WS382: Commercial Real Estate Done Right with Anthony Griffin

Our guest on the show today is Anthony Griffin, the founder of Griffin Group LLC, a commercial property investment firm located in Jackson, Mississippi. After quitting his job as a government employee, Anthony started his entrepreneurial journey of real estate investing, stepping out in faith to purchase a building in a “rough” neighborhood with his retirement savings.

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[INTRODUCTION]

[00:00:00] ANNOUNCER: Welcome to The Real Estate Syndication Show. Whether you are a seasoned investor or building a new real estate business, this is the show for you. Whitney Sewell talks to top experts in the business. Our goal is to help you master real estate syndication.

And now your host, Whitney Sewell.

[INTERVIEW]

[0:00:24.1] WS: This is your daily Real Estate Syndication show. I’m your host Whitney Sewell. Today, our guest is Anthony Griffin, thanks for being on the show Anthony.

[0:00:33.5] AG: Thanks for inviting me Whitney.

[0:00:35.6] WS: Yeah, appreciate your time and sharing your expertise with myself and the listeners today and I hope, as a listener, I hope you have gone and left a rating and written review, we would be very grateful for that and join the facebook group, the Real Estate Syndication Show. We can connect with experts like Anthony and ask questions and you can leave questions for me to ask on the show.

We would be grateful for any feedback, we’re always trying to improve the show and so you can get the most value out of your time listening. Go to Life Bridge Capital and connect with me personally and we’ll try to help you any way we can so.

Anthony Griffin is the founder of Griffin Group LLC. A commercial property investment firm located in Jackson, Mississippi. He’s been investing in real estate for over 13 years and is also a licensed home builder. Before he started his entrepreneurial journey, he was the property manager controller for a portfolio of over 2.5 million square feet of office space. A run in with his former boss was a blessing in disguise that caused him to open his own investment firm as well as start an insurance agency that handled commercial and personal insurance lines.

His unique blend of experience has allowed him to quickly build his own firm and to help other investors in his local market. Anthony and his wife also home school their sons while growing their business together. They are true family-preneurs.

Thanks for sharing that Anthony. I appreciate that and I look forward to getting into your experience, give us a little more background about yourself and I’d love to hear about how you took that plunge, you had the run in with the boss and I’d love for us to get into – take in that plunge and some of those steps because that’s a hard step to take I think. For most of us.

Give us a little more about who you are and what you’re doing.

[0:02:20.3] AG: Okay. Well Whitney, I guess I can say my career actually started officially being in investor in 2004. We’ve all bought a piece of property that look in and in hindsight being 2020, we wonder, what was going on in our head. The first piece of property I bought was a four plex and shall I say a very rough area.

When I say rough area, this place – to tell you how bad of a property it was, we bought a four plex for $25,000.

[0:02:52.8] WS: Wow.

[0:02:53.6] AG: This property when we looked inside, everything that couldn’t have been bolted down probably was gone and the floor was literally moving from all of the insects and rodents and stuff that were in some of the units. Needless to say, it was a challenge and during the time we had it, we ended up actually nine months later and I made every mistake in the book that you can make.

I got taken advantage of by a contractors, I didn’t know what to do, didn’t know how to rent it, it was just one of those properties that when it speaks to you, you can’t walk away from it. We end up buying it and nine months later, we actually made a profit.

[0:03:33.8] WS: Good for you.

[0:03:37.0] AG: To those story about the bad boss and this is where I guess where my real history comes from. I was working for department of finance administration which is a government office that handles all of the real estate, this government owned in Jackson Mississippi. We had two and a half million square feet of class office space and I was literally right in their budget, writing their leases and managing all of the property with an Excel spreadsheet.

Most people in the industry use Argus or Yardie or something like that mash property but we had an Excel spreadsheet so that tells you how out of date it was. I think you know every investor looks back at a moment in his career when you get that light bulb that somebody gives you and tells you that there’s other things on the way, there was an investor Rod Chambly. He’s deceased now but I was invited to a meeting of commercial brokers in our area.

Because I had so much property to deal with, these were all the other movers and shakers in our area. One of the gentleman asked me, he said well, you know, you’re neutral, our meeting, tell us a little bit about you, who you are, what you do. I told him all the stuff that I had to do and everybody starts laughing.

You know, when people are laughing, you’re not in on the joke, it’s a little uncomfortable. I asked the guy that invited me, I said man, “What’s funny?” He said, “I didn’t realize that you had to do all that work. I thought you just be in a few things” and so the gentleman asked me again, he said, “Sir, if you don’t mind me asking, you don’t have to answer but how much do they pay you a year to do all of that?”

You know, I’m cocky, thinking that as a government employee, I make a lot of money. I said $50,000. Everybody laughs again. Now, I’m really kind of nervous and I’m asking, you know, why is this so funny to everybody. The guy that invited me told me, he said, part way property, which is a public reap this used to be in Jackson. Now they’re in Florida. He says, they have a whole floor full of employees to do what they make you do.

$100,000 is the minimum salary for any of those people. That’s not somebody doing all of it. Mr. Chambly, I think he started feeling bad for the fact that I was kind of upset that I was the brunt of the joke and he says, “Son, if you want a little advice, do this job for three years and learn everything they’ll let you learn.” He said, “I can guarantee you, you can write your own ticket in real estate industry after that if you’re just willing to put up with it for three years.”

Well, you know, sometimes. Prophecy is told to you whether you want to believe in it or not. Three years to the date after that conversation, me and that boss had that talk. He told me, I don’t care how well you do your job, I just personally don’t like you.

[0:06:32.1] WS: Wow.

[0:06:34.5] AG: If you find something else to do. We stepped out on faith, my wife told me to leave and we started buying our own property and not only do we buy our own property because I’m a licensed contractor. We own a roofing and construction company too. Not only are we able to buy and manage our own property but we owned a construction company that renovates them also.

It’s kind of a weird set of skills, kind of Liam Neeson, you have a strange set of skills. That’s my history in kind of a nut shell.

[0:07:10.6] WS: Okay, tell me about that transition though? You left the state job. We’re all taught to believe that’s secure, right? We’re told to believe that his is secure, you know, you get an education but you get a job like this, especially a government job. I mean, that’s what everybody dreams about, right? Then you know, it’s so secure and you got that paycheck, you got that pension, maybe one day 30 years from now, you could retire, right?

Somehow, we’re taught to believe that but that didn’t work out for you. Tell me about – you left, you walked out of the building, you’re done with that and you know, how did you make it happen, becoming that entrepreneur, moving from that day job that we’re told to be secure out to this entrepreneur world?

[0:08:00.5] AG: I’ll tell you Whitney, some of what helped was I was at right there 19 and a half out of 25 years. You’re supposed to retire at 25. I calculated before I left what my retirement was worth to me. At 25 years, you only get 50% of what you make. For 25 years of your life, out of 50,000, I would have gotten 25,000 a year in retirement. The first building I bought pays me $40,000 net every year. That’s after all the expense.

[0:08:40.2] WS: Wow. Well congratulations to you, that’s an amazing story. Tell me about this building.

[0:08:46.0] AG: Well, we own an office building in a nice office park in north Jackson. The story behind this building, this is another one of those gems in the rough like the apartment building was. When I first left the state, I started doing the insurance for a little while, don’t know why I did insurance, it’s one of those things that you know, you had no skills but it just seems comfortable at the time instead of going into what you really know how to do.

We started doing insurance for a little while and I looked at loop net of all places which is where properties usually go to die. This building was a bank owned property that had been in foreclosure three years before I bought it. I bought it basically on price alone. They wanted $250,000 for it which I thought about it and I said, I could probably come together with $250,000, I could borrow that.

It had one tenant in it that was literally making all of the debt service. This tenant had been in this property 10 years. They were a long term tenant, had a long term lease and everything. Well, this is a weird story and it had a lot of faith to believe how this worked out. Because at the time I quit, I didn’t have any money in cash. I didn’t have 30% downpayment.

I looked around and something told me, your retirement is where your money is. Now, who wants to leave a job and then take the retirement out too? Because can guarantee you can’t go back, it’s one of those burn the ship moments.

[0:10:21.1] WS: Right.

[0:10:23.1] AG: When I got the money out, that was all of the money, I got $60,000 for $250,000 building. But, when I came in looking as the building, as a contractor, long story short, we negotiated building it down to 107,000. Needless to say, I was called a lot of things by the bank that was selling the property. They were not happy that they had lost half their value. Even at 107,000 and debt service being paid by this tenant, no bank in town would touch me.

I actually went to one bank and I won’t call their name but I deposited $60,000 in cash into a checking account in hopes that they would finance a loan for 107. They told me no and the reason they told me no is that well, you don’t have a job and I was thinking, “Well, being a real estate investor is my job and I’ve got almost 60% of the payment for the building and I got almost back in cash right now” and you can keep my money and lock it up and they told me no.

And so my lawyer at the time told me that if they won’t give me the money for this property I will because this is a slam dunk and at least to say I have owned this building eight years. We owe roughly about $50,000 on it. So I almost paid it off. It is deal generating 40 some thousand dollars a year in net income and I get to keep one office and it would have been fully rented for my own personal office for my construction company. So this one was a slam dunk too.

[0:12:08.4] WS: Wow, so great story. So did the lawyer partnered with you?

[0:12:12.6] AG: He didn’t need to.

[0:12:13.5] WS: Oh okay.

[0:12:14.2] AG: The lawyer ended up not having to partner with me simply for the fact that he introduced me to another banker and the banker thought it was a slam dunk. We had plenty of equity in the property, we had debt service being fulfilled by only half of it being filled and once we filled the other side we were way positive in our cash flow on it.

[0:12:32.9] WS: Nice, so why commercial real estate? Why not do single family homes and small residential?

[0:12:39.6] AG: I have done single family residential and the reason why I don’t do more of it anymore is that – well there’s two reasons. One is your value for your property is only valued at what your house next door is worth. So being a home builder, I know that you can throw as much as you want into a home but you still won’t increase the value if the house next door isn’t worth anymore and a lot of single family investors end up starting out in the roughest areas to try and get a cheaper house. But their property will never increase in value because the other properties are not worth much.

Another reason why I like commercial and multifamily is that when you have one vacancy in a single family house, you get to flip all the bills every month and that is painful. I’ve done it before. At least if it is more than one unit, you got some cash flow from somebody else’s. It very, very rare if you manage a property well that everybody moves out the same time. Unless it is a value added property and you’re moving them so you can renovate.

[0:13:44.7] WS: So what is your preference over say multifamily or office space like you’ve purchased?

[0:13:50.0] AG: I am actually not buying any more office space for the simple fact that when it’s really, really good it’s good but it takes a long time to replace a tenant. Once they leave, it is kind of especially with all of the WeWork spaces and people working at home, it gets a little bit harder to find somebody to fill an office space versus an apartment building with the economy being the way it is there will always be people who rent and I always tell my son who wants to be in the business also, as long as you keep your property safe and clean and manage it well, you will never have vacancies unless you just want them.

[0:14:28.5] WS: So clean and safe that is some good advice and we take those like you know that seems so simple but some of us still don’t do it or you know?

[0:14:35.6] AG: Yeah.

[0:14:36.1] WS: Anything else like in the differences between residential and commercial and why you’re sticking with multifamily now?

[0:14:43.3] AG: Well one thing about commercial when I spoke to the value of a property being only worth what is your next door neighbor is and residential that’s the only way they can appraise it is basically the other properties within a certain area. With commercial property, it is based a multiple of what your net income is. So the first thing you do is you buy a property, you improve it pass what it is now so that you can increase the rents eventually.

Well, the other part of that is save as much money as possible. If you got a lot of bad expenses on a property, clean them out, get rid of them and that makes your bottom line a little bit better and that bottom line is a multiple of what your property ends up being worth and that’s why they call it cap rate. I think you have spoken to that on some of your post.

[0:15:31.6] WS: Oh yeah we have, we have talked about that a lot on the show obviously and that is a great topic but you know, tell me now that you have the government job for that many years and then you have moved to this entrepreneurial field and commercial real estate, what do you tell people like your son for instance or other people that are saying you know I want to get into real estate as well, what path do you tell them to take?

[0:15:54.9] AG: I tell them look at least two units. I really tell them about looking at bigger than two or three units at a time to start because you still got a learn how to manage tenants and tenants are an interesting bunch. You know sometimes they’re good, sometimes they’re not and you had – it is almost like a three ring circus and you get to be the ring leader. You got to know how to deal with people and their attitudes and personalities and you still got to provide a good service.

I have a lot of people that work with me in church and we have a life group that is based around real estate and a lot of guys either want to wholesale houses or they want to buy single family rental and I tell them all that that’s a starter mentality. You can start like that and get your feet wet but don’t let that be the end all of your investing because once you get past five or six houses and they’re spread all over town it becomes a nightmare to manage them versus five or six sitting in one spot.

[0:16:55.2] WS: So how are you prepared for another downturn?

[0:16:59.5] AG: We have recently liquidated a bunch of stuff were involved in and we are sitting on cash right now because just like 2008, I was a builder when 2008 came and fortunately, I didn’t get stuck with any inventory because we just lucked out purely but I saw a lot of builders lose basically everything behind over building and they have a lot of inventory sitting on the ground so we liquidated in the last year pretty much everything we were involved in except for two office properties and we are sitting back looking for other opportunities to buy back in cheap.

This next presidential election is going to be really interesting to say the least and we’re waiting to see how the dust falls before we go back in really heavy.

[0:17:41.6] WS: So how are you increasing deal flow now or are you going to wait until after that?

[0:17:46.4] AG: We’re still looking at deal packages, a lot of areas outside of our area. We are in Mississippi of course so a lot of the hotter areas like Florida and Texas, they are becoming overheated as far as I am concerned as far as buying properties. Whenever you see a listing package and there is no price on it to either start with that’s overheated. So what we are doing is we’re looking at the Jackson metro market which is close to where we are.

And there is a lot of dilapidated property that is seen and sometimes deep rotten it can be renovated. We are starting to look at those now because there is a lot of upside on those instead of going to the class A properties where you are basically hoping that is worth something more in the future than it is now.

[0:18:29.6] WS: Awesome, so Anthony what’s a way you have recently improved your business that we could apply to ours?

[0:18:35.7] AG: Cut as much debt as possible. I know a lot of people who turn a profit every five years. Our basis on how we buy properties is if we buy them, we buy them to keep them 20 years.

So we hope to never sell anything unless it becomes to a point of somebody wants it really, really much more than we do and that is what we sold a lot of stuff latterly because the market is hot and everybody wants to buy something but my biggest advice would be know your numbers when you go in.

Buy cheaply as you can and don’t over leverage a property. You can almost never get from under one if it is over leveraged.

[0:19:11.5] WS: And what’s the number one thing that’s contributed to your success?

[0:19:15.3] AG: God.

[0:19:16.4] WS: I appreciate that, no doubt about it and how do you like to give back Anthony?

[0:19:22.8] AG: We volunteer with our church a lot. I also volunteer a lot with Habitat for Humanity through our construction company and I always believe that if you do something for something good will come back on the other end. So if you see an opportunity to give, don’t wait for somebody to ask you just do it.

[0:19:41.1] WS: Nice, I appreciate that Anthony and tell the listeners how they can get in touch with you and learn more about your business?

[0:19:47.2] AG: We have two websites, Griffinconstructionandroofing.com is where our construction company is and Griffin Group Construction is where our property investment company is. You can also find us on LinkedIn and Facebook.

[0:19:59.4] WS: Awesome, thank you very much.

[OUTRO]

[0:20:01.5] WS: Don’t go yet, thank you for listening to today’s episode. I would love it if you would go to iTunes right now and leave a rating and written review. I want to hear your feedback. It makes a big difference in getting the podcast out there. You can also go to the Real Estate Syndication Show on Facebook so you can connect with me and we can also receive feedback and your questions there that you want me to answer on the show.

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[END OF INTERVIEW]

[0:20:41.6] ANNOUNCER: Thank you for listening to The Real Estate Syndication Show, brought to you by Life Bridge Capital. Life Bridge Capital works with investors nationwide to invest in real estate while also donating 50% of its profits to assist parents who are committing to adoption. Life Bridge Capital, making a difference one investor and one child at a time. Connect online at www.LifeBridgeCapital.com for free material and videos to further your success.

[END]