Best Ever Tweet:
Anthony Griffin Real Estate Background:
- Founder of Griffin Group, LLC, a commercial property investment firm
- He is a licensed home builder and has been involved in real estate for over 13 years
- Focuses on acquiring complexes with 100 or greater units located in U.S.
- Based in Jackson, MS
- Say hi to him at anthony.griffingroup@gmail.com anthonygriffinblog.com
- Best Ever Book: Multifamily Millions
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Anthony Griffin. How are you doing, Anthony?
Anthony Griffin: I’m doing great, Joe. Thanks for having me on the show and letting me talk to the best listeners ever.
Joe Fairless: Well, it’s my pleasure, and I’m looking forward to our conversation. A little bit about Griffin – he is the founder of Griffin Group, which is a commercial property investment firm. He’s a licensed home builder and has been involved in real estate for over 13 years. He focuses on acquiring complexes with 100 and more units, located in the U.S. He’s based in Jackson, Mississippi. With that being said, Anthony, will you give the Best Ever listeners a little bit more about your background and your current focus?
Anthony Griffin: Sure, yeah. My background is really in construction and commercial property management. Most people who know me know that I was a life-long state employee for 19 years before I started my own firm, so I’m starting late to the party, as they say.
My last job before I found myself as an entrepreneur was as the controller and manager of a state-owned portfolio commercial property. We had about 2,5 million square feet of class A space that we were responsible for, and I was the guy that was tasked with drawing up leases, and collecting rent every month, doing all the property management, overseeing contracts and all, and I had the proverbial bad boss that didn’t like me, so I found myself an entrepreneur unprepared at one time.
Joe Fairless: Got it. So did you say 2,5 million worth of square feet, did I hear that right?
Anthony Griffin: That was correct, 2,5 million square feet of commercial class A space, and we had 32 buildings I was responsible for.
Joe Fairless: Wow… When did you make the transition from being the state employee where you were the controller and manager of the 2,5 million dollars worth of square feet of class A, to what you’re doing now?
Anthony Griffin: I’ve had my firm opened for about eight years. Now, in that eight years we’ve done a little bit of everything in real estate. We’re kind of honing our focus to change with the economy now.
My first property was a fourplex that I bought, that I probably should have been condemned if had had my head examined… [laughter] But everything went wrong with that building, and I’m gonna explain that one in much more detail in a few minutes… But based on everything that could go wrong, I decided that I need to get my license as a general contractor, so that I could at least understand the contracting part that has to go with this project. So that’s where all the stuff that went wrong went wrong.
Joe Fairless: Like what?
Anthony Griffin: Oh… Look, just as a quick on this building – we found this building through a mentor of mine that told me that “Oh, there’s an attorney that wants to sell this building, and it’d be great for you.” It was $25,000 for a fourplex. That should have been the first red flag. [laughter] He called me and he said, “Well, maybe you put about 40k-50k into it and it should appraise for like $100,000, and you’ll be good to good. Rents are good over here…” What I did not realize – and this is the best advice I can give to your listeners – is know your numbers and know what you’re planning on doing with it from the beginning. If you know your numbers, then it can make up for a lot of mistakes that you will make; be honest with yourself – everybody in business, and you’ve done this probably yourself… We go in with the best expectations on a property, but they never pencil out exactly the way you thought they would. It doesn’t go perfectly the way you thought it would.
Joe Fairless: Exactly.
Anthony Griffin: So with this property I didn’t realize it was next to a crackhouse, and literally, whatever we would fix that day, people would break in at about 3 o’clock at night and they would take it out.
Joe Fairless: [laughs]
Anthony Griffin: And it went on like this for about eight months.
Joe Fairless: Eight months?!
Anthony Griffin: Yeah, eight months. It took me eight months to renovate my first project.
Joe Fairless: Oh, wow.
Anthony Griffin: And I was having contractors, I didn’t know how to deal with them at the time; they would come in and I would pay before the work was finished, and I would pay for half-assed work, I was paying for supplies, and I didn’t know I was paying for tools sometimes… It was a nightmare while it was going on.
The bright story in that is that I sold it and made money at the end.
Joe Fairless: Really?
Anthony Griffin: Yeah. I made $16,000 after it was over with.
Joe Fairless: You bought it for 25k… How much did you put into it?
Anthony Griffin: I put 40k into it, so I had it for 65k. When I closed that, I had a check for $16,000 that I went to the bank with.
Joe Fairless: Good for you. I didn’t see that end of the story coming. I thought that it was gonna be a -16k in your future on that deal, but I’m glad there wasn’t.
Anthony Griffin: Yeah, fortunately I’ve never had one go belly up on me… But I’ve had some that at the end of the day you were looking in the checkbook and you were trying to scratch the payments together to get them finished. But through the process of dealing with this one, I ended up becoming a contractor and I started building houses. Now, with all my experience, I love building houses. The only problem with being a homebuilder is I was a homebuilder right around the time 2008 hit.
Joe Fairless: Yup.
Anthony Griffin: And fortunately, I didn’t get stuck with anything, but that dried up all of my production for a couple of years.
Joe Fairless: What did you do during those years?
Anthony Griffin: Well, that’s when I became a property manager for the state.
Joe Fairless: Oh, okay.
Anthony Griffin: And I’ve worked in the state for 19 years before I left and retired, so to speak, to do my own thing, and I was everything from the sexually transmitted disease investigator, all the way up to a property manager for commercial property. I think I did a little bit of everything in my tenure.
Joe Fairless: So in 2008 the building obviously dried up, because no one was building anywhere, for the most part… So then you went back to work for the state, is that correct?
Anthony Griffin: The state of Mississippi. What I was tasked with doing was they have an agency called Capital Facilities, and they manage all of the property in downtown Jackson that’s state-owned. Where I’m from, the state owns about 70% of downtown… So we had 32 buildings, 2,5 million square feet. I did not know how to do this job at the time, and I certainly didn’t know what I signed up for, so… This is one of the things that I’ll give your audience for advice – no matter how much you read and no matter how much a mentor tells you that you’ve gotta do things, you’re gonna have to figure something out. None of it is gonna go exactly according to plan. You always will have to figure something out, that it’s gonna be like “Oh, I didn’t see that one coming” or “I didn’t know that happens.”
So literally, on this job, I had to learn how to write a commercial lease, I had to learn how to do budgets, because we had a 15 million dollar a year plan. That’s how much rent we collected. I had to learn how to pave deals for all of that property; I had to learn how to send out maintenance people to do all of the work to keep our buildings going. I had to learn how to get [unintelligible [00:10:15].17] I did this job for three years, but Joe, I’ll tell you, this is the moment that made me realize that there was something better on the other side. It was just three years earlier me leaving.
I was invited to a meeting with the boss of commercial realtors in Jackson. These are all the guys who built all of the big buildings. The guy who invited me was a friend of mine, and he said “Well, you’ve gotta introduce yourself and tell them who you are and what you do”, so I did. I told them the same thing I just told you and the listeners. So the guy was heading the meeting – I’ll never forget him, because he gave me some good advice. He said, “Well, how many people do you have on your team, son?” and I said “Well, it’s just me and the two secretaries that work with me.” So everybody in this room – and we’re talking about 30-40 people – just burst into laughter. And I’m kind of nervous at this point, because I’m trying to figure out what’s funny…
They said, “Well, how much property do you have?” and I said “Well, we’ve got 32 buildings, just about all the downtown Jackson.” And he said, “And you only do it with two secretaries?” I said, “Yes, sir.”
He said, “Well, son, if you don’t mind me asking, how much do they pay you a year for that?” And most people don’t like to talk about money, right?
Joe Fairless: Mm-hm.
Anthony Griffin: So I proudly think that I’m making good money. I say “$51,000 a year.” Then everybody burst into laughter again. So I [unintelligible [00:11:34].00] I said “Man, you’re gonna have to let me in o this… What’s funny?” He said, “I didn’t know they made you do all of that.” He said, “Let me give you some advice.” He said, “If you can do that job for three years and really learn it, you can write your ticket in real estate anywhere, because nobody knows how to do all of that by themselves.”
Parkway Properties was a big REIT that was in Jackson at the time; I think they moved to Florida at this point… But he told me that REIT has a whole floor-full of people that do what they make you do by yourself. And he said “Just stick with it. Learn everything you can, because trust me, that knowledge will become invaluable later.” And he was foretelling the future, because then I got a boss that didn’t agree with me and I had to find something else, to do, so I started my own firm.
Joe Fairless: And what was your focus with that firm?
Anthony Griffin: Commercial office, because it was the one thing I knew how to do better than anything else.
Joe Fairless: That makes sense.
Anthony Griffin: But I’m gonna tell you something on how I took a side note on that; and you know how people will tell you that if you’ve gotta do something for yourself, you’re always afraid to do it, but if you think you’re doing it for somebody else, you’ll do fine…
Joe Fairless: Sure.
Anthony Griffin: I didn’t know how to do real estate, and that’s one thing I know how to do probably better than anything else. You know what I did first? I started as an insurance agent, with no prior experience.
Joe Fairless: [laughs] Oh, my… Did that go well?
Anthony Griffin: It went okay. I sold commercial, residential and life insurance for five years.
Joe Fairless: Okay, so it’s still a relevant industry… You stayed within the real estate realm in addition to life insurance.
Anthony Griffin: I did. But you know how it paid off later on? It’s because now any property we buy, I’m still a licensed contractor. My company does all the remodeling. We can do it at cost, we can look at a building and we can say exactly what it’s gonna cost us to fix it. I know how to manage the property, so my company manages all of our property… And since I was in insurance, I know how to ensure them, or at least I know how to go to a broker and intelligently talk about insurance.
Joe Fairless: Are all of your properties in Jackson? And if so, how many in Jackson do you have?
Anthony Griffin: I have five in Jackson right now.
Joe Fairless: Are they single-family homes?
Anthony Griffin: I have only dealt with one single-family home in my entire career, other than building it. Everything, strangely enough, has always been commercial property. I started in it, for some weird reason.
Joe Fairless: So what kind of commercial properties?
Anthony Griffin: All office property now. But as the market has started to change a little bit — the office market is a finicky thing. It pays really well, because the amount you get per square foot is a lot. But it takes a much longer time to fill a space once it’s empty. I’ve got one building that I bought, and I’ll talk about it in a little bit… We bought it as an REO, and it only has two units, but one unit has been vacant for about two years. Still the building is cash-flowing, but I missed a rent on it.
Nowadays companies let people work at home a lot more, and then you see flexible office space like — I can’t remember the name of the company, but they have–
Joe Fairless: Like WeWork…
Anthony Griffin: Yeah, like WeWork… That’s hurting the office market, unless you have gigantic tenants like big law firms, or something. So I’m eventually going to phase out of office and go strictly into multifamily. The reason why is because when I was a homebuilder I realized that everybody is not gonna be able to buy a home in the United States anymore. That’s not the American dream it used to be. People are really going to consider renting long-term, and it’s coming, whether people realize it or not. Most property owners need to go ahead and realize that. People aren’t buying anymore.
Joe Fairless: Well, I’d like to talk about office… Because we talk a lot about apartment communities on this show, and that’s the direction you’re headed… But so far, everything you’ve purchased is office, minus one single-family home, correct?
Anthony Griffin: That’s correct.
Joe Fairless: So let’s talk about the office properties that you have… I find this really interesting, and it makes sense that you focused on office because of your background, managing those 32 properties in Jackson… One of them, you said, has two spaces, and one of the two spaces has been vacant for two years. How tempted have you been over the two years – especially most recently, when it’s now two years – to just kind of fill it with a tenant who may or may not qualify, but “Let’s just get some money in the door”?
Anthony Griffin: Well, I’ll tell you what, Joe… Again, I said, “Know your numbers and buy it right in the beginning.” The story with this building is it was actually the first building I bought when I started myself. [unintelligible [00:16:33].24] office building that was owned by a bank. The original owner had had it for a few years, and he lost it to foreclosure, and the bank had it for three years… And the story the realtor told me is that nobody would come to even look at the building.
Joe Fairless: Why?
Anthony Griffin: They had it three years in their books and — I don’t know why. But the building was there for three years and they had no takers at all. And it was a great office building. The only thing it suffered from was it had a lot of deferred maintenance.
Joe Fairless: When you say it was a great office building, what makes you say that?
Anthony Griffin: It’s in one of the better office parks in Jackson, Mississippi. My neighbors are actually [unintelligible [00:17:14].23] insurance company, there’s a law firm on the corner from me, there’s a credit union association on the corner from me, there’s two non-profits in front of me, American Cancer Society is right next door to me, the FBI’s building, Entergy (the power company in Mississippi), their whole campus is across the street from mine. General Services, that is a Federal Agency, their office is around the corner from me, and so is their Employment Security Office. So I’m actually in the last office park that’s in Jackson. All the rest of the stuff has gone to the suburbs.1
Joe Fairless: And how much did you buy it for?
Anthony Griffin: It was originally listed for 265k. I closed at 107k.
Joe Fairless: Congratulations on that.
Anthony Griffin: Thank you.
Joe Fairless: And it was completely vacant when you purchased it?
Anthony Griffin: No, it was 60% occupied.
Joe Fairless: 60%? Help me with that math, if there’s two places…
Anthony Griffin: There was a tenant that had been there for ten years…
Joe Fairless: Okay, but aren’t there two spots in this building?
Anthony Griffin: Right. It was only 40% unoccupied, and that was just in one unit.
Joe Fairless: Okay, so 60% of the space is made up of one tenant, and 40% is made up of the other tenant? Is that how it works?
Anthony Griffin: [unintelligible [00:18:32].05] in one building.
Joe Fairless: So that one tenant that you inherited, is that the tenant who is still there?
Anthony Griffin: No, that’s a new tenant. That tenant left two years ago. They were an accounting firm that I guess from lack of business — because they were from New Orleans, which is three hours away from here. That was a satellite office for them. And I’m assuming the business had kind of gotten slow for them, so they relocated out of the area.
Joe Fairless: Okay.
Anthony Griffin: The tenant that’s there now is a mortgage non-profit that has actually got offices nationally.
Joe Fairless: And how did you recruit them?
Anthony Griffin: [unintelligible [00:19:07].28] boots on the ground and door-knocking. That’s the one thing that worked… And I hate to bash realtors, but a lot of them aren’t hungry enough, because in my experience here, a lot of them will sit on a listing and they’ll put a sign up, but they really don’t go door-knocking to find people… And the most [unintelligible [00:19:27].06] in a building were all because I went and knocked on doors and talked to people.
Joe Fairless: So whose doors do you know on and what do you say after they answer the door?
Anthony Griffin: The first people I usually go to is the local Chamber of Commerce. That’s because they know every business owner that’s around.
Joe Fairless: Okay.
Anthony Griffin: They know anybody that needs office space. “Do you have any companies that have just joined the Chamber who maybe are trying to get started, and they need affordable office space, or they need a good location?” And it’s really just building relationships with the people who are looking, because you can’t be in every place at one time. That would kill you. You’ve gotta have other people looking for you. And the most luck I’ve ever had was just talking to people and telling them it’s available, and usually somebody else will call on their behalf and say “Hey, I need a space” and then I kind of filter them out from there.
Joe Fairless: Is that how you found the mortgage non-profit, through the Chamber of Commerce?
Anthony Griffin: That’s exactly how I found them.
Joe Fairless: Okay. What’s the property worth now, being 60% occupied?
Anthony Griffin: The last numbers I did on the proforma had it at about 320k, I think. But if I get this other unit occupied, it takes me up to about 465k.
Joe Fairless: Nice. And what’s your plan with this? Two questions – how long have you had this property?
Anthony Griffin: Since 2011.
Joe Fairless: 2011, seven years… And do you plan on selling it soon, or do you plan on holding it and doing a cash-out refinance, or something like that?
Anthony Griffin: I’m probably gonna pay this one off and hold it. We at this point only owe $100,000 on it, and even with one tenant, it’s still throwing off about $1,500/month. My son is interested in architecture; I have a 16-year-old that’s interested in going to Mississippi State University, and in a year and a half he’ll be going off to school, and I told him that if he gets into architecture, that’s certainly something that can benefit the family business. And worse come to worst, Joe, when I pay it off and it goes vacant again in one unit, we will keep that unit we’ll run our office out of it.
Joe Fairless: Sure. When you say “pay it off”, what type of loan do you have on it right now?
Anthony Griffin: I have a 30-year adjusted with a five-year balloon.
Joe Fairless: Okay. So with a five-year balloon, but you’ve owned it seven years, so I imagine that’s a loan that you’ve got after you purchased it, correct?
Anthony Griffin: Right. We’ve refinanced it twice in seven years, for better rates.
Joe Fairless: Oh, cool.
Anthony Griffin: Never to add more debt to it, but just for better rates.
Joe Fairless: And it’s a five-year loan you’ve got on it… What year are you in for this loan?
Anthony Griffin: We’ve just refi-ed it about seven or eight months ago, so we’re in the first year of the next five.
Joe Fairless: Okay, cool. So when you say you’re gonna pay it off, is that bringing money from other deals to this loan and pay it off prior to the balloon payment in about four years?
Anthony Griffin: That’s exactly what we’re doing now. I’m a big Robert Kiyosaki fan, so I believe in throwing extra money into a note if I’ve got it, and knocking the payments down as fast as I can.
Joe Fairless: Taking a step back and looking at your four office properties, which one performs the best?
Anthony Griffin: That one.
Joe Fairless: That one? The one we’re talking about?
Anthony Griffin: The one we were talking about performs the best, because I bought it so cheaply.
Joe Fairless: Oh, yeah.
Anthony Griffin: The rest I bought at pretty close to what the market values were, but I had a little hedge on them… But that was the slam dunk, home run property out of all the ones I bought.
Joe Fairless: Tell us the numbers on the worst commercial property.
Anthony Griffin: Oh, let’s see… The worst one I’ve got, I probably net maybe $1,000/month, but it’s a much bigger property. It’s about 10,000 square feet. All my properties are small. I don’t do the real big ones.
Joe Fairless: How much did you buy that one for?
Anthony Griffin: That one was I think 460k.
Joe Fairless: And how many tenants do you have in it?
Anthony Griffin: That one’s got three tenants in it.
Joe Fairless: Okay. Any vacant spots?
Anthony Griffin: No. Thank goodness, no vacancies, other than that one home run building. Everything is fully rented, which makes me wonder if I’ve got them fully rented and not charging them though.
Joe Fairless: [laughs] The one that’s the grand slam for you, but ironically it’s 60% occupied – I guess it surprises me that it’s been two years and you haven’t found someone, given how resourceful you appear to have been on your other deals and how you have all your other properties fully occupied… So what is it about that spot or that unit, or space rather, that you think is creating the two-year vacancy?
Anthony Griffin: I think probably part of the reason is I partially use it. You know how you have a child and one becomes your favorite because you spend the most time with that one up front?
Joe Fairless: [laughs]
Anthony Griffin: I’ve gotten a little emotionally attached to it sometimes, when it will sit vacant and I will start going over there and I will run my office out of it… And then I start thinking, “Oh, you know, this is my space.” And I came to the realization that I lose money while I’m sitting here.
Joe Fairless: So you’re part of the problem. [laughs] You love it too much, okay. Now we’re getting to the bottom of things. I was gonna say — because it just seems a little weird that all your other properties are occupied, but this one has a space… But now I get it. Now it comes full-circle. It’s your favorite one, so you can’t bear to part ways with using some of the space.
Anthony Griffin: This was the property that was bought so cheaply, and I’ll have to tell you all the stuff we had to do to this deal. This is why the price it was so cheap – one, it was an REO. Banks are not in the real estate business, everybody knows that. They want what their loan is worth. They have no idea how to run the building, so to them everything is a deal. Well, this building had massive roof leaks, and it’s a flat roof on top of that. So the bank would constantly get calls that the roof was leaking.
Well, $15,000 and a brand new TPO roof fixed all that for me. But being a contractor, I knew that going in; when I looked at that, I immediately knew what the dollars were. The old person that owned the building, I’m assuming that something happened, but when he left the building, he left it literally like he packed up on a Friday at 5 o’clock and never came back. And all of the things that went with his business were still in there. So when they would show it to people – if they even showed it to people – you know how when you look at a property, you can’t look at it with your eyes, you have to look at it with the potential customer’s eyes…
Joe Fairless: Sure.
Anthony Griffin: When I walked in and I saw it the first time, it had overgrown landscape, and there were trees that were growing wild all around it, the roof was in a terrible condition, the parking lot didn’t have any stripes left on it at that point; it was [unintelligible [00:26:35].13] The unit where the old owner was, literally, it looked like he left at five o’clock, and you couldn’t even see the carpet on the floor because there was so much trash and debris everywhere… Because it looked like he owned a temporary staffing service.
Let me make you all imagine what that looked like when I walked into it. If you’ve owned a temp staff place, then you know they have personnel files that they work with, correct?
Joe Fairless: Sure.
Anthony Griffin: There were thousands of these things everywhere. And you can image you’ve got people’s personal data, social security numbers, and when you walk in, the whole floor, 2,200 square feet of office space is just covered in them. So I imagined that anybody who looked at it, if you see the ceiling roof tiles and stuff falling down, they’ve got mold on them because it’s rained in the building… I imagine that would scare people off. But to me, I saw it as a gem in the rough.
Joe Fairless: It makes sense, and clearly, it worked out. I’m gonna ask you the money question I ask everyone – what’s your best real estate investing advice ever?
Anthony Griffin: Know your numbers and know how to deal with contractors. The reason I say “Know your numbers” – if you get your numbers correct, you can almost get yourself out of trouble on a property. It can underperform a little bit, you can overpay for things, and you can still get it back under control. But if you’ve overpaid for a property, it’s like climbing Mount Everest trying to get it back under control. And almost every time I’ve seen people do it, they end up having to sell [unintelligible [00:28:05].14] because if you buy too high, you can’t make the numbers add up to what they are. They’re always gonna be as high as they are gonna be. But if you buy it low enough and you control the cost on the front-end, you can fix a lot of mistakes.
And as far as knowing how to deal with a contractor – and I’m one, so I really give you advice from a contractor’s point of view – get three estimates on everything. Even if you like the contractor and you’ve dealt with him in the past, you always get three estimates to keep him honest. Because number one, if they do all your work, potentially they’re gonna start charging you higher than they should.
Number two is you never wanna deal with the lowest price contractor. He’s the lowest price for a reason. And another thing with contractors – don’t beat the contractor on his price so much that he’s not making any money, because you will get the job you paid for.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Anthony Griffin: Let’s go!
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:29:12].03] to [00:30:17].26]
Joe Fairless: Best ever book you’ve recently read?
Anthony Griffin: Oh, that would be Multi-Family Millions by David Lindahl.
Joe Fairless: What’s the best ever deal you’ve done?
Anthony Griffin: That office building.
Joe Fairless: What’s the best ever way you like to give back?
Anthony Griffin: Doing construction work for my church.
Joe Fairless: And how can the Best Ever listeners get in touch with you and learn more about what you’ve got doing on?
Anthony Griffin: They can find us on our personal website at AnthonyGriffinBlog.com, or they can look at us on our company website, GriffinGroupConstruction.com.
Joe Fairless: Anthony, thank you so much for sharing your advice, talking about your portfolio, the commercial office portfolio, as well as how you’ve navigated the leasing of the units; you’ve got them all leased up, except for one, and we’ve talked about the unique circumstances of that one, as well as the finances.
Thank you so much for being on the show. I’m really grateful for our conversation. I hope you have a best ever day, and we’ll talk to you soon.
Anthony Griffin: Thanks, Joe.
