Founder Bridges the Gap Between Commercial Real Estate and Tenant Relationships

Transcription:

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Michael Salafia Teaser 00:00

The whole point of this, so bridging the gap between a tenant, right? And If you're a tenant and you're renting somewhere, you probably want to pay as little rent as possible, right? But that also might not be so bad for the landlord, because if the rent is on the lower side, chances are the tenant's always going to pay the rent, so your risk becomes much lower.

So we look at things like that and bridge the gap between all the parties and put these deals together.

Intro 00:26

Are you ready to hear business stories and learn effective ways to build relationships, generate sales, and level up your business from awesome CEOs, entrepreneurs, and founders without listening to a long, long, long interview?

If so, you've come to the right place. Gresh values your time and is ready to share with you the valuable info you're in search of. This is the I Am CEO Podcast.

Gresham Harkless 00:54

Hello. Hello. Hello. This is Gresh from the I Am CEO podcast. I have a very special guest on the show today. I have Michael Salafia. Michael, excited to have you on the show.

Michael Salafia 01:02

And we're excited to be here.

Gresham Harkless 01:04

Yes. Super excited about all the awesome things that you're doing. And of course, before we jumped into the interview, I want to read about Michael. So you can hear about some of those awesome things.

Michael is the founder and managing partner of STAX Real Estate, LLC, a platform for a sale, leaseback of single tenant net lease. Retail assets located in Miami Beach from retenting to ground-up development. The platform generates some of the highest yields in the marketplace with a strategic focus on maximizing investment value.

Michael has deployed over 250 million and successfully raised more than 150 million in private equity in 2023 alone. And prior to launching STAX Real Estate, LLC. Michael distinguished themselves as an award-winning member of Marcus and Mill Chaps, National Retail Group, the largest commercial real estate brokerage and national net lease properties group.

And Michael's doing so many awesome things. And, I was listening to an interview before we popped on this and I think real estate might run through his veins, specifically commercial real estate, if I'm right. And he has loads of. experience. And I think anytime you think of disruption and doing anything different, you think that you just jump in and flip over tables and throw things around.

But Michael has so much kind of holistic knowledge, and I think that's what really arms him in this ability to innovate and be such a disruptive person in this industry. So, Michael, excited to have you on the show. Are you ready to speak to the I Am CEO community?

Michael Salafia 02:26

Gresh yes. Thank you. And I love speaking to the community and getting to connect with everyone. It's exciting to share some of the experience. It's been a wild year for commercial real estate investments. One of the most challenging markets in decades. So it's a lot of shakeups this year. It's been tough to make deals.

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Gresham Harkless 02:46

Yeah, I can definitely.

Michael Salafia 02:47

That's for everybody.

Gresham Harkless 02:48

Yeah. And that in so many different industries and I appreciate you and getting an opportunity to pick your brain about what people are doing and how to arm themselves, especially in this commercial real estate world.

So I guess before we jumped into, what you do and how you make such a huge and impactful help and support for the market. Can you take us a little bit more about what I call your story? We'll let you get started with all the awesome work you're doing.

Michael Salafia 03:08

Sure. So I'm a third-generation commercial real estate owner-operator. In fact when I was first growing up, my parents and I lived in an apartment above one of our mixed-use buildings that we owned, and we operated some retail sites there as well. So it's always been very interesting now for me getting started in my career.

When I was graduating from college, it was in the midst of a financial collapse and there was a large mortgage crisis. So it was a terrible time to get into commercial real estate and finance. So I actually pivoted into tech and did my master's degree in high-tech entrepreneurship. And that got me my background in tech startups and fundraising, starting with venture capital.

So I've been through it all in the tech world from series A to series B rounds to exits. And eventually, I moved to New York and started a consulting company. And just organically, I ended up working with a lot of commercial real estate investment firms, a lot of large REITs brokerages and investment sales firms, as well as Moody's commercial real estate analytics.

And having the opportunity to work so closely with the chief economists at Moody's gave me so much knowledge and perspective into the industry from a macro level. So I'm approaching this slightly differently. Then your average investor or your average broker would that experience.

Gresham Harkless 04:35

Nice. I appreciate that and appreciate, how all that experience has helped set the foundation for you to build everything awesome that you're doing now.

And marrying, it sounds or having a great insight of course, the commercial real estate part, but also I imagine that tech part probably helps you to build the business that you have now in the organization and probably helps to make sure you break through that noise.

Michael Salafia 04:54

Yeah, big time, big time. It's really gives us a unique selling proposition having such a deep technology background. So we do have a proprietary algorithm and an AI model that helps us underwrite thousands of properties at scale. And, this came from development again, studying Moody's analytics.

And working and interviewing lots of commercial real estate investors institutional real estate investment trusts, and understanding the exact mechanics that they look for when they acquire a property, what works long-term, what's successful, all of these case studies and data are out there, but aggregating it and then distilling it to a point where we have these triggers and data points that we can hit and compare to make more informed, actionable decisions.

More informed and actionable decisions that makes all of the difference.

Gresham Harkless 05:50

Yeah, absolutely. I think when you're able to and that's 1 of the beautiful parts around the technology is, of course, great to be able to just have it sitting there and collecting dust.

I guess you could say unless it's digital, but you. Being able to aggregate that information and bring it together to start to make decisions. It sounds is one of the really big things that helps, set people up for success in their organizations up for success of all right.

Michael Salafia 06:11

Yeah, absolutely. And it's very helpful because then we can keep a smaller agile team.

And focus and not spend all of our focus on just administrating a team and hiring people in project management. We really get to dig in and be the best investment managers, be the best developers and really understand and create deals that generate. Above market returns.

Gresham Harkless 06:34

Yeah, absolutely. So I guess could you take me through a little bit more on like how it works?

I need to talk a little bit around the secret sauce and what kind of sets the part and be able to have that convergence for lack of a better term of the technology and being able to use the proprietary software to be able to make those decisions. Is that could you tell us a little bit more on like how you work and serve your clients?

Michael Salafia 06:52

Yeah. So put yourself in the position of someone who invests in commercial real estate, right? Why would you make an investment, Gresh?

Gresham Harkless 07:02

To generate more revenue.

Michael Salafia 07:04

Exactly. It's about your cashflow. You want to be bringing in income because the key difference with commercial real estate versus other real estate is that commercial real estate is typically an income-producing property.

You're not buying it to hope that your home value appreciates over 20 years. That's not really the thought process or the core thought process here. More we're looking at. As a landlord, how much money can I charge in rent and how much will I be left over? What's my net operating income, my NOI at the end of the day, right?

So now for me, for someone like myself, who's in the single tenant net lease space, that makes it a little bit less complicated because what's unique about single tenant net lease retail compared to any other asset class is that you're typically dealing with triple net lease properties. With a tenant who's corporate, right?

It's a brand that, most of these are national brands or national tenants and the properties when they're assigned a triple net lease that is basically describing the responsibilities that the landlord has versus the tenant has, right? So each net would be insurance taking care of taxes and taking care of maintenance, right?

Those are the big three with the, with an absolute triple net lease property as a landlord, you're free of any of those responsibilities. The tenant is responsible for anything, everything rather. So the tenants almost acting as your property management company. As well as being your tenant, right? And it makes these assets very attractive.

Typically, you'd require them with a long-term lease in place, maybe 15, 20 years, and you can kick back and collect direct deposits over the term of that lease.

Gresham Harkless 08:54

Nice. I appreciate you breaking that down and, even simplifying it.

Michael Salafia 08:58

The whole point of this, so bridging the gap between a tenant, right? And If you're a tenant and you're renting somewhere, you probably want to pay as little rent as possible, right? But that also might not be so bad for the landlord, because if the rent is on the lower side, chances are the tenant's always going to pay the rent, so your risk becomes much lower.

So we look at things like that and bridge the gap between all the parties and put these deals together.

Gresham Harkless 09:24

Yeah, absolutely. And I love, in bridging that gap, how you create like a win, win, win scenario. And, so I wanted to switch gears a little bit and I wanted to ask you for what I call a CEO hack.

So this could be a little bit more of an Apple book or a habit that you have, but what's something that makes you more effective and efficient.

Michael Salafia 09:40

ClickUp.com Have you ever used that? It's a really good project management software. Yeah, I'm obsessed with it. I come from a tech background, I've used every, all the major project management softwares. What I like about ClickUp is, and especially if you're a CEO, and this is applicable to any kind of business, right?

So ClickUp gives me the ability to operate multiple, to manage multiple teams across multiple projects, all from one place, right?

So anytime there's a deliverable. Something anytime there's a deliverable, there's a line item somewhere right in a department and then each department has a has their folders and initiatives and lists. But somewhere there's a deliverable. It gets assigned to somebody. There's a due date. I get it. You can do that from any project management software.

However, when you're doing something like for my case, we're managing a lot of projects all at once. Sometimes 30 or 40 commercial real estate transactions over 25 development deals, the stores that we actually manage retail operations for, right? It's a big organization. I have a lot of people, even my PR team, right?

All of these initiatives, you need to keep track of them. So Click Up. I've got everybody on there and I'm just tracking everything. I have a full picture of everything that I'm doing across the organization. I'm sure there are ways to do it better, if you're a CEO of a startup company with under 25 employees, this is a fantastic way to go.

Gresham Harkless 11:06

Yeah, I appreciate you sharing that. And so what would you consider to be what I like to call a CEO nugget? This is a little bit more word of wisdom or a piece of advice. I usually say you might give this advice to somebody who might be thinking of getting into commercial real estate, or if you are to a time machine, you might tell your younger business self.

Michael Salafia 11:24

So if you're someone who's interested in getting into commercial real estate a huge tip is that this is a very relationship-based business. It's not something where you can just start and become an overnight success. I spent years researching training. I went through arguably the best investment sales training program.

In the world for commercial real estate accelerated through that I've had a lot of mentors along the way. I've spent years developing relationships with no paycheck coming from that, right? So it takes a lot and you should be mentally prepared for the amount of energy it's going to take to get the ball rolling on commercial real estate investment deals.

And starting on a path as an agent is a great way to get started, right? So even though I came from a family that's been doing this for a long time, I started from scratch as an agent on the ground floor.

Gresham Harkless 12:21

Yeah, and if I read or I was listening to an interview with you, you've had I won't say every position, but it sounds like you've really worked your way to have a really good awareness on the different aspects of commercial real estate and, different positions and jobs.

And I imagine responsibilities as well, too, that is armed you with the success that you've been able to have now.

Michael Salafia 12:40

Yeah, absolutely. made it from cold calling landlords on a sales floor working for commission only funding myself for doing this. To being a multimillionaire commercial real estate investor in, a very relatively short period of time.

Gresham Harkless: Yeah. But they, they always say, I don't know if you've ever heard Malcolm Gladwell's book Outliers and that's whole 10, 000 hours principle. But the quote that kind of always comes to mind is the secret to overnight success is it takes 10 or 20 years and people don't see the behind-the-scenes, the work, the toil, the cold calls that you said all those things that happen that lead to success.

So I appreciate you for sharing that because I don't think. A lot of times we hear the behind-the-scenes, we just see like the accolades and awesome things you've been able to do, but we haven't seen the journey that you've been able to go through.

Michael Salafia 13:25

Oh, yeah, it's full grind mode and the tech background helps big time because if I have to do something, say like graphic design or code something on a website and it's going to, I need it in an hour.

And if I assign it to one of my contractors, it's going to take them two to three business days. Guess what? I can just stop and get done myself and keep it moving. So that really helps me jump through hoops faster. Gives me a competitive edge.

Gresham Harkless 13:52

Yeah, absolutely.

And now I wanted to ask you my absolute favorite question, which is the definition of what it means to be a CEO. We're hoping to have different clinical CEOs on the show. So Mike, what does being a CEO mean to you?

Michael Salafia 14:03

To me, it means being an inspiring leader and also means that I create the opportunity for those around me to thrive and reach their goals and provide for their families.

Gresham Harkless 14:15

No, Michael, I truly appreciate that definition and that perspective. And I think so many times I say we forget about the human aspect of business. And I love how you brought that home with the family piece, because, as much as what it is important, why we do it is probably even more important.

Michael Salafia 14:29

Thanks, Gresh.

Gresham Harkless 14:30

Absolutely. Michael, truly appreciate that definition. Of course, I appreciate your time even more.

So what I wanted to do now is pass you the mic, so to speak, just to see if there's anything additional that you can let our readers and listeners know. And of course, how best people can go view, and find out about all the awesome things you and your team are working on.

Michael Salafia 14:45

Yeah, absolutely. So if you just plug my name into Google, or if you want to go to staxsre.com, s t a x r e. com. It's a great way to get in touch with us. If you are a tenant that, or an operator of retail properties and you're looking to expand that's the type of person we would work with or the type of company that we would work with.

We have a sale-leaseback financing program that basically we fund you opening up more stores, and help you cover the costs of getting your business set up by you signing a long-term lease and us bringing a landlord to the table. And. Making it an investment property for that landlord. And this is very common, by the way.

This is like how McDonald's, Walgreens, CVS, 7-Eleven, all these companies. That's how they build their real estate footprints. So, we're making that more accessible to people, and we have a great platform for doing it. If you're an investor looking at net lease properties, please, we'd encourage you to reach out.

We have a lot of opportunities. We keep most of our deals off-market as they're proprietary and highly coveted. And I would encourage anybody to reach out if you have any questions about triple net lease investments especially when it comes to gas stations and convenience stores.

Gresham Harkless 16:02

Yeah, absolutely. Michael truly appreciate that. We're of course going to have the links and information as well on the show notes that everybody can follow up with you. So thank you so much, my friend, and I hope you have a phenomenal rest of the day.

Michael Salafia 16:12

Thanks, Gresh. You too. And thanks everybody for tuning in.

Outro 16:15

Thank you for listening to the I Am CEO podcast. Powered by CB Nation and Blue 16 Media. Tune in next time and visit us at iamceo.co. I Am CEO is not just a phrase, it's a community.

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Also, check out our I Am CEO Facebook group. This has been the I Am CEO podcast with Gresham Harless, Jr. Thank you for listening.

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