April 3, 2023

JF3133: Getting Started with Triple-Net Commercial Leases ft. Jonathan Hayek



Jonathan Hayek is the owner of Endurance Properties and the host of The Source of Commercial Real Estate Podcast. He uses single-family home flips and small multifamily investments to buy more passive, non-residential commercial properties. In this episode, Jonathan talks about why he loves retail, office, and industrial real estate, how he learned to buy his first commercial property, and what investors should know about triple-net leases.

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Jonathan Hayek | Real Estate Background

  • Owner of Endurance Properties and host of The Source of Commercial Real Estate Podcast.
  • Portfolio:
    • Small multifamily properties
    • Small commercial properties
  • Based in: Cheyenne, WY
  • Say hi to him at: 
  • Best Ever Book: The Gap and the Gain by Dan Sullivan and Dr. Benjamin Hardy
  • Greatest Lesson: Take due diligence seriously.


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Joe Fairless: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel, and I'm with today's guest, Jonathan Hayek. Jonathan is joining us from Cheyenne, Wyoming. He is the owner of Endurance Properties. He is using single family flips in small multifamily to buy more passive, non-residential commercial properties. Jonathan's portfolio consists of small multifamily and small commercial properties. Jonathan, thank you for joining us, and how are you today?

Jonathan Hayek: I am great. Thank you so much for having me here today, Ash. I get so much value out of you, and the Best Ever brand, so I'm just grateful to be having this conversation with you today.

Joe Fairless: Jonathan, thank you very much. Fair disclosure, Best Ever listeners, Jonathan and I are friends. And Jonathan, before we get started, can you give the Best Ever listeners a little bit more about your background and what you're focused on now?

Jonathan Hayek: Sure. My first ever deal that I did was way back in 2007. I was fresh out of college, freshly graduated, started my first job as special ed teacher, and I promptly bought my first condo, and almost immediately lost 15 grand on it. So after that, I took about an eight-year hiatus from investing in real estate. I did all kinds of things. I worked on an Indian reservation, I was a special ed teacher for a while, I went to New Zealand and picked apples there... I eventually got back into the real estate investing game and started with flipping single family homes, bought small multifamily properties... And at this point, I am using real estate to fund my lifestyle. I'm investing in real estate full-time, I'm no longer teaching, and now pivoting to non-residential commercial real estate for various reasons, which I'm sure we'll get into.

Joe Fairless: I feel like we should have scheduled more than 45 minutes for this interview. Picking apples in New Zealand... There's a lot of rabbit holes we can probably go down. Okay, so you had an eight-year hiatus, and you came back. Was real estate just the default? Or was it something you wanted to do and you were passionate about it?

Jonathan Hayek: I've always been passionate about real estate. And maybe it would help to tell you about this first deal that I did. So I'm 22 years old, I've just graduated college, and I've got basically no money to my name. So this is 2007, right before the big real estate collapse and the Great Financial Crisis. So I graduate college, and really ever since high school, I just thought it would be so awesome to buy a property, fix it up and sell it and make a bunch of money. So that's what I intended to do. And I did no education, I had nobody mentoring me; I just thought "I'll just buy any property that needs work, and I'll fix it up, and I'll sell it and I'll make money. That's how this works, right?"
So I bought it in 2007. I had this great idea to sell it in 2009, after I put 15k to 20k worth of work into it. It was this '70s vintage condo. So I did all this work myself, put all this money into it, and wanted to sell it in 2009, which most listeners will remember pretty much the worst time in recent history to try to sell real estate.

So I did end up selling it, but I had to take a loss. I lost all of the money that I put into it. So I put in probably $15,000 of my own money into this property, sold it, and eventually just said, "I'm gonna take a break from real estate", because at that point I knew that I just didn't know enough. I didn't know how to estimate rehab costs, or what ARV meant, or what kind of loans to get, or anything like that. So I just took a break, and I did all kinds of things. I went to an Indian reservation, and worked on an Indian reservation, and like I mentioned before, I did a lot of world traveling... So real estate was a passion.

So eventually, I got married in 2015, and I was a special ed teacher, and I knew that I just wanted a bigger life for my wife and I at the time, and now we have children... And being a special ed teacher was great. We need great teachers in this world. But it ultimately was not going to provide the lifestyle that my wife and I wanted. And that meant financial freedom, it meant time freedom, geographical freedom... And I knew that real estate was a great way -- if I did it the right way, I knew real estate was the way that could get me those types of freedoms.

Joe Fairless: Interesting. Had you educated yourself in that eight-year period? Or did you go back in with a different perspective the second time around?

Jonathan Hayek: I really went in with a different perspective. So after that initial mistake in 2009, I could see the real estate market heating up. And then in the mid 2015-2016, I, like a lot of people, started drinking the Bigger Pockets juice, and started really self-educating, reading tons of books, listening to tons of podcasts... And to be quite honest, to flip a house or to buy a duplex or a fourplex, it's a fairly low barrier to entry. There is some immediate fear that you can have there, but once you do it once or twice, it's a pretty basic process, if you do it the right way.

So I just read tons of books, listened to tons of podcasts, and eventually just took the leap. And my first deal after that hiatus was a deal that I bought from an auction; it was a single-family home with a separate unit in the basement. I bought it at an auction, I had to borrow all of the money to pay for it... I used investor capital on that deal in 2016. And I was successful; it really gave me confidence, and I just continued from there.

Joe Fairless: Looking back at that first condo - we're going to call it a failure. What are your thoughts on that?

Jonathan Hayek: If the idea of real estate is to make money, it was a failure. If you have a slightly wider perspective, and you treat everything as a learning experience, and you have a growth mindset, and you say "This particular deal didn't turn out exactly the way I wanted it, but I got a master's degree in what not to do when buying a small property", then I think you can take a lot out of those failures. And ultimately, as real estate investors, that's really how we learn in life, is by making mistakes, and being humble enough to admit the mistakes, and looking inward and realizing what your mistakes were and how you can get over it and move forward.

Joe Fairless: Yeah. Speaking of admitting when we made mistakes, that last question that I just said came out very harsh... And what I really meant to say was, it's a blessing, because we all will have those mistakes. I think you got off lucky in that your very first deal you lost a fair amount of capital... But it could have been a lot worse. Whereas the mistakes that I made were further into my career, and it was a tremendous loss of time, a fair amount of capital loss. So it's really a blessing that you had that early on, and I'm sure there's going to be more that you learn from. So the point is you were lucky to have encountered that on your first one, because a lot of times what happens - and we're seeing this now, we've had a great 10-year run, where a lot of syndicators have had a parabolic rise, and they've never had those epic failures. Now with interest rates up and cap rates decompressing, there's a lot of carnage out there. So it's good that you were humbled on your very first deal.

You mentioned that multifamily and single families are fueling your passion to invest in commercial. Can we dive into that a little bit?

Jonathan Hayek: Yeah, absolutely. So I was a special ed teacher for about eight years, and that provided a great salary, and benefits, and a really safe lifestyle, and really a safe situation, if I wanted to be a teacher for the next 30 to 35 years. That could provide me with a nice income, and a pension. But ultimately, like I mentioned before, I really wanted the freedom that real estate investing can provide.

So leaving that W-2 job was a calculated risk. So I know a lot of people want to talk about leaving W-2 jobs and pursuing real estate full-time right now. And I was able to do it; if you're able to do it, it's a great idea. But I think often the advice that some people on the internet give is burn the boats, just do it, just start investing in real estate... And I think for a lot of people, particularly if you have something to lose - so this doesn't apply if you're 20 years old, you have no net worth, and you literally have nothing to lose. Fine, go ahead and pursue real estate full-time.

Joe Fairless: You don't even have a boat to burn at that age.

Jonathan Hayek: Exactly. But for the rest of us, who maybe have developed a nice net worth, who have a spouse and children, and a portfolio, and we really do have something to lose, I really think pursuing real estate full-time needs to be a calculated risk, and a calculated decision. So when I left my W-2 job, I already had some passive income coming in. So I already owned some small multifamily, I already had some flips in the hopper, and then my wife and I made the decision to have 12 months of expenses in the bank.

So at this point, I really took advice from Tim Ferriss. If you haven't read The Four Hour Workweek, that is a great resource if somebody's going through this period in their life... And there's a part in there where he talks about if you're considering a decision like this, think about what is the worst that could happen, and actually write it down. So I quit my W-2 job, and then just go down this rabbit trail of "Okay, my small business doesn't work out. Then I have to go into my personal reserves. And then this happens, then this happens, and this happens." And what you'll usually find is that the worst is not actually that bad. And before you even get to that worst point, you're probably going to go back and get a job. So before your bank account hits zero, you're probably going to hit the brakes before you get to that point, and go back and get a W-2 job and rethink your process. So my adventure into real estate full-time was really a calculated decision. And fortunately, now four or five years into it, I haven't had to look back.

Joe Fairless: Which all sounds great. However, my question to you is are you disciplined, in that you are protective of your time? Because for me, that might have been one of my goals when I started, and I obviously just am super-passionate about this, so I work 12-14 hour days by choice. I know you're passionate about this as well. But are you still protective of your time, where you're disciplined and essentially try to work towards that four-hour workweek?

Jonathan Hayek: It's truly a learning process. The very simple answer is I'm not as protective as I should be. And I think one of my biggest faults or weaknesses is that I am a DIYer to a fault. And quite honestly, it's what got me to where I am today. And it's how I was able to grow a decent-sized portfolio and a decent-sized net worth in a very short amount of time... But there's the phrase that "What Got You Here Won't Get You There." So DIYing it, I was tiling showers, and laying floor, and mudding drywall, and all that kind of stuff, and I was able to save a ton of money on contractor costs, and I was able to grow really fast in a short amount of time. But now that I'm married, I have kids, I want to spend time with my kids, if I have an office building, I simply can't be tiling bathrooms and building walls and mudding drywall at the office building. It's not possible, it's not a good use of my time. And so really learning where the best use of my time is. I think for everyone where your time is best used is one of the best investments that someone can make.

Joe Fairless: Agreed. Jonathan, back to the residential versus commercial. Why commercial?

Jonathan Hayek: I could talk to you for about three hours about why people should be thinking about non-residential commercial properties. But let me give you a couple things to think about. So first, there is a high barrier to entry in the non-residential world. And I don't say that meaning you need exponentially more money to get involved. I mean, there's a high knowledge barrier of entry to the non-residential world. For example, you might be talking to someone who is maybe struggling in multifamily, and is saying "Wow, retail - that sounds really interesting. I think it'd be really cool to invest in a retail strip center. But I don't know how to find tenants, I don't know what a fair prices, I don't know how to structure leases, I don't know what going lease rates are... So I'm just not going to worry about it, because it's impossible to learn. I don't know how to learn, and I'm just gonna stick in my multifamily space."

So for that reason, I was in the same boat. I was right there. And so there are a ton of different ways to learn, but that really is a competitive advantage, because there are so many real estate investors who simply don't consider the non-residential world, because there's just so much to learn. But once you do learn, it's like everything else; you can analyze deals in 30 seconds just by looking at something.

Another reason to consider the non-residential world is tenants don't live in your property. This is one of my favorite things about commercial real estate, is not having tenants live there. When you're responsible for the place that someone lives. There's a lot of responsibility that comes with that. There can also be a lot of drama that comes with that. But on the flip side, you own the place where someone has their business, and the place where someone has their livelihood staked. I've had tenants actually thank me for owning the building and giving them an opportunity to have their small business in my building.

I've owned quite a few small multifamilies over the years; I don't think I've ever been thanked by a tenant of an apartment that I own for owning that building. But I get thanked - it's happened multiple times, where someone has been able to leave their W-2 job and start their counseling practice on their own. They pay me a reasonable rate in my office building, and they're able to do life on their terms. And I just think that's awesome.

Joe Fairless: That is incredible. You think about the individual that is leaving their W-2 to start their dream, knowing it may fail; just like you when you got into real estate, they're putting all their eggs in their own basket moving forward, and you get to be a part of that. That's awesome.

We just got through with the Best Ever Conference. I had a great time with you out there as well. Neal Bawa was one of the speakers. He came out into the hallway afterwards, and he was surrounded and mobbed by people asking all kinds of questions on multifamily and data and the economy, and what's going to happen next. And when he finally got a moment to breathe, I said, "Hey, Neal, why don't you invest in retail?" He actually turned and looked, he said, "Retail is awesome, but I know nothing about it." And then he carried on with the multifamily stuff. So you're right, to your point about barriers to entry - how did you learn how to buy your first commercial building?

Jonathan Hayek: My first commercial property was an office building. And I made some mistakes on this first one. I'm not going to lose money, but it's one of those deals that I look back on and I say, "Probably wouldn't do it again." Learned a ton... I still own it, and it's cashflowing, but I did learn some lessons on it.

So this was an office building, and I happen to think that this strategy is a great way for new commercial investors to start. So it was a vacant office building; buying vacant properties is a whole other strategy in itself that we could go down a rabbit hole on. But this was in my hometown, it was a location that I was extremely familiar with... So something that's really saving me on this deal is the location. It's one of the busiest areas in town, where I live; it's not large, but this particular road does get 20,000 cars per day. It gets a ton of traffic, so everyone knows about this building. It had been vacant for a few years, and I toured it several times. I didn't end up actually putting a contract on it for several months after I saw it for the first time, because I just kept going over it in my head. But it's an office building about 6,000 square feet, and when I purchased it, it was already divided into about 12 different individual offices, plus one larger office space of about 1,000 square feet. So me as the former small multifamily investor, I thought, "Wow, these offices, they're like 12 by 14, 12 by 16, something like that." And I thought, "I bet I could fill these offices with all kinds of solopreneurs", like a counselor that I mentioned before... All kinds of people; they just need a space. So that's exactly what I did.

I started advertising, I put a sign up front... Again, being a DIYer, I did all of this myself. I knew this street that it was on had a ton of traffic, so I made a sign, I put it out front with my phone number, I put postings on Craigslist, Facebook Marketplace, and I just waited for the phone to ring. I also have a broker who is really invested in the community and gets calls like this all the time, and he was the one that encouraged me to buy this place, because I was going over my strategy for this property, and he said, I get calls every single week for people looking for space like this.

And a broker like him, he's just not going to take the time to show people a 12 by 14, space because there's just no money In it For brokers. But for someone that's willing to bootstrap it like myself, there is money in it, if I can find tenants myself. And so I was able to fully lease this building, full of all kinds of different tenants. They're local mom and pop tenants, there's a custodian, there's a massage therapist, a couple of counselors... There are even a couple of tenants who have never even been to the building, but they just want a mailing address. So that's really how I got started with this small office building.

Break: [00:20:35.11]

Joe Fairless: You made me nervous when you said that there were 12 small offices, and coming from the multifamily world, I was thinking "Please tell me you didn't knock down walls and make it more open", because those small offices are very highly in demand. Now what do you say to somebody, Jonathan, that says "Office is dead, or dying. That was a foolish move. Why would anybody buy office today?"

Jonathan Hayek: I think that is a common perception of somebody reading headlines... But part of being a commercial real estate investor is diving deeper, and knowing asset classes much more than just what the headlines are telling us. So if you're looking at office in CBDs of large metros, like Chicago or New York or places like that, there might be quite a bit of risk in investing in office space in places like those, and that may not be advisable, unless you've got an incredible plan, and tons of capital, and your capital is really patient. But there really could be a strategy for office space, if you look at it differently.

Look at suburban markets. So not CBDs, but look at well located buildings in suburban markets, with lots of amenities around; maybe there's a gym in the same complex, maybe there's a bunch of restaurants, and shopping nearby. Because the patterns that we're seeing is people want to stay close to home. They're not wanting to do the 45-minute or hour commute to downtown both ways. They're wanting to stay closer to town. And I think employers are gonna pay attention to this.

At the Best Ever Conference I had a conversation with John Chiang, with Marcus & Millichap, and he had a really interesting perspective. He thought people are going back to the office, eventually; it might take a couple of years, but employees are eventually going to go back to the office. But it's going to look a little different. If they're working for major employers still, these major employers may end up setting up satellite offices in suburban areas, close to housing, close to amenities, so that they can keep their employees happy, and their employees can stay close to home, they have a shorter 5, 10, 15 minute commute, close to amenities, in nice class A, Class B office spaces.

And another thing is investing in office buildings that are either already demised into smaller spaces, like I mentioned with having individual offices, or maybe under 5,000 square feet. If you're trying to lease up 20,000 square feet, it's going to be a challenge. But if you have 20,000 square feet demised into smaller chunks, maybe you've got chunks of 5,000 square feet, 2,000 square feet, some individual offices, 12 by 16... Those unique and dynamic spaces I think are how office investors are going to find success in the next decade.

Joe Fairless: I very much agree with you. How do you find lending on a completely vacant property?

Jonathan Hayek: Getting lending on a vacant property is a challenge, there's no doubt about it. I was able to get lending on this vacant office building through a relationship. So I bought it with a local lender, and this local lender was enthusiastic about it, because this local lender knew this building, they knew the history of the building, and the lender also knew me. So I've probably done 25 deals with this lender up to this point... So this lender believes in me, so we worked out terms. The lender also allowed me to open a line of credit for the sole purpose of adding value to this property... So that's one thing that people do really need to be careful of, if considering a vacant property, is "How am I going to pay for it?" With vacant properties, ultimately probably cash is king, or a relationship-based lender that feels good about you and feels good about the property.

Joe Fairless: And that's important. You've done multifamily loans, as well as commercial loans with multifamily, is it more commodity-based, you can get a broker, get the best deal? And then with commercial loans, it's more relationships, is that right?

Jonathan Hayek: That's probably true when you get into larger multifamily stuff. When I'm doing my small multifamily and single family flips, I'm using local lenders. I'm using commercial banks; these are banks that have one or two locations, and I get incredible terms, particularly on the flips. I get terms that when I tell people about, they're just shocked at what a local bank would do. So I do really want to stress and emphasize the value of having a quality local lender, who knows you. I send my local lender Christmas cards; they know me, they know my family. I send them updates on my financials every year proactively... So when you're in this space, it's a relationship game.

Joe Fairless: Jonathan, your thoughts on retail.

Jonathan Hayek: I think you need to know what you're doing, and stay in your lane. So there are a million different ways to invest in retail. A lot of people not super-savvy in the non-residential world will think triple-net retail, they'll think about the Walgreens and the CVS, and buying a Rite Aid at a five cap, and --

Joe Fairless: That's that mailbox money, right? That's that mailbox money.

Jonathan Hayek: And there is some mailbox money in that, but the returns are pretty low in that space. So retail - it's such a wide topic. For someone interested in this space and interested in retail, or doing things more mom and pop, and doing things themselves, and not the institutional kind of stuff - multi-tenant strip centers is something to consider. Think about things that are Amazon-proof, or Amazon-resistant. Think about nails, hair, pizza, dog groomers, pet food, accountants, people like that. Just think about in your own world - coffee shops, and little sandwich shops. Think about around your house, in a three to five mile radius, the types of businesses that you frequent, and that your friends frequent, and your neighbors go to, and think about what kind of things that they want.

So thinking about retail and multi-tenant strip centers, the real value is learning about leases, who the guarantor is, what their lease rate is, how much time they have left on the lease, and if there's any vacancy in the strip center. Because the real money is made by adding value. In the multifamily world we add value by redoing bathrooms, redoing kitchens, putting in vinyl plank flooring, and jacking rents up. That's really not the formula in the non-residential world. We add value a lot of times on paper. We add value by getting great tenants in there, with longer-term leases, with annual escalations, and by filling vacancy.

So if you see a strip center and you're looking at this deal, let me tell you maybe an ideal scenario that a lot of us are looking for. Maybe there's a multi-tenant retail strip center, great location, 20,000 cars a day or more, and there are six units in the strip center, and two of them are vacant, and the other four, the tenants are on month to month leases. A lot of investors don't want to deal with month to month leases. But the savvy value-add investor is going to look at a month to month lease or a short-term lease with an expiration in the next year and he's gonna say "Wait a second, I can keep this tenant and I can offer this tenant an opportunity to stay with a longer term lease, maybe with annual escalations, and those two vacant units - I can fill them with complimentary tenants, so that when someone comes to the pizza place, they're also maybe going to go to a liquor store, or a hair place. or something."

Finding those tenants that are complimentary so that this strip center can bring in more traffic. And tenants are happy when there are lots and lots of customers coming in and out of their strip center, because then their business improves. And these long-term leases are key. So not just one years, but sometimes three years or five years; tenants often actually like having long-term leases, because they can predict what their expenses are going to be much easier. They know that "I cannot raise their rents outside of what's in their lease", if they have the signed lease agreement. So tenants often like having the security, they know where their business is going to be, and they know what their costs are going to be for the next several years, so they can make plans for it.

Joe Fairless: And having a multi-year lease can get you over the hump of economy with headwinds in it, right? At the Best Ever Conference a lot of people spoke about "Survive till '25. If you can make it past the next few years, things are good." So having those multi-year guaranteed leases can get you through that, which is also very helpful.

Total side story, I was thinking of when our kids were young... You said complementary businesses; there was a baby consignment store that my wife would go into to buy kids' clothes. And of course, next to that was the hobby store, where there's remote control cars, and cool stuff for dads to walk into. So that was cool, because I don't think anyone ever goes to a hobby store. But because it's next to other complementary stores, they get carryover traffic from those tenants. A lot of dynamics here... What are you looking for next? Office? Retail?

Jonathan Hayek: I am open to multiple different asset classes. I really liked the industrial space. A lot of people like the industrial space. But I'll tell you a couple of reasons why I like industrial, particularly multi-tenant industrial. When you're looking at a quality industrial property, it's fairly bare bones; the people that are looking for these industrial spaces to lease - and there are tons of people looking for these industrial spaces; small, flexible industrial spaces. Think about the HVAC contractor, plumbing contractor, electrician contractor, a woodworker, a cabinet-maker, a granite countertop person... All these kinds of people are looking for space where they can get their work done, maybe park a vehicle or two, have an office where they can do bookkeeping, or have someone else do bookkeeping, and a bathroom. And if you can have some space that fits that profile, it is really, really valuable right now because like I said, there's so much demand in many markets; you do have to know your market, but in so many markets, this kind of product, it's pretty rare, but it's so useful and so flexible.

So I'm looking for industrial property, and retail and office, but it really fits the mold that I mentioned before. So I'm currently not buying vacant properties... So I look for partially-tenanted properties, with either expiring leases, or leases that are going to expire in the next year or two; lease rates are below market value, and maybe they're gross leases, or modified gross leases, which means the tenant is not paying any taxes or any insurance or any common area charges back to the landlord.

So those are areas that I can add value by increasing rents, getting quality tenants into vacant spaces, and implementing some version of a net lease. And I don't know if we have time to go into that too deep, but a net lease is a version of a commercial lease where a tenant is either directly or indirectly responsible for paying taxes, insurance and common area charges for the landlord. And those common area charges are things like landscaping, snow removal, exterior common lighting, things like that.

So that's one of the beautiful things about commercial real estate, is transitioning tenants to triple net leases, and that makes your asset much more marketable on the open market. So when the day comes that you're ready to sell that asset, it's really attractive to other investors when you can say "I've got a four-tenant industrial property with triple net leases." Right now anyway, there are investors falling over themselves for a deal like that.

Joe Fairless: Jonathan, if you could imagine what a triple net lease would look like in the multifamily world, and paint that picture for our Best Ever listeners.

Jonathan Hayek: Imagine you have a 100-unit apartment building, and it's a great location, it's close to a workforce, and your tenants pay a base rent, and on top of your base rent -- by the way, they've signed a five-year lease. So each year, there's a 3% increase in the lease rate. And then on top of this base rent, your tenants are also paying you their pro rata share. So if it's 100 unit building, they're paying one one onehundredth of your property taxes, of your property insurance, and your common area fees. So that landscaping, the snow removal, exterior lighting, pool maintenance, hot tub maintenance, that nice lobby you've got, the people in the leasing office... All of your tenants are paying their one onehundredth pro rata share every month to pay those expenses. Can you imagine such a thing in the multifamily world?

Joe Fairless: And you don't need a property manager, because they're responsible for everything. They'll change their own light bulbs, they'll fix their own leaking sinks and showerheads... They'll take care of it all. What a world, huh?

Jonathan Hayek: That's a world that I would consider living in. It would make me consider going back to the multifamily world if I could get that deal.

Joe Fairless: Speaking of which, now that you're experienced in commercial, are you still looking at residential or multifamily?

Jonathan Hayek: I'm not. I have been that guy in my past. I've run commercials on the radio; I've done TV commercials. So just getting as many leads as possible. All kinds of different leads. But I've pulled my commercials, I'm not doing any direct mail to residential right now... I am all-in on the non-residential world.

Joe Fairless: Yeah, brother, you're reiterating the same message I've been screaming from the mountaintops for 10 years. And once somebody goes from single family to multifamily, they never go back to single family. But once they go from multifamily to non-residential commercial, they'll never go back to anything residential. Jonathan, what is your best real estate investing advice ever?

Jonathan Hayek: Know thyself. And what I mean by that is just know what kind of investor you want to be, and what your goals are. So we talked about the mailbox money and the coupon clipper earlier of buying a Walgreens at a five cap and just waiting for the money to come in. Know that if you're going down that route, you're not going to be building wealth very quickly.

Those kinds of deals are for people who have more money than they know what to do with, and they just want to get something for their money. But if you are a value-add investor, and you are willing to do some work, and do some learning, then the value-add route, and knowing what you're looking for, knowing asset classes, and knowing markets - that's what you want to be focused on. Versus buying a vacant property, which might not produce any income for 12 months or more; versus buying a semi-tenanted building, which might cashflow a little bit on day one, but there's a clear path towards increasing the value of that property. So investors really need to know what their goals are, and how they want to achieve them.

Joe Fairless: Jonathan, are you ready for the Best Ever Lightning Round?

Jonathan Hayek: Heck yeah, let's do it.

Joe Fairless: Alright, Jonathan, what's the Best Ever book you recently read?

Jonathan Hayek: A lot of people know a book by Dan Sullivan and Benjamin Hardy, "Who, not how." But actually, my favorite book by those two authors is called "The gap in the game." That's not a book that's talked about very much, but my biggest takeaways from that book are - as real estate investors, we so often forget to stop and look back and appreciate how far we've come. And we're always constantly moving the goalposts. So once we say, "Hey, I want to get to a million dollars in net worth." Before we have that million dollars in net worth, we've already created another goal of having $2 million in net worth. And we forgot to stop at 1 million, take a look back and say, "Wow, look at all that I've done. Look at all that I've learned. Look at the people that have helped me along the way." So if you are struggling with constantly setting higher and higher goals, that's a good thing, but if it's holding you back in a way, "The gap in the game" is a great read.

Joe Fairless: I've never asked our Best Ever listeners to pause an episode, but this would be a good time to pause and actually reflect on what Jonathan just talked about. Very important. You're right. All we do is move the goalpost. Jonathan, what's the best way you like to give back?

Jonathan Hayek: I am kind of a crazy person, I like to run ultra distance mountain races. So one of the ways that I like to give back to that community is by volunteering at races, and doing trail maintenance on these mountain trails.

Joe Fairless: Jonathan, how can the Best Ever listeners reach out to you?

Jonathan Hayek: One of the ways that I learned about non residential commercial real estate is by starting a podcast. And the name of the podcast is "The source of commercial real estate." This podcast is 90% focused on non-residential deals. We also get into mindset, and things like that, but I talk with experts in the field of office, retail, industrial, medical. So if you're sitting, listening to this, thinking, "Man, this non-residential stuff sounds great, but how do I learn?", check out my podcast. I think you're really going to enjoy it.

And I even created a special link for listeners to this podcast. If you go to thesourcecre.com/BestEver, I've got a free download for listeners of the podcast, and I'd love for you to check that out.

Joe Fairless: Jonathan, I've gotta thank you; it's an honor again to call you my friend. Sharing your story where you were a special ed teacher, took an eight-year break after that one condo didn't go your way, and now killing it in commercial real estate, and taking the time to educate others. Thank you very much for sharing your time with us today.

Jonathan Hayek: This has been awesome. Thank you so much for having me.

Joe Fairless: Best Ever listeners, thank you so much for joining us. If you enjoyed this episode, please leave us a five star review. Share this podcast with someone you think can benefit from it. Also, follow, subscribe and have a Best Ever day.

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