Ep 177 | What Starbucks Teaches Us About Real Estate Investment

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Let's get into it. Today I want to talk about real estate investment and the number one rule in real estate investment, which is location, location, location. We've all probably heard that before. Uh, but it is incredibly true. Location is first and foremost the most important thing in my mind. And I think the, the mind of most real estate investors when in fact it comes to, uh, acquisition specifically of, of long-term rentals, long-term holds. Now I want to focus on location today. And as you're driving around your respective community, uh, your, your neighborhood, your city, you're going into the office today or you're coming home, I want, I want you looking at things a little bit differently than you did, say yesterday. Okay. And what do I mean when I say that? Well, I'll start with a story and then I'll explain a little bit more and I think it will change your vantage point as you're driving the streets of your city. So this story is going to be kind of out of left field because most, most probably did do not know this about me. It's not something I typically share because it's not really all that interesting, but about, gosh, 20 years ago, when I was trying to figure out what I was going to do in my life, I'll spare you the details, but I found myself talking to this coffee company, a company that in fact was opening up drive-thrus all around the nation, and I was considering franchising with them. And the leader of that company flew out to Phoenix and hung out with me for a day. And he was not super familiar with Phoenix, and he asked me to drive him around, and he and I could chat all day, spend some time. Now, mind you, 20 years ago, 2003, 2002, 2003, the internet and mapping and all that stuff, yes, it was there, but it was not nearly to the level it is today. So when we were driving around, we were actually physically looking at locations. And I'll tell you what he had me do. What he had me do was drive from Starbucks to Starbucks to Starbucks. Like, I think I actually went on Expedia and like, or Maps, and like mapped out all these Starbucks locations. And I'm driving with them, driving with him, and his name was Ed. And I'm like, Ed, why are we going to see all these Starbucks? And he said something that was a huge aha for me, a light bulb moment. He said, why would we not go look at all these Starbucks and see what locations they're in? Because Starbucks has a far more robust real estate investment, or I'm sorry, real estate location analysis department than we ever will. In other words, they're spending all the money, time, effort in researching great locations. Let's just go find where they're at and quite possibly open up down the road. I mean, they've already identified great spots and it was a big aha for me, as simple as that sounds, to leverage the real estate departments of these major companies that have, you know, top-level analysts they're paying top dollar to. And so that day, Ed and I went Starbucks to Starbucks to Starbucks and analyzed why they were choosing certain locations. What was the traffic of that particular intersection, or what was the surrounding environment? What were the demographics? What did the neighborhoods look like? On and on and on. And while I never went down that route in opening up the, the coffee franchise, I did learn a ton that day. So when we think around location, you know, using that story or the things you could draw from that story, what companies or what businesses can you, can you quite possibly leverage as far as their research and consider investing in homes or housing, I should say, uh, units around those respective businesses? Businesses. I'll give you some examples. How about Home Depot and Lowe's? You know, those two companies, which by the way, they typically open up across the street from one another, which is a whole different episode as to why they do that. But they're doing some heavy research before they open up a store. Is it possible that the research they're doing is indicating that maybe, just maybe, what they're seeing are things you should be looking for as well in terms of neighborhoods, communities, and where they're opening? Same with CVS and Walgreens. Why do they drop certain locations? Like, what do they see in specific locations? Now, mind you, yes, traffic has to exist, but so does discretionary spending. So does, you know, access to other related businesses. Like, they're not going to open up, um, in some idle scenario. Now, Walmart may, because they oftentimes are the anchor and they use an inkblot strategy that's much different than others. But some of these businesses, they just do not do that. Another great example, Chick-fil-A. Chick-fil-A needs a certain amount of spend, a certain amount of access, a certain amount of traffic. Point being, if a Chick-fil-A is dropped in an area, should that be a flag to you that maybe there's something going on in that area that you need to research? Now, the holy grail from a real estate investment standpoint, in my opinion, Whole Foods. If a Whole Foods lands in an area, not only must there be traffic, but there's got to be stable employment. There's got to be a degree of spend. There's got to be, you know, a certain type of neighborhood that oftentimes makes sense for real estate investment. So I love looking at where Whole Foods are going. The second I hear about a new Whole Foods opening, I will look into that surrounding area and say, what's going on in that area? What do I need to be looking for? In addition to, you know, tracking what some of these big— and there's many more beyond the ones I just mentioned— but in addition to tracking these big companies and trying to figure out why they're making their decisions, another thing I like to look at, I love to follow big industries. I love to follow industries when they're opening up new locations because those new locations, again, they might tell you something around the real estate, but more specifically, they're creating new jobs. Oftentimes higher paying jobs. And in doing so, they're creating new, a new need for, for housing units. I'll give you an example, two examples. Uh, Micron, major technology company, announced plans to open up a massive, massive location outside Syracuse, New York. Track what's going on now in Syracuse and the surrounding community. And what you're going to find is increased demand for housing. You're going to see prices increase. Now, of course, that's happened most places, but it's unique, uh, uniquely happening in Syracuse right now. Why? Well, because there's more demand for homes, but there's also some very savvy real estate investors. In, in my neck of the woods, North Phoenix opens up, uh, Taiwan Semiconductor. They've been building a massive plant. You could see, you could see, uh, all sorts of, uh, cranes and things like that out there. They're going to employ thousands of people on this 1,000-acre campus in North Phoenix. And that's going to create new jobs, new demand, new business, and likely greater opportunity on the investment side. So I love following industries. I love following new jobs. And I want your head on a swivel as you're looking for, you know, where's a great place. Following these businesses is a great thing to do. Now, how do you learn about these businesses? How do you learn about these moves? Well, obviously observation, obviously keeping, you know, keeping your ear, you know, to the street to find out what's going on, paying attention to what's going on. But I'll tell you two things I'll always be looking at. I'm a broken record on this. Wall Street Journal, looking at that every day. You will find, at least on a weekly or biweekly basis, you will read about a company opening up something somewhere. And that should be intriguing to you. That is why I'm in Birmingham, Alabama. That is why I'm outside Cleveland. That's why I'm looking at a handful of other places that typically you may not think— when I say I'm there, I'm invested there— you may not think of these, these places, but when you read about big businesses moving there and creating new jobs and changing the environment because they're so large and they're so influential, it's got to pique your interest. So I look at the Wall Street Journal, And of course, maybe an even better resource, local business journals, local business journals. So if you're interested or there's something intriguing to you about a city that's outside your backyard, or even your own local business journal, all you have to do is go to Google and look up, you know, the Denver Business Journal, look up, you know, the Austin Business Journal, look up the, you know, just Google that. You'll find these publications. These, these business publications. And if you look at them regularly, regularly, you will find different opportunities, different businesses, different moves that should pique your interest. So real estate investment, the topic today— location, location, location. And what does it mean to find or to track businesses, both in terms of the big ones going in and the traffic and the demographics that must exist, as well as the big ones making moves that are gonna create new jobs and change areas. Tracking these things and leveraging that great knowledge that you're just using the internet to track and not spending money on leveraging these amazing real estate departments of these big companies. It's such a competitive advantage if you are in tune with it. So the focusing question for you today, who could you track? What companies can you watch a bit closer than you do today? What can you be reading? So that you have a leg up on the competition when it comes to real estate investment. Being first in, finding deals before others, and finding them in the right area is so critical. You make your money on the acquisition, not on the resale. That's all I have for you today. The No Days Off Podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.