The Art of Creative Investing with Tyler Cauble

Today's guest is Tyler Cauble.

Tyler is a seasoned commercial real estate investor, developer, and thought leader based in Nashville, Tennessee.  

He is an Author, Speaker,  has a YouTube Channel, Podcast and shares his expertise with industry professionals and entrepreneurs, helping shape Nashville’s vibrant business landscape while educating a wide audience.  


tylercauble.com

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Creator/Main Host: Vish Muni

Show Advisor/Editing: DBT Marketing

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Transcript

>> Vish: 0:00

today we have a, fantastic guest, Tyler Cabo. He's my mentor and I, I belong to his mastermind group. That is how we met. but other than that, Tyler is a seasoned commercial real estate investor, developer and thought leader based in Nashville, Tennessee. And he's also an author, speaker, and is a YouTube channel host, educator. And, and he, and he is always educating people. And with that, let's welcome Tyler to Outrunning Failures. Tyler, could you please tell the audience a little more about yourself?

>> Tyler: 0:44

Yeah. Vish, thank you so much for having me on, man. Excited to be here. So I got started in commercial real estate back in 2013 as the in house leasing agent for a smaller boutique development firm here in Nashville, Tennessee. After I dropped out of college and spent a couple years focused on leasing up their portfolio. And each week I was able to sit in on the development meetings and learn how they looked at putting these development projects together. So my third year in the business, back, 2015, 2016, give or take, I put together my first development deal, which was 42 townhomes that we built from the ground up. We were initially going to lease them all out and sell it like an apartment complex, but we decided about halfway through construction to just sell off the units individually. learned a lot about how to put these deals together from, from that experience, wrote a book on leasing commercial real estate. In 2018 called Open for Business, I left and started my own firm, the Cobble Group, to focus on commercial real estate brokerage. Six months later, this is also in 2018, I started a commercial property management company called Parasol Management. Then, I started my development firm in 2020, YouTube in 2020. And here we are now. I currently own a little over $60 million worth of real estate. Mostly industrial, but, a fair amount of retail and office as well. I'm developing a hotel too, so we kind of do a little bit of everything.

>> Vish: 2:11

All right, thank you Tyler for that fantastic, background about how you started and where you are right now. So with that, investing in all these projects, is there any challenges or. I would call, I wouldn't call them failures, I would call them challenges or which you had in the past and which, changed the way you do your investing moving forward.

>> Tyler: 2:35

Yeah, I mean, when I was first getting started, and even still to this day, I prefer to do more creative out of the box deals and that was very difficult getting started. I wasn't doing myself any favors with the banks because banks don't like anything that's different or unconventional. They prefer things that have been proven time and time again. And you know, the funny thing is I, I never had any issues raising equity from investors. It was always securing the debt. So, today I've got a solid track record. We've been doing this for six years now. That certainly helps when it comes to the banks. But I also learned very early on in every single deal that you do bring in a strategic partner, somebody that has been there and done that before so that you don't have to worry about finding that experience elsewhere when you're going to the bank. So for example, I'm under construction on a boutique hotel. It is the first hotel that I have ever done. So of course I called one of my friends who has been doing hotels his entire life and brought him into my general partnership, gave him equity in the deal just to be the advisor there looking over my shoulder to one, make sure that I do the project right, but two, to make the bank happy. And that is one of the best moves you could ever make as an investor, especially if you're just getting started.

>> Vish: 4:01

Well, that is fantastic, Tyler. because at one piece of advice I only heard about, people talk about opm, other people's money, but in this case, what you just spoke about other people's time and other people's strategy and other people's experience that probably put you way ahead of the competitive competition. So that, that is a great advice. Now you've been through all spectrum of real estate as a commercial, broker, as a leasing agent and as a management company and in the construction also. Now that being said in terms of investing is do you have any one specific, favorite asset class within real estate, which you spend a little more time on, which you're a little biased?

>> Tyler: 4:50

You know, I really don't. Which I know makes me a little strange as a commercial real estate investor because most guys, that are in a similar position that I'm in will say, oh, I'm a self storage guy, I'm a multifamily guy. I do, you know, value add, retail or grocery anchored shopping centers, whatever it is. To me it's, it's more about what's, what's to be fun, what's interesting, what's going to push this neighborhood forward, what's going to create a better community. Because that's what excites me and gets me out of bed in the morning. You know, I could sell off my entire portfolio, retire, never work again. So the reason that I keep doing this is because I find it interesting. Right? And so that's the that's the fun thing about commercial real estate is you really can do pretty much anything that you want. So instead of niching down because by asset class, because I do actually recommend every investor niches down some way, I, I niche down by picking neighborhoods. Right. So we started off in East Nashville, so just across the river from m downtown. Then we moved into Madison, which is just on the other side of east. And then we moved into Chattanooga, like the southern part of Chattanooga, Tennessee. And I just studied those neighborhoods. I learned them really well and I started to deliver projects based on what I felt the neighborhoods needed as opposed to saying, hey, I'm an industrial guy, we've got to go find industrial land so I can build an industrial warehouse. And you know, for better or worse, I think it makes me a better investor in some ways and maybe it makes me worse in some ways. I'll never be an expert industrial real estate guy or I'll never be the best apartment guy, whatever. but also whenever we have an economic downturn and multifamily falls off or office falls off, like what we've seen in the last four years, I can pivot very easily and go focus on other types of commercial real estate and it doesn't impact my livelihood.

>> Vish: 6:47

Well, that is, that's really good advice what he gave just now instead of picking one asset class. Now a few minutes back you also spoke about being creative and you're able to raise money from investors pretty quick. But the challenge, what you had was with the debt, not with the raising capital. So that being said, do you have any secret sauce? How do you go about, building relationships? Or do you have any specific formula you have? How, do you raise capital so easily?

>> Tyler: 7:22

That's a great question. So one, I mean having a YouTube channel where you teach people how to do this, definitely helps. Same, with having a podcast. Right. As I'm sure you found out by starting this one that that makes it very easy. Right? Because I'm out there, I'm in people's ears every day. They're watching me on YouTube. It certainly helps. I think the big thing is having a vision and being able to properly convey that vision while also de. Risking the unknowns. Right? Because people love the out of the box creative ideas. The reason that they choose not to invest in them is because there are so many unknowns. Right. So whenever I'm doing a project that has maybe never been done before, the Tenants are actually the first ones usually on board. So I have done deals before where we went out, put a rough site plan together to show off how crazy this project was going to be. I went and recruited all of the tenants and I've had 90% plus Lois in hand by the time I even go to investors so that I could say to them, guys, here's a really cool one. Here's how it's different from everything else, and here's how we have de risked it. I've already gotten all of the tenants committed, on board, ready to move forward with this project. So it's little things like that, being able to tell the story of what you're going to do, but then also making sure that your downside risk is protected.

>> Vish: 8:51

Well, that's that's so critical when you do that. Now did you, did you learn this from, experience or you just, just while doing your business? How did you, how did you figure out to work around this, having Lois before you talk to your investors?

>> Tyler: 9:07

You know, I think that that comes from just having a background in commercial real estate brokerage. And so it's, it's a little on the job experience. Right. You know, having been in commercial real estate for a while, I know that banks and investors love to see tenants on board. Right. They don't like vacant buildings necessarily. Right. And so by being able to show up to the conversation to say, hey, look, here's who we already have on board. These guys are committed. Makes your life that much easier. Right? And so I think, you know, again, just being able to tell that story, you know, and having the experience as a commercial real estate broker, I mean, look, I think getting started in the industry as a commercial real estate broker is one of the best experiences that you can have because you learn how to go and find these tenants that are ultimately going to be your clients. Right?

>> Vish: 9:57

Yeah, that's, that's important. And then I remember, I remember listening to you at one time and which sort of got into my long term memory, which I can never forget you. I remember you telling at one of the calls that don't confuse your investors, just keep it simple. You confuse, you lose it, you end up losing it. Because that is so easy. But it's the most difficult thing to do because we all like to think that the other person is, is really great. And the way they present, they confuse you with the fancy terms and terminologies and formulas and presentations, all those things. I mean, they all might look good, but in the Long run, I don't think I would want to invest in something which I, it takes me a long time to understand. And I, I always think that there's something else to it, even if I know that's right.

>> Tyler: 10:52

Yeah, I mean, it's a great phrase. You know, if you confuse, you lose. Because. And that really applies to everything that we do in our lives. Right. You know, if you're trying to convince an investor as to why they should invest with you, but then you've got four different waterfalls based on different internal rates of return and you know, whatever. I mean that investor might have been willing to give you a million dollars, but now they're getting confused by how the waterfalls work. They're not going to invest, right. Because they're worried that they don't understand something and they're not going to invest in something they don't understand.

>> Vish: 11:27

All right, now that's, that is so easy. I'm trying to be that way, but it's, it's taking time. It takes some time to unlearn your older, I mean you, you got to let go your old habits. So, so that, that is what it is. So now how do you, how do you work? Because I think one of your key strengths is your your hometown is Nashville and then you know the neighborhoods better and you, you primarily focus on your neighborhoods and you see how you can add value by not, by not restricting yourself to one asset class. Now I remember watching a YouTube video about how you converted your, the car washes into something completely different. Now is there any other new creative project you're coming up with? Anything which our audience might get excited?

>> Tyler: 12:18

You know, at the moment, nothing too sexy, right? Nothing crazy. We've got a 48 room boutique hotel that we're renovating from an old roadside motel, that was originally constructed the, the motel buildings in the 1950s, but the original building in the center was built in 1856, so 170 years ago. So we're going to bring that back as a really cool hip boutique. Right. We're not flagging it. Right. It's not going to be a Hilton, it's not going to be a sleep in whatever. It's, it's our own brand called Salt Ranch and it's really a Palm Springs meets Southern hospitality vibe which we're pretty excited about. I'm also working on. We're under contract in a 105 unit self storage facility right down the road from my office. And then I am I Just got my plans approved for 215 indoor climate controlled self storage units out in Chattanooga, Tennessee. So really excited to get that project going. And then I'm also working on some other things. Right. So we've got some interesting things in the works on a facility I have out in Chattanooga for a youth sports complex. Right. So think multiple soccer fields, indoor paintball, basketball, courts where we can host all these athletic tournaments regionally. so things like that. You know, I like just thinking out of the box and doing things creative.

>> Vish: 13:39

I love it. I mean the more I didn't realize there's so much creativity involved in, commercial real estate. And because I started with the single family homes and I thought that was the ultimate thing to do, just buy and hold and and. And one day after 10 years, I decided, well, there is, there has to be something more to real estate. And how do people buy this commercial buildings and where are they getting the money from? And that is how I educated myself and got into multifamily and did some syndications and finally told no syndications is probably it's okay. But it was management intensive. So I decided to come into triple net buildings. And once I got into triple net buildings is a, whole new world opened up. Like you were talking about being creative, man. Every deal, every offer, every conversation is creative. I'm loving every bit of it.

>> Tyler: 14:43

Yeah. Oh, it just, you know, it makes it so much more fun, man. Right? It's like, yeah, you could be boring and you could do dollar generals in, in the middle of nowhere America, but come on man, that's so boring.

>> Vish: 14:56

Well, I love it now. Now I look at every, every deal from a different angle. Because last week we, me and my partner visited another property in Houston and I, I have a checklist now. I. Pros and cons. I have 20, 20 different things I can do on that deal if I get it. that was the thing. So. So, Tyler. So I go about building, I have a secret formula for building relationships or what I need to do on any given day that is called, H. H as an H for H stands for health and E is for education and R is for relationships. It's very easy to remember like her, her. Now, why. Why that, her. And how does it apply to what we are conversation. Now I always felt that, a relationship can be strengthened based on your education, at least with what I'm doing. And that is how I always seek to work or talk to people who are way ahead of me and who have a lot more knowledge in than me. Now, do you have anything and how do you go about building relationships? Because, you are pretty. You, you. Did you raise a lot of money to relationships or do you have any secret sauce or secret formula?

>> Tyler: 16:21

Yeah, I mean, yes and no, right? I mean, I think the secret formula is really just being consistent about the actions that you're taking. Right. So it's not like I have found some sort of secret that nobody else knows about, but I am very consistent in the things that I do. You know, I've been running a commercial real estate investors breakfast for well over a year where I, mean, it might even be coming up on two years now, where every other Thursday I get together with other commercial real estate investors. Anybody in Nashville is welcome to join.

We get together at 7: 16:56

15am M. At my favorite coffee shop and we just hang out for an hour and talk commercial real estate. And so I've gotten investment partners out of that. I've gotten business partners out of that. There's a lot that can come from just showing up and having conversations with people. I'm also big about going to industry events. So this upcoming Tuesday, I'm going to the Urban Land Institute's Emerging Trends in Real Estate, you know, event, which is going to have hundreds of people there that are all very interested in what the emerging trends are in the world of commercial real estate. So I think it's all about putting yourself into the situations where other people will be so. But also being true to yourself. Right? If you love, volunteering, go get involved with a charity, right? Join, the board and network with everybody there. If you like hanging out at a country club, go join a country club and genuinely get to know people at these spaces. Just put yourself out there and have conversations, and eventually somebody's going to ask you what you do, and then you get to tell them no.

>> Vish: 18:09

That is, that's a great piece of advice. Thanks for sharing that. Yeah, so I, I tell people about, this simple things. And I'm a member of, a few nonprofit organizations because I feel that it is my, duty to give back to the community. So I volunteer all the time as a nonprofit in. It's called, Lions Club International. And, and we do that all the time. So. So apart from that, apart from real estate, because I know you 24 by 7. You're all about real estate. Anything to do with real estate. So apart from real estate, what is that one thing you do on any given day which, where you don't need any inspiration, you don't need any likes. And by doing that rest of the day is going to get better.

>> Tyler: 18:59

That's a good one. So this has nothing to do with business, but I built a steam sauna in my bathroom, over winter break last year. So I take a 30 day sabbatical every year, December 15th to January 15th. I'm out of the office, you're not getting a hold of me. And so during that time last year, I built a cedar steam sauna in my bathroom and I use it just about every morning. And you know, I played football back in high school, grew up playing sports. And so I've got, you know, I'm stiff, right? There's, there's some things that don't, that you know, hurt. And, and I wish at 32 years old that they didn't hurt, like they did. But what I have found is if I start off the day immediately jumping into the sauna for 20 minutes, it's, it's a night and day difference as to how much pain I feel in my body, which means I can, I can exclusively focus on everything that I want to get done for the day. So hands, down recommend if you've ever thought about doing a steam sauna, probably one of the best things you could ever add into your life.

>> Vish: 20:07

Well, that's interesting, Tyler. We all have something, that one thing which moves the needle every day. Because for me it is I need to be out of bed at 4am every morning no matter what. And I need to get my one hour of exercise done by 6, 6am and if I do that and followed by a cold shower and I'm set for the day, I'm ready to take on any challenges every, every single day. I don't need any motivation, I don't need any likes and no, nothing. I just do it. I don't care if anybody likes it or not.

>> Tyler: 20:46

That's right.

>> Vish: 20:47

Right. So, so that's the thing. And then one other thing. Now what are you working on right now? I know you have your, your hands in multiple things and you're an author, you're a, YouTube, you have a YouTube channel, you have a podcast and you're a speaker and you're on several real estate organizations and you have several meetups. So when do you, where, what is your downtime? You don't, do you have any downtime on any given day or.

>> Tyler: 21:16

No, not necessarily. No. I mean, I try not to. My girlfriend gets on me all the time about that because I Can't sit still. I've always got to be doing something. And here's the thing, I don't have a TV at my house. So if that means when I'm at home I'm actually actively working on stuff. So. Yeah, I mean honestly, when I, when I'm not in the office, when I'm not focused on commercial real estate, I'm doing manual labor. I bought a 10 acre farm probably 15 minutes from my office. I've got a barn, I've got a wood shop, out there. I built a cook shack, out there, this, this past summer. And you know we're, we're always looking at doing more out there. So I, I like working with my hands. Right now we're renovating the kitchen, so I'm about to start building all the cabinets for that. So that's what I like to do in my spare time, as you know. I know that's kind of interesting, but I like to be able to, to kind of turn my brain off and work with my hands because I have to work with my brain so much throughout the day. it's nice to be able to actually physically exhaust myself as well.

>> Vish: 22:16

That is so important Pilot. Because most of us were so passionate about real estate. I mean we could work all day, all night and without being tired. Because I hear people talk about Monday morning at 6 o'clock telling me I'm tired. I told you days hasn't even started and you're already tired. But you will never come across someone who's passionate about what they're doing telling you that I'm tired.

>> Tyler: 22:44

That's right.

>> Vish: 22:45

They're a lot more energetic working for 12 hours a day. And so what I strongly feel is that we all need to do what we love to do. And if we do that, I don't think we get tired. I don't think we need a break. There's no question of downtime because I get asked all the time, when do you take, when is your downtime? I told, whenever I feel like, like you step out to your, to do the manual work. I mean we all, we all do that. A few minutes break, you're there. So that being said, is there anything you'd like to promote to our audience? You have any new projects going on or do you have any, anything? How can I help you and how can my group help you?

>> Tyler: 23:27

Yeah, I appreciate that, Vish. I mean, you know, we're good on the equity side of things right now. We've got A ton of investors. But, one thing I do like to plug, I mean, I've got a YouTube channel with over 550 videos at this point, teaching you how to invest in commercial real estate. I'm really passionate about sharing my commercial real estate knowledge and imparting that upon other people. I, believe that's how you found me initially, Vish. And Vish is now a part of our CRE accelerator Mastermind, which is where, you know, I'm diving in, with our, with our members on a weekly basis into their deals and we're underwriting them, we're analyzing the markets, we're helping them acquire their first property and then build a portfolio of passive investments. So if you're interested in that, you can find that@cre central.com or, you can just go get the education for free on the YouTube channel at, under my name, Tyler Cobbler.

>> Vish: 24:19

All right, thank you. Thank you, Tyler. With that, I have one last question. How do you stress test your new real estate, investments or plans because you have a wealth of knowledge with that. I'm sure there's always some risk involved in whatever we do. And we all can plan only for so much risk, but there's always some, surprises like any project.

>> Tyler: 24:42

That's a great question. Yeah, I like that. Well, I like that a lot. So, I mean, when I, when I'm stress testing a project, I'll, I'll get into the underwriting, right? And so after I've underwritten what I think is the likely scenario, that's when I'll go back and say, okay, what happens if it sits vacant for six months longer? What does that look like? What happens if we lease it up as fast as I think we are, but we end up getting $2 a foot less in rent? What happens if our construction costs go over by 50, 60, 100 grand? Right. How does that impact my returns? What if my cap rate is 25 basis points higher on exit than I think it's going to be? Does that make the exit Good? Right. So I'll go through all these different scenarios saying, okay, well, maybe the valuation gets hit on the back end, maybe we get bad tenants in the spot, or maybe we don't get any tenants at all. What does all of that look like? And I mean, honestly, I'm so conservative with my deals, I feel bad for them, because I beat the h*** out of them when I'm going through my underwriting. Because I really want to make sure if I'm going to take on investor capital that I'm going to be responsible with it, which to me means expect the unexpected. I know that's impossible to do, but if I stress test for every scenario that I can possibly think of, and I've seen a lot over the last 11 years, then at least it'll make me sleep better at night knowing, okay, if everything goes wrong in this deal, here's our exit plan, so hope that helps. I definitely recommend stress testing every single deal that you do. And you could do it, in multiple ways. I just prefer to do mine in a spreadsheet and work through, you know, different metrics that could go awry.

>> Vish: 26:28

All right, thank you. Thank you, Tyler, for your time and, appreciate all your experience in your business ideas and, it's. It's always great to see you. And with that, one thing, I always like to thank you is, is I do see that now, all the setbacks and that they're not called failures. After talking to you for this long, I started looking at them from a different lens. I look at setbacks as opportunities. There's a lot more growth waiting to happen. So with that, thank you once again and, look forward to seeing you at the next, meeting.

>> Tyler: 27:04

Yes, sir. Vish, thanks for having me on, man.