Category: Jewels of Wisdom Newsletter

2025 Year in Review

Last year I proclaimed that we would double our profit. While that didn’t occur, we did have our best year ever:

• 20% Growth: While we didn’t double our profit, we did grow by more than 20%. We also have 35% more inventory on the books, somewhere in the range of 140 deals. This is the best position the company has ever been in.
• Biggest Deal Ever: We did our largest deal ever, reaping multiple seven figures on a single deal.

The Goal for 2026

The goal, once again, is to double the profit of the company in 2026. 

More & larger deals means more & larger profit shares for every partner on team assisting in making the best deal possible.

My Framework for Setting Goals

1. What is the #1 skill I have now which produces the most results? Can I expand this further? 80/20 rule, 80% of results come from 20% of our actions. IDENTIFY the 20% most impactful actions, the make that 20% become the 80% and you can multiply your results by 3-4X. For me, this skill is sourcing & negotiating deals.
2. What are some things I do, which cost time, that produce little, or even no results? Can I say “No” to these things next year to growth my results in other areas? 80/20 rule again. Long time REI Diamonds fans have notice much less podcasting from me this year. Doing the podcast is fun, but doesn’t generate deal flow for my team here at Diamond Equity. So I’ve done less to make more room for sourcing & negotiating deals.
3. What will life be like a year from now if I recreate certain areas of my life around my current/future goals?  This is a visualization, with eyes closed, SEEING myself living life one year in the future. The nature of my goal is that my team benefits the most when it is achieved. My greatest achievements are when partners of mine have bought new cars, bigger houses, and even houses for family members. They get their goals which gives me great satisfaction. I want to do more of this.
4. For any goal on my list, am I willing to pay the price to achieve it? Every goal has a set of actions, beliefs, and time/money investment required to achieve. It is important to understand the cost up front, when setting the goal and deciding whether or not you actually want to do/believe/pay to live out that goal. My goal requires 365 days per year of attention. Yes, I take off sometimes, but my mind is ALWAYS running on how to take our results up another level.

Care to join me in 2026? It is NOT an easy role, being a Diamond Equity Acquisition Manager. You work hard to make & run 10-20 deals each year, but earn $150K-$250K or more, depending on your skill, hustle, & luck of the market.

I’m looking for one commercial real estate partner to work leads we provide to acquire, operate, and resell industrial & retail assets. We have capital.

I’m looking for several residential acquisition managers to work leads provided to buy, renovate, & sell houses throughout the U.S. You must be able to work from our offices in either Roswell, GA, Schamburg, IL, or Folsom, PA.

If this is you, please reply to this email and convince me that you have what it takes to be a volume Deal Maker with Diamond Equity.

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $56,031,000
• 2025 YTD $59,463,000

What are YOUR Real Estate Talents?

Here’s a summary of the Parable of the Talents. You can read the full story here.

• The Setup: A master entrusts his property to three servants before traveling: five talents to one, two to another, and one to the third, “to each according to his ability”.
• The Investment: The first two servants trade with their talents and earn an equal amount more. The third servant buries his single talent in the ground. Note, there is SKILL in investing successfully. More to come.
• The Return: Upon his return, the master praises the first two for their faithfulness and rewards them, but condemns the third servant as “wicked and lazy” for doing nothing.
• The Consequence: The master takes the one talent from the third servant and gives it to the one who had five, stating, “For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away”. -Matthew 25:29

What is a “Talent“? Talent now refers to a natural aptitude, skill, or ability in areas like arts, sports, or academics, but also broadly means a person with such skills, or a group of skilled people in business, and historically was an ancient unit of weight or value. In fact, one talent of gold might pay for a house, or 20 years worth of a laborer’s wage in those days.

Talent as a Measure of Value applied to Real Estate Investing One servant began with 2 talents, the other with 5. So one was starting with more capital than the other. For each to double their original amount, they had to successfully invest in deal sizes which fit their starting position.

When I review my career, I remember buying houses for $20K, investing $30K in repairs and selling for $90k, reaping about $20K in profit. That was a 2 talent time in my life.

Recently we sold a shopping center for $16M after buying at $8M and investing approx. $3M in capital improvements. This is a 5 talent time in my life.

As time goes on I’ve become more comfortable running deals with much larger budgets. $20K renovations have become $200K or even $2M capex projects. The key was treating every deal done with a high level of care & execution. 

Talent as a Skill applied to Real Estate Investing Doesn’t it seem interesting that the Parable of the Talents is about investing money, but uses the word “Talent”? I always look for deeper meaning in everything. Seeing “talent” as a skill was key for me, because I didn’t even have one talent worth of money, let alone two or five.

Back in 2011 when I read this, I had no money to speak of, other than maybe $5,000 or so. No car, owned no houses. But I had that natural aptitude, skill, or ability to do real estate deals. Thank God!

I remember thinking & praying on that skill. It wasn’t much at the time. Maybe I’d find a deal for another investor and create a $3K profit. Or flip a house and create $5K for myself. However, I found great peace & joy KNOWING I was working with my talent with an EXPECTATION of what was promised:

“For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away”. -Matthew 25:29

Ah, that now-fulfilled promise of abundance.

The lesson here? No matter where you are today, whether 2 talents or 5 talents, in skill or in money, keep it growing and you will have abundance! God said so, and I am living proof.

If you’re interested in keeping your capital working by placing it short term with us at 12%, please sign up to review deals at www.FundRehabDeals.com

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $56,031,000
• 2025 YTD $58,039,000

Why are Mortgage Rates Still Above 6% (as of Friday, Dec 12)

Mortgage rates are actually set by investors who view risk & reward in the same way you do. To illustrate the reason why mortgages are still above 6%, allow me to do a demonstration: (assume you have $300,000 to invest)

Would you loan me $300,000 at 12% interest? Many readers actually make loans like this to Diamond Equity (my company) often. I assume this is because the 12% is an attractive return compared to competing opportunities AND our track record and strong balance sheet offers lower risk

Would you loan me $300,000 at 6% interest? Most readers would NOT make this loan. They have better opportunities to earn more than 6% OR don’t want to risk their money being tied up at 6% in case something better comes along.

Would you loan me $300,000 at 4% interest? We all agree that no one reading the Jewels of Wisdom newsletter would make a private loan at 4% to fund a fix & flip investment deal. We would rather leave it in a money market account safely earning 3% with no risk.

This is How Mortgages Work

The money to fund those 6% mortgages comes from bonds. Bond investors are people like us and institutional investors (life insurance companies/pension funds).

Why Were Rates so Low for so Long?

Until early 2022, the Fed was buying mortgage bonds. The fed was willing to “lend” into mortgages at rates as low as 2-3%. In other words, using the example above, it would be like the Fed lending the money to me at 2-3% interest.

Once they stopped buying those bonds (lending through mortgages), rates immediately jumped to the 6-7% range. This is the market driven rate of return investors expect in today’s market if they are waiting 20-30 years to have their money returned.

Don’t Count on Rates Dipping Below 5-6%

I recently wrote about The Maturity Wall, where the high interest rates have arranged a dirty bomb in commercial real estate similar to what occurred in 2008 in the residential housing on account of adjustable rate mortgages.
View Source

6% Mortgage rates are the “normal” rates over the course of our lifetimes. During the time from 2008 (shaded area is recession) through 2022, the Fed was “buying” the mortgage bonds and receiving 3% return on their investment. Now, they are not.

We can expect rates to settle in this 5-6% range for the next few years unless we enter recession. If the overall economy falters significantly, and the Fed buys mortgage bonds again, that is when we could expect to see 4% mortgages. I don’t have high hopes in this occurring anytime soon.

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $56,031,000
• 2025 YTD $55,921,000

The Fireplace Fallacy: Why You Aren’t Getting “Heat”

Imagine standing in front of a cold, empty fireplace and screaming at it to keep you warm. It sounds ridiculous, yet this is exactly how the majority of aspiring real estate investors approach the business. They stand before the marketplace with a sense of entitlement, believing they’re just going to find a deal for sale that is profitable at the list price.

Don’t Mistake Movement for Progress

Even those who are willing to put in effort often fall into the trap of dragging heavy stones into the hearth. They exhaust themselves carrying the dead weight of busy work—perfecting logos or organizing desks—genuinely confused why their backbreaking labor yields no sparks. In this business, rocks might feel heavy like work, but they will never burn like wood; effort alone is useless if it is applied to the wrong materials.

The Skill is Knowing Where to Dig

Real success comes from venturing out into the snow-covered field of the market to find the hidden logs. The “magic” isn’t in how hard you carry the fuel, but in knowing exactly where to dig to find the deals that others overlook. Experienced investors work smarter, not harder, gathering high-quality wood that ignites easily, realizing that you must provide specific value to the fire before it will ever provide heat to you.

Proverbs 25:2 “It is God’s privilege to conceal things and the king’s privilege to discover them”

Anyone I’ve studied who built lasting success has built in this manner. Discovering the nuanced & effective actions and then repeating them over and over. It’s actually simple, but not easy.

Success & deals are discovered through intelligent effort and high level execution. And yet, sometimes a deal is had through luck by an idiot. I’ve found the latter to be tough to repeat-better to build a business on sound strategy, tactic, decisions, & effort than luck.

Stones: Heavy Lifting, No Heat (Busy Work)

These tasks feel like work because they consume time and energy, but they do not generate revenue. They are heavy to carry but will never catch fire.

• Organizing the CRM: Endlessly color-coding your database or shuffling old, cold leads instead of generating new ones.
• Endlessly Touring Property: You can see all the properties you want, but without an offer made, you have nothing.
• Doom Scrolling the MLS, Zillow, Loopnet, Etc: Daydreaming over listed property might feel good, but you have to take action!

Wood: The Fuel for Profit (Revenue Generating Activities)

These tasks often require digging through the “snow” (rejection), but they are the only things that create heat (money).

• Making Offers: Putting a specific price and terms in writing and presenting it to a decision-maker.
• Follow-Up: relentless contact with warm leads who aren’t ready to sell today but will be ready tomorrow.
• Live Conversations: Speaking directly with property owners about their motivation to sell.

Personally, I’m ALWAYS on the hunt for Heat, those good, profitable deals. If you have one, I am ALWAYS buying, open to Joint Ventures, and write many checks throughout the year into Private Placement deals.  Feel free to email me back. (You sign up for this newsletter to get my personal email address)

Additionally, I’m ALWAYS on the hunt for our next Acquisition Manager. Ideal Ac Man’s have made $70K-$100K per year in a sales job before, want to double that, and know the cost, in effort, to create that result. Find me if this is you. Convince me of your “heat” with more than a resume.

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

The Grind vs. The $1.8 Trillion Wall

There is a misconception that real estate is a “passive” game. We are sold the dream of sitting back and collecting checks while the market does the heavy lifting.

But in 2025, the investors who relied on the market to do the work for them are in trouble. The era of “lazy capital” is over, and the era of the operator is back.

The “Easy Money” Crash Between 2020 and 2022, too many investors got comfortable. They bought properties with short-term bridge debt, assuming low interest rates were a permanent law of nature. They didn’t hustle to create forced appreciation; they leveraged cheap debt to fake it.

Now, those bills are coming due.

We are staring down a $1.8 Trillion commercial real estate “Maturity Wall” by 2026. These loans are expiring, and the owners can’t refinance. Their properties are worth less than they were three years ago, and rates have doubled.

Why Hustle is the New Equity This is where the separation happens. While the passive investors are paralyzed by negative leverage, the real operators are engaging. You actually have to WORK the deals in order to generate the return.

The Opportunity: Thousands of owners are holding assets they can no longer afford. They don’t need a “market price” offer; they need a solution to a debt problem that is about to drown them.

The Work: These deals aren’t just sitting there waiting to be picked up effortlessly. You have to make offers, often below what the sellers paid in 2020-2022. Then you have to have the capital to close & complete improvements.

As value add investors, we buy “as-is” because we aren’t afraid of the mess. We aren’t afraid of the work required to stabilize a property that a “lazy” landlord let slide. Plus we have the cash necessary to do the work.
The Maturity Wall is scary for the passive investor. But for us? It’s the greatest buying opportunity of the decade—if you’re willing to put in the work.

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $52,164,000
• 2025 YTD $54,246,000

No One Wants to Buy Your Property

To 99.999% of buyers in the market, your property is a pass. They simply aren’t even interested enough to notice it’s for sale. To that remaining .001% your price is too high, except for that single buyer willing to pay the price, clear due diligence, and follow through on closing the deal.

When searching for a buyer, it can feel like searching for a needle in a haystack. It’s even worse when a seller’s price expectations are above what a buyer is willing to pay. This has been the situation over the past 2 years in both commercial & residential. Most buyers aren’t willing to pay record high pricing, leaving us in a declining transaction volume situation.

That’s just how the market works. How many buyers were willing to pay more than $16M for our shopping center in Las Vegas? Only one. Thank God they cleared DD and closed. Money is in the bank & already re-invested.

How many buyers are willing to buy that freshly renovated house flip you have for sale? Well, in that Covid era of low rates, you might get threatened by many offers, but only one can actually close.

Now, in this more normalized market, I can tell you from the 235 deals closed this year, most deals went to closing with a single offer from a single buyer. Many Miracles. Thank God for every single buyer on every single one of those deals.

Most buyers pass on most deals because the PROPERTY is NOT a fit for them. 

• Buyer needs a house with 2 bathrooms, and yours has 1, it’s a pass.
• Buyer buys shopping centers and you have a warehouse, it’s a pass.
• Buyer wants more land than your .25 acre lot, it’s a pass.

Diamond Equity is a Market Maker

Our company, Diamond Equity, does not operate a “buy box” the way most buyers are constrained by. We are MARKET MAKERS. We will review any piece of real estate in the U.S. and MAKE AN OFFER. We don’t discriminate, we buy MANY properties which almost everyone would rather not own.

Diamond Equity IS that .001%, that willing buyer, for nearly any asset. Sure, there are some lots, buildings, & locations which are simply economically unviable for some reason, but 99% of the property that crosses our desk will get fully underwritten for an offer & closing. I know of no other buyer in the U.S. (and I know quite a few) who is willing to engage in such broad asset class targeting & ownership.

400+ Problem Properties this year, undesirable for some reason:

 We bought them. 

• 2 Bedroom house in a flood zone? We bought it
• 60,000 sq. ft. shopping center 60% vacant? We bought it
• Undeveloped 1/2 acre land in a low income area? We bought it
• 30k Sq. Ft. Landlocked Warehouse? We bought it

I will not waste your Sunday with the endless list of 235 property examples bought this year. Instead, if you have a deal you want to exit, I invite you to email me the details.

PLEASE NOTE: We are VALUE ADD buyers. Any deal we make, we MUST be able to increase the value by adding value. Renovations, upzoning, entitlements, permitting, leasing at market rates are a few examples of value we expect to add. We may not be the highest “offer” you can extract, but what’s important is actually going to closing & collecting your proceeds! (not going under contract & re-negotiated before closing)

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $52,164,000
• 2025 YTD $52,759,000

Thank you Scott Scheel & the Commercial Academy Team!

This year I won the award for Platinum Member of the year acknowledging the growth & results of the past several years. Humbled to be acknowledge among many great operators across the U.S. who share their wisdom at these Commercial Academy Events.

Commercial Mastermind Take Aways

1. The Wall of Defaults – $1.5 Trillion in commercial real estate debt is due for refinancing by the end of 2026. Much of this debt is upside down: the buildings are worth less than the outstanding mortgage. I see dozens of these deals monthly, many with sellers who have no clear exit.
2. The Coming Interest Rate Reductions – Once Jerome Powell leaves his position with the Fed, a more dovish appointee will replace him. This is a 99% probability, in my view, signaling lower rates in 2026. Guaranteed (but NOT my personal guarantee…)
3. Buy VALUE, not cheapness – I’m naturally drawn to properties in the worst condition. I’m a real estate healer; I love transforming distressed properties. But in commercial, many GREAT DEALS are great properties with unlockable value, often selling at a price that isn’t considered cheap.
4. This time, it’s Different. – This isn’t 2008. Currently, we’re seeing rolling distress. The office sector is hit hard, multi-family is less affected but worsening, and many other asset classes are soft. In 2008, everything stopped at once. This time, it’s more of a wave. None of us know if this is just a large wave that crashes or a tsunami that simply overwhelms everything. Who knows? Perhaps a drop in interest rates will save the day.

Had a great time seeing all of my fellow Commercial Academy friends. Looking forward to catching up again in 2026!!

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $52,164,000
• 2025 YTD $50,297,000

The Value-Add Playbook: Flipping Commercial Property – Yield on Cost

When most people hear “flipping,” they think of residential TV shows—a fast-forward montage of new paint, granite countertops, and a quick sale based on neighborhood comps. In commercial real estate, “flipping” is a different sport entirely.

You can’t “flip” a 50,000-square-foot industrial building with fresh paint. The value isn’t based on emotion or comparable sales; it’s based on math.

A commercial property’s value is a direct function of its Net Operating Income (NOI). The formula is simple: Value = NOI / Cap Rate.

Therefore, to “flip” a commercial property (what we call a “value-add” play), you have only two options:

1. Decrease the market cap rate (mostly out of your control, as it’s set by the market).
2. Increase the Net Operating Income (entirely within your control).

This is where the real work is. It’s not about cosmetics; it’s about executing a business plan to fill vacancies, increase rents, or cut bloated expenses. And the single most important metric for this strategy is Yield on Cost.

What Is Yield on Cost (YoC)?

Yield on Cost is the metric that measures the success of your entire value-add project.

It’s your future, stabilized Net Operating Income divided by your total project cost.

• Stabilized NOI: This is the potential NOI you will achieve after your business plan is complete (e.g., the building is 95% leased at new, higher market rents).
• Total Project Cost: This isn’t just the purchase price. It’s everything you spend:
  • Purchase Price
  • Renovation & Capex Costs
  • Tenant Improvement (TI) Allowances
  • Leasing Commissions
  • Carrying Costs (interest, taxes, etc. during the repositioning)

The formula is: Yield on Cost = Stabilized NOI / Total Project Cost

This single number tells you the true return on all the capital you invested in the deal.

The “Spread”: Where Profit is Manufactured

Here is where the “flip” profit is created. Your goal as a value-add investor is to create a significant spread between your Yield on Cost and the market cap rate.

The market cap rate is the price investors are willing to pay for a stabilized, low-risk asset.

Your Yield on Cost is the return you created by taking on risk (construction, vacancy, market uncertainty).

The difference between them is your profit margin.

Let’s use an example:

• You find a vacant retail center you can buy and renovate for a Total Project Cost of $2,000,000.
• After 18 months of work, you lease it up, achieving a Stabilized NOI of $160,000.
• Your Yield on Cost is $160,000 / $2,000,000 = 8.0%.

Now, you take this stabilized building to the market. Buyers for a fully-leased, safe asset like this are happy to pay a 6.0% Cap Rate.

• New Value = $160,000 NOI / 6.0% Cap Rate = $2,666,667
• Your Cost = $2,000,000
• Your “Flip” Profit = $666,667

You manufactured over $660k in equity. That 2.0% “spread” (8.0% YoC vs. 6.0% Market Cap) is your reward for the risk and work of transforming an empty building into a stable, income-producing asset.

The Real Work of a Commercial “Flip”

This profit isn’t a quick hit. A residential flip might take 3 months. A commercial value-add project takes 18-36 months.

The “work” isn’t painting; it’s negotiating leases, managing construction, navigating zoning, and underwriting tenant credit. You are taking a high-risk, non-performing asset and absorbing that risk until it is a low-risk, performing one.

In commercial real estate, you don’t find value; you create it. Yield on Cost is simply the “report card” that shows you how well you did.

Have a Value Add Deal For Sale? Here’s our Buy Box:

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $52,164,000
• 2025 YTD $49,233,000

The True Value of Commercial Real Estate – The Net Operating Income

In the world of investing, assets are valued on a spectrum between pure emotion and pure math. On one end, you have assets like fine art or classic cars, where value is almost entirely subjective. On the other, you have commercial real estate (CRE).

While a “trophy” property might have some emotional pull, the true value of an income-producing property like a retail center or industrial warehouse is driven by one thing: its Net Operating Income (NOI). The NOI is the engine of the property. It is the total income generated (rents, etc.) minus all operating expenses (taxes, insurance, maintenance). This simple number dictates what an investor is willing to pay.

Income vs. Emotion: A Valuation Breakdown

Not all assets are valued equally. The driving force behind the price tag changes dramatically depending on the asset class.

Single-Family Residential:

Value Weighting (Approx): 60% Emotion / 40% Income

Value is driven significantly by emotion. A buyer is purchasing a home, not just a cash flow stream. They factor in school districts, kitchen finishes, and the “feel” of the neighborhood. I ABSOLUTELY LOVE buying, renovating, & selling houses for this exact reason. You have a chance to sell to an emotional buyer on the exit.

Stocks (Publicly Traded): 

Value Weighting (Approx): 50% Emotion / 50% Income

This is the ultimate hybrid. A stock’s value should be driven by its fundamentals—earnings, dividends (income), and future growth potential. However, the market is also a massive voting machine driven by daily news, fear, and hype. A stock with zero income can skyrocket based purely on market sentiment. If you can get on the right side of the buy-recognizing the potential for emotional expansion-you can win big.  Think Tesla stock  bought in 2020 or Netflix stock bought 2 years ago. Ah, but there is also the skill/luck necessary to “HODL”….

Commercial (Retail/Industrial): 

Value Weighting (Approx): 95% Income / 5% Emotion

Value is driven by mathematics. A buyer is purchasing a business asset. The only questions that matter are “How much does it pay?” and “For how long?”

This fundamental difference is why NOI is the king of all metrics in commercial real estate. The entire valuation is an expression of the perceived risk and durability of that income stream.

Why Retail & Industrial Leases are Different
In the retail and industrial sectors, the lease agreement itself & the durable income stream it provides is the most valuable asset—even more so than the physical building. The remaining lease term is critical; a 10-year lease with a national corporation provides a bond-like, predictable return that investors will pay a premium for. A building with only one year left on its lease is a speculation, not a stable investment. In fact, it is viewed as completely vacant by buyers & their lenders. Impossible to get a loan=lower purchase price is needed.

Tenant Options Restrict Value

Furthermore, in strong markets, a lack of tenant options to extend the lease gives landlords significant leverage. If an industrial tenant has only one or two other buildings in the submarket that meet their needs, the landlord has immense pricing power at renewal. Properties with many extensions create challenges to unlocking the full value of the property by bringing rents to the true market price.

Releasing is EXPENSIVE!!

However, on the other hand, when a lease does expire, the costs to “re-tenant” the space are substantial. An owner must often budget for 6-18 months of vacancy-paying mtg, taxes, & insurance- hefty leasing commissions, and often tens or hundreds of thousands of dollars in tenant build-out costs to attract a new user. Obtaining that durable income stream-that tenant-often costs as much as 20%-50% of the value of the building once that lease is signed.

The best time to sell is when you have a fresh lease with long term.

When the NOI Fails: Understanding Tenant RiskThe subject of any email about CRE should be: “How durable is the income stream?” Because when the NOI falters, the property’s value collapses. This failure typically comes in two forms:

The “Credit Tenant” Bankruptcy: Many investors bank on the security of a large, national, publicly-traded company. However, as we’ve seen with recent large-scale bankruptcies (Rite Aid, Big Lots, Ruby Tuesday-to name a few), this “guaranteed” income can vanish overnight. When an anchor tenant goes dark, it can trigger co-tenancy clauses, allowing smaller tenants to break their leases, causing a catastrophic domino effect on the property’s NOI.

The Fragile Local Tenant: On the other end of the spectrum is the small, local “mom-and-pop” tenant. While they may be the heart of the community, their income stream is often fragile. They are highly susceptible to local economic downturns, new competition, or even personal health issues. A two-month dip in sales could be the end of their business—and your rent check.

We Buy Value Add Commercial & a Boat Load of Houses throughout the U.S.

(I Need a $3M-$9M purchase to close by year end.)

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $52,164,000
• 2025 YTD $48,497,000

Are Diamonds Discovered? Or Built?

As real estate investors & developers, we are always on the hunt for that next “diamond in the rough.”  But what if the most valuable diamonds aren’t found? What if they’re made?

That’s the difference between a standard investor and an investor with a developer’s vision.

An investor with “Developer’s Vision” creates the Best Deal Possible.

It’s the ability to look at an empty lot, an outdated motel, or an underperforming property and see not just what is, but what could be. It’s a strategic foresight that goes far beyond blueprints and budgets; it’s about identifying an unmet need in the market and having the courage to build the solution.

This vision is the engine that creates value from the ground up. It’s how an investor moves from competing over the same scarce deals to creating an entirely new, high-demand asset class.

From Vision to a Niche Asset: The Large-Group STR

We explored this very concept in a recent episode of the REI Diamonds podcast with Andrew Llewellyn on the topic of Large-Group Short-Term Rental Investments.

This is a masterclass in developer’s vision.

Andrew doesn’t just buy a big house and hope a large group rents it. He dives deep into a specific market gap: the need for properties designed from the ground up to host large groups like family reunions, corporate retreats, and milestone celebrations.

This vision dictates every decision:

• Acquisition: Finding land or properties that can be legally and physically transformed.
• Design: Creating layouts with ample bedrooms, massive common areas, and unique, “wow-factor” amenities that groups can’t get anywhere else.
• Operations: Building a management system that can handle the unique challenges and logistics of large-group turnovers.

By developing a product for a specific, underserved customer, Andrew’s vision allows him to create an asset that commands premium rates and faces far less competition than a standard 3-bed, 2-bath vacation rental. He isn’t just in the real estate business; he’s in the experience business.

Listen to the Full Episode

To get the full blueprint on how Andrew Llewellyn identifies these opportunities and executes his developer’s vision in the short-term rental market, you won’t want to miss this conversation.

Listen Now: Large Group Short-Term Rental Investment with Andrew Llewellyn

The key takeaway is this: A true “REI Diamond” isn’t just a property; it’s a well-executed strategy.

What unmet need do you see in your market? What could you build that everyone else is overlooking?

Cultivate your developer’s vision to spot value where others do not.

Have anything like this for sale? I am Buying: 

(I Need a $3M-$9M purchase to close by year end.)

• Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
• Mobile Home Communities (50 pad minimum)
• Well located Retail Development Sites
• Residential MFR & SFR
• Located anywhere in the U.S.
• Value Add Required-There MUST be a path to push the value
• Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

• 2021 $54,615,000
• 2022 $54,547,000
• 2023 $57,489,000
• 2024 $52,164,000
• 2025 YTD $48,034,000