Commercial Real Estate Isn’t Just for Millionaires
Most beginners lose thousands on their first commercial real estate deal — and it happens faster than you think. But here’s the truth: it’s not because they’re inexperienced or reckless. It’s because there are hidden traps in commercial real estate that no one talks about… until it’s too late.
In this video, I’ll show you the three silent killers that ruin first-time investors — and more importantly, how you can dodge them. If you’re coming from the residential side, these traps are even easier to fall into… and much more expensive to recover from.
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Key Takeaways:
Commercial real estate isn't just for millionaires - it's about how you structure deals, not how much money you have.
Successful investment strategies include:
Finding overlooked properties
Building the right capital stack
Partnering with someone who has a unique edge
Focusing on operational improvements rather than major renovations
Underwriting conservatively
Specific example: Tyler and his partner Jacob bought a failing self-storage facility for $1.7 million by:
Raising capital from a small investor group
Leveraging Jacob's moving company for built-in tenant pipeline
Improving operations instead of doing expensive renovations
Increasing occupancy from 58% to nearly full within 90 days
Key investment principles:
Look for small deals in transitioning areas
Build relationships with potential investors
Identify your unique competitive advantage
Underwrite based on realistic expectations
Keep the investment strategy simple
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
Tyler Cauble 0:00
I thought commercial real estate was only for millionaires, and I was dead wrong. I still remember standing in front of my first office building, terrified that I was in way over my head. I didn't come from money. I didn't have a trust fund, and I sure as hell didn't have seven figures in the bank. But once I learned a simple way to structure the deal, that same building became the foundation for my entire $75 million Portfolio today. So in this video, I'll show you exactly how I do it and how you can too, even if you're not a millionaire,
Tyler Cauble 0:39
most people think commercial real estate is just for the rich private equity firms, Legacy developers, guys with deep pockets and connections, but here's the truth that no one really talks about regular investors break into this space every day, not because they've got millions, but because they understand how to structure a deal. They know how to leverage financing, bring in partners and stack the capital the right way. And the crazy part, those same strategies are available to you right now if you know how to use them. Commercial Real Estate isn't about how much money you have, it's about how you pull what you have together. So let me show you exactly how we structured a deal like this, even without millions in the bank. Last year, I partnered with my buddy Jacob. He owns a moving company called sixth man movers here in Nashville, and we bought a failing self storage facility just north of where we are right now, north of downtown Nashville, in Madison. Now, I say failing, but that's actually where the opportunity was. That's what I go and look for. This property was neglected, the occupancy was fake, and the systems were a total mess. The seller told us it was 95% occupied, and day one, when we took over, it was really closer to about 58% now most people would have run the other way and probably hired attorneys and sued the seller, but we saw the upside and didn't want to waste our time. So here's how we made this deal happen. We bought the property for $1.7 million to fund the deal. We raised capital from a small group of investors, I think, like four or five total. Then Jacob and I each put in some of our own cash as well, and we signed on the debt. He runs the operations. I structured the deal and led the race. That's the power of the right partnership. We didn't need millions of dollars. I didn't need $1.7 million in cash. We just needed the right plan and the right team. And because Jacob owns a moving company, he already had customers who needed storage, that gave us a built in tenant pipeline from day one, that's the heck. Instead of treating this like a passive investment and hiring third party management, we created a vertical integration play that really unlocked way more value. All we had to do was run it better, answer the phones so small, respond to maintenance calls, not that much work. Lease vacant units. I know mind blowing. No major renovations, no big construction budget, just fix the operations. So in the first 90 days, Jacob signed seven new tenants and got us back to break even at above market rates. Today, it's almost completely occupied all from existing demand that his team is already working with. So that's how you take a property and turn it into a performing asset without overpaying or overbuilding or really just over complicating the entire deal. So now let's talk about how we actually financed it, because this is where I see a lot of beginners get stuck when they're going through the process for the first time. We didn't just walk in and write a $1.7 million check, right? I didn't just go out and raise all of that money from investors. We built a capital stack that made the deal work and really minimized how much of our own cash that we had to put into the deal. So here's how it worked, a bank loan about 75% of the purchase price, so roughly 1.27 5 million investor capital was just about over $450,000 and Jacob and I put a little bit of our own cash alongside our investors that covered the down payment, the closing costs and gave us some healthy reserves for the first year, which was critical, because I knew that there would be a rough takeover period. Now, we didn't budget for any major renovations or cap backs. Why? Well, there wasn't any that was needed. The play here wasn't a physical rehab. It was operational. The facility was underperforming, not because the building was in poor shape, but just because nobody was managing it. Literally, the previous owner wouldn't answer the damn phone. So instead of spending $300,000 on upgrades. We raised just enough to cover the purchase, right? Build us a little runway and start fixing the operations from day one now. That's the kind of structure that works when you don't have millions just sitting there in the bank. You raise only what you need. You keep it super, super lean. It's a startup, right? And you. Focus on execution, and by the way, we still own 100% of the upside because we structured it with a small investor group and handled the operations ourselves. We didn't give away all of this equity to a management company or a big investment partner. That means, when we increase occupancy in noi, which we will all of that value flows back to us and to our investors. That's the power of knowing how to stack the right capital and structure your deal right. So why did this deal work? Even though the property was an absolute mess, simple, the fundamentals were solid. First, the location, we're in Madison, just 12 minutes north of downtown Nashville and about two blocks north of my Madison Square development, that sub market is turning around fast, and we're already seeing big development projects all around us. Second we bought based on what the property was actually doing, not on what the broker told us, yes, the rent was clearly inflated, and yes, the occupancy was fake, but we underwrote assuming we'd lose about 20 to 30% of the tenants anyway, and we did. But because we planned for that, it didn't tank the deal. We had reserves. We had a plan, and most importantly, we had a partner who could fill it fast. Third our strategy was pretty simple. Don't over build, don't over promise, just run it better. We didn't touch the buildings. We didn't paint, we didn't repave, we didn't even pour any concrete. All we had to do was take over the phones, respond to our existing and potential customers, and really just reestablish trust that we delivered that alone pushed us back to break even within 90 days of acquiring this property. And the truth is, we just didn't need a value add budget. The value was the operations, and once we realized how much underutilized land was sitting on the property, we knew we had even more potential upside built in. Keep that in mind when you're acquiring properties. How can you expand? We're already planning to add 30 to 40 new units using shipping containers or prefabricated buildings without touching the original footprint, so that one move alone could increase our net operating income by over $40,000 a year and add over $500,000 in value at a modest cap rate, all from just running the numbers and knowing which levers to pull in the deal. So if you're sitting there thinking, Man, I would love to do a deal like that, but I have no idea where to start, here's exactly what I would recommend. Step number one, look for small deals in overlooked areas. We weren't chasing a trophy asset. We weren't at the corner of Maine and main this was a beat up facility in a transitioning neighborhood, and that's where the upside is. Step number two, build your capital stack before you need it. Talk to local banks, learn about SBA or conventional loans, start planting seeds with investors who would be interested in 10 to 12% returns. Step three, find an edge. We had Jacob, owner of sixth man movers, that company has built in demand. What's your edge? Maybe it's marketing, maybe it's management, maybe it's access to deal flow. Just play to that. Step number four, underwrite for reality, not a pro forma. Assume some tenants are going to leave when you take over, assume there's some deferred maintenance, which there will be. Assume operations are worse than advertised, because they probably are. If the deal still works after that, you're being conservative in your underwriting, then you've probably got something. Step number five, just keep it simple. We didn't build, we didn't renovate, we didn't gamble, we just improved occupancy and operations. That's it. We're not even a year into it. Yet. Commercial Real Estate doesn't have to be complicated. You just need the right deal, the right partner, and a structure that fits your strategy, not the other way around. Now if you're thinking that sounds great, but I still wouldn't know where to start. That's exactly why I created the CRE accelerator mastermind. It's a step by step system that I wish I had when I was first getting started in commercial real estate, and it's already helped people just like you close their first deals way faster than they thought possible. Take Joe and Matt when they joined they figured it would take years to get their first deal done. Instead, 103 days. They currently hold the record for the fastest deal done in the group. They raised capital for the first time from their investors and saved $72,000 because I showed them how they could structure this deal creatively. And now they're not guessing anymore. They've got confidence, they've got a track record, and they're stacking more deals. So if you're serious about breaking into commercial real estate, the link to the mastermind is in the description below, and you need to watch this video next on how to structure real estate deals with investors and actually raise the capital.