July 7, 2023

JF3228: Navigating Retail Investing With National Tenants ft. Michael Flight




Michael Flight is the CEO of Liberty Real Estate Funds and principal of Concordia Realty, the world’s first net lease security token fund. In this episode, Michael shares three key factors required in doing due diligence on a NNN property, tips for investors pivoting into retail, and how to attract national tenants to your retail centers.

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Michael Flight | Real Estate Background

  • CEO of Liberty Real Estate Funds and founding principal of Concordia Realty
  • Portfolio:
    • NNN and single-tenant retail
    • $5M sale/leaseback fund
    • Hotel debt fund
  • Based in: Oak Brook, IL
  • Say hi to him at: 
  • Best Ever Book: As a Man Thinketh by James Allen
  • Greatest Lesson: Pick great partners and colleagues in all aspects of investing — not just investors, but attorneys, CPAs, etc.

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Ash Patel: 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, Michael Flight. Michael is joining us from Oak Brook, Illinois. He is a repeat guest on the Best Ever podcast. So if you google "Joe Fairless and Michael Flight", his episode I think is one of the first ones ever recorded. I'm sure it'll be valuable listen.

Michael is the CEO of Liberty Real Estate Funds, the world's first tokenized Real Estate Fund. He's the principal of Concordia Realty Corporation, and co-founder of blockchain real estate Summit. Michael's portfolio consists of retail, triple nets, single tenant retail, a $5 million family sale leaseback fund, as well as a hotel debt fund. Michael, thank you for joining us, and how are you today?

Michael Flight: I'm doing great, Ash, and I want to say, I don't think I was one of the first ones on ever, but I think I was in 2018. So I was pretty early on. And I could say I was his first retail guy ever, because he had a lot of questions on retail.

Ash Patel: Awesome. Michael, 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?

Michael Flight: Sure. I started in the real estate business while I was still in college. I was working for a multifamily fixer upper guy. And then I graduated, became a commercial real estate broker. Whether you call it efficiency or laziness, I realized that if you get into retail real estate leasing, you can do multiple deals with one tenant, versus going out, knocking on doors for office and industrial and you do one deal and then you've got to start the whole process all over again.

So out of that, I worked for a national shopping center syndicator in the late '80s. They had about 270 shopping centers nationwide, and I handled the Midwest for them in terms of leasing and redevelopment. We hit the crash for the savings and loan crisis in 1989 and 1990. I was laid off, and my partners and I started Concordia Realty Corporation and Concordia Realty Management. And we have since then partnered with insurance companies, REITs, hedge funds, international property investors, international fund consortiums... So we've done just about the gamut. We're one of the first companies in the United States to actually do de-malling, which is taking an old, what they call dead mall, and repurposing it into something else. So that was an adventure.

And lately, since about 2017, we realized that a lot of tenants were going to go away, because some of the stuff was going online, and then just a lot of the tenants, their business model had just expired. So we've put together a triple net real estate fund. And around that time, I realized that there were these things out there in cryptocurrency called stablecoins, and I had advised some guys out of Romania, an ICO, a coin offering. These guys raised $750,000 to $1,000,002 off of that coin, and they had no real estate experience, and I don't think they even had any assets. I'm like, "If these guys can do this, I want to create a real estate stablecoin, and actually provide real value to people." So that was the adventure that we've been on since 2018, which is tokenizing shares of syndications. So that's the complete nutshell.

Ash Patel: Let's dispel the retail myth. Everybody thinks retail is dying. The Amazon effect, the retail apocalypse... What are your thoughts on that? And that's also amplified by the headlines. Recently, Bed Bath & Beyond just filed for bankruptcy. Of course, we had JC Penney after 120 years; they survived the Great Depression, world wars, and 2020 got them. So the headlines are not great for retail, but what are your thoughts on the health of retail?

Michael Flight: Well, the health of retail - you can see the fact that Amazon has been opening stores at a crazy pace. So they not only bought Whole Foods, but they're also opening up their own Amazon Fresh grocery stores, they're opening up Amazon bookstores, and stuff... And a lot of pure retail retailers, like Warby Parker and some of the other ones, Allbirds, those guys are now opening up stores, because they realize that it's really expensive to run an online store. You have to pay a ton of money to do SEO, which is search engine optimization... It's more expensive, because there's a higher rate of returns.

Somebody told me just the other day, some guys out of Old Navy; we just did an Old Navy deal. And one of the guys that was really high up said "Right now our online is doing great, but they've got 40% returns." So it's I don't know how you calculate that.

So to make a long story short, one of the things that we did when we were looking at creating our net lease property fund was what type of retailers or what type of retail type of things cannot go online? So that's going to be auto service, that's going to be daily destinations... I don't know if grocery is ever going to go completely online, and you can see that by the fact that Amazon has really gone big in the grocery, because really, people want to touch and feel their food. So the myth is - and I think I even mentioned this back on the first interview that I did with Joe - retail has always been changing. Sears went out of business sometime around 2022. They were like the Amazon of their day. Montgomery Ward was the Amazon of their day; they were catalog stores. So people order stuff... I live in a town where on the next block over there's Sears houses; people ordered those things, and they shipped the entire house through the Sears catalog.

Ash Patel: Yeah. And when you mentioned triple nets, can you give the Best Ever listeners just a brief definition of what a triple net property is?

Michael Flight: Yeah, my apologies. I'm using terminology --

Ash Patel: Oh, it's okay.

Michael Flight: Triple nets - you can remember it by the acronym TIM, taxes, insurance and maintenance. And with a triple net property, the tenant pays for the taxes, the tenant pays for the insurance, and the tenant pays for all the maintenance on the property. So if it's a pure triple net lease -- some people will advertise triple net leases, and the landlord actually has to maintain the HVAC or the roofs. And that is really not a pure triple net lease. That's what we call a double net lease. So what we like to describe triple net properties is is nothing but net income. So our podcast is nothing but net.

Ash Patel: And you have a triple net fund. Is that a value-add, or do you buy fully-stabilized properties?

Michael Flight: The thing about triple nets - with the shopping centers, we typically do value-add property, so that we can add some sort of value to it. So if you take a look at that, that's like your growth stock. And with the triple net properties - there are single tenant triple net leases, like for example Jiffy Lube. Jiffy Lube is owned by Shell Oil Company. So in certain situations, you get Shell as your tenant on the lease. And I sometimes trust Shell Oil Company more than I do the US government in terms of their debt service ability... So you're getting a lease with a major national tenant.

So we look at those as you're buying a bond wrapped in real estate. And the great thing is, is that if you bought that Shell bond, they would be paying you less income. And I'm not a tax advisor, and I'm not an attorney, so whatever I say here... But if you're buying the real estate, you get tax benefits of owning the real estate, which shelter some of that income. So you're not only getting a higher coupon return from them, but you get the exact same tenant with a better tax deal.

Ash Patel: And you have rent escalations either annually, or upon each lease renewal.

Michael Flight: Right. The typical increment on a lot of national tenants is every five years the rent will escalate. And what we especially look for and what we like in auto service or medical properties is a lot of those are written so that the rent escalates every year, which is really nice. There's some tenants that you really have to look out for, and I'm not going to name them, but you can get really high cap rates on them, but the rent is flat for 15 years. So you end up upside down with inflation at the end of that lease.

Ash Patel: And as each year goes by, that lease is worth less than less than the next buyer, because there's an uncertainty of whether this tenant is going to renew or not.

Michael Flight: Yeah, you're 100% correct. So there's three different values that go into doing the due diligence on a triple net property. Number one, you need to underwrite the tenants. So you have to underwrite the tenant, and "Is this tenant's business model, and is this tenant financially strong? And are they going to be in business for the full lease?" So if it's a 10 year lease, you expect them to be there for 10 years.

The next thing is you, most importantly, have to underwrite the location. A lot of people buy triple net properties and they don't underwrite their location. And you actually have to go out there and see if they're easy entrance. And the other thing about the triple nets that I'm talking about is it's all retail, because I only know retail. You can do triple net industrial, you can do triple net office, but everything that I'm saying here today is triple net retail, which includes restaurants, it includes medical retail, and it includes automotive. So you just have to make sure that you can get in and out, you have to make sure that it's visible... So those are all the things that go into underwriting that part of it.

And then the final part of it is you have to underwrite how long the lease is. So if the lease is expiring within three years, there's a lot of risk involved with "Is that tenant going to renew? Are there options on the lease?" And a lot of people that are just getting into the triple net space, the broker will tell them "Oh, there's five years left, but there's a string of [unintelligible 00:11:31.06] options." Well, an option is only in the tenant's favor. The tenant can say "I'm gonna not renew." A big trick of national tenants is they'll come back and say, "Well, I was going to renew this option, but I'd like a rent discount." So then you have to say, "Do I really need this tenant? Do I need to give them the rent discount?" Or in the case of one certain well-known coffee company - they will come to you every time there's a lease expiration, and say "We're not sure we're going to exercise our option." And on one of them, they had this beautiful location, right off an interstate exchange in Colorado. There was no reproducing it. So they said, "Well, we'd like to renegotiate the rent down." And I said, "Well, if you don't exercise the option, I'm going to renegotiate the rent up." And they're like, "What?" Like, go out there and tell me where you can replace this location. If you can find a location to replace it, fine." So about three days later we received by FedEx renewal notice.

Ash Patel: Good for you. That's a tough position to take. Because they have a lot of leverage...

Michael Flight: I understand that. It's all part of doing the homework. You don't start out in your first deal doing that, but you have to do the homework. And if you know that there's no place for them to go... And you also have to take a look at what type of sales they're doing. Because there's certain tenants -- what a lot of people don't understand is, is that you can actually give the tenant the space for free, and they still won't make money if they're not making money at the store. Because rent is at most 10% of their total expenses. All the rest of it is inventory, and employees.

And the other big thing - we're going to circle back to political issues - is what they call shrink. So you've got triple net tenants and you've got retail tenants in some of these major cities, and they're closing stores because they're just getting robbed blind. So there's certain cities where -- you can see it right now, Walmart and Target both closed in Chicago, where I'm at, and it's because it's just a free for all, and it's eating into their profits; they can't make money there.

Ash Patel: Yeah. Michael, I do want to mention... I pointed out that as the years go by, the lease is worth less because of that uncertainty. However, the land theoretically should be appreciating in value as well, right? Because you potentially have a piece of land that is very well sought after.

Michael Flight: Well, it's not only that, but a lot of people asked me about what happens with triple net with inflation. And the other thing we go back to the Starbucks example is that they might be able to find the land that's just as good, but what is their construction cost going to be? They're going to be in at double the construction costs that you've got into your property. So you not only have the land which is valuable, that's why especially you want to underwrite the land and make sure that it's good land and all the rest of it, but you've got potentially a building there that's reusable.

So if you really want to go out on the risk spectrum and get some higher cap rates, you can actually buy -- and we'll play the cap rate game, because in certain situations we know that if the tenant doesn't renew, we can backfill them with another tenant that we have a relationship with. So sometimes we'll go in and buy something that's expiring in three years, because we know -- we're actually hoping that they don't renew, so that we can backfill it.

But again, you really either have to have somebody that really has great retail connections, or you have to be comfortable doing that yourself. So it's not something that you start out doing, but I do believe that in terms of -- especially if somebody has invested completely in residential or multifamily, triple net properties are a great way to diversify. And as you said initially, it's cash flow immediately. So it's not like, "Oh, we've got to perform a value-add, so the money's on [unintelligible 00:15:24.08] This is like, I'm getting regular monthly cash flow, 12 times a month. And the great thing about these national tenants is they will send you the money five days beforehand, because the very worst thing that they want is to be paying anything late, because that's their credit rating.

Ash Patel: You had so many great points there. And the great segue into my next question is, how do multifamily people pivot into retail? Do they start out with triple nets? Should they go for a small mom and pop strip with gross leases? What's your recommendation?

Michael Flight: It's a hard thing to say. What I would say is that you should have a really good relationship with a leasing broker, because you can go out and buy the stuff, but all the value in a shopping center or a triple net lease is all in that lease. It's a 20-year lease, or a 5-year lease, or a 10-year lease, so everything that you do, the value is created by doing the correct leases. And as you said, the gross leases is where the landlord pays for everything. So that's a great value-add thing. And if you know the neighborhood well enough, and you've got a relationship with a leasing broker that can fill that stuff, or you think you can fill it yourself, it's a really good way to add value. Because as those leases expire, you can either renew the tenant, and they start paying all the nets, and so they start paying a lot of your expenses, and your exposure is gone on that, or you just replace them with newer tenants, that might add a little bit more traffic to the thing...

And when people are looking at retail, they have to think like a retailer. If you're looking at buying a restaurant, like a Burger King, or a McDonald's, or anything like that, you have to think "How does these guys make money? And if I'm buying this, are these guys gonna make money? And how can I make sure that they make money?" It's the same thing, like you said, in a little small strip center. It's like, what type of tenants would really work here? Is there a nail salon in the area that we can go out and get somebody and put them in there?

But to answer your question, I think one of the best ways for multifamily operators to get into the retail space is maybe a joint venture with somebody that's already got experience in the retail space. Because we've gone through this with a few people that are really great at running multifamily, and they just want to diversify their offerings... And it's a great learning experience. And it's good for me, because we can relearn things all over again.

Ash Patel: Yeah. So many great points here. I've always said, you look at all the systems some of these multifamily people have, the teams that they've built... If they apply that to retail, it would be incredible. They've got things so well systematized.

Michael Flight: Right, and this is what I've found -- because we primarily did institutional real estate up until 2017. And then I got into going to multifamily events, and speaking at multifamily events, and doing that... And while they're not institutional people, I think they've got a lot of the systems dialed in a lot more. So I talk to institutional guys to this day, and they're running 10 million square foot portfolios and stuff, and I said, "Well, we're doing a lot of our underwriting. We've got underwriters in Bulgaria, Romania, and India." And they're like "What?" I'm like, "Yeah, we've just outsourced that." And they're actually sometimes much better than some of the interns that we're using to do this stuff throughout the years. And we're doing a lot of our VA stuff. Or if there's tenant stuff. Like for example in shopping centers, the tenant has to maintain the insurance, but you as the property owner need to make sure that they have the insurance. But you need to be calling them up every year saying, "I need that certificate of insurance proving that you have the insurance, and naming us as an additional insurance. So in case somebody slips and falls in a parking lot, or in your store, we're covered, and I don't lose my building because you're doing something stupid."
So I agree with you. I've learned so much from people that were in the multifamily space, in the syndication space, so it's been a really great cross-pollination.

Ash Patel: That's great. Michael, one of the things that you mentioned earlier was cashflow on day one. But in addition, we're not bound by rent comps. Right? So if we have a class A multifamily property, and the class A property down the street, their rent is $100 a month cheaper than ours. We're kind of bound by that comp. Whereas in our world, the lease is everything, right? So if we have a mom and pop coffee shop, and then we get a Starbucks, and we potentially added a million dollars in value to that center, and the mom and pop coffee shop could be right next door, or a block away, in the same exact footprint, but it's all about the leases. So important to distinguish.

Michael Flight: 100% leases. I am going to push back a little bit about -- we're bound by two things with setting rent. Number one, as I said before, you could give the space away. But if you've got a really good shopping center, tenants will pay a ton of money to be there, because they want to be there, they know they're going to do business.

So we've got one shopping center where it's got to number one stores in the country, because it's just got a ton of density, and it's got a great merchandise mix... So we get tenants in there, and they'll pay some of the highest rents that they pay in the country just to be there, because they know they're going to do business there.

The other thing is that if you're on the same corner, and the tenant can go across the street, sometimes they will just move across the street, because it's basically the same location, but they can get the other landlord to build out the space for them, so they don't have to remodel their store. Because it's much easier to operate in place. So you'll see that a lot. Why did Walmart just move across the street? Well, it's way cheaper to just build it brand new across the street, and then close the other store, than it is to expand and be open during construction. So those are some of the things that you've got to be aware of. Can somebody build something across the street that's going to compete with me?

And the other thing that we really look at when we're buying is we buy price per pound. So it's not only are we cap rate sensitive, but is it how much are we buying per square foot? Because if the market is being built right now at $150 to $300 per square foot, and you're buying something at $500 per square foot, you're overpaying for the property. So you have to have a compelling reason to do that.

Break: [00:22:11.25]

Ash Patel: Do you require your tenants to provide sales numbers?

Michael Flight: We always ask for sales numbers. In the single tenant triple net leases the tenants typically do not provide sales numbers. In the shopping centers they do. And the other thing that we try to get is a percentage rent. So if they're paying percentage rent - and most of them never pay percentage rent, because the minimum rent is so high... But there's a clause in the lease where the tenant will pay a percentage of their sales, and that's how you get sales numbers and you know whether the tenant is doing well or not.

There is a really good service out there called Placer.AI. And Placer will tell you the foot traffic and the car traffic around there. So that's another way you can tell whether it's a good location or a bad location. And that's very helpful, especially if you're buying, let's say a Walgreens. And let's say there's five to seven years left. If the Walgreens is not doing good, they might just close it and go dark, which means that you'll still get payments. But at the end of that term, you're probably going to have to put some capital in to redo that location. So it's better to have as much information as possible about the location.

Ash Patel: And to that point, if you have a tenant that says, "Sales have been going down, I'm just not making much money", and you look at that foot traffic data, and you're like, "Wait a minute, you doubled foot traffic from last year." [unintelligible 00:25:31.09]

Michael Flight: Right. This is the other thing... Let's get back to the renewal option thing. We just had a national Dollar Store come back to us and say, "Well, we're not sure we want to renew the option. But we'll give you a lower rent, and we'll extend the lease term." And they're part of a really successful shopping center. I said, "I don't give a crap about the lease term." And they're like, "Well, this store isn't really doing what it's supposed to do." I'm like, "Well, why don't you just send me the sales reports and then we'll talk about it?" And he's like, "Well, we don't send sales reports." I'm like, "Well, I don't negotiate on leases unless I get a sales report."

Ash Patel: You're giving me chills here... So this is a major national retailer, and you're basically playing chicken with them. I would imagine there's some evolution where you didn't always do that, but you've learned over time.

Michael Flight: There has been certain times, but I've been in it long enough to know the tricks. So I know a lot of these national retailers, especially in shopping centers, they'll always audit the camp charges, and just look for something. Because out of 15,000 stores, if they get $200,000 back, that ends up being a lot of money on their bottom line.

So it's just the way things are... I guess I've also grown a lot more cynical. When I was younger, I can remember starting out, and my boss and then my subsequent mentor would be really tough with retailers. My mentor, David Verment, who taught me just so much stuff, and he had built 30 shopping centers East of the Mississippi, and they were just beautiful shopping centers... And one of the things was we were negotiating with Office Depot, and Office Depot was like, "Well, let's go out to Santa Barbara and we can negotiate with them." And I was talking to David and David says "Right now, I don't hate them, and they don't hate me. If we meet in person, I can't guarantee you that it'll be the same."

So he used to do stuff that would just scare me to death. One time, Sears closed their store early and went dark, and we had Circuit City, and so we were gonna replace them with Circuit City. And it was a time of faxes. The internet really wasn't a thing back in the early '90s... And he writes this long four-page fax to Sears, that says "Dear Mr. So and So. I hate you and I hate your effing company." And that's what it starts off with, and then it goes into four pages. And sure enough, they wanted $2 million to leave early, and they agreed to leave for $200,000.

Ash Patel: Why would you have to pay them to leave early? They have to continue paying rent, don't they?

Michael Flight: Right. But in shopping centers, if you've got this large vacancy, it really affects the sales of the shopping center. And you also have things sometimes called co-tenancy clauses. So if one or two or three of the anchor tenants are dark, or vacant, then the rest of the tenants can either stop paying rent, or pay a reduced rent, or actually leave the shopping center. That's why you see so many of these dead malls... Because once the anchor tenant leaves, it triggers all these co-tenancies and the entire shopping center empties out.

So if they've got term left on their lease, that's an asset to them as well, and they know that you want to get the asset back. We had a large grocery store do the same thing to us in another shopping center, 90,000 square feet; they had a 20-year lease, they closed in year four, and it was a negotiation to actually get that space back. We ended up having to pay them. But since they had built the building anyway, we actually ended up paying a super-discounted price, so we got an $11 million building, and we ended up paying to actually own the full building now. I think it was in the neighborhood of $1,5 million.

Ash Patel: Wow. Can you not put clauses in the lease that state they have to be open certain hours, and they're penalized if they're not?

Michael Flight: That is common in every lease, but major national retailers will not agree. So typically, when we're negotiating a lease, we say "You at least have to open one day", but major national retailers will typically negotiate for the fact that if they want, they can close the store. And then you subsequently negotiate "If you do close the store, we want the right to, after it's done been vacant for six months to one year, we want the right to recapture the store, so that you just can't sit there."

Ash Patel: Got it. And back to getting some of our multifamily friends into retail... You mentioned if we buy a mom and pop strip mall, converting to triple net... So that's basically taking those internet-resistant businesses that you talked about - the pizza place, the deli, the dog groomer, the auto shop - and finding something maybe close to home, because they know the area, they know it's on the up and up, they know that there's demand... And you also mentioned, make sure there's not adjacent land where they can build the same thing and steal all your tenants. So once they do that, typical gross leases where the tenants just pay one price, how do they convert that to triple net?

Michael Flight: Well, you cannot convert it, because the lease actually gives them all kinds of rights until the lease expires. But as the leases roll over, you can convert that. So you can just say, "We're going to write a new lease." Typically, what we do in order to soften the blow - because a lot of times these guys aren't going to be able to handle a $3 to $5 increase. So we'll say "We're going to go triple net, we're going to increase your minimum rent by a little bit, and you're going to start paying the real estate taxes, the insurance and a piece of the maintenance." It ends up being very close to what they were paying before, it's just they're paying a 10% bump, maybe 50 cents a square foot bump, or something like that. Because I will say that it is much less expensive to keep a tenant in place than it is to replace a tenant. Because a lot of people look at it, it's like, "Well, I can just replace the tenant", and it's like, "Well, you might have to rebuild the space", especially if they've been in there for a while. So you might have to re-whitebox it; you're definitely going to have some downtime in terms of vacancy; even in a really good shopping center, you're going to have some sort of downturn and turnaround time. And then if there's a broker involved, especially -- there are almost no national tenants that don't have a national broker, so you're gonna have to pay brokerage fees. So the best thing is I'm going to convert them, and you've also just added a ton of value to resell or refinance that property, just by converting those leases.

Ash Patel: Yeah, because those triple net properties are a lot more attractive, especially to out of state buyers.

Michael Flight: Right.

Ash Patel: Nobody wants to buy a strip mall three states away, that's gross leases where they get phone calls for everything.

Michael Flight: Right. Exactly.

Ash Patel: And then the million-dollar question - how do you land national tenants? You mentioned brokers that have those relationships, or do the work yourself. And when you do the work yourself - what does that mean?

Michael Flight: Well, doing the work yourself... There's an organization called the International Council of Shopping Centers. They just had their big meeting in May out in Las Vegas, they have regional events, too... The national tenants all go there. It's expensive to join the National Council of Shopping Centers. But if you do, there is a list of all the tenants there, and it gives all the information.

So for example, if you look up Starbucks, Starbucks probably has 10 real estate reps, maybe even 20, or 30, that cover different parts of the world. And they also will have in there the construction people, and everything else. So you want to look for the real estate rep, or you go to their website, and a lot of these retailers will have their real estate reps and what areas they cover; you can contact them directly.

In certain situations, the real estate rep will deal with you directly. In other situations, the real estate rep most likely will just kick your email or your phone call to their broker. And a lot of times they'll have one national broker that's like their internal real estate department, and then they'll farm it out to local brokers. So like here in Chicago, there's brokers that are well known for repping tenants. So when we have a vacancy here, I know who to call up and say "This, this and that." And they're like, "Yeah, we've got these guys in our portfolio, we've got these guys." And it's the same thing nationwide.

For example, Bed Bath and Beyond is a really good example. I knew the head of real estate for Bed, Bath and Beyond. So he was the head of real estate for the last two years. And unfortunately, they went out of business. But I've known him since the 1980s. So I can call him up directly and say, "Hey, Mark, we've got this great location here. It's exactly what you're looking for, it's 20,000 square feet." And he says, "Yeah, that's great. Here's my broker, call him up." Okay, so I've known this guy since the mid 1980s. I still have to go through a broker. So that's just one of the things.

And the other thing to attracting national retailers is you should have a really would package on your shopping center. Just like as you're a multifamily syndicator, you've got the full package in order to raise money, you need a nice package on your shopping center that says it's in this location, in this town, you want to have the demographics in there... On the smaller Mom and Pop center it's going to be 0.5 miles, one mile, maybe three miles, but most people aren't driving three miles... They could drive three miles to go to a nail salon, but maybe not. And then if it gets to be a more regional shop, it could go out as far as 25 miles. For what we call a county seat market, it could be the entire county. But that's more of a regional mall type of a thing.

So you want to have that, you want to have the site plan, which shows the parking lots and it shows the stores in there, and it shows what the vacancy is. And then you might want to just do a little bit of a write-up, just like you would on a multifamily project. "Oh, this is what the new industries in here are. This is what's going on. There's a good daytime population here, so it brings people in to eat, because there's offices across the street..." So I hope I'm not overwhelming you with a lot of stuff, because I'm bouncing all over the place.

Ash Patel: No, and I'm taking a lot of notes. This is great. This is incredible. Yeah, it's a question that a lot of people ask, "How do you leave that Starbucks? How do you land Old Navy?" And thank you for demystifying --

Michael Flight: Have the right location. [laughs]

Ash Patel: Well, yeah, but thank you for demystifying all of that. Michael, I've got to ask you, what is your best real estate investing advice ever?

Michael Flight: I know this was one of the questions coming... I don't have one best real estate investing advice ever. Learn as much as possible about what you're doing. So no matter what asset class you're in, make sure you absolutely know it backwards and forwards. And then my next advice ever is pick really good partners. And that's not only the partners that you're actually partnering with financially, but my relationship with my attorney, who does all my leases and does all our sales - I've known him since 1994. I've had relationships with family offices that have been investors of ours for 33 years... So just make sure that you pick good partners; and you might have to go through a few, but that's my best advice, is get involved with somebody that knows what they're doing in terms of the legal, the title, all the rest of it, because they're gonna give you way more education than you would just trying to learn it from a book or watching a YouTube video.

Ash Patel: Yeah, that is great advice. Michael, are you ready for the Best Ever Lightning Round?

Michael Flight: Sure.

Ash Patel: Alright. Michael, what's the Best Ever book you've recently read?

Michael Flight: The best ever book I've recently re-read is "As a man thinketh." I probably reread that once a year. I am going to recommend another book that I really love, and I'm rereading it again... It's "Turning Pro" by Steven Pressfield. It's just a really good book. And then my newest book, that I'm just finishing up, is Peak Mind. It's about meditation and training yourself to calm your mind.

Ash Patel: Michael, what's the best way you like to give back?

Michael Flight: This is what I said on the first Joe Fairless podcast I ever did, is I really don't like the term give back. Because that implies you've taken something; what I really like to imply is I want to add value to everything I do. So I'm adding value, I'm not subtracting value. But the way I like to do it is I have been involved with several nonprofits over the years. One of the great things was that I've been involved with four nonprofits now that I've been able to use my real estate skills to help them. So if you have the opportunity, and you can add value to your real estate skills, that gave me the most satisfaction, because I could do something for them that really leveraged a ton.

For example, one of them, Chicago Hope Academy, is a private high school in the city of Chicago; they started flipping houses to raise money for the school. They raised anywhere on a year, $300,000 to a million dollars per year flipping houses. And I was able to introduce them to a bank, and get a line of credit, just because we happen to have it. I told the banker at the time, I said, "If you're not using these guys in your advertisements as "We're doing this with these guys", and you don't do this deal and give them the line of credit, then you're just idiots and I'm actually pulling all my money out of your bank."

Ash Patel: [laughs] Good for you. Michael, how can the Best Ever listeners reach out to you?

Michael Flight: The best way to get a hold of me is my personal website, which is MichaelJFlight.com. And they can just contact me through the Contact page. So just hit Contact, and just mention the fact that you heard me on the Best Ever show, and we will get back to you right away; because sometimes we do get spam through there.

Ash Patel: Yeah. Michael, I've gotta thank you. You're a wealth of knowledge. We don't get a lot of retail people on here. I could talk to you all day. Thank you for sharing all these incredible nuggets. I'm going to re-listen to this podcast, because it was just great advice all over. So thank you so much.

Michael Flight: Thank you, Ash. I really appreciate your time.

Ash Patel: And Best Ever listeners, again, google "Michael Flight and Joe Fairless" and you will find the previous episode that was recorded many years ago. And Best Ever listeners, thank you 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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