino  11:49  

Well, how I work with my clients? Actually, I have a kind of an intake interview, and I’m really asking them, what are their plans? What are they trying to look at almost getting a financial a better financial picture of what exactly their goals are, for this type of investments, whether it’s asset preservation, whether it’s cash flow, whether it’s potential for a much larger equity build or appreciation. And then with that, we start finding the right type of properties that can then fit into that timeframe for their whole period, you know, some investors, I have quite a few investors that literally, they buy it, and they say, You know what, I’m just going to give it to my kids, I’m never going to sell it. And in that scenario, depending on their age, we may actually even start looking at different types of assets that may have bones depreciation schedules, because you know, with the tax code, money today is worth more than money tomorrow. So if you can actually depreciate the property faster, that means that cashflow is, is worth more, and they don’t have to worry about if they’re not going to sell it. And then when the heirs take over the property, they get a stepped up basis. So it’s actually better for them to fully depreciate it. So depending on their age, it’s really a factor. And the way that we look at investment is, it’s personal to every individual, you know, some are also just looking at, you know, if they want the value add or the exit, so depending on what they’re looking at it typically I look at a five to seven year investment horizon for myself. That being said, you know, I’ve held properties a lot longer, because it was not the right time to necessarily sell at that point, or there were no opportunities to exchange it over into something better, and it was doing very well. So it’s really an analysis that’s ongoing, I think that when you go into it, you should have a business plan of here’s what we’re planning on doing, here’s what we’re looking to do. But if this doesn’t happen, then we’re going to go this route. And then we’ll finally exit strategy, you know, especially, you know, and I get this quite a bit with our, my investors on single tenant net lease is, you know, yes, they’re buying a really nice asset that’s really good for one mitigating, you know, the inflation increases, because the tenants are solely responsible for the maintenance repairs and property tax and insurance. So it can mitigate that you still have the increases and you also typically have a very long term lease 15 to 20 years, that is typically guaranteed by either a strong franchisee, or or a corporate guarantee. So it’s, you have a really good revenue caching that’s guaranteed, but the problem is, what happens when they vacate? Who are we going to return this with? And that’s where we come in and start looking at, you know, even if they’re planning on holding it forever, we’re still giving them an exit strategy like if the tenant does not renew the lease or exercise and option. What are your plans? Here’s what we’re going to do prior to that, we’re going to do do this, this, this this, but even before that, on the acquisition side, I’m gonna Looking at this tenant is great, I love this tenant. But what happens if they go out of business? Who am I going to return it with? Who’s going to want this location? So I’m actually doing that analysis ahead of time trying to mitigate that risk? By finding out everything from traffic counts demographic patterns, what are the growth patterns in the area? Both for income and population? What are other traffic generators that are irreplaceable? Like, is there a high school immediately next door to the property units a fast food location? Or is there a hospital that’s not going to go anywhere, and you’re looking at drugstores or dialysis centers, things like that, we’re looking at what what are traffic generators that are going to always be there, a football stadium, you know, I saw a great property that was a Circle K with gas right next to the Atlanta Falcons football stadium, hard to beat that location, and more than likely always have a tenant for that location. So, you know, that’s what we look for. We’re always looking at just not just the acquisition, but the exit. And I think all investors should be doing that. But a lot don’t.

J Darrin Gross  16:07  

You know, the exit strategy, I mean, eventually, you know, at some point, you’re going to exit it, whether you exit it for the next world, or you choose to sell or whatever. But there is, I mean, to have some sort of a plan or a strategy or, you know, like, I like how you said that plan A B and, you know, then or, you know, have some sort of an idea of what’s going to happen, because I think, you know, what we’re, what we’re seeing right now, and, you know, it’s likely going to continue to affect the market for a while, I would think would be just how the interest rate reset, you know, for the not the institutional lender or the investor so much is, it is more likely to the mom and pops and in smaller investors, when you’re going from a raid environment of, of, you know, sub five to now, you know, what, I don’t know what her rate is right now. seven or six, seven? Probably some seven.

George Pino  17:06  

Yeah. Right now for commercial?

J Darrin Gross  17:10  

I know that it, it certainly makes a difference in your in your you know, your your actual cash flow? And I guess it all depends on what you’re coming into the, the property with first down payment, and, and, and, and that. But speaking of that, in the the asset classes you deal in, what’s the primary asset class to you? You mentioned, the triple net.

George Pino  17:37  

lease is my primary asset class. Although I, you know, I still do some multifamily sales in Los Angeles for clients. And I also, for a lot of repeat clients and referrals, of course, I will handle leases as well. Generally speaking, though, 90% of my business is investment grade properties, investment sales counted. So and then we have other agents, though, that also that I oversee, that do all aspects from the leasing to regular sales to owner user sales, all that

J Darrin Gross  18:07  

in your activity? Is it primarily sales? Are you doing a lot of leasing as well?

George Pino  18:12  

Yes. For me, okay, property wise, it’s probably about 5050. For me, it’s 95% sales. Got it.

J Darrin Gross  18:22  

And in with that, on the sales, can you describe kind of a range or kind of the, the average of what what the size and type of product, you’re, that you sell?

George Pino  18:35  

A range is probably from on average, two to 10. You know, and then there are some investment properties or first time investors getting into the getting into it, that, you know, because of the down payment, you know, commercial requires a much heavier down payment and residential investments, you know, you’ll get minimum 35% plus a debt service coverage ratio that you have to worry about. So, you know, even though someone may have a good chunk of change, you know, I spoke to someone earlier today, they said that they had $500,000, that they wanted to invest. And when I told him, Well, maximum price is about million five that we can find. And realistically with debt service coverage ratios, and the rents and the cap rates where they are right now, probably about 1,000,002. He was shocked, you know, he thought he could buy a two and a half million dollar property going out and it’s just not there at that point. So, you know, we do have sales though that are you no less than that. And when will you know we have sales 20 $30 million, as well for some of the larger investment stuff.

J Darrin Gross  19:40  

And so for for like a $2 million single tenant type property. What kind of square footage with that, would you expect that to me?

George Pino  19:49  

Well, typically speaking it’s it’s interesting that single tenant net lease is not typically traded on square footage, but based upon income and cap rate, which is a factor. The income is also factor of the demographics and area traffic counts everything that we talked about a little bit earlier. So you know, what you’re typically looking at, though, in the $2 million range is something along the lines of maybe a smaller AutoZone or QSR, fast food restaurant, about 2000 to 3000, square feet, Autozone are probably four or 5000, you could get a 10,000 square foot Dollar General, in a tertiary market as well, I wouldn’t necessarily recommend that. But, you know, so that is that ability as well. So it’s a lot of that is also a factor of what kind of rents that you can achieve. For instance, you know, I did re tenant a old wienerschnitzel in Los Angeles for a client. And, you know, this was, the building itself is only about 450 square feet. But we got some very good rents over $200,000 a year. And realistically speaking, if we were to put it on the market, we’re probably getting about 4 million due to the location right now. So, you know, we’re looking at over $1,000 a square foot, which, you know, it all varies. So, yeah, so, you know, it’s harder to say, actually, we will get 10,000 A foot for 4 million to 400 square feet. Sorry.

J Darrin Gross  21:19  

Just just two decimal points are not a big deal. Yeah, just

George Pino  21:22  

one decimal point. Rounding here. Yeah. No, I

J Darrin Gross  21:26  

appreciate you kind of sharing that. Because I think one of the things that, you know, we talked a little before we started recording was recognizing that, you know, given the market, and for people that are looking to get in, maybe they’ve been curious, or they’ve been kind of paying attention a little bit up to this point. You mentioned the the downpayment, kind of the, you know, what the investors expectations were, how much he thought he could buy, as opposed to the reality of the change in interest rates, and also what the banks now are in more of debt cover, or debt service coverage ratio, I think, is that, are you finding that the, you know, the DSCR is kind of driving the, the, the limit of what someone can purchase based on what they have to invest more than, you know, when interest rates were

George Pino  22:21  

lower, right now, especially, you know, because we’re dealing with properties that, you know, with the cap rates, where they are, they’re still compressed more than what the interest rate increases have been. So they have not increased as much. So it’s also about affecting how much they can borrow. When you start looking at that, and then we’re, you know, we’re already talking about how, you know, there’s an article out that the back to work for office, is going to cause roughly an $800 billion loss in value. Because a lot of the value of a property is based on the income, not just the square footage, you know, if you have a vacant building, no one’s going to pay you as much as if you haven’t fully occupied. So it’s not just the square footage that people are looking at. But what we’re looking at is also the income and the potential for income. So when we’re writing into these situations with the debt service coverage ratios, if you have a building that was 80%, occupied when you purchased it, and is now 60%, occupied, and your loan comes due, because what also what investors don’t realize is, almost all commercial loans have a due in 10 clause. So they’re typically amortized over 25 years with a balloon payment at the end of 10 years. Now, they do have fully amortizing loans. But those are typically on a 15 year amortization, which most investors don’t get, because it kills the cash flow. And then yeah, and it’s different for multifamily, but we’re talking about straight commercial here. So when you look at that, and I’m looking at a 80%, occupancy down down to a 60%. And also when in a declining market, you know, obviously, again, I’m a big, big believer in economics and the basic laws of economics, you know, so if you have now an increase in demand or supply, because there’s so much more available, but demand really is actually even going down, your rental rates are gonna go down. So even though it’s only a bout a what

J Darrin Gross  24:20  

least a 25% is at dropping

George Pino  24:23  

to 60% occupancy, a drop is about 25% or not about it is exactly 25% Drop in your income. But then, in addition to that, your expenses don’t change for the running, operating the building. So it’s really equates to about a 30 35% and your net operating income, which then allows if you have to refinance now, and you just bought the property seven years ago, when it was fully occupied, you likely will not be able to refinance for the amount that’s due. And that’s the issue that we’re running into right now is you know, that debt service coverage ratio, and that’s all about that. It’s you know, it’s been Because the property is higher vacancy, less income, less opportunity for rent growth right now. And that’s the issue that we’re running into with the lenders and getting loans in place. So in that case, you’re probably looking at about 50% if not higher downpayment.

J Darrin Gross  25:17  

Right. Right. No, and having to come up with cash to refi. Yeah. Or, I mean, have you? Have you seen any of this play out? I mean, I understand the scenario. And I know, there have been some larger syndications that, that, at least with multifamily I’ve heard about that have had some issues. But I would think that as the as the calendar continues to move forward, more and more of these that had a, a very favorable interest rate, you know, based on the terms of their loan are going to come to maturity to where they’re going to have to refinance or sell. And this, this valuation, just like you described, is going to become, you know, not just a theory but a reality. And, you know, people are going to be faced with this, have you seen it play out recently? Or is it more of like, what, what a raise expecting to come?

George Pino  26:15  

No, I mean, we’re definitely seeing it right now. And had been seeing it for the last six, seven months, where people were looking to refi. And there are notes that are coming due that very large property owners purchase, but they can’t refinance it at this time. I mean, there’s one of the largest landowners in Los Angeles just made news to, you know, they’re in already in default, because the loan came due, they’re trying to do a workout and they just requested a big workout. And we’re, we’re talking 100 million plus homes. The, so we’re seeing that happen already. But typically more on the largest sale, and lenders are a little bit more open to do workouts at that point. And you know, so a lot of those investors are developer investors, what they’re doing is, you know, a developer typically gets a shorter term loan. So what you know, they’re not planning on staying staying that long, or if they’re doing an act rehab, or acquisition rehab, you know, you’re doing a different type of loan that has to be refinance out, and that is where they’re getting caught a lot of as well, and they’re having to restructure. Lenders are open to some restructuring, but it has to make sense for them as well. You know, ultimately, it doesn’t do anybody good for the banks having to take back and foreclose on all the properties. Because that way, you know, in that scenario, almost everybody will lose.

J Darrin Gross  27:34  

Have you seen any of the workout terms? Or do you have any kind of sense of what, what workout terms might look like?

George Pino  27:42  

Not really, you know, I wish I had I’ve been knock on wood, here. My clients have not had that experience. At this point. A lot of my clients, I tend to be as Bert, and for myself with my investment portfolio, I tend to be very conservative, so I don’t do high leverage. I am always looking at exit strategies, I always tell people I buy for cash flow. So even in a down market, I’m not worried, I’m going to cash flow, I’m going to be happy, I’m going to be fine. I’ll wait for the market to come back up until I sell, am I going to sell I always tell everybody, I’m not a seller in the market. But if somebody comes in and offers me the right price, yeah, I’ll look at it. And I’ll sell it. In fact, I mean, the last property I had was that I sold was one in Texas, that was a seven, two unit apartment building. And, you know, we had unsolicited off market offer that came in, when we looked at the numbers, our plan was, we’re actually going to raise part of the building and redevelop it. Because the large lot, and when looked at the what they’re offering, most of our profits were already built into it. So it was like done, took the awkward ran

J Darrin Gross  28:55  

the risk off the table don’t have to like, get into the construction. Absolutely. You know that stuff? Yeah.

George Pino  29:02  

So you know, it’s, and I think that’s how most people should look at their investments. A lot of them get a little too attached to it, where it becomes more of a, you know, I love this investments that and you know, ultimately, you should always, as an investor be analyzing what your returns are, what your properties are doing, or your investments are doing at any given point. And can you do something better, you know, especially with the current market conditions and changes, putting your head in the sand and not really addressing what’s happening in the, in the near future. And mid future is one of the biggest issues I see with a lot of the mom and pop investors, you know, they just don’t it’s like, Oh, it’ll come back. It’ll come back, but not really having a plan of action in case it doesn’t.

J Darrin Gross  29:47  

Yeah, and, you know, putting your head in the sand is not going to work. If you do decide to do something, you’ve got to have a pretty good sense of what the options are. So I get it. Let me ask So the the, you know, we’ve talked a little bit about how the, the markets frothy, we’ve talked about how, you know, some of the conditions and and specifically with the lending environment and and you know what’s affecting borrowers and investors for somebody that that’s looking to get started in investing here in 2023? What’s the most critical thing that you would encourage somebody to look? Or to start? Or what are the critical pieces of real estate investing in commercial real estate investing that you see that somebody has to has a has to have a firm grasp of in order to, you know, move with some sort of a sense of certainty or, you know, to be to be up to speed to actually be successful in commercial real estate? Well,

George Pino  30:58  

you know, great question. I think it also it depends on the asset class, and what you’re looking at, you know, if you’re doing Commercial Investments in multifamily, one of the reasons multifamily is so popular is almost everybody has rented an apartment one time in their life, they understand how that works, how the lease works, how the tenancy works. Commercial real estate is like a true straight commercial retail office, it can be a lot more complicated, instead of dealing with a lease that’s five, eight pages long, you’re dealing with leases that are anywhere from 25 to 150 pages long. And that scares a lot of investors coming in, like, well, I don’t know how to do this. So it’s really a matter of making sure they have the right team around them. Because, you know, if you’re investing in property, even some very astute investors I know, you know, and that are attorneys, they still hire their, you know, their specialized attorneys to work with them on their acquisitions. You know, it’s finding the team behind you to be able to make sure that you have everything going in, all buttoned up, so to speak. And you know, that starts with the agent, the broker, making sure that they understand exactly what you’re looking to accomplish and what you’re looking to do, then it goes into your title, or title and your third party vendors to mitigate the risk ahead of time going through the title survey, environmental reports, doing your due diligence ahead of time, but then also having your team for any legal issues that are in there as well, like, know, who am I going to go to, you’re not going to go to a transactional attorney, if there’s an eviction that needs to be done. So make sure that it’s all in place, and understand that you’re not going to necessarily be there. But more importantly, I think investors really need to understand the commercial leases, what they can do, and you know what they’re allowed to do, you know, commercial leases, there’s a lot less protections for the tenants than on a residential lease. And as such, you know, there and a lot of commercial leases, the tenants are reimbursing the landlord for a lot of these costs that they may have to incur. But some landlords don’t understand that. They never recharge it back, or they do the work that they do, nor do they or they won’t hire the attorney or do something because they don’t want to incur the costs, even though they would technically get reimbursed.

J Darrin Gross  33:17  

No, I liked the answer there have a team that knows what they’re doing, because there’s a lot a lot of moving parts. And, you know, I think real estate, to me is one of the most tried and true ways to accumulate wealth. But the risk is there and without having a team

George Pino  33:37  

millionaires were created with real estate than any other form of investment.

J Darrin Gross  33:41  

Yeah. And but again, to the to the point there having a having a team of experts on your team, to help guide you through the, the kind of the uncertainties or the the unknowns is is just, you know, priceless, you got to you got to make sure you got that if somebody was looking to get into commercial real estate is perhaps a real estate professional, whether it be a you know, real estate broker or lender, property manager, something like that. What are some of the things you would encourage them to, to do in order to to be successful in commercial real estate? Well,

George Pino  34:24  

again, firm believer and organization, so I’m always even agents, our new agents that come on board, I tell them what’s working on our business plan. Let’s see what we’re going to do and and really find, you know, the way I look at it as well, especially when it comes to sales here, we’re not high pressure sales. I’m not a salesman that’s going to try and force a deal through or whatever, but rather, I’m of the firm belief. Find what you’re passionate about which asset class what you’re doing, and that passion will be conveyed to your clients and that will then in turn, have them Come on board as opposed to just selling, you know, if you’re going out there selling and it’s like, I don’t believe in it and whatever. But one of the first things that was told to me when I first got into my career in real estate was, how can you recommend to somebody to invest in this property? If you’re not investing in any properties? And, you know, that really sunk in? It’s like, okay, and you know, frankly, um, I don’t do stocks, you know, my stocks or some retirement accounts in stocks, but they’re all like more mutual funds stuff, because, you know, I think it’s gambling. I think it’s too risky, it’s and whatnot. But I understand real estate, and I understand it, I think very well. So all my investments are in real estate. And that’s how I look at it, you know, when you’re getting into the business, have that business plan, if you’re, if you want to be an agent, what do you want to do? How are you going to go about it and understand that, but also look for companies that will be able to give a mentorship style, versus a, you know, to me that I think works a lot better than a company that is like, Do this, do this, do this without explaining it. So find, find a company that fits your personality that’s going to help you learn. But at the same time, don’t be afraid to ask questions, wherever I mean, my business partner and I, we actually do training, or he does, he does not so much we do training in our office, he actually trains agents around the country. And, you know, and I always throw it out there as well, when I’m talking to an agent, if I’m recruiting them. And speaking to them, I’m saying, Well, you know, here’s what we’re doing, let’s meet and TOF no expectations. Worst case scenario, you come away with a couple ideas that we’re doing that you might be able to incorporate into your business. And then we likewise here, at, also, I think, the biggest thing, network network network, not just with the clients and people who can refer business, but other agents, you know, I have a pretty good network of agents around the country that if I needed to pick up and find out what was going on in Miami, I could pick up a phone call, they’re gonna do it, and they’ll actually do some work for me and do some research and send it back to me, Well, within a day or two, if I have agents that are sending me off market deals for my clients, around the country, and that’s just from networking, being in it for so long. I also, you know, we some seminars we go to, I recommend that we’re especially when you’re starting off one for networking, but also learning what the top agents are doing in their marketplace. And you know, if you emulate emulate success, it’s going to potentially increase your chance of success.

J Darrin Gross  37:40  

No, I love it. I love the if you’re selling real estate, it’s good to invest in real estate. And once we have a Zig Ziglar if you’re selling Fords, and you’re driving Chevy’s you got it all wrong, you got to know the know what you’re doing. That’s good. Hey, George, we could I’d like to shift gears here for a second. Sure. By day, I’m an insurance broker. And as such, I work with my clients to assess risk and determine what to do with the risk. And there are three strategies that we typically consider, we first look to see if there’s a way we can avoid the risk. If that’s not an option, we’ll see if there’s a way we can minimize the risk. And when we cannot avoid or minimize the risk, we’ll see if there’s a way we can transfer the risk. That’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests, if they can look at their own situation, could be your clients, investors, tenants market, the political error, the you know, the Fed, however, and identify what you consider to be the biggest risk. And again, for clarification, while I’m an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you, George Pino, what is the BIGGEST RISK?

George Pino  39:01  

Biggest risk? Um, I’m gonna answer that as the biggest risk I see for investing in real estate when you’re just getting started. Because that’s kind of what we’re talking about as well. And the biggest risk there, I think, is, we see this happen a lot. And you’d mentioned like jumping on the bandwagon. You know, I’m constantly getting calls and our offices getting calls over the last month and a half about adaptive reuse for office space. And yet people have no clue what that is or what to how to go about it. But they hear about it, and they read it and I want to do this not understanding the whole business of it. And that right now, at this point, it’s just too cost prohibitive for the most part. It may not be especially if the government’s come in and give some incentives. So you know, I think one jumping on the bandwagon but I think that correlates into the ultimate answer, which is not doing your homework or due diligence ahead of time. Just here’s my investment money. This is what I heard was going to happen. This is what I’m going to do. You know, I I think the program that you’re looking at, you’re talking about as far as an insurance company, you know, identifying the risks, mitigating the risks, transferring the risk, absolutely correct in any type of aspect, and investors should be looking at that as well, you know, identifying what the risks are, and then mitigating and we’re transferring it. Part of that is also not understanding what’s going on in the future or reading that. And, you know, we don’t have crystal balls, I don’t have a crystal ball, no one has a crystal ball that I’m aware of, was at the Magic Castle a few weeks ago, they had a crystal ball there, but I don’t trust it. So. But when you’re looking at the future, though, you can still kind of see what’s happening, you know, what laws are going to come into place, you know, if it’s going to be a headache, if you know if you know, right now there’s, you know, insurance industry, at least in Southern California, we’re having some issues, you know, there’s a lot of carriers are pulling out of California. And that’s going to cause an increase in your insurance rates. Now, if you’re in a single tenant net lease or net lease property, sure, you’re looking at what the tenants are going to pay for that. But you have to think a little bit further, if your triple net expenses are too high, and they’re going to offset by trying to lower the rent. So it can’t just be a complete passer, you have to think about what’s going to work for everybody. And also, the last thing you want is to pass through expenses that cause your tenant to go out of business. So you have to really think about how to go about that and how to plan for that action. And a lot of people don’t don’t really think about that. I mean, speaking of insurance, I just got a insurance person, I had a company that just denied insurance on a property because the neighboring property had too many homeless people based on aerial photos. So the insurance companies are getting very picky and pushing and that’s been an issue. But you have to understand that going in if you’re investing that this is going to just be part of my investment strategy here my expenses, they may be this today. But in reality after I close escrow, it’s going to be here, and a lot of people don’t really look at that and have a plan for that action. They’re just kind of looking at that snapshot today. And I think that’s the biggest risk that they have if they’re just not taking the whole picture in.

J Darrin Gross  42:17  

Now very, very well said, taking the whole picture and and make sure you have a good idea of what you’re getting into. I like it. Hey, George, where can listeners go if they’d like to learn more connect with you?

George Pino  42:32  

Absolutely. Best way is my website CBI Commercial.com. It’s Charlie Bravo India and then the word commercial.com. Also, Instagram is GPIO care that’s also do quite a posting but more LinkedIn these days. And just always reach out. We’re always here to help out and I don’t mind any questions whether they are first time investors or very astute investors. Awesome.

J Darrin Gross  43:03  

George Pino, I cannot say thanks enough for taking the time to talk today. I have enjoyed it. Learned a lot. And I look forward to doing it again soon.

George Pino  43:12  

Well, thank you. I enjoyed it very much. So thank you so much for having us. All right.

J Darrin Gross  43:17  

For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we’ve got this week. Until next time, thanks for listening to commercial real estate pro networks. CRE PN Radio.

Announcer  43:36  

You’re listening to CRE PN Radio for influential commercial real estate professionals. For more information on this or any of our guests like us on Facebook CRE PN Radio.