Entrepreneurial Investing with Gary Chesson

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here's your host.

This podcast is for educational purposes only and should not be relied upon for investment decisions. The opinions expressed are those of the guests and not their companies. Listeners should not act upon the information without first seeking appropriate advice from an accountant, lawyer or other professional.

Welcome to episode number 178 of the Insider's Edge to Real Estate Investing. This is your host as always, James Nelson. Thank you so much for joining. The show is all about helping you gain the insider's edge to real estate investing so you can gain the advantage and outperform the market. And today's show is going to do just that. I am incredibly excited to have with us today Gary Chessen. And Gary was introduced to me a while back, but I read his book Creating Blueprints of a Real Estate Entrepreneur and Investor and I was blown away because this book really spoke to me. Not only do I identify with Gary in his building a brokerage firm, but also starting to invest as well. And it's just an incredibly inspirational story. I also really appreciate how much Gary goes into the details. I'm sure you all have read books out there that are heavy encouragement and light on the details. I'm a details guy and I want to know how things are done and Gary really gets into it. So we're going to have this conversation today and you're going to learn about how to build a real estate business and how to create an investment fund. Now Gary is the retired co founder of Trinity Partners, a full service community real estate firm headquartered in Charlotte, N.C. and Gary and his partners also co founded Trinity Capital Advisors, the private equity real estate firm which has invested $4.1 billion through acquiring and developing more than 28 million square feet of office and industrial assets, primarily in the South. And you're going to hear how to create an open and generous culture which shares profits evenly. Gary offers advice on how to prioritize family fun and balance to avoid burnout. He also shares insight on having an entrepreneurial mindset and taking risks. Lastly, and I think goes without saying the fact that Gary is retired and he is still doing this, he is mentoring students, young real estate professionals and so what an incredible resource as always, you can go to jamesnelson.com that's where you can find the show notes. That's where you can find out about Gary and Trinity Capital Advisors and how to connect with him. We're going to have a brief word from our sponsor and we'll get right into that interview with Gary Chessen.

A Different Approach to Putting our Clients First Avis and Young's Tri State Investment Sales Group sells multifamily office, retail, development and specialty sales throughout the New York metro area. As experienced thought leaders in their industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter LinkedIn and Instagram amesnelsonnyc to learn more.

Welcome everyone. I am incredibly excited to have with us today Gary Chessen who is now a retired co founder of Trinity Partners and also author of his book Creating Trinity Blueprints of a Real Estate Entrepreneur and Investor. And as I was telling Gary before the show and look, I read dozens, I don't know if it's hundreds of books per year, but definitely dozens. And this book book really spoke to me personally. So I know for so many of you listening today, I know you're going to get a tremendous amount out of this discussion and Gary and I just met. So Gary, thank you so much for joining, especially now that you're in retirement. So you know we appreciate you're taking a little bit of break. I know you're a big fisherman too, but appreciate your continuing to make yourself available and share all the incredible messages from this book.

So glad to be here. Really excited.

Wonderful. So Gary, I'd love to start off with your why if you're a Simon Sinek fan and I know the process of going through writing a book, it's a lot of work, right? And it's a lot of effort and I mean this is certainly is a blueprint and I mean incredibly valuable information. What was the impetus when you sat down to write this?

You know I think my goal was maybe twofold. You know, I think as I said in the book, I had listened to a podcast by Guy Raz called How I Built this and he interviews a lot of the the a lot of entrepreneurs who have created much, much larger companies, you know, household brands. And I really related to a lot of those struggles and the positive experiences that these entrepreneurs had had. And I realized that I had a story to tell. You know, we had a really unique culture at Trinity. I wanted to share that. But really the why part is when I was coming along in the business, there was nowhere you could go to read about what your career might be like, what could it look like, what's possible to achieve out there? And I wanted to pull back the curtains for the younger generation to let them see this is what's possible to achieve in the business.

I love that answer. And I could really kind of see myself in your shoes and early on in your career and those early days in brokerage and how you built it over time. For our audience, please maybe give them a little sense of your story and talk about how you initially got into real estate and the trajectory of your business and then ultimately creating Trinity.

Creating Trinity really refers to two companies. You referenced Trinity Partners, brokerage business. We also created a sister company, Trinity Capital Advisors, which was our private equity real estate investment platform. You know, I started off, came out of college undergrad at unc and jumped into banking because I really had no idea what I wanted to do. I enjoyed what I learned in the banking environment, but I really wanted a field where I was properly compensated for taking more risk. You know, in banking, it's a very safe career path. And I wanted to be in what we call, you know, the term eat what you kill. And so I dove into the commercial real estate business and really enjoyed it. The selling aspect, the financial and the analytical side of the business. But, you know, after being a broker and really learning the trade for the first seven years in the business, I knew there was more out there that I wanted to achieve more than being a better salesman. And that's what led me to want to start Trinity.

Wonderful. And I'd love for you to share the story of how you came together with your other two partners, one who has now passed on, and you had some wonderful things to say about him in the book, but maybe talk a little bit about how you all decided to come together. And you talk about in the book how you decided to create this union, and maybe so you could talk about how you were set up and how you were structured.

Well, really, the first step was, you know, for me, I had this idea, and I just created a list of potential people in the business that I liked, that I respected. You know, I'd been studying Models of other real estate firms for a number of years. And I had an idea of what I wanted Trinity to look like. But, you know, went out and found one guy that I was an office tenant rep broker, found a guy that was an office leasing agent, and we really clicked. And I wanted to go with just the two of us. But then, you know, to his credit, he said, Peter said, we really need more diversity in our platform. And so we found David Allen, who, like you, was in. In the investment sale arena. And not just that, but David really understood a capital market side of our business, which, for Peter and I, we were two street brokers. And we had no idea what capital markets even was. We knew the property markets, but not the capital markets. So we came together, and you're referring to the decision early on to become a union. And I'll tell a little bit about that. We were invited to dinner in Atlanta with a firm like us. You know, there was 10 years ahead of us. Bullock, Terrell, Manley, and they wanted to talk to us and maybe recruit us to join their platform. We took the opportunity to really ask a lot of questions. And how did you do this? How did you get started? What were the, you know, what were the big hurdles for you? But late in the meal that night in Atlanta, one of the guys leaned over and said, have you guys decided if you're going to be a union or a confederacy? We had no idea what he was talking about. And he explained. He said we were early on a confederacy where we just shared overhead, but if one of the three of us had a big year, he got all the payday. And we did have some fee sharing. But what we found was that we'd always agree on something up front and then renegotiate it later. It was a real hassle. So he said, about a year after we started our business as the Atlanta firm, we decided to become a union where every dollar that came in the door got split three ways, no matter who found it, no matter who executed it. And we thought that was really good advice. And so we did that from day one. You know, that strikes a lot of people as strange. When I speak to students at my alma mater at UNC or down at Auburn, where my youngest daughter is in school, I say to them, what if you could pick two other students and you guys share grades? Your grade, two thirds of your grade is dependent on what the other two do. It's kind of a scary concept, but, boy, it really worked for us. And it created this culture of openness of everybody Rolling the boat in the same direction of generosity. And that was a really important decision for us.

Hey, Gary, really appreciate your sharing that it really resonates. We have a brokerage team here in New York and we are one unified sales team with one commission pool for our listeners who are not in brokerage. I mean, you know this, but that doesn't exist in most brokerage shops. Everyone, yeah, sure, they're under one roof, but people are competing at the same firm in many cases for business. So the fact that you can bring everyone together and really focus on the business as opposed to, you know, how you're dividing everything up for every single deal. So I thought that was really fantastic and how you all realize early on how you complemented each other. The other thing that I loved about your story was how important culture was and family and, and you wrote in the book which most people, you know, you think of these hard charging entrepreneurs. Yeah, I had to work 80, 90, 100 hour weeks. I think you wrote in the book that you don't think you've ever worked over 50 hours in a week because you wanted to be home with the family for dinner. You wanted to be out there watching the game. So I love the fact that you brought that forward and center. So maybe you could just share a little bit more about that.

One of my buddies, older friends in the business, said very early on I really admired him a lot. He said, your career is a marathon, not a sprint. And if you treat it like a sprint, you know, we've both seen people who have burned out in the business over the years and, you know, end up getting divorced and just in a bad place. And so what's funny is we had, we wanted back then what a lot of people call a millennial lifestyle today. They want a life outside of work as well as a fulfilling career. And we embraced those concepts back then and still do today.

I would have to imagine that really helped with the longevity and what you were able to accomplish. And it really seems like even though you were operating with that mindset, I mean, you, you still really operated. You talked about the entrepreneurial mindset. Maybe you could share for the listeners as far as that entrepreneurial drive. And, you know, maybe there's someone listening today who's thinking of building their own investment platform and maybe talk about how you were able, maybe you were more nimble, you know, what separated you from the bigger shops. And you can answer that as far as on the brokerage side or what you've done with your investment platform.

Well, you know, I'D say staying with culture. And I referenced this in the book. We really, when we created our very first business plan 25 years ago now, we said there are three things at the top of the business plan that are most important to us. And then later that sort of led into our culture. The first is family first. Second is have fun at work, which, again, sounds like a bit of a cliche, but, you know, it's competitive enough out there. You want as much harmony inside your walls as you can because you're going to go get bloody noses every day outside of the walls of your business. And then the third was keep balance in your personal and private, between your personal and your professional lives. And, you know, we figured if we could do those three things, then we would be, you know, all the rest would take care of itself. But as far as the entrepreneurial mindset you reference, the other thing we did, you know, we. A lot of us came from athletic backgrounds. A lot of the people that joined us were former athletes as well. And we hated to lose. We were very, very competitive, and we worked really hard. Again, not more than 50 hours a week. But we really wanted to win. And, you know, we didn't want to just be a nice firm. I used to hate the term boutique firm, but we were a boutique. But we still wanted to be top three in office leasing, market share in our markets, we weren't as successful in investment sales because the nationals usually had a bigger share of that, but we were tops in other. In other arenas.

Yeah. Gary, I love the fact that you're making that distinction, that, yes, we wanted to do business in the right way, in the right culture, but that doesn't mean that you didn't want to be the absolute best. And what I really loved about your brokerage story is how you talked about early on, even though you were a small firm, you wanted to give out that big institutional presence. And there's someone listening right now again, who's thinking about starting their business. And this is some really great advice to, you know, sure, it costs a bit more money to set it up in the right way and bring in a designer and have the right website. You know, we're not saying spring for, you know, the fanciest office on Fifth Avenue, but at some point in your trajectory, you said, no, we've got to have really nice offices. You know, we really have to have, you know, make that impression. So I'm really glad that you drew that. That distinction. So. And, Gary, I love the other part that I really love about your story. Is this attitude that you're going to jump in and you're going to figure it out. And you know, even you look at some of the things you do, hobbies you talk about. You ran a 5k and before you know it, you know, you talk to someone, oh, you doing a marathon, oh wait, you're doing an ultra marathon, right? So here's someone who could, you know, barely finish a 5k and next thing you're doing a 50 mile trail run. So I love that mentality when I hear people who say, you know what, I don't know how I'm going to get there, but I see that target and I'm going to figure out a way to get there. And so with that in mind, I'd love for you to talk about the evolution of Trinity Capital Advisors and you write about the first acquisition where I think it was 30, 40,000 spec industrial, where you basically say we didn't even know what we were doing. Fast forward. So you'll have to tell us how many years was. But end of 2021, the last count, $4.1 billion of real estate assets acquired 28 million square feet of office industrial in seven states. So again, if that doesn't inspire the people listening to this show, I don't know what's going to because again, when you started with your first 30 40,000 square foot development, is it fair to say you were figuring it out on the fly?

We were the blind leading the blind. I mean we really, you know, again I give David Allen, my, my now deceased partner a lot of credit like you. Yeah, really good capital markets background. He, you know, both David and I had done some smaller investing on the side before we started Trinity Capital. You know, I got started buying residential duplexes in the historic area of Charlotte called Dilworth where I live. David did some small commercial stuff and bought some industrial land for investment. So we weren't as ignorant as I'm making it sound. But we had just done little small mom and pop things and then we translated that into over time into the space we were most comfortable with which was institutional quality office and industrial assets. You know, those were really the place through Trinity Partners where we had a really strong leasing and management team, accounting staff, et cetera that was already doing third party work for others. And so to do that for our own assets was very natural, you know, but, but, but gosh, communicating how that evolved over 25 years, you know, I did that in the book, but doing it in a few paragraphs is making it a little tougher all right, so.

Everybody'S got to read the book and they should read the book again. There are so many lessons that you share here that again, would be impossible to cover over a podcast. But Gary, I do want to talk about one of the number one objections or fears really that I believe hold people back from investing. There is someone listening to this show right now who's saying, okay, Gary, that's great. You got into it, you did a 30, 40,000 foot industrial, but you were already in the brokerage business. Like you said, you had the knowledge. And maybe that person is at a brokerage firm right now and maybe they have that knowledge. But that first investment, and you know, maybe it was that 11 unit building that you invested that you bought on East Boulevard. I don't know how much of your net worth and if you, you know, feel comfortable sharing at the time what you were putting on the line for that investment. But it's scary. So the, the question is, at what point do you say, I'm going to put chips on the table and I'm, I'm willing to jump in the game, right? Because I, I can't imagine you're going to tell us that. Well, at the time that was 2% of my net worth. And you know, this was kind of a side gig. I mean, at some point you jumped in, right?

You know, I don't remember what my net worth was, but I can promise you it was negligible. I mean, it was nothing. Right. And when I, when we first started, my very first deal, lived in an old house in door that was 28 years old and a widow owned the duplex next door to us. I went to the widow and I got some encouragement from my father who's in the real estate business and figured out, you know, I'm never going to get a bank loan for this. So I went to the widow and said, and again, this is 30 years ago, right? All right, I'll pay you $100,000 for this duplex. I'll give you 10,000 down, you take back a purchase money, deed of trust, so basically sell or finance it for the 90,000. Because this was an older place, she had no money put in it. She was only getting $400 aside. I knew that if I put a little, I say, lipstick on the pig, did a modest renovation, I could attract professional tenants and double the rent to 800amonth. So I could pay her more in terms of payments than she was receiving as the owner of the property. And so that's a lot of detail. But the point is, at 28, I said, I noticed that the market there was sort of a bifurcated market. There was a, a bunch of old rundown duplexes in the area that were renting for peanuts and there were a lot nicer places with double the rent. And so I targeted those owners that had the old, the old in place rents. And it's sort of the classic, it's funny, but the type of investing I did at 28, I did 30 years later, but with just office towers and industrial parts. You find it's shocking to me how much inefficiency there is in our real estate space owners that you, that you think should know what they're doing, they come in and run an asset into the ground. They don't hire the right leasing team. They don't, you know, they want to keep tenants in place so they don't raise the rents. So there's low in place rents. There's an amazing amount of inefficiency in the market. And you just have to become a student of that inefficiency whether you're looking for your first duplex investment or you know, later office, industrial, retail, whatever it may be down the road.

Gary, really appreciate your sharing that. And even though that seller financing deal, I guess close to 30 years ago, I, I think it's coming back in fashion because I will tell you right now in New York we are doing seller financ financing deals and you know, look, creativity, and you all have heard it on this podcast before, you know, go back, listen to that episode we did with Francis Greenberger. Listen, you know, he was, he's a self made billionaire who was the co op king of Brooklyn. He'd do these stretch deals, right? And so the creativity, he'd have a long closing, he'd figure it out. So especially as you're looking to get your start, you know, again, these are the kind of things that you should be, you're learning from this show and that you can implement. So Gary, I want to talk next about finding partners. And because it seemed like to me as you were growing the portfolio, you would take on projects and whether it was going into industrial or building an office tower, ground up, but you would figure out, okay, if we don't know how to do this, then we're going to go find a partner. And that's also a big premise of the insider's edge to real estate investing is that, you know, if you don't know how to do it, but you find a great opportunity, that's a Perfect way to start, find a good partner. So maybe for our listeners, maybe tell them how you go about finding a great partner and what that, how that allowed you to grow your business.

I get a lot of readers who reach out to me, you know, men and women in their 30s, 40s, early 50s that are saying, okay, I've done this for a while. I want to start an investment platform. I want to do this, want to do that. It's amazing. And we have the same mental hurdles to clear to do these things. But one of the things we realized early on, and as you point out I referenced in the book, that when we, you know, with our first larger deal, $25 million deal, which to me or back then, this was 21 years ago, felt like just a ginormous deal, we didn't know how to raise capital from friends and family. And the deal was we're buying 300,000ft of flex industrial with 60 acres of land. And the land was going to have a retail component. So we went to a retail developer in town and said, let's buy this together. We'll operate the flex, you do the retail. And through that joint venture, we learned how to raise high net worth capital. We raised seven and a half million dollars back then. Later we had an office site, that office tower site in downtown Charlotte, and we'd never done it down a CBD office tower. And we decided to joint venture with the owner of the site, which was a residential condo developer. They had high rise development expertise, which we didn't. We had a deep office leasing and management expertise, which they didn't. And so together, you know, we piggybacked off of them. We had never done an institutional joint venture. This was in 2007. We followed their lead. They showed us the ropes on putting a book, equity book together and finding an equity partner. And you know, you fast forward 16 years and we've done dozens of them. Now 100% of nothing is nothing. So give up half the deal and joint venture with someone and learn how they do it and then move on and do it yourself.

So, Gary, this obviously worked out tremendously well for you and Trinity Capital Advisors. But, you know, you always hear these horror stories of partnerships going wrong. So how did you know at the time that these were going to be great, trustworthy partners? I mean, maybe you'll tell us you had a relationship with them before, but there's probably someone listening to this now who says, okay, I've got the great opportunity. I think I know who'd be good for it. But what happens if they just go take the deal and run and do it themselves? So there's gotta be that certain amount of trust going into it. So how do you gain that when you haven't done business with them before?

Now? Are you referencing the joint ventures we did or the business part? The joint ventures, you know, we, we actually had, as most people in the business know, you've got to control something. We generally had control of the deal before we went and said, would you like to do this? And plus, in some cases, these were our friends in the business. And so they weren't going to go take the deal from us and run with it. You know, that just, you know, reputation in this business is very important. And so we, I guess we never really felt threatened by exposing our, you know, by being vulnerable and saying, we need your help with this, that that was a risk.

And if your JV partners had to describe you and your partners at Trinity Capital Advisors, what, what would they say about you? What. What kind of partner are you?

What I would hope they'd say the first thing was honest, ethical, hard charging. Experts in the field always do the right thing. You know, I think you've got to find partners. And this was being on the sponsor side. We wanted to find equity partners, institutional equity partners that were aligned with us in terms of their vision, whether it be whole period, execution of the deal, etc. But also I'd care, you know, really good character, people we trusted, that gave us leeway to run the deal. And I like to say discretion in a box. You know, here's your discretion in these parameters and you run with it, but if it goes outside the box, give us a call.

That's great. So maybe now, Gary, maybe you can talk about one of the deals that you're most proud of and then maybe could also talk about maybe a deal that didn't go so great. Because I would be surprised if you told us over your entire career that everything was a home run. So where. I'll give you guest prerogative on which one of those questions you'd want to answer first.

Well, I'll tell you about one that is both a happy ending and a sad ending at the same time. We bought an older office tower in downtown Charlotte. Think I talked about this in the book. That had a large anchored tenant, 500,000 foot tenant. And you know, the building I think at the time was 43, 44 years old. So it scared a lot of people away because this tenant only had two years left of term, plus it had the building had 10 years of deferred maintenance. So with our deep brokerage, bench brokerage, property management, engineering, we were able to really go in and analyze and price the renovation, get our partner comfortable with what was involved there. And we also knew the market really well. We knew this 500,000 foot tenant had nowhere to go. So we went in and pulled the trigger on a large renovation. Before we got a commitment from the tenant, they saw us putting money in the deal. They renewed for five, six years and then we exited. And it was a 4x equity multiple on our investment. It was a great outcome. Now fast forward the same building. The buyer said, trinity, we've been trying to do business with you for three years now and would you stay in the deal, you know, the building, you know, the tenant, you know, downtown. We said sure, happy to, you know, so the building, the investment profile goes from very opportunistic and risky to being sort of a core plus deal, meaning, you know, credit tenant, six years of lease term, and then the, this tenant says two years after the new buyer comes in, we're buying land for a new building downtown and we're moving everybody out of this building. Then the pandemic hits and this now 50 year old office building is viewed as sort of the bottom of the heap of this utility company, doesn't want to occupy space in it, nobody will. And so it doesn't look like it's going to have a happy ending, but it'll be the first time in 25 years that we've had anything go back to the lender. But that's becoming, as you know, a very common theme in the office business. But this one is exacerbated by the fact that the building's so old it's really tough to repurpose.

Really appreciate you sharing that story. And unfortunately there's many other very substantial office owners, operators out there who are in the same situation. In the sequence of events between Covid and rates going up and return to office is really, I don't know if anyone could ever have expected this sequence of events, but I would imagine, Gary, just to complete that story, that even when maybe things weren't going your way with the property, you don't strike me as the kind of person who would start in on a lot of litigation or causing problems. I would imagine when things get tough, you probably were quick to communicate and try to be as cooperative as possible. Is that a fair statement?

Yeah, I mean, that's always our M.O. it's, you know, we want to do what's right for the investment, what's right for our partner and us. And, you know, we're going to work as hard as we can. I mean, we did this during the Great Recession from 08 through 2010. You know, we worked three times as harder to get one third of the outcomes that we did. And that's just what you do. And that's where I think most of the market is now. In particular in the office arena, they're working three, four, five times harder than they ever have. And the outcomes, they're just scraping by.

Well, Gary, really appreciate your sharing that. And, you know, typically in an interview like this, and you've had so much success and, and, you know, we hear on the show about a lot of success, we don't talk as much about challenges when things don't go right. But the fact that you have, you know, maintained your reputation and your character throughout is really a great message for our listeners.

And you probably recall the quote that David Allen gave and that newsletter, that letter to us at Christmas 2009 and where he really outlined his character. And to me, that really sums up everything you want to be about.

Yeah. And again, for the people listening, I love the fact that you shared these internal letters and memos. I mean, you really held. You did not hold back in the details in this book. So, Gary, I would like to talk about. Well, first of all, I want to go back to something you said earlier. This will set up my next question. But you talked about the inefficiencies in the market, and this is a big part of the insider's edge to real estate investing. We talk a lot about the inefficiencies. Maybe you could start by talking about maybe inefficiencies when you started investing or even today. You know, why do you like, for example, investing in real estate over the stock market? What are the kind of advantages and what are the types of inefficiencies that you. That attract you to this asset class?

You know, globally speaking, I think over my career, what attracted me was, you know, when you really learn the market as a broker and you sort of study the different owners, you know, REITs, for example, for the first 10 years in the business, I had no idea what a REIT was, you know, and then because I was more property markets focused, and then you learn, well, REITs own assets for the purpose of producing income for their shareholders. And REITs often keep rents very low so they can retain their tenants more than the industry average. So you think, well, REITs would be a great place to buy Assets that have low in place rents. Then you realize, well, REITs only sell assets typically when the asset has lost functional or has become very functionally obsolete and can no longer attract those tenants. So basically they sell their crappy buildings and then they try to refresh them with new buildings, their portfolio. So buying from a REIT is not great. But then we bought wholesale from a reit, you know, the east coast portfolio of Duke Realty. And we bought three really good markets in one kind of rough market, St. Louis that came with the package. But we bought a lot of low in place rents and then rolled them up to retail rents to market. And you know, the market is full of inefficiencies like that, whether it's a neighborhood office building or you know, it's very common in our business where the owner just doesn't want to spend capital to keep that asset up. And so as a result the rents fall. And if you buy that asset, you can invest and bring the rents back up to market and create a lot of value.

No, that makes, makes a ton of sense. And I'd like to also a follow up question to that. How you find your opportunities. Are these mostly on market? Are they off market? Because I'd also make the case that there's a lot of inefficiency if someone is selling off market and you're not competing with the rest of the marketplace.

You know, I think at one point, and I don't think we kept this up tracking it for long, at one point we used to say that 75% of our opportunities were off market. If you're in the market day in and day out, you're looking at deals. Sometimes they were a deal that somebody like yourself might have taken a market, it didn't sell, you follow back up and you know, or falls out of contract and you pick it up later. But it is ideal if you can get as many off market deals as you can, because you don't often you're not going to have a, a tremendously successful career just winning a lot of bidding wars when an asset goes out to auction.

Good advice. So Gary, but those situations where you did buy an on market deal or you had a competition and clearly now you know, Trinity Capital Advisors shows up to the table. You've got a very long track record that you can point to. But you know, there's someone listening right now who's looking to do their first or second deal. Maybe they've done a two, a three, a $5 million deal and they're looking to land their first 20, $25 million deal. And they're now kind of bumping up against the institutional space. So the question is early on, when you did not have that institutional track record, how did you win deals? How did you convince them, the sellers that you were going to perform when I would imagine you were competing with much larger experienced investors?

That's a really good question. And you know, in the very beginning we were using profits from our brokerage business. We sort of capped our, our take home pay and we kept money in the till to go out and invest in real estate. And so we told folks where our capital was coming from. And then later when we started doing bigger deals, we, you know, we raised friends and family money. But then we realized this was in 2005, we realized we can't put a deal under contract and then spend 60 days raising money. So that's what led us to want to do our very first real estate fund, which we did in 05. And what that did was it gave us some credibility when someone said, well, how are you going to buy this? We said, well, we've got a real estate fund now. It was tiny. Our first real estate fund was $11 million, I mean super tiny. But it gave us that initial credibility. And then over time, once you start performing in the marketplace, people see you closing deals, you got a reputation for doing the right thing, then you don't have to worry as much about that credibility going forward. But it is about establishing credibility early.

On and I would imagine also not over promising and under delivering. So I mean, was there ever an loi that you submitted that ultimately you couldn't back up or I'd say that.

Was pretty rare if it ever happened. We were not gunslingers in the sense that we didn't tie a lot of things up and then go out, you know, looking for equity or debt and then drop it, you know, later. That was really not our style. We really close on just about everything we were serious about and put under contract. Great.

So Gary, now as we start to wrap up this, this conversation that's just been incredible and so grateful again for everything you're, you're sharing here. And, and I hope everyone is taking a lot of notes because I in your book and, and we'll certainly listen to this recording again. But let's talk about the different stages of your career because again I, everyone listening is going to identify with part or depending on where they are in their journey. So you start off as a broker, which even though you did adhere to the 50 hour work week, it was still a grind. Right. And so at what point did you say, okay, you know, this brokerage thing, I like it, but I want to start investing. Right. And then it would seem the next phase was, okay, well, I'm kind of drawn towards investing because it's a longer game. I'd love for you to talk about that transition from brokerage and principal. And it wasn't. Again, you continued to do both, to be clear, I think, for a long period in your career. But I think it'd be really helpful for people to hear about that, that progression.

You know, I think the progression took a couple of different. Went through a few stages. The first was I call the apprentice stage, where for the first seven years, I learned the business right, both as an office tenant broker and a leasing agent. Then the next leap for me was, I want to own my own business. I've always had this personality where I've hated the concept of having a boss. I can't tell you what it. Why that's the case, but I've always known that to be true. And so owning my own firm was very appealing. We had other peers in the industry. Just like anybody listening can identify, they see other of their peers go out and do it successfully, really. Before we started Trinity, though, I did start investing in the residential duplexes in my neighborhood in my late 20s. I started Trinity at 32. And then, you know, I think the impetus to switch over into the real estate investing world was very, very simple. Real estate leasing and brokerage can be a young person's game. We didn't want to be a leasing agent. We don't want to be in our 50s competing with a leasing agent in her 30s, because they've got a lot more energy, a lot more, you know, whatever.

Well, I don't know, Gary. You're still running 50 milers out there on the trail, so. Could have fooled me.

Well, I mean, we really didn't. So we said, we want to be in a position financially to not have to be brokers into our 50s. And so to do that, we wanted to be successful. That was sort of our why from a professional standpoint, why invest? It wasn't just to go to cocktail parties and tell them, I built this building every year. We wanted to get ahead financially. So that. But, you know, I'll back up and say over the years, got a lot of people, CB JLL and others come and try to buy the brokerage business. And when we looked at the numbers, we realized when. If we sell this business, that's not going to be a life changing event. Which is another aha moment for us when you realize a lot of young burgers may say, if I own my own business and sell it, wow, I'll be done. I can retire. Well, it wasn't a life changing financial event. And so we said we want to create this investment platform that can create those financial life changing events for us.

Thank you. And that makes a ton of sense. So Gary, for the brokers listening right now who are thinking of making the transition to investing, talk about the potential conflict, right? And it's interesting. I actually just came from a lunch with a good friend who is at a brokerage firm his family owned, but he is solely focused on investing now. And he said they came to a point where the brokerage firm said, look, this just optically is not great because you're out there operating office properties, right, for lease, but you're also advising other landlords, right? So how do you reconcile that? So Gary, how did you. When you started buying in the same market where you were brokering, didn't your clients just say timeout? Wait a second, are you now my competition? How did you navigate that?

You know, that's an excellent, excellent question. We were very, very worried about that in the beginning. And what we realized was that if we had ever gone out and tried to raise an institutionally sized fund, a starter fund, 300, 400, 500 million, then yes, our leasing and management clients would have looked at us and said, wait a minute, you look like us. You know, we don't want to work with you. As it was, we really tried to keep the brands of Trinity Partners and Trinity Capital very separate, separate website, separate everything. And we were very intentional about doing the right thing and not getting in the way of our third party clients. But it did present some conflicts. Now, our brokerage team, if you interviewed them today, they say it was a real pain in the ass to have to explain, no, no, we're not that trinity. We're the other. But it worked out over time, but it was challenging to navigate and we were able to do it.

And I'm sure that probably also involved a lot of communication and transparency. So you made. If there was even any potential conflicts, I'm sure you would have put it out there.

So I'll say this and I'll add that in the very beginning, when we would be hired for a new leasing assignment downtown, a buyer would come into Charlotte or Raleigh and say, do you guys invest in real estate? In the beginning we were really nervous about answering that but we'd eventually say, yeah, we do. And nine times out of 10, they'd say, great, we want a partner and you can be our partner. Wow. And we, we'd say, oh, well, good. Glad that worked out.

So that's great. Yeah, Gary, I really, this is fantastic because I think a lot of brokers, you know, for good, good reason, they want to be cautious about crossing that line. And on the flip side, investors who are out there brokering as well, sometimes brokers say, okay, well, stay in your lane. So it is something that you need to be open with and carefully navigate. But, Gary, there's someone listening right now who's in college. Maybe they're, or maybe they're doing their masters. They're to going, you know, they decided they want to jump into real estate. So having gone through all this incredible successful career is starting off in the brokerage world. Is that a great start? Would you, what would you say to that? That graduate right now? If they want to get into, hopefully one day having a portfolio even half the size of yours, a quarter the size. What, where would you tell them to start out?

You know, I think I make this distinction in the book that for folks that eventually want to own, there are two paths, right? We took the, the old school path of learning the business on the factory floor, learning how buildings operate, learning leasing, management, selling the buildings like you did. We learned everything about the property market side of the business and then eventually learn more about the capital markets, too. These days, though, a lot of younger people are going back to unc, mit, Wharton, and getting a master's in real estate, where they learn more about the capital market side of real estate than I learned in my first 10 years of being exposed to it. And then they sort of dive into the investing side of the business. And there's not a right or a wrong answer, honestly. It's just, you know, what path you feel is right for you. But both work well.

That's great advice. So, Gary, you know, usually as I wrap up these podcasts, I, I asked that question for the, the newcomer, someone who, who's looking to get in the business. But now I, I, I, I have to ask you your decision now. You are now retired. So what was the moment where you said, okay, I'm done, I'm willing to retire the jersey, whatever you want to say. And what does that retirement actually mean? I mean, obviously you're sitting here talking to me on a podcast, we're talking real estate. So I, I think, you know, you would surprise me if you said that you don't if you're still not involved in some capacity. So what led to your decision to retire and what does that mean in as far as your day to day?

You know, I think, as you know from reading the book, one of my partners died in 2014 and the other partner both were five years older than me. The other partner, Peter Conway, retired a couple years before me. So I was sort of alone at the top of the heap in a sense with a dozen younger partners. You know, I was the referee for those dozen younger partners. And with my two guys gone that I was very, very close with, it just wasn't as fun as it was early on, honestly. Plus, we've had some real unusual outcomes on the in the investing arena that put me in a financial position where I could say, you know what, I don't want to be everybody's referee anymore. I want to do fun things. And so I semi retired at the end of 2019. I fully retired at the end of 2021. I do love the real estate business and I stay engaged through mentoring other people that have either read the book or I go up once a month and mentor UNC MBA students who are trying to figure out their path. I lecture down at Auburn where my daughter's in school from time to time. So I stay very involved through actively mentoring people. You know, they call and say, I read the book. How did you do this? How'd you do that? And I've had folks fly in from other markets, we got a dinner and to me that's really enjoyable and it keeps me connected to real estate.

I love that. Gary, this is so wonderful and really appreciate everything you've done and all the lessons from the book and just so incredibly inspirational, everything that you've accomplished in your career and doing it in the right way. So we really appreciate your joining us today.

Thanks for having me. It's been a real pleasure meeting you and talking about real estate again, which I love.

Hey, Gary, besides the book, how can people find out about you? Is your. Do you still have a site or contact or what's the easiest way to stay connected and following what you're doing?

I think I'm on social media, but I think if anybody wants to reach out, LinkedIn is probably the best way to do it. Easy to find my contact info there and happy to get back to you in chat.

Wonderful, Gary. Well, thank you again and thank you to everyone who has tuned in. Or do we even say tuned in anymore? I think that's a radio thing. I think you probably downloaded the episode or maybe you're watching this via LinkedIn, YouTube, Instagram or Twitter. So we are now officially multimedia. So but regardless of how you're finding or listening to us, we are here to help you gain the insider's edge to real estate investing. And if you if you didn't get game changing strategies to outperform the market in this episode, I don't know how to help you because this was incredible amount of information here. So wishing you all the best until next week. This is your host James Nelson. Thank you again for joining.

Thank you for listening to the Insider's Edge to Real Estate Investing. We appreciate your subscribing and sharing with your friends. If you haven't already, please connect with James AmesnelsonNYC on LinkedIn, Instagram and Twitter. Please also visit jamesnelson.com where you can find the show notes and other episodes along with an exclusive video series and other helpful resources so you can gain the insider's edge to real estate investing. Until next week.