State of the Market & Mastermind Takeaways, with Jeff Stark & Claude Condo

In today’s episode, we give you an update on the state of the market and our takeaways on the commercial real estate mastermind we have just been to. Being surrounded by a community of people with the same passion is a great way to reset and get back to a healthy baseline, network with people and build new friendships with which you could do business. That’s why we encourage you to become part of a mastermind group that you can learn from and that will hold you accountable to go farther in your business or investment.

Our conversation also zeroes in on the state of the real estate market. We have witnessed how the market has changed drastically over the last six months. Interest rates continue to rise and the banks are becoming stricter and picky about the deals they want to finance. However, it is still a good time to invest. We’ll explain that further in this episode and also talk about different investing strategies on how to take advantage of the current market, so be sure to join us!

Key Points from This Episode:

• Most investors stay on the sidelines because of high interest rates and uncertainties in the real estate market. However, the right time to invest is now.
• How can investors strategize and take advantage of the market?
• The importance and benefits of joining masterminds and participating in a community.
• Claude’s insights on the state of the market for real estate and other businesses.
• What’s the possibility of getting higher returns because of the changes taking place in the marketplace?
• Claude’s vision on what will continue to happen in the market for the next six months.
• What to prepare for and expect for investors with bridge loans.
• What opportunities are available for people with money who want to grow it differently?

Tweetables:

“It's not just buying deals, deals and deals; it's actually studying the market.” —Claude Condo  [00:03:45]

“You've got to get around other people and expose yourself to ideas that are coming from other people's brains. That is where the magic happens. That is where you learn and that is where you grow.” —Jeff Stark [00:09:47]

“It's always about seasons. There's a season to sow, there’s a season to reap. So, I think this is the season to sow and work strategies.” —Claude Condo [00:11:41]

“There's the possibility for getting higher returns because of the change in the marketplace. They're slightly better than they have been over the past few quarters, maybe a few years even.” —Jeff Stark [00:14:46]

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The main sponsor of our podcast is Rx Real Estate Investment. They make everything we do possible, and our conversations and interviews would not be available without their support. If you want to diversify your retirement portfolio and get into commercial real estate investing, working with Rx Real Estate Investment may be a great match for you. Check out the website at www.rxrei.com. 

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Transcript

jeff:

Welcome to the show. We're glad you're here. My name is Jeff Stark, your host. We have Claude Condo my co-host. What's up Claude? How are you doing?

claude_condo:

Good man, how are you? Excited?

jeff:

Doing really well. So No guest on today's episode. This is a little bit more of like an organic conversation between you and me just talking about the market and updates on the company and just more of like a I guess a little bit more of a chit chat

claude_condo:

Yeah.

jeff:

So this is the first one of these that we've done. We'll probably do this maybe a couple times a year moving forward just to kind of keep everybody in the loop on what's happening with us, the company, and you know, these kinds of conversations, I think value comes out of them at multiple points, or at multiple different times in these kind of conversations. So I guess I'll start up, or I guess I'll kick this conversation off by just giving everybody an update. course mastermind that lasted about five days. And it was a three day kind of general for three days we covered the basics of commercial real estate investing and got to got some really good reminders on what people are doing successfully in the investment, the commercial real estate investment space. And that was followed up by a two day crash course where we reviewed case studies are working on some really big, really interesting, really successful deals. And got to learn from some failures as well, which I know you and I both got a ton of value from that side. But anyway, let's start there. If you want to talk a little bit about your experience at the Mastermind and what you learned and what your takeaways were, that would be awesome.

claude_condo:

Yeah, man. Thank you. Thank you. You know, I went there last last last month, you know but just to me or just to be in that environment of people actually doing deals and Was striking to me was how they are so, you know looking forward for this market. So You know, they're like we can't wait, right versus when I was, you know, meeting with my brokers we are selling less and less. And when I went to this mastermind, they're like, we can't wait, right? We can wait even though the interest rate are higher, even though the media is saying that, hey, you know, real estate is crashing down. They were telling us, hey, this is the perfect time to actually buy, because most people are kind of like, you know, staying on the sidelines, and this is the time to actually invest. So it was just a different mindset where, where, you know, being in a mastermind group We all encourage each other to push ourselves to study the market, right? It's not just buying deals, deals and deals. It's actually studying the market saying, okay, what do  we see this in three months? What do you see the opportunity in four months, five months? You know, we know that the interest rate are rising. We know that, right? That's a fact. How can we strategize to make sure that we take advantage of the market, right? Whether market is higher or lower, you know, If it's a good deal, it's gonna pencil out. So to me, that was the biggest takeaway, just to see that optimism, people are like so positive about the state of the market and real estate. And then coming out of the meeting with brokers, we'll be like, oh, it's like two different worlds. So

jeff:

Ha ha.

claude_condo:

to me, that was just a contrast, which is great, that's what we want.

jeff:

the guys if you're not a part of a community you are missing out big time when you get around other people who are interested in the same thing that you're interested in or if it's like a business or like whatever industry that you're in that you're that you've been working in you've got to get around other people and expose yourself to ideas that are coming from other people's brains. is where you, that is where you grow. You know, I mentioned that mastermind being three days of kind of introductory basic material. That stuff is all great to, you know, you kind of need that every now and then to like reset yourself and maybe get back to a healthy baseline. But the real magic happens when you're in between those meanings when you're networking with people when you're you know, you're meeting somebody that you could do business with. That's where, even though those first three days were kind of like introductory and basic, there's still great things happening every couple of hours. So I just encourage you to get around other people who are like-minded, passionate about the same thing, and people that you can grow from. of the mastermind, we got to review case studies. And like I said earlier, really interesting successes and really interesting failures. I think those are like the two, I guess those are like the two big areas that interested me the most. Was there anything from that part of the mastermind that stuck out for you?

claude_condo:

Yeah, yeah to me who's just how they were using one of our you know colleagues were using different strategies to Get it deal done, you know, whether doing a you know, I'm gonna go a little bit technical doing a master lease doing Sell a financing You know all those different strategies because yeah, you know one of our mentor was saying the other day that you know successful or not successful. So for example, last year, you know, there were low interest rates, so money was really cheap to buy, right? To buy real estate. Now, it's actually cash is king, right? Because if you have cash, you can buy versus, you know, going through the banks and banks are really, really tightening up their underwriting, right? So that's exactly right. So it depends. Each market requires a different strategy. one box, you just have to apply to, you know, to, you know, different strategy, which, which I love the most, you know, just looking at guys that doing, you know, 20 millions or 15 millions and, and, you know, sell a financing or, or master lease, or, you know, you know, all those different kinds of strategy was just to me was just mind blowing. And the second part you mentioned was well as well, networking, right? Because I that networking that

jeff:

Yeah.

claude_condo:

we are working on a deal together. And we're still negotiating, I will see this week if it goes through or not. But yeah, so those are the best place, proximity is power, right? Being around those people, they have the same value, the same goals, it's always important. It's pricey. Jim Ronald was saying that you have to invest in your personal growth. Your personal growth reflects your banking, your checks, right? you have in a bank, you reflect your personal growth. So just to me, it's always start to me like I need to be in a network with people that have the same goal as me and just push each other you know that accountability to go even farther and helping our families and helping our investors as well. So that's really critical.

jeff:

Yeah, the accountability part of it is huge for me as well. You know, I think one of the first guys that got up on stage was talking about how he found the community and joined it. You know, he invested in himself like you're talking about. But that for this guy in his particular situation with this one deal that he was working on, he didn't get paid for three years. with people that were going to keep him accountable, push him towards that goal, push him forward. And I mean, he eventually that check came and it was all worth it when it did.

claude_condo:

Yes, yes.

jeff:

So stories like that and what you're talking about the accountability, the proximity, that is when you prioritize those things and you're very intentional about those parts of magic happens, which I think is so cool. Let's switch gears a little bit or unless you want to, is there anything else about the mastermind that you want to mention before we kind of switch gears to like market update or...

claude_condo:

No, no, I think we touch, you know, all the main points, the feedback that we got from the mastermind.

jeff:

So let's switch gears a little bit then and talk about the market. Like I think you've kind of already like hinted at a couple of things, but from your perspective as a small business owner, you know, somebody that's running a couple of pharmacies at the same time and investing in commercial real estate, you talk to banks. What are some interesting things that you're seeing out there today that is different from just a few months ago and what things do you see changing? And groups like ours, RX Real Estate Investment having to either add to their tool bag or just new processes or new ways to do business. So kind of curious to hear your thoughts about all that.

claude_condo:

Yeah, I wanna do, let's start with the state of market. The way I see it, the market has changed drastically the last six months, going from like 2.5, 3% interest to like seven, eight. So it has changed a lot and the banks, they did adjust the underwriting. So they are becoming really, really picky about what deals they will finance, right? Now, like we said before, we just have to kind of adjust to the market by bringing a different strategy. So now we've been trying to get self-financing, doing master list and all those different strategies so we can get the deals done. And we believe actually this is most investors have been waiting for this year or this kind of time for a while, since 2010, right? value, appreciations, and cheap money. And now it's about using strategies you have to think. So that to most seasoned investors, they are really, really, really optimistic about this kind of market because, you know, we'll look back in this time, five years ago, it'd be like, I wish I could buy more deals, right? So

jeff:

Right.

claude_condo:

that's, that was the same thing I had 2008, we feel like, and not just me, but our mastermind group, they feel like this is one of the seasons where you look back, say it was the best season to invest, right? Because to me, it's always about season, right? There's a season to sow, there's a season to reap, right? So I think this season, it's to sow and with strategies, right? So to me, that's not looking at the bank, can buy stuff for cash and we finance in two or three years and you know get your money back and do the same or sell a financing or like there's so many strategies right so you shouldn't be sitting on the sideline this is the time to actually be a little bit aggressive um

jeff:

Can I pause you there and ask

claude_condo:

yeah

jeff:

a question? So everything that you're kind of describing makes sense to me. We're on the same team. We're at Rx Real Estate Investment. We go out and we find commercial real estate opportunities to invest in. So this conversation between you and I makes sense. From the investor perspective, you're rates going up and all of this new opportunity for an investor though, somebody that has some cash sitting on the sidelines, you know, some of these terms that you're throwing around might not make a lot of sense, but what about, can you just describe a little more, go a little bit more in depth about what it means for an investor who has $50,000 or $100,000. Maybe

claude_condo:

Yeah.

jeff:

it's sitting in and I want to use it in a new way. Like what is this kind of opportunity? What does it mean to somebody in that kind of situation that has that kind of money that they want to grow it in a new way?

claude_condo:

Yeah, that's such a great question because I'm always looking at myself as an investor. I usually consume my own products. So to me, if I look back three, four months ago, buying real retail centers, it was stabilized, it was about like 6%, you know, cap rate. return, then you know, you couldn't work. But this time around, because there's less buyers on the market, so Cap rate has started rising up, right? So if Cap rate rise up, then, you know, my cash on cash return might be actually even better, right? So if I was

jeff:

Mm-hmm

claude_condo:

buying a 6% Cap rate, now it's a 9% Cap rate, that means potential I can get my 8% cash on cash, my 9% of the strategies and the ex-strategies and the deals that you're working on. So as an investor, this is exciting because the cash I was getting last year was good, but this year I'm gonna get even more, right? So I can even invest more. So as an investor myself, I'm excited because I know that Capri are actually arising. So and there's that margin cash return the way I want to get.

jeff:

Mm-hmm

claude_condo:

I'm not sure if it makes sense.

jeff:

Yeah, yeah, it's making sense. There's just a higher, I guess there's a the possibilities for getting higher returns because of the change in the marketplace, they're

claude_condo:

Yes.

jeff:

they're slightly better than they have been over the past couple over the past few quarters

claude_condo:

Yes.

jeff:

maybe a few years even.

claude_condo:

Yes. And the other part too,

jeff:

Lets go back then,

claude_condo:

sorry, sorry, to, to, I want to just add a couple of different points to, and this year too, it's like bonus depreciation should be 80%, right? So that's still good time to get tax, tax break on that. So the depreciation part, I'm still getting that. And then the other part too is, it depends of the market. So if you get set up financing and three years, four years, you will finance and get my money back, plus my cash on cash quarterly basis. So to me, it's still a great time to invest as an investor. So I'm just throwing out those main three points, you know.

jeff:

And bonus depreciation, I believe it was 100% in 2022.

claude_condo:

Yes.

jeff:

It's 80% this year and

claude_condo:

Yes.

jeff:

it goes down by 20% every year. So next year it'll go down at 60, 40% the year after that, and so on and so forth. At least that's the current.

claude_condo:

Yeah.

jeff:

Let's go back to like looking forward now. So over the next, let's say six months, over the next year, any, I'll just kind of leave it open ended. Maybe just give us like your vision on what you think is gonna continue happening in the marketplace. And this time of new opportunity that we're in, how that will change moving forward

claude_condo:

Yeah, I'm a student of life as well. So I'm studying this market as everyone else. So I don't, but what I've seen is it looks like the market will continue to, the interest will continue to rise, right? And we're going to start seeing a little bit of pain. Unfortunately for some people, they took some bridge loans that might be coming due either or early next year. So we're gonna start seeing some pains, unfortunately for some people. But for others that were prepared, that could maybe a really, really great opportunity to really pick up a couple of great deals, right? So because some, like, I don't know if you knew, but like Blackstone defaults on a, I think it was over $80 billion of, Europe, you know, of a note because it was a floating interest rate, they couldn't catch up with the payment. I mean, I know they're going to negotiate and get it maybe fixed rate or so forth. But that's, so that's a macro perspective looking at Blackstone, but on a, on a, on a smaller scale, you know, same stuff, people bought multi families or retail on a floating rate. And those floating rates are actually the market rate right now. So how to pay 8% when you told your investor that I bought this at 3.5%. So it's gonna be, those people will come up a lot in the next couple of months. So we'll see some deals, getting retrade or, and if you couple with banks financing too. So to me it'd be like a perfect storm to get couple great deals. But that's what I can see on the market. As far as RxREI, man, you know we look at so many deals. Even yesterday we were talking about, you know, some LOI’s that we need to send and just

jeff:

Yep.

claude_condo:

discussing strategies. So we have a team that's underwriting deals every single day looking at, you know, I don't know, 20 deals and we're still looking out and then I know Jeff is a master of reaching out to sellers and you know, we do everything that we can to get the best deal that we can. And it's, we just don't want to get this to get this one I get the perfect deal right, even though perfect is not really true but I want to get the best deal because I'm the consumer I want to make sure that my money is going far right. So in RXII, we're doing everything we can between acquisitions, underwritings, reaching out to sellers directly, calling brokers and doing all the things that we can just to make sure that we can get a great product for our investors.

jeff:

Yeah, and the best place to learn about those potential deals and all of the work that we're doing behind the scenes is go to rxrei.com , sign up for our newsletter which we send out around the 15th of every month. It's got a recap of some of the podcasts that we've done in there and then any new investment opportunities that we make available to the investors that sign up on our investor platform. We've announced a couple new investments over the past quarter or two which have been really exciting for our team, And we're hoping to present a couple others here pretty pretty soon

claude_condo:

Yes.

jeff:

So again, go to our rxrei.com sign up for our monthly newsletter. You can also Book either me or Claude for a quick call if you're interested in finding more about our group and how we do things Claude anything else before we close out this mini episode.

claude_condo:

No man, I love exchanging ideas and talking and getting big takeaway from our mastermind and just spending time with you man. I always enjoy spending time with you. 

jeff:

Cheers, brother! We'll do it again soon. Alright, thanks Claude.

claude_condo:

Right man! Take care.