Starting a Family Office | Office Hours
Starting a family office sounds like something reserved for billionaires, but the truth is the “family office mindset” kicks in way earlier than most people realize. If you are sitting on a meaningful liquidity event, a paid off asset, or even a few million in deployable cash, you are already in the zone where strategy matters more than hustle. The problem is most investors hit that point and keep buying deals the same way they always have, reactive, scattered, and without a real portfolio blueprint. That is how wealth gets built, and quietly leaks.
What separates families who compound for generations from those who stall out is not access to deals. It is structure. How you hold assets, how you protect them, how you finance them, and how you balance stability with upside. The goal is not just to grow your net worth. It is to build a machine that preserves it, produces cash flow, and stays aligned with what your family actually wants long term.
In today’s breakdown, we cover:
• How family offices really structure ownership and liability
• The portfolio mix that keeps cash flow steady while still creating growth
• Why single tenant net lease can act like “bonds” inside your CRE strategy
• How to think about debt relationships, 1031 timing, and long term holds
If you are serious about turning a strong balance sheet into lasting generational wealth, this is where the game changes. Let’s dive in.
Get commercial real estate coaching, courses, and community to jumpstart your investment journey over at CRE Central: www.crecentral.com
Key Takeaways:
Practicing daily underwriting significantly improves deal analysis skills, and many viable deals can be found in common online marketplaces.
Tyler advised against purchasing a specific industrial condo deal due to unfavorable returns and risks, stressing the importance of careful deal evaluation.
For small family offices, use a holding company or trust with separate LLCs for each asset to maximize asset protection and management.
Work with a specialized real estate CPA for optimized tax planning and execute 1031 exchanges by preparing ahead of asset sales.
Allocate portfolios with a mix of stabilized assets, value-add properties, and selective higher-risk investments according to the family’s desired involvement and goals.
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
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. It's Thanksgiving week, and today, for office hours, we're going to be diving into a deal that one of you all submitted from Abe. So Abe, if you're listening, we're going into your deal today. Yes, that is a new thing that we're going to be doing on this office hours. If you have a deal, if you have plans, if you have four plans, or architectural concepts, whatever it is and you want to get my feedback on it, we now have a Google form where you can go and submit that for a chance for me to review your project, your deal, whatever it is, live here on Office Hours. That link is in the description below. It's a Google form, pretty simple for you to follow. We will also be diving into structuring family offices, smaller family offices. This one today has, it seems like about $5 million in cash. Where should they be investing that those funds? We'll dive into that thread from Reddit, as well as all of your questions, whatever you have. That is exactly what this is for. If you've got a question, ask it in the comments, and I will get to it. We'll be sure to be diving into whatever you have today. All right. Up first, we recently finished 30 deals, 30 days. Last Thursday, I believe, was the last day we went live and underwrote a deal every day for 30 days. And it was, it was really cool to see. You know, we had a couple 100 people join the challenge. We got some great feedback on it. Sounds like a lot of you all feel a lot better now about how to actually go about the underwriting process, finding deals and underwriting them. If you missed that series, it's a playlist under my YouTube channel. Now, just go to my channel, go to the playlists and find 30 deals. 30 days. You can watch them all in order. They're incredibly helpful. I highly recommend you watch all 30 if you can, and maybe even practice each day see if you can find us a similar deal, right? Because if you underwrite a deal every day for 30 days, you will be incredibly well versed on how to go about looking at deals, finding deals in your market and dropping them into the spreadsheet. I know that underwriting spreadsheets can be one of those intimidating things, right, especially when you're first getting new to it. But I promise, if you just spend a little bit of time in it, they're not super complicated, and you'll get used to it a lot faster than you might think. My biggest takeaway, I thought that this was really interesting. My biggest takeaway from those 30 days underwriting, you know, the deals that y'all submitted underwriting, random deals that I've found, or that my friends found, was that a surprising amount of those deals that we found on loop net and crexie actually penciled right? We always talk about how, you know, loop net is where deals go to die, and I think that for the most part, like, hey, there's a reason that that stereotype for loop net exists. However, I think that over 50% of the deals that we underwrote, so, like, at least 10 to 15 of the deals that we underwrote actually penciled like they were. They were actually deals that I said, Yeah, you know to, you know, so and so whoever submitted this, I highly recommend you go and see if you can make this deal work. Now, keep in mind, we weren't touring these properties. This was a very high level, you know, 85 to 90% confidence level of underwriting. But I that was my biggest surprise. I didn't think hardly any, any of them were going to work, right? So I thought that that was really cool. We do have a big announcement. We're going to start live streaming once more each week. We haven't really settled on a time, so that might bounce around through the end of the year. So stay tuned in office hours for the times for it, but tomorrow, so Wednesday, November 26 I will be going live at noon, and we're starting back our commercial real estate news segment. So you guys might remember this from like, four years ago. I used to my first, my very first live streams. I would go live, I would talk about commercial real estate news, and I would give you guys my thoughts and opinions on what's going on in the world, what's trending, all of the fun stuff, all right? And we stopped doing it for a while. I don't really know why. I don't really recall why, but I'm bringing it back because I think that being able to give you my thoughts, my opinions, and let's have a discussion around major things that are happening in the real estate business world could impact how you are going about and approaching your data. Day. So tomorrow we will be diving into utilize emerging trends in 2026 we're going to talk about what is going on in the world of commercial real estate. How do all of the biggest principles in the country and the world honestly, what do they feel is going to happen in 2026 and how can you take advantage of that? We're going to talk about Trump's ballroom. I think that that's pretty interesting from a commercial real estate perspective. You'll see why. Tomorrow we'll talk about the 50 year mortgage. I'm sure most of you all know that that's got to be a joke, right? It's a horrible, horrible idea. But again, we're just teasing for tomorrow, we'll dive into Zoran Mamdani and his election in New York City, and how that might impact flight from New York City, how that could damage real estate in New York. And then we'll talk about how the Federal Reserve is feeling like they may not be cutting interest rates in December, which, you know, be a horrible Christmas present. So lots of that going into tomorrow will be a lot of fun. So if you have interesting bits of news and you want me to cover it on the show, feel free to submit that, send it to me. DM me. You guys know how to find me on Instagram or in the comments here. Of course, Ethan is saying, I watch all of your episodes on Spotify. This is my first time making it live to office hours. Ethan, glad you you are able to join us live, my friend. Hope you're enjoying everything on Spotify. So that is, that's really what I've been up to. I mean, you guys know it. We went live for 30 days in a row. I was kind of updating you as we were going along. So the only other thing that I wanted to dive into before we dive into this advice on structuring a small family office is a deal that Abe submitted. So if you guys have, like I said, deals for plans, you know, concepts, whatever it is, and you want to get my thoughts on it that Google Drive or not Google Drive, that Google Form is in the description below, feel free to go submit stuff, and I'll pull it up. Alright. So he's saying, Hi, Tyler, looking for your input on a seller financed industrial condo deal in Warren, Michigan, is an eight unit industrial condo building. He's purchasing five of the units. I'm going to tell you right now already not a fan of this. Average is 91% occupancy over the past five years. HOA manages insurance and taxes. Deal structure, purchase price of 1.2 million. Seller financing 1,000,080 at 0% interest, 10 year term, principal only payments, then balloon payment at maturity. I mean, those are incredible seller financing terms. But you also have to think, Why in the world would somebody need to get out of this deal that bad that they would charge 0% interest? I mean, because if you think about it, over a 10 year term, they're losing a substantial amount of money down payments, $126,000 that includes closing costs and inspection. Average noi at acquisition is about $50,000 so So, I mean, we're talking about, you know, close to, well, the NOI doesn't include your debt service. So I mean, if we're, if we're just going to do principal only, let me do the math real quick. So it's 1,000,080 divided by 120 months. So you're paying 9000 a month. Is that right? $9,000 a month in principle?
Tyler Cauble 8:39
That sounds crazy. Million, 80, 123, 0% interest, 120 months, 9000 Well, I guess we don't know what their amortization is, but if it's principal only, payments for on a 10 year term, yeah, it's gonna be 9000 a month, which is insanely high. It's 108,000 a year. So you're losing about $58,000 a year based on this. Now, if we're getting a 20 year amortization, then maybe that changes things. At that point, we're looking at $4,500 a month. You're still breaking even, and I so I'm a little confused as to how the finances actually work on this. Abe right now, it doesn't seem like this deal works. So projections, vacancy, maybe he gives me that information later on. Now, vacancy conservative at 10% it's fully leased after acquisition, noi is $43,213 that's with a 10% vacancy, 40% OPEX, including tax reassessment year one, cash on cash is 9.8% he's saying about $12,356 in annual cash flow. So let me do that math real quick. He's saying his cash flow. Low is debt service 43, to 13, minus 12, 356, his debt service is only 30,008 57 a year. So divided by 12, that's 2571, a month. 571 Yeah, Something's just not adding up here, because basically what that's saying is that they're going to amortize it over 420 months or 35 years. So I'm not understanding that reaching double digits by year two and a half, year 10 in Hawaii, 70,002 56 seems reasonable consider, you know, it almost doubles over a 10 year period. Projected sale price in year 10 is $936,000 so substantially less than what you're buying it for. It's at a seven and a half percent cap rate. Total returns are $270,000 including 10 years of collected cash flow, annualized ROI is 7.9% absolutely not walk away from this. If your annualized return on investment for any piece of real estate is 8% over 10 years, just invest in the stock market. Man. I mean, at that point, it's just, it's absolutely not worth it, like that's a lot of work, that's a lot of headache, and it's a substantial amount of risk for an 8% return. Like you know, you could buy treasury bonds right now and literally do nothing for 5% so I wouldn't be getting out of bed at that valuation. Fair market value at seven and a half percent, cap rate, $576,000 premium paid $623,000 so 108% of her market. It's not worth it. Question, what's your take on paying roughly double market value in exchange for 0% financing and no bank involvement? Answer, absolutely not. What I ever touched that with a 10 foot pole? That's a horrible, horrible deal. Now I have overpaid for real estate because we got really good seller financing terms. I have not come anywhere near to to more than double what the actual value of the property is. Because here's the thing, in 10 years, you're not going to get the value back out of it. It's probably not going to double in 10 years. And so you're just not going to see the type of investment that you could anywhere else. I mean, look at, you know, $126,000 you can go and invest that in somebody else's syndications, like our deals. You don't have to invest with me. Go find somebody else, but we aim for an 18 to 22% annualized cash on cash return. So my deals are giving my investors triple the amount of returns as to what you're getting here. My investors don't have to lift a finger. They don't have to do anything over a five year period. You're going to have to run, manage and deal with a lot of stuff here. So it's just not worth it. He's saying this is based on conservative underwriting small improvements, for example, negotiating down to 1.1 million still too high, lowering OPEX to 35% and achieving 5% vacancy pushes returns to 17% cash on cash year one and approximately 17% annualized roi i plan to sell By year 10. Yeah. I mean, that could work. That's a lot of ifs, though, right? I mean, that's, that's a lot of like, if we can get this, if we can get this, and if we can get this, then this deal works. And, you know, hope is not a strategy, in my opinion, to me, like, there's so many more sure deals and opportunities out there, I just wouldn't do it. He's saying PSD 0% interest rate is based on my religious beliefs. So he's probably Muslim, which prohibit earning or paying interest. I was able to negotiate 0% interest rate by agreeing to a higher purchase price of $1.2 million even though I could have acquired the same property with traditional bank financing for around $576,000 financing for around $576,000 but with an unfavorable interest rate that makes deals most times not pencil out a but it's it's a creative way to get around not being able to pay interest. I think that we're splitting hairs. You're really paying interest on this deal, right? And you're paying a lot of interest, because for you to pay, I mean, let's just run the math here and see what it is, because you're going to end up paying, you know, 1,000,002 for a $576,000 property. So 1,000,002 for 576,000 that's $624,000 that you're paying in interest, essentially. So, you know, to me, it's just like, man, that's, you know, if you got 5% interest on a 20 year amortization, that basically ends up almost being the same thing. So you. I would. I don't know. I think it's, I think it's too, too, too, too much. Actually, it's more than that. Because I ran that on 1,000,080 let's say 576, you're putting 20% down. So let's say $450,000 and on a loan, you'd have to be paying like 10% interest. 4342 times, 120 oh my gosh, you'd have to be paying like 15% interest to make this work. And I know that you've got, you know, special restrictions with your religious beliefs, but to me, like, it's just not worth it. Like, honestly, I would save up some more money and pay cash for a deal. This is going to get you tied up into a property that is going to take up too much of your time. It's not going to be worth the returns. There's too many ifs here at play. So that's what I would say. Abe, sorry. I'm sure that's not the advice that you were hoping for. But you guys know, I like to be real with you. I think, I think that's, that's kind of a tough deal to make word All right, okay, let's get into this one from Reddit. This is advice on structuring a small family office and portfolio strategy. This user is saying, looking for some advice on how to set this up the right way. I currently own a 13 and a half million hour industrial building that is unlevered, meaning they don't have debt on it. It built a suit warehouse where the tenant has the option to purchase between January 27 and January 2030 when the build the suit sells, I expect to net about $4 million the plan is to 1031 that into a new deal, into a 60% LTV, refi on the 13 and a half million dollar building. It gives me roughly $12.1 million of equity, if I hold back about 20% as reserves. That leaves me with around $24.2 million of buying power at 60% LTV to start building a small family office style portfolio. For those who have done something similar, I would love input on entity and ownership structure, tax planning and 1031 strategy, debt relationships and banking setup, whether or not to bring in outside partners, portfolio strategy at this scale, asset types, markets and business plans that worked well. And I am especially interested in how you approached picking the right properties at this stage, and whether you focused on fewer larger deals or more smaller ones, and how you balance yield, stability and upside. Any practical advice or wish I'd known this earlier, lessons would be really appreciated. So I have consulted a fair amount of families that are starting family offices, everything from just, hey, here's here's the how to balance your portfolio. Here's the assets that we're gonna go target. And we've helped them literally build out that entire out that entire portfolio all the way to it's the very infancy, and we're structuring the governance of how all this is going to be set up. I mean, I think the last family office I consulted it, we gave them, like, a 70 or 75 page document on how to go about structuring their family office the right way for them. Specifically, I spent two days with them, so I've got a lot of experience here. And what I would say is, as far as entered to entity and ownership structure, typically what we will see for family office offices is that you will have a holding company where everything filters up to
Tyler Cauble 18:21
and that could also be a trust. It depends on how you want to structure it. It could be multiple trusts. Everybody kind of does it differently. This is one thing that you're gonna have to talk to your CPA and your attorney about, right? Because I'm not an attorney, I can't give you legal advice. I'm just sharing with you what I have seen. So generally, there's some sort of holding company, whether that's an LLC or that's a trust, right? And then there's typically an LLC for every single asset that they own, right? Every asset is in its own LLC. It's very important that you do that. Well, we do that right, because it's for us, our, our the strategy that we deploy to make sure that all of our assets stay safe by having an asset, one asset per one LLC, make sure that it's siloed off, so if anything happens with this LLC, it doesn't impact all of these other ones over here. All right, so that's kind of how we do it. As far as tax planning and 1031 strategy goes. I mean, the biggest thing make sure that you've got a great CPA on hand, right? Somebody that understands actual real estate. Ask them about cost segregation studies. There are CPAs out there that claim to be real estate CPAs that are not for cost segregation studies. That's accelerated appreciation, by the way, if you're not familiar with the cost seg, if your real estate CPA is not pro accelerated depreciation, they're not a real estate attorney. They just play one on TV. All right, leave them. And go find somebody else. Because that's that's insane. I've seen way too many real estate investors get stuck with these terrible CPAs that have cost them a lot of money over the years. So that's a big one. The as far as the 1031 strategy goes, I would start identifying properties prior to closing on the deal, right? Because once you close, like once you sell your deals, I mean, the nice thing is, if you're refinancing one of your properties, there's a substantial portion of equity there that you don't have to rush on. But it sounds like you have about $4 million in equity that you're going to need to 1031, relatively quickly, that I would just go and find you could buy two Starbucks for that, right? I'm not saying like Starbucks is the way to go, but as far as like, larger, branded, single tenant Net Lease deals, something to help anchor and stabilize your portfolio that's going to bring you consistent cash flow, zero, headache, zero. You know, management necessity and and long term leases. I love Starbucks deals. I love, you know, these, these, I used to say Walgreens, that doesn't work anymore. Even take five oils. You know, there anything that's QSR fast food, these bigger chains. I'm not a big dollar general guy. You guys have heard me talk about that before, but those deals are great because they can, they can be like the bonds of your portfolio, right? They hold down the fort, and they just consistently throw off cash flow. You're not going to get a substantial amount of value add out of them. There's nothing to value add. Your revenue is not going to jump up significantly because of any annual increases. There aren't any, right? It's just a very steady base for your portfolio. All right, then what I would start looking for is something that's, you know, maybe larger than that. That could be a five to 10, you know, or more tenant strip center or industrial complex, you know, flex Park, something like that, where you do have the ability to create this value add, it's still relatively stable, right? Because you're buying Class B or Class A, right? I wouldn't necessarily go for Class C if I was a family office, because you don't need to create substantial amount of value. You really want to more, so preserve what you've already got and make sure that you're cash flowing it properly. So I would, I would go after something that's relatively stabilized, where, you know, the next 1020, 30 years, you can just continue to increase your rents, right? Family Offices look at properties a little bit differently. They look at these for the long term hold because that's how they start to create substantial value for the family, is just by holding these assets for a while. Now, if you have somebody that's going to actively be working on them, then, I would say, sell them every five to seven years and 1031 exchange into something better, because you'll have paid down enough of your you know, your principal balance, you will have, you know, at least, gone through one five or 10% rental increase on one of these assets. You'll be able to flip it before you get down to five years remaining on the lease. Hopefully you're selling them with 10 years remaining on the lease, right? Because that's where you'll you'll get the most value out of like Senate, single tenant Nellies deals, the other ones are a little bit different, like, if you've got a flex park or a shopping center, you know, those will always be what they are, because you're you want the leases coming to a different time so that somebody can create value. That would be my strategy is to go out, start identifying those types of properties first, before we even sell this asset, so that I have a really good idea about where I'm going to deploy this cash, as far as debt relationships and banking, if you're not planning on investing locally where you are, which is typically what I recommend for a family office, especially single tenant and at least deals. You can buy those all over the country. Doesn't matter. You don't have to be there. But I mean, look, if it's there's something kind of nice to be able to say, especially as a family office like our stuff is here in the community. You know, I would go ahead and start building relationships with those local lenders. Don't go for the big national guys. I'm talking Chase Bank. We're talking wells, Fargo Bank of America there. You know, there's no point in trying to do real estate with any of those types of banks. They are. They're really big. They don't have the best customer service. They don't have the best I guess just thoughts on real estate in the community compared to your local community banks and your regional banks. I mean, I'm talking banks with with less than $5 billion in assets under management, those can be some of the best lenders you ever work with, because they want to get deals done. They're hungry for them, and they will work to make that happen. If you are looking outside of your area, then I would find a really good mortgage broker. You can typically find one through like Marcus and Millichap through their Capital Markets team. You could also go to CBRE capital markets. I think Colliers might have one too. Call those groups right, because they. Got connections all over the country, and that is specifically that doesn't mean that you have to work with them on the brokerage side, but that is specifically what they do. They source the debt for those types of projects. Now, portfolio strategy at this scale, I kind of laid that out, but essentially what I would be doing is I'd be putting at least 50 to 75% of your portfolio into more stabilized assets, right? So let's say 50% of that goes into single tenant Net Lease deals, right? That have consistent cash flow, long term leases, zero overhead for you, right? Then maybe 25% goes into these, you know, flex parks, or even 30% goes into these, flex parts, shopping centers, stuff, where you can create value, all right, but they're still relatively stable. Then the other, you know, 20 to 25% that's where I'd be, you know, doing the fun stuff, taking a little bit of risk, maybe even as a family office, investing in somebody else's syndication. So I can go from, you know, my 5.25% Starbucks return to maybe a 20% annualized return investing into another deal with somebody else, maybe even doing development, maybe even doing a heavy value add something to kind of take a little bit of risk on right and have fun with but it always depends, like that. Portfolio balance always depends on how involved the family wants to be I've had family offices that we've worked with where, you know, one generation of kids, or one generation of the family wants to be heavily involved in everything with the real estate, and that's awesome, right? So we'll build a portfolio for them. It's like, okay, well, you know, let's do one project a year, or two projects a year, where you have to be heavily, actively involved, right? But we'll build everything else so that you still have cash flow coming in that you don't really have to worry about while you're doing that. We have other ones where it's like, look, I don't want to deal with anything anymore. I've sold my business. You know, we're retiring. I just want the cash flow cool. We're going to go heavier on the single tenant netley side, right? So it just, it completely depends on, really, what everybody's goals are. That's what we have to work towards, right? And so that's, that's one of the things that we don't know about what this person is looking for in terms of their goals around investing in, in commercial real estate, but that's what I would do. I think that family offices are incredible.
Tyler Cauble 27:19
They really start to set you up for that generational wealth. You don't have to have a substantial amount of assets to be starting a family office, really. I mean, you know, I start encouraging my clients once they've got one, two to $5 million in cash, really, once you get to 5 million, it's a lot easier, but $5 million in cash to start treating like a family office, right? And all that means is that you, your full time focus is managing the family's assets, right? So here's the thing, if you have $5 million in cash, and you're getting an 8% return, you're making, what, $400,000 a year, right? That's enough for you to take, you know, $150,000 salary and continue to invest the rest in your other deals, right? Save some money, keep it going. All right, guys, that is it for this week's office hours. Appreciate you all for joining me this week. Every Tuesday, 8:30am Central Standard Time. We're going live answering your questions. Feel free to drop regular questions in the chat. I have the Google Form now that you guys can fill out in the description to submit your projects, your deals, and I will dive into those live. Don't forget to join me tomorrow, 12pm Central Standard Time, Wednesday, November 26 as we dive into our first we're bringing it back baby deal desk. All right, this is where we're going to be diving into commercial real estate news trends. I will see you guys there. This
Tyler Cauble 28:50
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.