From Rentals to 12 Commercial Buildings | Adam Craig’s Real Estate Journey

Adam (00:00)

Yeah, I think my commercial investing is a little bit unique. On the residential single family side, I started doing the BRRR method. So the buy, rehab, rent, refinance. So I was able to pull all my investment out of every deal, which drew me to that style of investing. On the commercial side, I didn’t know if it was possible, but I always, I read Reddit subs and books that said, yeah, sure, sure it is possible. And 11 deals later, we haven’t left a penny in any commercial deal. So we’re buying really ugly buildings,

a lot of times they’re vacant or at least partially vacant. And then we’re turning them into nice buildings.

Erika (02:08)

Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika. Today I’m thrilled to be joined by Adam Craig. He’s been making serious moves in the commercial investing space. Adam, I’m so glad to have you on the show today.

Adam (02:24)

Hey, Erika, thank you for having me.

Erika (02:26)

Yeah, I’m excited for you to be here. So let’s dive on in. For our listeners who may not be familiar with you or your journey, give us the rundown. How did you get started in real estate? And when did you know this was the path that you wanted to take?

Adam (02:44)

So yeah, I am 37 now, live just outside of Cleveland, Ohio, and I started my real estate journey right out of college. I went to Kent State and I studied finance. My senior year, I kind of started an online retail business that I won’t go into too much, but I was able to get enough income from that to kind of surpass any entry level job. So I never ended up going into corporate America. I was able to ride this income and kind of save it into everything my real estate has developed into now. So I kind of socked away every penny right out of college and I

Poured it into real estate, bought my first single family home in 2013. It was a rental and I sold that property around 2020, but I remember well. Since then, I’ve done about 85 single family deals and then around 2019, I transitioned to commercial real estate, specifically a lot of retail and office, a little bit of.

warehouse and I’ve been doing that since 2019 and I now own 12 commercial buildings.

Erika (03:44)

drew you to transitioning over more to the commercial side, Adam.

Adam (03:49)

So it was honestly by fate and a bit of an accident ⁓ in hindsight. mean, it was a great, great thing that happened, but right around 2018 had my first kid and previously I had a home office set up that wasn’t going very well with a screaming baby crying around. So I toughed it out for like the first year. And then a year later, my second kid came around and I said, now the home office thing is not going to work. So I started looking for just a office to rent right in my hometown. ⁓

Blog story short, I found a run down building that I had a little bit of interest in and I ended up buying it.

exactly knowing what I was going to do other than maybe use it for myself and try to lease the rest and maybe break even. Two months after that, COVID was announced. It was the first, you know, first sign of COVID. It was right at the infancy. And here I am sitting with this office building ⁓ and they’re shutting everything down. Luckily though, it had quite a bit of work that needed done. So, I mean, we re rehabbed it for about the next six to nine months. And by the time we were done rehabbing and ready to lease it, the world had opened back up again. COVID was extremely prominent and

It was definitely a different world, but people were doing the best they could to live their lives. So

was able to fill it up, made a little bit of money and I said, man, you know, let’s try this again. The second deal, I got an amazing deal on an 8,000 square foot building and I made considerably more money and I guess the rest is history.

Erika (06:01)

Yeah, that’s really exciting and fast forwarding to today now that you’ve gotten more of a feel for it. How do you decide when it comes to commercial real estate if a property is worth it? Do you have a certain criteria or process for that?

Adam (06:18)

Yeah, I think my commercial investing is a little bit unique. On the residential single family side, I started doing the BRRR method. So the buy, rehab, rent, refinance. So I was able to pull all my investment out of every deal, which drew me to that style of investing. On the commercial side, I didn’t know if it was possible, but I always, I read Reddit subs and books that said, yeah, sure, sure it is possible. And 11 deals later, we haven’t left a penny in any commercial deal. So we’re buying really ugly bills.

buildings,

a lot of times they’re vacant or at least partially vacant. And then we’re turning them into nice

but most of them are older. They’re C or B class. They’re not class A with a credit tenant like, you know, Wells Fargo. Most of them, we do have a couple of banks, but I would say most of our tenants are mom and pops. We tailor to the smaller tenant, the mom and pop, a lot of hairstylists, salons, tattoo artists, insurance agents, things like that.

Erika (07:15)

it comes to these properties that you’re finding too, how do ⁓ you balance the renovation costs and getting that good ROI and ⁓ making sure that you utilize any value adds to the space? What’s that like?

Adam (07:32)

So yeah, that was definitely a learning curve. On the residential side, you know you’re looking at comps. You’re going online, you’re seeing what properties have sold for you, you’re trying to estimate how much it’s gonna cost you to rehab and what it’ll be worth. On the commercial side, and on the residential commercial side too, as you get into higher unit count, the buildings typically are valued on the revenue they’re

specifically the net operating income. So I was able to develop, ⁓ actually not develop, I had a Excel pro forma that was given to me that I was able to tweak and it really helps me come up with valuation. And again, these valuations are coming from the amount of income the building is bringing in, not necessarily what the one next door sold for. Another reason why I love the commercial side of things because the forced appreciation, which is basically increasing building revenue, ⁓ is totally in your control unlike what the market conditions

on the building next door are doing or if the market’s going down. ⁓ So if you have a building that’s producing $10,000 a month, you’re gonna put maybe $100,000 into it and then it’ll be producing $20,000 a month. You can just kind of come up with the valuation through a pro forma and use your best judgment. So we’re buying buildings, let’s say maybe $500,000, putting several hundred thousand dollars into them that might be worth a million and a half at the end of the day. So we typically try to 2X our investment on the commercial side.

Erika (08:50)

in the commercial space, what’s like, you know, one misconception that you think you see out there that you want to set the record straight?

Adam (09:00)

Well, for me, I said, who’s going to rent this from me? I mean, are there people out here who need office space? And, you know, I feel the building during COVID, we have a chiropractor, an insurance agent, a couple of lawyers. So during COVID, people needed office space. So certainly post COVID, people are needing office space. know all the, ⁓ you know, work from home, people who are being forced back into the office aren’t happy. Me as a ⁓ biased office building owner do get excited when I see some of those articles, but I totally sympathize for the people

who want to work from home or do a hybrid model.

But at the end of the day, office space is needed. We’ve done some creative things with office buildings by taking maybe 25 % of them and converting them into something like salon lofts. That way we have some diversity in an office building. Because even though I just said people do need office space, the world has changed and there are people still working from home and companies who still are going to let their employees work from home. ⁓ So, you know, you just have to get creative and think a little outside the box and not just fill it with traditional office tenants.

Erika (10:37)

Yeah, absolutely. I’m sure as you know, Adam, every operator in real estate pro has a moment where, you know, things get real. Maybe a deal went sideways or there was a time that you had to pivot fast. Can you share one of those moments in your journey?

Adam (10:55)

So yeah, I mean, when I was doing residential real estate, I started off doing maybe two deals a year from about 2013 to 2015. then when I discovered this bird thing, I had a hard money lender. I knew I’d be poor.

kind of like, you know, let the floodgates open. So I was buying everything in sight. And mind you, in 2015, there were deals everywhere. You know, I would pass up on properties in my Cleveland market that were $80,000 because they were too expensive. you know, hindsight is 2020, but those same properties are worth, you know, two or $300,000 now. So I wish I had picked up more of them. But, you know, it was a difficult and stressful time when I was starting to accumulate 10 or 12 properties. I was trying to get myself

systems in place, trying to find all my contractors, getting ripped off left and right, ⁓ over leveraging myself. So yeah, you name it, I went through it. I’m at a much better position, you know, doing this 13 years now, slow and steady kind of wins the race is my mantra.

Erika (11:58)

focus these days is more commercial, but what kind of advice would you give to people in the residential space?

Adam (12:07)

You know, I think the best thing you could do is buy and hold. I’ve had so many colleagues that have gotten into this business and they get addicted to flipping because you you need the cash. Everyone needs cash. But I always say, if you can flip a couple of houses, get yourself a little nest egg, whether it’s $50,000 or $100,000 or less, depending on what your monthly.

is and then start holding on to properties because the guys that I know who have gotten in and out of properties have nothing to show for it at the end of the day. have properties that I you know I bought for you know $50,000 back in 2013 and that are now worth $200,000 or $300,000 today and I have equity in so many of them and had I not held those properties I wouldn’t really have the net worth I have today. So flipping is a business but if you want wealth building you need to own.

Erika (12:56)

Yeah, and speaking of ownership, know that you’re also in the multifamily space. Can you talk more about what that’s been like and what’s been working for you there?

Adam (13:08)

So I wouldn’t say I’m in the multifamily space. I have commercial buildings that have multifamily components in them, but you’re talking like a building with retail bottom, a little bit of multifamily up top. So I thought I was going to dive deep into the multifamily space. That was my progression of plans. I was gonna buy residential. I was gonna buy single families and then buy apartment buildings. But again, I did pivot in 2019 and I can never say never, but the management side on the non-residential is one of my major draws.

I was compared to, let’s say you have a $5 million apartment building with 100 units in it. ⁓ And then we can compare it to a $5 million strip plaza with maybe seven or eight businesses. That hundred unit apartment building has a hundred fridges, a hundred stoves, washer dryers. People are living there. They’re there 24 seven. You have a lot of crime. People are in and out. The retail plaza. Not only are most of these tenants responsible for their own space, they’re only there from nine to five. Some of them are closed on certain days. They’re not living.

in the space. So the management intensiveness of residential on a comparative basis to non-residential is immense. And as I continue to do this business, I’m looking for ways to reduce the amount of time I spend in it. And I didn’t see that on the residential side. The scale that would be needed to do it on the residential side is possible, but it’s much more difficult to me than the non-residential side.

Erika (14:32)

Yeah,

speaking of, you know, getting that time back, you know, that seems to be a common problem in real estate. You know, what what kind of advice do you have for our listeners when it comes to finding more time or just that work life balance?

Adam (14:49)

I mean, this really boils down to preference. I did a commercial real estate mentorship class with a guy named Mosh Patel and he’s a great guy, but he’s in

forties, he’s pushing 50 and he still works all the time and he thrives on it and he loves working. I love working too. I’m always, seven days a week I’m doing something with my business, but from the time when I was working 50, 60, 70 hours a week in the 2015 time,

that that’s not really worth it. Granted, I’m in a much more comfortable financial position than I was, so I do think the grind is necessary and I think you should go through it, but work’s not everything. I think family is only here for a short time, especially if you have children. They’re not gonna be in the house long. You can always resurrect your grind when they get out of the house, but I do think it’s important to slow everything down, not only for family’s sake, but just for your own mental health. It’s difficult, you can burn out, and I think balance is important.

Erika (16:30)

Yeah, absolutely. Were there any systems or anything that you have changed or evolved over the years with that in mind?

Adam (16:40)

Yeah, I’ve made ⁓ hires every year or I’ve increased the amount of work that I’ve given a particular hire. So it’s been slow. I have a hard time delegating because I do like control. But after you do delegate, you realize maybe that control wasn’t necessary. Someone can do as good a job as you’re doing. It’s not that difficult as long as you find the right people.

Erika (17:03)

Yeah, absolutely. ⁓ you know, it takes time to find that people you gotta, you know, build your network too. And, ⁓ you know, when it comes to you and building your network in the real estate world, what has been the biggest game changer for you, Adam?

Adam (17:20)

Well, social media probably. I started a social media campaign right around 2020. Prior to my commercial real estate career, I was doing the residential and I had a hard money lender. You borrow $120,000, you do your flip or your rental and you pay it back. 12 to 15 % interest rate at the time was pretty common. But as I was going into the commercial side of things, I needed a lot more money and it was gonna be difficult to borrow half a million or a million dollars at a high

interest rate when the buildings have no income coming in. So I kind of realized I had to find an alternate source of funding and through that came my social media campaign where I just started posting Instagrams and Facebooks and I was able to attract a lot of private investors. And the private investors I’m able to pay something less than the hard money lenders and it’s enabled me to really launch the commercial side of things.

Erika (18:14)

That’s a really exciting for our listeners who are ⁓ looking to level up. They’re new to real estate, haven’t done a lot of networking. Where should they start?

Adam (18:26)

I mean, look at your local meetups. You can only go so far with the local meetups, but it’s the contacts that you make through them. I’ve met someone at one of those meetups that we later got coffee with and the guy moved out to California. And then three years later, we bought a commercial building together. So you just never know where these relationships or these handshakes are gonna lead to.

I’ve actually gotten a little bit lazy with that now that I’ve kind of figured things out and I feel like I don’t necessarily need to rub shoulders with as many investors anymore, but I miss it. Some of the opportunities that present themselves from just rubbing shoulders with those people is invaluable. So get out there, network, talk to people, and if you do buy a property, hold onto it.

Erika (19:08)

Yes, absolutely. Adam, let me ask you this. What are you most focused on solving or scaling next in real estate?

Adam (19:19)

So I’ve got a little project. We have a building under contract and one of the things I mentioned earlier is we filled a lot of our office buildings with a salon loft type suite. So you have your salons, barbers, cosmetologist, masseuse, those types of things. ⁓ We’ve had such success with building our buildings with them. We’re actually going to basically do a full building of salon loft. So instead of just putting a sink in each room, we’re going to have washer dryers. We’re going to build it out, you know, really,

at a higher level, we’re gonna have a lot of shared space. So we’re not gonna have a subscription service like you would with your standard salon lofts, but we’re gonna kinda try to, the idea is instead of getting $500 for a room with a sink, maybe we can get $800

for a room that’s all suited out. So it’s a 8,000 square foot building, so relatively small project to test the market on, and if it goes well, we may do it on a bigger scale.

Erika (20:13)

That’s exciting. Are there any challenges that you foresee with expanding that way?

Adam (20:20)

So when I talk about…

Mom and pops being my bread and butter, that’s good and bad. The good thing is we can charge more for the smaller spaces than you can for a 5,000 sprawling foot space. But the bad thing is it’s more work. If you have a credit tenant like Wells Fargo who occupies a whole floor, maybe you’re not making a ton in cash flow, but they sign a 10 year lease, they take care of everything. You don’t have to worry about collecting the rent. With the small mom and pops, have 170 tenants spread out all over the Cleveland area and it is a lot of work.

But we’re willing to do that work. have a team to help with that work. And at the end of the day, more work, more reward. And that’s how I feel about it.

Erika (21:00)

Yeah, that’s a big and you’ve already got a great track record. So that’s very exciting. Before we wrap up, Adam, if someone wants to reach out, connect, collaborate, how can they reach you?

Adam (21:15)

I’m at Instagram, my handle is AdamTheInvestor. My website is CLEInvest.com. You can also reach me through email. My email is on my website as well.

Erika (21:26)

Excellent. Well, thanks again for being here and sharing your insights and your story. It was awesome.

Adam (21:32)

Thank you, Erika.

Erika (21:34)

And for our listeners, if you got value from this episode, make sure that you’re subscribed to the Real Estate Pro Show. We’ve got more conversations coming up with pros like Adam, who are out there building fantastic real estate businesses. We’ll see you on the next episode. Bye.