Table of Contents
Podcast Transcription
Dave Dubeau [00:00:09] Hey, everyone, this is Dave Dubeau with another episode of the Property Profits Real Estate podcast today, zooming in from Orlando. We’ve got Mr. Austin here. How are you doing today, Austin?
Austin Hair [00:00:21] Doing well. Thanks for having me today.
Dave Dubeau [00:00:22] My pleasure. So Austin is a very accomplished real estate entrepreneur. He’s a podcaster. He’s been involved in all sorts of different kinds of real estate investing. And these days he’s into a very, very interesting niche and that is working with health professionals and helping them to get into their own commercial space. So, Austin, tell me a little bit, how did you get into that specific niche because it is pretty specific? And what have you found to be the big, the big benefits of focusing on that?
Austin Hair [00:00:55] Yeah, so you’re right, it is it is it is super niche, but the way that I got into it was that I was a fitness entrepreneur, so I had a couple gyms, my own little fitness centers around Orlando, and I was looking to add three locations. I was looking to expand to several more. And I was using someone to help me go and look for locations. And it’s that my now current partner. But at the time I just when I was working with them, they really liked the way that they broke down all the data. It was very analytical. It was everything from obvious things like density and income and population density, that kind of stuff. But a lot of things that I hadn’t really thought about before, like your number of competitors per population and combining those with the Google reviews. And then how close are you from like, you know, synergistic users or anchor centers or whatever? As what we did was, we put all those out on a graph part of it and gave them different rankings and different scores for each of those different rankings. And then it made the data very clear. And so like while it was interesting, like working on looking at it for that perspective, I had really good clarity into where I wanted to go and locations that I had felt good about. It ended up looking not so good locations that I didn’t have any emotional feeling about going up looking a lot better. And so actually, I was able to sell the gym to the 2019 before COVID. That was very lucky. Wow. Yeah. And then, you know, and I had always been not always good, but like I’d been investing for a while in commercial real estate as a limited partner, and I had also bought residential properties along the way and I had converted those into Airbnb. And so I had an interest in real estate. I had some experience in that sense, but that’s when I really started working for the general partner side of things. And so his specialty for, you know, for like 14 years, though my partner and the rest of the guys we work with have been doing retail health care. And so the premise is the theme is that there’s just an underserved kind of niche. And when you look at, you know, you go back historically, the mom and pop foods, the fast food chains, back in the 60s, they were popping up everywhere. It was the ones who like, really started taking good real estate on hard street corners, great visibility and great drive by traffic in good locations like they started to really do well and they started getting consolidated. And then now look how big that industry is, right? And then you have like the pharmaceuticals like, Edwards added. What were Walgreens CVS? Those guys started to take it. And then in the 70s and 80s are really that. It was kind of nice to thousands kind start with the banks. Urgent care were kind of around that same time. And then now we do a lot with Dell, which has been a lot later. And you see they don’t take any big prominent corners. And so really, what we try and do is just help give data to the field and help people who are in health care at any capacity. And we don’t do just health care. I mean, we got entertainment we’re doing with banks right now, too, but it’s like putting numbers behind the feeling to help them really get the best spot that’s going to help them in their business because you might end up paying a little bit more in rent for these high places. But it can happen. You pay less than your digital marketing dollars, right? And a lot of times people don’t think about it in those terms. So and then of course, there’s the investing side of it, which is where we buy the buildings. I’m half of tenants and we invest in them and will make money on the upside from the opportunity. So.
Dave Dubeau [00:04:01] So yeah, that’s huge. And I never really thought about it that way. So you guys have taken a very, very scientific approach to the whole location, location, location thing with real estate investing and what you’re using and what you’re showing your clients is that location is. In a certain way, part of their marketing budget there, they might be paying more to be in that location. But the traffic is going to be so much greater.
Austin Hair [00:04:27] Exactly, yeah. So, you know, there’s a story of a guy that we helped. He was paying three thousand dollars a month in rents and he was at his business wasn’t doing it. We relocated him. Not very far. Side of the freeway is in Georgia and a more prominent center. His rent went from three thousand to ten thousand. So, you know, from selfies, you’re tripling and it’s very scary. But he doubled his business. He doubled his practice revenue. And so as a percentage, that rate factor still was relatively small in terms of his overall expenses. He doubled his entire income. And so it’s like looking at it in those types of terms and getting past the emotion to really
Dave Dubeau [00:05:04] help them find the best. Well, I guess we’d have to see what his original income was. Yeah. Compares that to me. What four of six grand to 12 grand, which I obviously that. But yeah, that. But it definitely makes a big, big difference. Yeah, I would imagine. So what kind of was he a dentist or what was he?
Austin Hair [00:05:22] He was a family practice family practitioner.
Dave Dubeau [00:05:25] Yeah. So we’re talking, you know, we’re talking millions of dollars a year in revenues
Austin Hair [00:05:31] and yeah, yeah, that makes a big
Dave Dubeau [00:05:34] definitely.
Austin Hair [00:05:34] Yeah, yeah. He was below a million dollars in revenue before, and I believe he bumped up to above $9 after. You mean significant numbers. And then the other thing too is sometimes when groups are growing, they like if you, you know, whether it’s urgent care or dental or whatever, a lot of times they have strict directions to buy the businesses. And so what happens is you might come to a place like if Citigroup wants to acquire individual practice, the practice might be on both the practice and obviously it might be owned by the doctor. Right. They want to sell that real estate as part of the transaction, and the group basically can’t buy it right there. Physically, they have the directive of what to do with the money. Maybe it’s private equity, maybe it’s Sandy office, whatever that money is. They have specific metrics for that. And so they physically can’t buy the real estate. So we’ll come in and buy the real estate on their behalf to help them facilitate that transaction as well. And for the investors that are involved in, that’s where we take investment. For the investors that are involved in that, then the upside is significant as well.
Dave Dubeau [00:06:36] Yeah, so walk us through how that might work, because from the investor’s standpoint, so in this case, you and your investors would go in and you buy the property, your client would buy the business, you would become you and your investors would in essence become the landlords. How are you able in that case to kind of bump up the value of the asset? Or are you just kind of buying it?
Austin Hair [00:07:01] No, no. We are great questions. So, you know, in commercial real estate, it’s very different than residential real estate, which is based strictly on location. Commercial real estate is based on the cash flow, and it’s based on the strength of the tenant. So that means is you can have a tenant paying $100000 a year in rent. But if that’s a mom and pop, you know, like, I was a great example when I owned the gyms, right? Like I was a mom and pop fitness store owner. Like, I was not commanding a good price for that building. I it providing I was considered high risk. So my hundred thousand dollars in rent that I would pay might make the building worth a million dollars. If you’re factoring that at it at a 10 percent cap rate, I’d say, is there a capitalization? So if somebody like a large dental group in this example were to come in and take over that same space, pay that same hundred thousand dollars, well, you’re going. That’s a lot safer bet right there. The risk is much, much, much lower and better. Pay more for that. Now you would lower that cap rate would go from could potentially go from a 10 percent cap rate to a five percent cap rate. And so you’re essentially, you’re doubling the value of the building now you’re looking at a two million dollar value. So it’s the same thing when you are when you have an individual practice, who’s selling their real estate there, a lot of times they’re it’s valued based on the lease that they’ve signed as an individual operator, which is going to be like an eight and a half percent cap rate or so. I want a big, much bigger institutional player comes in. If they’ve got dozens of locations, then that cap rate is going to be much smaller. So you’re going to go for like eight and a half to nine percent cap rate down to a six and a half or six percent cap rate, which we did the math just a moment ago. You can start to see how much that really increases. And so what we do is we buy from the individual dentist, the value based on him, we see it and then we get the lease signed from the organization in order to increase the value that building and some money, significant money can be made on the upside. And that’s where investors are taking that as well.
Dave Dubeau [00:08:52] That’s a fascinating idea. Hold that thought for a second. Hi, there, this is Dave Dubeau and real estate investors hire me to raise capital the right way. Why? Because most of them are stuck with two small of a portfolio, and they don’t know how to attract investors and raise money for their deals. So I help them to connect, capture and close their ideal money partners. Bottom line when you’ve got a deal, you’re going to have the capital to do it, so go ahead and book a no cost capital clarity session with me at Book a chat with Dave dot com. Again, that’s book I chat with Dave dot com. I had no clue that is. That is fascinating. It really is
Austin Hair [00:09:31] it. It’s crazy. Yeah, yeah, it is crazy, you know. And it’s just unless you really get into that world, you just don’t know. You just don’t understand, kind of like the nuances of what investors are looking for in terms of real estate and commercial real estate. And this.
Dave Dubeau [00:09:45] Well, it’s fascinating because it’s forced appreciation, not based on anything you’ve done to the property itself. It’s complete based on the new tenant and the risk level of that tenant as a long term tenant in that property. Yeah, that’s fascinating. Very, very cool stuff. So how did you kind of I mean, it’s it sounds like you’re pretty analytical kind of guy. You were dabbling in real estate. You were doing the whole fitness thing. How did that light bulb just kind of I mean, what? You went through this with these guys to help you find new locations? What was like the eureka moment for you? Or when the angels sang and said, Hey, this, I’m getting out, I’m getting out of the fitness biz, I’m getting into this.
Austin Hair [00:10:28] Yeah. You know, a couple of things of my partner. You know, he, he and I kind of like I told you earlier that we he was helping me out by location and stuff like that, but to go into more depth on that story, he invited me out to like a Tony Robbins event, and we just decided to go. And we just got along really well. We’re both kind of into that, you know, self-improvement, if you will, or like that self-education type thing. And it’s a lot. And so it was during actually Tony Robbins event that he really realized like, Hey, you know, as the broker, we’re the ones where I identify all this valuable real estate, all this valuable locations. And I was seeing guys go out and execute. The strategy was like, you’re bringing the value and the landlord is kind of reaping the benefits. So why don’t we take on both sides now? Of course, it’s really easy. You know, when I say it like that, it all sounds like, Oh yeah, that’s a no brainer all along. But it’s much easier said than done because really did find the Rolodex of tenants to be able to represent. That’s where it really takes a lot of time. That’s where I started getting involved is bringing in new clients new business for because, you know, you are really you’re at the whim of the tenant. You have to prove yourself with them, you have to have experience, you have to get them to trust you. And so. And it’s like and they’re not accredited tenants are not a dime a dozen, right? It’s not very difficult to find someone who’s got like one location or two locations or locations, but they’re not. And so you really start getting into that 10 man and EBIDTA and you’re even two and above, you know, you’re really not going to start see cap rate compression. So there’s just a lot of guys, like most people who will say, I look in the right spaces by far, most of them are not going to be what you consider accredited. And so you can’t
Dave Dubeau [00:11:59] take anybody, right? Yeah, OK. But yeah, no, that’s fascinating. Like the way you guys have dial that in. So what would you what would you say now? So you’ve been doing this for a couple of years and primarily before. The business was a brokerage rite, a commercial brokerage looking to find tenants good spots. What percentage has the business switched from that? To you guys actually bringing on investors and buying properties? What would you what’s your best guess on that? Yeah, I mean,
Austin Hair [00:12:30] you know, we’re still mostly doing a lot of brokerage because you just simply can’t develop everything, right? And so we do love the development. That’s our focal point. But where there’s so many opportunities to just pass up on. So we still do like we still love brokers, we still do a lot of that. And so, you know, I would say it’s still probably most of our time is still spent on the brokerage side, but it’s definitely shifting more and more and more towards the development side as we acquire more properties as we grow and stuff like that.
Dave Dubeau [00:12:59] Very cool. Now, just out of personal curiosity, Austin, what have you done to find these A-plus type tenants? What did you call them? Accredited tenants that
Austin Hair [00:13:10] created the tenants? I love
Dave Dubeau [00:13:11] it. So what’s working well for you for finding these kind of tenants because they sound like the dream?
Austin Hair [00:13:17] The dream? Yeah, yeah. You know, it’s been interesting. Certainly, it’s always been through live events. And so last year, those were all shut down, you know, and we weren’t able to do any live events. So it’s a short
Dave Dubeau [00:13:30] time out for a live event. What the heck would you? What would you call that kind of event and how would you get into?
Austin Hair [00:13:37] event like, you know, an urgent care event, like not a not a real specific event, but just like something where people go and meet up and you have vendors and booths and stuff.
Dave Dubeau [00:13:44] Oh yeah, like trade, show off type things. Yeah, exactly.
Austin Hair [00:13:48] Yeah. So those have been largely shut down. And so we’ve just been trying to be smart about how we go to relationships. We’ve been trying to network with them on LinkedIn. We’ve been trying to use our friends have been trying to have them on as guests on the podcast. We have and have conversations and be intentional about it and, you know, mailing them packages in the mail and stuff like that. And so rolled around like, yeah, any anything and everything to build our relationship. And you know, it’s not. We’re trying to be transactional about it. You know, we’re trying to really get to know these people and develop friendships as well.
Dave Dubeau [00:14:18] Well, yeah, because I would imagine your ideal clientele, like you say, they’re not one or two locations. They’ve got locations everywhere. You do a good job for them. You get your foot in the door. Theoretically, you know, the next time they need to expand where they’re going to talk to.
Austin Hair [00:14:31] Right, right. Exactly. Yeah. So you do a good job with them on that. You’ve got a good relationship with them. The first one, I mean, that’s you’re really working with these guys a lot. You know, a lot of them are growing five, 10, 15 locations a year. I mean, that’s a lot of conversations that we have now.
Dave Dubeau [00:14:46] It’s down. You’re based in Orlando, but you’re telling us about a client that’s in Georges. Are you guys going to national? Are all over the place? How do you fly
Austin Hair [00:14:54] all over the place? I just got back from Texas, where there are a couple of times to do some site scouting with client. And then, you know, we purchase a building in Lee’s Summit Missouri, where about the first one in Alabama? And so, yeah, we just do it all over the place.
Dave Dubeau [00:15:06] Yeah. So you must have to find local commercial agents boots on the ground, kind of people to partner up with in those locations. Or I mean,
Austin Hair [00:15:14] we don’t have to, you know, like we do have our own network partner. So, you know, so let’s say that we can get paid because it’s just one of those things because real estate, you just have to have, you know, local partners everywhere. But we really think about using a local broker. It can work well or it can kind of backfire. There’s like three things really that we do like a little bit differently. And so, you know, one thing is that we’re not location down. And what that means is sometimes the local broker can have location bias. And simply put, he’s been there his whole life or he’s been there a long time. It feels like he knows the area very well, and he may not think that he needs to go drive the area right or like, physically, look at it. And the problem is like things change all the time. Something’s come up with, well, not everything his costar or whatever program you’re using to look at stuff and so you physically have to go there and drive it. So it’s like it would take me a long time. To learn all of Dallas. That’s a massive area that’s got 14 to 18 different trade areas, but I can learn the trade area that our clients go to within a day. You know, I’ve been driving it. So we’re not going to say we’re not location bound, we’re not lazy because while we’re out there, we’re going to be doing the due diligence. We’re going to be driving around and then we’re we like to utilize technology. So a lot of brokers may not be as good as utilizing the technology that’s available today. We’re not super young, but our early 30s, but we’re a little bit younger than the average person real estate guy. And so we just will cross-reference Google Maps with Costar, with a local property appraiser to uncover every stone and find out even if there’s a building that we go ahead and drive by not listed anywhere. It’s not for sale. What can we find out who the owner is and give him a call and see if we can help?
Dave Dubeau [00:16:51] you figure out that that’s the perfect location for your client? Right? You’re not smart. Really, really smart. I love how you guys are using the technology now as we’re going to wrap this up. Boston Coast time flies when we’re having fun. Tell me a little bit about your podcast and also how you mentioned it earlier, how you’re using this as a way to kind of get to know some of your ideal clientele because I think that’s really, really smart. So if you’re OK to it about it, tell us a little bit about your podcast and how you’ve used podcasting as a marketing tool.
Austin Hair [00:17:24] Yeah. You know, we wanted the podcast to be mutually beneficial, and so we also will use it as a way to build relationships and network with other people. And so what that means is if there’s a client, somebody who we think would be ideal client for us. We would invite them to come on to the show and figure out ways where they’re also going to be benefiting from doing an interview and so that somebody who’s acquiring dental practices that they can talk, we can talk to them about what makes their business unique. Like, why would a doctor want to sell to them? You know, we’re talking it really, anybody’s anybody who has a business like what is their unique selling point? What is their niche like? Because obviously they’ve got something they’ve been doing something right as they pop up on our radar. So it’s not it’s not like they’re just random person. And then, you know, making sure that we’re generous with the content that we like to share, the files. We like to share links and stuff like that and just helping them promote their business through the podcasts and just creating these situations where everybody’s benefiting from the time that they’re selling into the show.
Dave Dubeau [00:18:29] Smart. Really, really smart. So awesome. This has been a fun interview. I really appreciate it. Obviously, I enjoy all of my interviews, but this one was cool because I learned something quite new that I wasn’t aware of before, so I appreciate that very much. If people want to find out more about you and what you’re up to in the podcast, what should they do?
Austin Hair [00:18:49] Yeah, absolutely. Just go on to our website. It’s just leaders that are using real estate, so leaders are e-comm. You can check us out there, you know, if you have questions, are interested and learn more about our investing in the dental practices. Or, you know, my email address is just a hair, its first initial last name, a hair at Wieters, our income as well. And yes, we’re happy to help and provide value over again.
Dave Dubeau [00:19:15] Awesome. Well, thank you very much for being on the show. Yeah, thanks for having me. My pleasure. Alright. Alright, take care. We’ll see you on the next episode. Bye. Well, hey there. Thanks for tuning into the property Profits podcast if you like this episode. That’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book Right Back There. There it is the money partner formula. You’ve got a PDF version, an investor attraction book dot com again investor attraction, book dot com. Take care.