Navigating Real Estate Partnerships | Office Hours
Partnerships can be the fastest way to scale your commercial real estate portfolio — or the fastest way to blow it up.
In this episode, we dive deep into how to structure real estate partnerships the right way so you protect your capital, avoid deadlocks, and set yourself up for long-term success. I’ll share real-world examples from my own deals, lessons learned from past mistakes, and how to keep your business relationships from turning into lawsuits.
You’ll learn:
Why 50/50 partnerships almost always end in conflict — and what to do instead
How to structure LLCs and operating agreements that protect you
The cleanest ways to handle spouses, trusts, and transfer-on-death clauses
When to bring in partners (and when to go solo)
How to align goals, roles, and decision-making authority before the deal closes
Plus, I’ll share updates from my current projects — including a 101,000 SF flex space lease-up in Chattanooga, a boutique hotel nearing completion in East Nashville, and a new 350-unit self-storage development — along with live investor Q&A on:
Approaching neighboring property owners for land acquisitions
Choosing between 506(b) and 506(c) syndications
Whether percentage rent is ever worth it for small business tenants
If you’re serious about building wealth through commercial real estate, this episode will help you form smarter partnerships, structure cleaner deals, and protect your investments from day one.
Join our underwriting challenge to get all the tools, resources, and coaching on underwriting your deals: 30 Deals, 30 Days starting on October 22nd, 2025 - https://crecentral.com/30deals30days
Key Takeaways:
Value Creation Over Cash Flow
Focus on creating equity, not just collecting monthly rent
Potential to make more money by improving property value than through steady cash flow
Example: Tyler's land deal generated $900,000 in three years versus minimal annual cash flow
Partnerships
Partnerships can be powerful for scaling your business
Always have a clear operating agreement
Avoid 50/50 partnerships; ensure someone has decision-making control
Choose partners with complementary skills
Underwriting Strategy
Consistently analyze different property types
Learn to evaluate markets and assets systematically
Be open to various commercial real estate sectors (flex space, storage, mixed-use)
Raising Capital
Start with friends and family (506(b) offerings)
Build relationships and trust
Demonstrate expertise through consistent content and market knowledge
Investment Approach
Don't just chase cash flow
Look for opportunities to create significant value
Be willing to invest time in property improvement
About Your Host:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors.
Episode Transcript:
Tyler Cauble 0:00
I this episode of the commercial real estate investor podcast is brought to you by my cre accelerator mastermind, where you'll get access to my step by step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way. Go to www.crecentral.com to learn more. Welcome back to the commercial real estate investor podcast. We are live from the cobble group Studios here in Nashville, Tennessee, for another round of office hours. You have questions on commercial real estate, whether you're doing a project, whether you're trying to raise capital for the first time, whether you're a broker and you're looking to learn how to grow your business. Doesn't matter. That is what this time is for. We'll dive into whatever questions you have around all of that. We go live every tuesday at 8:30am central standard time to answer those questions. So feel free to join me pretty much anytime. Robert, what's going on? Man, jumping in the chat saying, Good morning. Good morning. Good to see you. Robert has been a regular, and all of our 30 deals in 30 days, which I'll be talking about here in a second. It's been a it's been a lot of fun. All right, before we dive into today's topic, which I want to talk about, which is partnerships. The title of this Reddit thread is me and a partner are buying an industrial property, and he wants to bring in his wife, talking about complicated partnerships. How are we supposed to handle that? We dive into it. I'm going to give you my thoughts on how to work with commercial real estate partners. But this past week, we had our capital raising mastermind here in Nashville. 70 people came into town from all over the country. Some of them are from Nashville, not not as many as you would think, which is kind of funny. But we had the accelerator, we had the brokers mastermind together, and we had some guest speakers. We had some panels, we had some workshops, Property Tours. It was, it was a great three days here in Nashville. We had a good time. It was our biggest in person mastermind event, yet. It was the first one that we actually opened up to non member guests. So keep an eye out. We're going to do the same thing in March. We will open up probably 10 or 20 seats for non members. If you want to come and get a taste of how we do things right, learn how to raise capital or learn how to underwriter, learn how to go out and find your first deal. We cover all sorts of different topics at these at these events, they're a lot of fun. So the past week, I guess, technically, today is day seven. We are in the midst of 30 deals in 30 days. If you're not familiar with that challenge, that is the underwriting challenge that I have put on, I guess, kind of for myself, but also for you. All right, I'm going live every single day, 30 days in a row, underwriting your deals. So people that have joined the challenge are submitting deals. They're submitting cities or types of assets that they would like for me to underwrite, and we're going live and we're finding something on crex C or loop net or whatever that's on the market, right? So these are not deals that I have looked at or found before. Do you guys get to see in real time my thought process, wrapping my mind around a new market, around this type of asset, trying to find comps, all of that good stuff. So far, let's see what we have underwritten. We have underwritten flex space conversion. We've done mixed use value add. We did a 30 tenant strip center that was out in California. Some people think California is too expensive. I don't necessarily think so. We did a value add flex space. We did stabilize self storage. And then last night, we underwrote a fully abandoned building in downtown Tacoma. So it has been a wide variety of assets. The entire point of 30 deals in 30 days is to give you enough knowledge of how I go about the process, so that you can go out and find your own deals and underwrite them, right? So let's see catching you guys up on some of the projects that I've got going on right now, the friars deal that we closed. Y'all may be familiar with that. We did a video on it back in, I don't know, August, maybe July, we bought a 101,000 square foot flex building out in Chattanooga, Tennessee, and we brought about $1.2 million in CapEx for the budget to fix the space up. And we ended up getting a all of our leases signed without any tenant improvements. So we have 1.2 million just sitting there. So that is one thing that we're discussing now is, hey, what do we do with this money? Do we return it back to our investors, or do we invest it somewhere else, into the property? That's a great problem to have. Pretty excited about that, but hey, that shows you that there's a lot of demand for flex space when you're doing it right. Salt Ranch is pretty, pretty close. Oh, we are so. The one yard line. It's my boutique hotel here in East Nashville. It's right down the street. I'm headed over there to a construction meeting after this to see when we're going to be finally getting our certificate of occupancy. It should be close. We've passed most of our inspections. We just need the fire inspection done, and they were supposed to be out yesterday, so either we passed that or we got some feedback on what else we should be doing, but we're this close. Can almost taste it, which is really cool. So it's fun. You know, hotels are just different, right? I mean, when you do a strip center, you kind of get it to a certain point, and then you're done, right? The tenants going to come in, they're going to do their own FF and E, they're going to do their own, you know, details on the property, whereas with a hotel, you have to do all of that yourself. So now we're looking up, okay, who can do core 10 steel signs of our logo? You know, little things like that. We got to go shopping for all the books to go on the library bookshelves. We got to make the wine selections to go in the wine shop. All sorts of little micro decisions that have to be made that could be pretty exhausting, but it's it's all going to be worth it. I'm really, really excited with with how that, that building is turning out, and then my storage facility out in Chattanooga. You guys know that I'm building a 350 unit self storage facility out there. We We were really, really close. And then the the company that we hired to build our deck and our ramp, like the stairs and the in the ADA accessible ramp, they decided that they would interpret what ADA accessibility and to code meant on their own, which, you know, sometimes it just happens, I was out there when they were building it, but the but it looked really good. The last part that they built, though, which I was not there for, was the ramp. If you're remotely familiar with how ADA accessibility works, you have basically one inch of rise over a 12 inch span, right? So that means for every foot that you go, it can only go up about one inch. So, you know, these are steady inclines, right? I got out there to look at it, and it was so steep you couldn't walk up this ramp. And I looked at it, and it goes up five feet over an 11 foot run. So it's like a 45% grade, like they basically don't make roads this steep. So we're having to have them completely tear that out and redo that. I'm having to buy some more materials, but I'm putting some of it on them, because some of our materials would have been fine if they had built it the way that they were supposed to. And then the other thing too, they they put the stringer wrong on the steps. You go up to the steps and you see it, and then there's just a whip at the top, like the steps end, and then there's just a, like, a half inch lip, like, that's a major tripping hazard. How did you do that? So there's always something. There's always something. We're getting the doors installed here. Soon, all the units are done. We're still waiting on EPB, which is a local power board, to to finalize our electrical plans, and then we'll be open for business, baby. I'm, I'm really excited to be getting that self storage facility going. It's, it's going to be a good one, because, you know, that's, that's a deal where my partner and I, we both put $100,000 each into a piece of land here in in North Nashville, rezoned it, and, you know, walked away with about 1.1 million after about three years, right? So, so about a 5x on our capital, not, not a bad deal for not having to build anything. And, you know, that's the nice thing about going out and doing deals where you are just entitling land and flipping it to the next guy, right? We didn't have to take on a substantial amount of debt or risk to make that happen, and then we just 1031, exchanged it into the Self Storage Facility, so it's going to cash flow like crazy. I'm really excited for that. Y'all know, or you may know, may not. I have not invested for cash flow for the last. You know, six, seven years that I've been doing this. Most of my deals have all been equity creation. So I don't personally invest for cash flow. I think that, you know, a lot of people do that, right? They get very excited about it. But if you're trying to build a portfolio of commercial real estate, I think that's one of the slowest ways to do it is to actually focus on the cash flow first, instead of the amount of value that you can create, think about it if, if my partner and I had invested $200,000 for cash flow, and we, you know, let's just say we were getting an 8% return on our money, right? I mean, we're talking about what, 16 grand a year. So.
Tyler Cauble 10:00
16,000 and after three years, we walked away with 1.1 million. So a $900,000 profit. So if I divide $900,000 by $16,000 a year, it would have taken me 56 years to make the same amount of money from cash flow, as I did, from creating value on the asset 56 years. So that's why I have not invested for cash flow. You know, by the time that you get to the point where cash flow matters, it's really because the asset, you know, like you're done, right? You're tired, you don't want to do anything anymore, and you're fine with that money not making as much money anymore. So keep that in mind. As you're as you're going through. You know your strategy, your plans for building out your commercial real estate portfolio, cash flow is important, but it's not the most important thing, especially if you know how to create some value. All right, let's look at this article today, diving into partnerships. So this is me and a partner are buying an industrial property, and he wants to bring in his wife. He wants to bring in essentially a third party, but kind of somebody who has his partner's best interest in mind, right? So he's saying we're still under contract, and as the buyer is in both of our names, there was a clause in the contract saying we can assign the deal to any entity that we own. That's very common. I typically put it into, like, I have a holding company that has zero assets that I'll put, you know, these deals under contract in and or assigns right that way, because, you know, we'll create the LLC towards the end of the acquisition. And so there's no need to start an LLC for a deal you don't know if you're closing on or not. The plan was to create an LLC where we are each a member. Here's where it's getting weird for me, my partner wants to create an LLC with he and his wife, and they would own 50% and then I would own 50% probably as a member, as part of the umbrella LLC that we originally planned on. Am I overthinking this, or is he basically bringing in a third partner? He keeps telling me that I still have my 50% but I'm not quite convinced. I told him I do not want it to be a tick, and that shouldn't be a problem. My concern is that now all aspects of owning the property have to involve a third partner, to a degree, also, they will have a separate operating agreement for their LLC, and it could make things confusing. His concern is he wants to make sure his wife gets something if he dies. I feel like we can come up with another solution for his concern in the operating agreement. Am I overthinking this? I mean, right off the bat, I think there's a little overthinking going on here, because at the end of the day, you know they still have their vote. You still have your vote. It's still 5050 which, first off, you should never do anything, ever that is 5050 at least give somebody 51 and the other person 49 I don't care if you're giving up that controlling right, as long as everybody's going into this knowing who is actually going to be making the decision at the end of the day, the worst thing that you could ever do. I had one deal that went incredibly sideways. Fortunately, I was still able to sell it and get all of our investor capital back where I was naive. It was one of my earlier deals. I went in with a partner, 5050 and he decided that he wanted to do his own thing, and so I couldn't get anything approved, nothing, because I only had 50% of the vote. He had to also agree, and if he didn't agree, it didn't matter, like we had to get attorneys involved. It was a really, really really big deal, because he almost cost our investors a lot of money. It was really, really bad. And so fortunately, we were able to basically say, Look, if you don't do this, you are taking on 100% of the liability of what's going to happen to our investors next. And here's what that's going to look like, and we will be suing you, and the investors will be suing you. And he ended up backing down and just agreeing and let us sell, let us sell the property. But it was an absolute nightmare. So moral the story. Don't ever do anything. 5050, I don't care if you have to give up the 1% control so that somebody else can ultimately make the decision. It's going to make your life substantially better. All right? So to me, I'm like, Yeah, I don't I don't care if there's 30 people involved on that side, they still only have half the vote. And that doesn't mean that you have to have a meeting with 30 people, or you don't even have to necessarily meet with him and his wife. They're going to have their own operating agreement, and they're going to have a managing member of that operating agreement. So theoretically, you could just say, I'm only going to deal with the wife, or I'm only going to deal with the husband. It doesn't matter. Pick a partner, however that ends up working out. However I will say, like the partner wanting to make sure that his wife gets something if he dies, could be very easily solved through a trust or. Through a will. So that, to me, doesn't necessarily make any sense from that perspective. I mean, he may just be saying, I want it to be easier for my wife to step into my shoes and take over this which is totally fair and fine, right? And we have, I have partners that have their wives as partners in the LLCs in which they're investing in. It's really not uncommon. Let's see what some of these other comments are saying. Why can't you both buy two separate properties and own them? Each can do as they decide. Yeah. I mean, it's that's a lot easier said than done. I can't stand the whole rhetoric of like, Oh, don't ever get a partner involved in anything, because partners are terrible. I mean, you have to be very careful with it. Make sure you've got an attorney involved. Make sure that you are approaching this the right way. But at the end of the day, partnerships are a phenomenal way for you to grow and scale your commercial real estate business, especially if you don't have the cash, or especially if you're not great at raising capital, or you're not good at finding deals, but you are good at raising capital. Everybody has different skill sets. And you know, if you look at if you watch Shark Tank, like most of the sharks, they don't want to invest in single member deals. They always want a couple of partners. That's like the private equity model. They want at least two they want two co founders, because if something happens, there's somebody else there. This next comment is saying, this is actually a pretty common concern in commercial real estate partnerships, and you're not overthinking it. Here's my take, your partner structure would effectively, effectively make his wife a third decision maker. Even if you maintain 50% ownership, this could complicate operational decisions, distributions and future sales. While his estate planning concerns are valid, there are cleaner ways to handle this, like transfer. Handle this, like transfer on death provisions in the operating agreement. Yeah. I mean, obviously legally, it doesn't make her a third decision maker, unless it, I mean, it's just not, because in the operating agreement, their LLC will have a vote, and you will have a vote, right? However, it does obviously inject her opinion into this, whether she's involved or not, she could start, you know, complicating things. You can clean all of this up with an operating agreement like it's very easy to just go to your attorney and tell them, you know, that you want to make sure that this isn't going to become a problem, and it's going to be relatively easy to solve all of this, right? You could have timelines on how decisions on when decisions can be made. You can have guidelines as to how decisions will be made. So, you know, they could all be handled that way. That's what an operating agreement is for. Also saying having two separate LLCs with different operating agreements adds unnecessary complexity and potential conflicts. For example, what happens if their LLC has internal disputes? How does that affect property management decisions? Keep it simple, one LLC, one operating agreement, clear terms. I completely disagree with that. I don't think that having multiple LLCs complicates anything. Again, that's their LLC. They have to deal with it that has nothing to do with the LLC that owns this entity. If they have internal disputes, that's between them. We have investors that invest in our deals, in LLCs because they're raising capital from 1020, 30 friends, they all invest together in this LLC, and then that LLC invests with me, so there's never problems there, because they're all professionals. It's all been handled in the operating agreement as to how everything will be managed. So to me, it seems like you might have some amateurs here that are jumping in and try to give some of this legal advice. Now, one thing I will say, I'm not an attorney, and I'm not going to give you legal advice, and none of this is legal advice. Talk to your attorneys about this, but I'm just sharing like, from my experience, that's generally not how it happens. Yeah, here's another one. Having a partnership is the best way to get screwed. Friends become enemies. If you are in a community property state, his wife owns her share too. If they divorce, she could fight him, and the court could give you her as your new partner. People have these. People have no clue how operating agreements work. I mean, we like we actually specifically have a clause in our operating agreements that, if you know the transfer upon death, fine,
Tyler Cauble 19:21
but they have to get bought out, or they they no longer have a vote in the day to day, depending on on which which deal it is, because nobody wants to be partners with somebody else's spouse. You can just handle that with an operating agreement. It's, it's really, really not that complicated. People are funny. All right, so there is my take on this week's Reddit thread. Let's see what Evan's saying. I'm planning on building new flex in the spring next year and looking to buy some of the neighbor's lot so I can expand to the future. Any suggestions on how or what I should say for them to sell. I mean, Evan, I'm a pretty I'm a pretty simple man. I would just say, Hey, you want to sell your lot. I. I'm a buyer, you know? I mean, I texted a buddy yesterday. We had talked about one of his deals, like two years ago, and I just said, Hey, man, you know, because we were going to build something there, he was going to build something there, we were going to lease it. He never ended up doing anything with it. I was like, hey, you know, would you be interested in selling us? He's like, Yeah, maybe, you know. So I said, What do you want? He goes, I don't know. Okay, cool. Well, I'll crunch some numbers. I'll get back to you. I'm pretty simple when it comes to that. I don't think that there's some sort of magical phrase that you're going to be able to say to convince somebody to sell. So I would just be straightforward and say, hey, look, you know, we'd like to buy your lot. What are you interested in selling it for? And Tony is saying, Tyler, good morning. Bit of an odd question, but I'm curious to know what type of content that investors like yourself would appreciate seeing from a broker. Not an odd question at all. I like seeing comps in the market. I like seeing the deals that you've recently closed, the deal terms that are coming out of it, right? Because, you know, think about it, if I'm underwriting a deal, I want to know that the deal down the street was giving 20 bucks a foot in TI, and then a deal was actually inked at $25 a foot triple net with, you know, delivery and as is condition, but the landlord gave 20 bucks a foot in TI, right? Little things like that, or maybe that, you know, hey, market terms right now are 30 days free rent, right? Something like that. I mean, think about it from your perspective of, like, only something that a broker is going to know that commercial real estate investors are going to value when they're going through the underwriting process. And and Tony, I know you've been very involved in our 30 deals 30 days. There's a lot of information that we're covering, that we're covering in there where I'm saying, like, I would have to call a broker for this. So how do you get in front of all of these property owners and let them know you've got that information, right? That is, that is when a broker can become unbelievably valuable. Is when they are actively calling property owners and not pitching anything, but just saying, you know, Hey, John. This is Tyler Cobble. I just did a deal down the street from your building at 123, Main Street. I just wanted to let you know, you know some of the deal terms that we had on there, just in case it's going to impact anything that you're doing at your property. You have five minutes to talk. Come on, as a property owner, you're going to sit there. You're not going to say, No, I have no time for you, right? Like that could be a very good conversation for that investor to have. And you're you're proving to them that you're active in the market. You're proving to them that you're closing deals. You're proving to them that you know what's going on in the area, and you might be the go to for them whenever they have a vacancy, or they decide to sell or whatever. So you don't even have to pitch. You're just showing them that you're the expert, and eventually, over time, they're going to know that you're the person to call, right? So I think that's a great way to approach it. Z is saying, Good morning. Good morning. Z, good to see you. Also very active in 30 deals, 30 days. Got a lot of regulars on the show. Now it's really cool to see we've got day seven today. I don't know what we're going to be diving into later this afternoon, but I think we're going live at what, 4pm Central Standard Time, no, 3pm central standard time for day seven. If you want the actual schedule of when we're going live and underwriting deals, so that you can jump in and watch every deal from the beginning. Or if you want to submit deals, feel free to join the challenge. It's C, R, E, central.com/thirty deals, 30 days. That link is in all the descriptions of all the videos as well. Z is saying, what would you recommend 506 B or 506 C as a new syndicator in the neighborhood Z, that's a great question. We actually talked about that quite a bit this past weekend. I have my securities attorney come out and talk to everybody about 506 B versus 506 C. I am not a fan of 506 C's for newer investors, because, you know your investors have to be accredited in order for you to do a 506, C, and you're able to market it, which is great, but if nobody knows who you are, if you don't have a track record, if you aren't BlackRock, that marketing is it's not going to matter. It's really not. What I have found in the past, when I did a 506 C on firesflax And we did a 506 C, you know, several years ago. So those are the only two. Everything else I have done has been 506 B. What I found on that first 506 C, I thought, oh, you know, we've got this YouTube channel, we've got the podcast. I've got a pretty decent following on Instagram. We'll go market it to everybody. What I found was that I got like, two new accredited investors. All I did was cut out all of my regular investors that were not accredited. They couldn't invest in that deal. I was like, Man, that was. That's kind of a bummer. So I ended up, that's why we do mostly 506 B's, you know, it's, it's friends and family. As long as I can prove that I've got a pre existing relationship with you, then you are able to come in on our deals. So, I mean, even with, you know, like, I get a lot of investors through YouTube, I get a lot of investors through Instagram, as long as, like, I don't have to have had a personal relationship with them for 10 years. As long as, you know, they reach out. We have a call, we stay in touch, we discuss commercial real estate, maybe we get together in person for coffee, whatever that's that's enough for them to be able to invest, you know. So that's what I would say, is go with the 506 B's. You've got plenty of friends that are willing to take a chance on you. And maybe throw in 1015, 25, grand in a deal. You know, finding accredited investors is it can be tougher sea barriers thing. I'm wondering, if you have ever done a lease type of a small business where you don't take any rent for X amount of years, but instead get X percent of their monthly cash flow, and then average it for rent. So sea bear, what you're talking about is called percentage rent, and it's not uncommon in commercial real estate, when you get into like downtown areas or really high end retail districts or something like that. I avoid it like the plague, because it's just not worth it. I have the rent that I would like to get, and then that's it. You run your business. The problem is, if I start doing percent run now, I have to get involved in your business. I have to see your monthly PNLs, and I may even have to audit them to make sure that you're not hiding money from me. And so it's just not really worth it. And also, like, it kind of penalizes a business, in my opinion, for doing well. Like, if a business does well, I want them to just stay there and keep paying me rent every month, whereas some businesses will start to look at that and go, I am paying an absurd amount and percent rent to this landlord just for the privilege of staying here. I'm moving as soon as this is done. So, you know, I'm just, I'm not a huge fan. You'll see it typically in like retail or FnB, but definitely not, you know, flex space. It just, it just wouldn't make any sense. So awesome guys. Well, that is it for this week's office hours. I will be live next Tuesday, 8:30am Central Standard Time for the next round of office hours. But until then, catch me every day, 30 deals, 30 days live underwriting random deals I've never seen before so that you can learn how to do it too. Appreciate you guys, and we'll see you in the next one. This episode of the commercial real estate investor podcast is brought to you by my cre accelerator mastermind, where you'll get access to my step by step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way. Go to www.crecentral.com to learn more you.