Sep 20, 2022
Ariel O. Diaz, CCIM is the Managing Principal of Trajan Capital LLC and CEO of Trajan Commercial Real Estate Inc. He and his wife, Claudia oversee the day-to-day operations of their family-owned commercial real estate investment and consulting firm based in Miami, FL. He has achieved the distinguished Certified Commercial Investment Member (CCIM) designation, which only six percent of all real estate practitioners across the globe have the privilege of holding. He serves on the CCIM Miami Dade/Monroe District Board of Directors.
In this episode, Ariel discusses
his approach to raising funds, breaking through limiting ideas, and
how he's been successful in commercial real
estate.
[00:01 - 05:08] Getting into
Commercial Real Estate Investing
- Started as a real estate broker 20 years ago which led to his property management career
- Built his own commercial real estate brokerage with his wife
- Commercial real estate and brokerage are challenging but doable with the right team
[05:09 - 09:26] Teamwork in Business
- Breaking down the fund side of his business
- He teams up with different partners from other states allowing them to operate without starting all over again
- Find out why Single Purpose Vehicle is the fund structure that works for his team
- The long-term benefit allows attorneys to lower their price
[09:27 - 17:14] Build Relationships, Build Business
- Turning active investors into passive investors
- Break limiting belief in raising capital by presenting investors with opportunity instead of asking for money
- Talking to more people increases your chance of finding good opportunities
[17:15 - 19:17] Closing
Segment
- Earning the Certified Commercial Investment Member (CCIM) Designation
- Reach out to Ariel and check out his latest book: The Four Pillars of Real Estate
- Links Below
- Final Words
-----------------------------------------------------------------------------
Connect with Ariel on LinkedIn for passive commercial real estate investment opportunities!
Connect with me:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!
Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
[00:00:00] Ariel Diaz: Most people, I'm not gonna say everyone and everyone structures their business differently. But definitely we have noticed, at least for ours, definitely, you know, everything matters. So, you know, you have to have the good articles, you have to have a good website, you have to have all those things. But at the end of the day, you've got to call people and let them know even if you sent them an email, hey, did you receive that email? I have an opportunity now, I don't know if it's gonna last, you know, we are getting reserves coming in. And just that simple call.
[00:00:42] Sam Wilson: Ariel Diaz is an investor himself that creates opportunities that he shares with his clients, so everyone can participate in a high-quality asset that outperforms the overall market. Ariel, welcome to the show.
[00:00:53] Ariel Diaz: Welcome. Thank you.
[00:00:55] Sam Wilson: Hey, you know, there are couple of questions I asked. Three questions I ask every guest who comes on the show Ariel in 90 seconds or less? Can you tell me where did you start? Where are you now? And how did you get there?
[00:01:04] Ariel Diaz: Sure. Well, I started 20 years ago, as a real estate broker, I assisted people to buy and sell residential properties. And that led me into a property management career. And about 15 years later, I started my own commercial real estate brokerage with my wife, and I ventured into commercial real estate really enjoyed that I ended up buying multifamily properties. And then little by little, we scaled and by actually looking for better opportunities, because I'm here in Miami, Florida, we were trying to invest that estate and we ended up partnering with an operator, I ended up investing in that project. And I brought a couple of my close clients along. And that's how I started actually a fund and investing in other people's projects.
[00:01:56] Sam Wilson: 15 years you say as a residential broker?
[00:02:01] Ariel Diaz: I was 15 years as a resident. Well, give or take? So in 2014, I transitioned into strictly commercial real estate, I had done one multifamily project. And, and I fell in love with it, I was really, that's what I've always really wanted to do. And I said, You know what, I'm never gonna do residential again. And I'm just going to do commercial real estate. And then it just went on from there. And we did industrial properties. And we got involved in a retail center. And next thing, you know, we were just focused on commercial real estate. And when I say we, it's myself and my wife, because she's a commercial real estate broker as well.
[00:02:38] Sam Wilson: That's awesome. Do you ever look back at your story and go, Why did it take me so long to get involved in commercial real estate?
[00:02:45] Ariel Diaz: All the time, all the time.
[00:02:46] Sam Wilson: So what was the lightbulb moment? Like when were you? When did you go oh, my gosh, like, this is 100% What we have to be focused on.
[00:02:53] Ariel Diaz:
I always wanted to do it. The thing
is, I was very fortunate, I had a mentor, but he didn't like
commercial real estate. And he told me, you know, you're just gonna
have to get involved with a bunch of attorneys and all these rules,
regulations, just stick with residential, you'll be able to do that
it's a lot easier. And I guess that just goes that you can only
grow as much as your mentor allows you to and he was extremely
successful and no knocking that at the end of the day, I really
feel it just depends on what you want. But one day, I just ended up
doing it anyways. And then. And then that's when I obviously
started my own brokerage because they said, Okay, I'm gonna do
commercial real estate, let him do residential. And the funny thing
is, just this last year, he was calling me for advice on getting
into a commercial real estate deal.
[00:03:40] Sam Wilson: That's awesome. That's the what, that's the way it goes. Now, do you still own and run the commercial brokerage?
[00:03:46] Ariel Diaz: Yes. We're still actively running an operating it here in Miami, Florida.
[00:03:51] Sam Wilson:
What have been some of the
challenges in growing a brokerage? But it also sounds like you
know, you guys have started a fund and you're investing, you know,
a lot in multifamily. So, what have been some of the kinds of
challenges of running? I mean, those are two obviously compatible
businesses, but very different businesses.
[00:04:08] Ariel Diaz: Yeah, they're extremely different. It's basically two monsters but at the end of the day, running the brokerage has taught me a lot to also run the fund. And it's just about putting systems and processes into place. Now luckily, again, I do run the brokerage with my wife, so she's had to take on a lot more responsibilities and deal with a lot more of the headaches that I used to be doing. So if so to allow me to more focus on the funds. But really, what we've been able to do is work with them together. So a lot of our investors that invest in the funds come from past clients from the brokerage. So that's really been able to give us I guess it's an extra layer of comfort, knowing that we already have people that understand those know us, you know, have worked with us before. And trust us to get inside something so complicated as an investment fund.
[00:05:08] Sam Wilson: So break down your business for me today. On the fun side, are you guys partnering with other operators? Are you know, building the fund and then acquiring and owning and running yourself? Or what's the structure there?
[00:05:22] Ariel Diaz: Right. So we owned and operated our own here in Miami. But as you know, as most people know, this is an international city, it got extremely competitive. And to be able to scale, it really got, you know, where the cap rates and the returns weren't really aligned with what we wanted to do with ourselves with our own investments and with bringing on partners. So what we started doing was going to other states mainly Arizona, and I could talk to you about that if you want of why we chose Arizona. But by doing that, we realize you know what, the best way to do this is we're going to just meet up with an operator, well, we've met up with plenty of them. But we figured out that would probably be the best strategy, because to get to know that market, as well, as someone that actually lives there and operates there, you know, to get to know the property managers to basically build our team all over again, would take so much time, effort and energy for most. So it was just really fortunate that we were able to find this particular group and, and that's when we decided just partner with them. And we got advantageous, I guess, you could say splits for investing with them and bringing a large sum of money. And then, you know, that's basically how we were how we structured it. And then in order to get those ready to get those specific splits, we had to bring in a larger amount, and then that's when we got some of our clients involved.
[00:06:52] Sam Wilson: That is really cool. There's so many ways that funds can be set up. Why did you choose the particular structure of the fund that you have?
[00:07:04] Ariel Diaz: Right, so we created let's call it a single, and I won't get too technical, but it's a Single Purpose Vehicle. And so it was just a particular, you know, in layman's terms, it's just an LLC, that is just going to invest in this particular project. Right. So but what was good was, let's suppose that we were just going to invest $100,000, we were going to get a 70-30 split. But since I was able to raise money, I said, well, if I bring in at least a million dollars, will you give me a preferred rate? And the operator was okay with that, because now he's just dealing with one group that has a million dollars instead of 10 different people with $100,000. Okay, so then that's when I got my investors involved. And we were able to raise that million dollars, and we've done an 8020 split. And a couple of other advantageous things. If, if the property performs a little bit better, then we also got, you know, most investors get like a 5050 split, you know, after a certain of return has been reached, and we were able to keep that 80-20 Split throughout the entire investment.
[00:08:14] Sam Wilson: Wow. Okay, cool. That's, that's I love that one of the challenges that I have found with SPVs is that they add another layer of expense to a deal that may be you know, it, depending on the size of the deal can almost become cost prohibitive. How have you overcome that?
[00:08:35] Ariel Diaz: Yeah, well, that's just networking and getting to know a lot of different attorneys out there, and just being able to feed them business, then you're able to get a discount. And if they're familiar with that particular operator, and they understand, you know, the way that you know, the SEC regulations and everything that has to deal with, you know, creating this fund, you can typically work out something like everyone, everyone's running a business, right. So if you're able to offer them something, though, their attorneys, they're able to lower their price because they know that they're going to benefit in the long run. So luckily, I was able to lower the price on this particular deal, promising them more business in the future and also bringing them business from people that we know.
[00:09:25] Sam Wilson: Right. Talk to me about the capital raise process for you guys. I mean, it's really interesting. Of course, you've got clients on the brokerage side that are looking for active investments How did you broach that conversation with those clients of yours saying, hey, by the way, I've got an opportunity over here that you could possibly invest in.
[00:09:42] Ariel Diaz: All right. So it's actually trickier than you think. Because yeah, they are looking for active investments. And that's the keyword. They're typically active investors. So when you try to explain to them how the passive investment side means, they're gonna get good returns. And typically, they're able to diversify into other asset classes into other markets, this is all great. But yes, as a passive investor, you're not going to be in full control of that property, right and of that investment. So that's where they typically have a little bit of an issue in issue with, but as they really start diving into it, and explaining it to them, you know, not everyone jumps on board, but a good enough amount of people that really understand it and really realize, wait a second, this is actually very beneficial. And I put myself in their shoes, because I was an active investor, and I still am, and I believe they, you should have a combination, if you feel comfortable being an active investor, you should definitely be an active investor as well. But the way that I saw it was, hey, I'm able to diversify in a new market, I'm able to diversified potentially, in other asset classes, not put all my eggs in one basket, why not test this out, do it. And it's, it was very viable. So as I explained to them, what I went through, they kind of feel the same thing. And they're like, Okay, so let's go ahead, and let's give it a shot. And the good thing is, you know, you could just start off with $50,000 $100,000. So it's not like they're putting in the full million dollars, or whatever they're used to putting into an investment, they could test it out with just 50,000, 100,000, 200,000, whatever they feel comfortable with.
[00:11:23] Sam Wilson: Let's talk about that capital raising a little bit more, what's been one thing or one kind of limiting belief, maybe that you've had around raising capital, and how did you overcome it?
[00:11:34] Ariel Diaz: Right? Well, the limiting belief, I try to stay away from them, but I would say is just how much money you can raise. Right? And it's, it's a difficult situation, because you know, the operator is counting on you to deliver, right. So if you're telling them, Hey, I'm gonna bring in a million dollars or $2 million, and that's the reason why they're allowing you to come in into their deal, right, because they've, they've done pretty much everything, they really set it up perfectly for you, right, they found the mismanaged property, they're going to be operating, they're the ones that are going to be renovating it, running the whole operation, and they're allowing you to take part in this. And not only that, they're gonna give you a better deal than they really would give them to themselves or to their own investors, because you're supposedly bringing in a large sum of money. Well, there's pressure there. And so I think, you know, that can mess with you mentally. But, you know, you just go through it, and you just realize, okay, you know, really the sky's the limit, the more people you talk to, the more it's, the more people are going to understand it. And the reality is that people are looking for these type of opportunities. And once you really take it like that, like you switch it around, you're not asking them for money for your fund, right? It's more of, hey, I'm bringing you an opportunity, I'm giving you an exclusive opportunity to invest in here. That's when your mind switches. And that's when you're able to raise a lot more money, that's for sure.
[00:13:07] Sam Wilson: Oh, it certainly is for sure. And I take my own there. I've had some of my own capital in a retirement account sitting idle. I'm embarrassed to say it even on this show, but you know, I try not to hold any, any cards. The best. I mean, it's been sitting there for like eight months, right? And I've had deal after deal after deal come across my desk. And I'm like, oh, yeah, I need to do that. I need to do that. If I'm sitting in that position, with money sitting in an account doing absolutely nothing. You know, there are other investors out there in the same position that are just waiting. And I think what you said there was really key so the more people you talk to, there was a call I was on here recently, someone and they said somebody effective. Well, I sent the deal out, and I just didn't get any feedback on it. I said, Well, did you pick up the phone and call everybody? Did you dial their number on your top not send attack? Did you call them? No, I haven't done that yet. I'm like, right. And so the guy that called me yesterday, he was like Hey, and it's somebody it's a friend of mine for you probably know him here in the business as well. And he said, Hey, you know, I got an opportunity. And I said, Great done. Oh, good. You can meet my need to place capital and you're we're on the phone and we're getting this deal done. Because in that's what I think people over they just don't realize that. I think on the capital raiser side of things that we've got to be proactive in those outreaches. So I love what you said there, the more people talk to you.
[00:14:527] Ariel Diaz: Yeah, I think it's very few people have it down packed, where they're just you know, you're gonna have people calling you and saying, Hey, can you get me into a phone? Right? I think people get confused. And no matter what, even if you have the coolest website, the cute the best articles out there. Most people, I'm not gonna say everyone and everyone structures their business differently. But definitely we have noticed, at least for ours, definitely, you know, everything matters. So, you know, you have to have the good articles, you have to have a good website, you have to have all those things. But at the end of the day, you got to call people and let them know, even if you send them an email, Hey, did you receive that email, I have an opportunity now. I don't know if it's going to last, you know, we are getting reserves coming in. And just that simple call. Because these guys are busy, you know, so maybe even if they met to look at your email, and they want to invest with you and everything, that doesn't mean that they're going to definitely get to that. So by you calling them even if they don't say yes, on the phone right there, it at least puts an added I guess not pressure on them. But add a reminder for them to actually go and do what's best for them, which is to look at your opportunity and invest with you.
[00:15:35] Sam Wilson: You said it man. You said at one of the things that I saw there in your bio, was that you have your CCIM designation. Tell me really quickly No, if I had one other guests, I don't know what this will be 670 episodes a mod by the time you come on your lead one other guests, I think that I can remember talk about that. Tell me why you did it. And then what the advantages are to you personally for having that?
[00:15:52] Ariel Diaz: Well, it is a global standard for professionalism and commercial real estate, I always try to reach the top of whatever I do. So I do believe in getting highly educated in anything I do. So that was the main goal, it was just a challenge that I put to myself. And I said, if I was going to do it, I was gonna have my wife do it as well. So I challenged her as well. So we were able to do it together, which is great. But, you know, like I mentioned to some people what you said that not too many people that you've had on the show had and that's because only 6% of the world real estate professionals have it. Right. So it's very unique cream of the crop type of people that you get to network with him. So I went into further education, but the value really was meeting all these other top quality real estate investors and commercial real estate professionals that made me really stick around and stay with it and say, hey, you know what, this is something valuable to get. Now, I don't think that everyone should go out there and get it. But I do think that everyone should at least take the CCIM one on one course, and at least dive into it. Because just that one little course was there's four main courses will teach you so much more than what you think you already know. And it does take that education to another level.
[00:17:14] Sam Wilson: That's really, really cool. Last question for you. You've recently written a book. Can you tell us a little bit about that?
[00:17:20] Ariel Diaz: Sure. So it's called The Four Pillars of Real Estate. Feel free to get it. It's on Amazon and on my website, pillarsofrealestate.com. It's also available right now for free. But yeah, it was a process. It was something that I've always wanted to do. As I said, I've been doing this for 20 years. And it's something that I wanted just to get out so that people can understand why they should be investing in real estate. I'm not telling people to invest in real estate, just because I'm a real estate broker or I'm raising, you know, money for my clients. There is the true value of why you know that there are so many millionaires, you know, that got there because they invest in real estate. And I basically break it down into four main reasons of why someone should be investing in real estate.
[00:17:20] Ariel Diaz: Man, that's really cool. Ariel, thank you for taking the time to come on the show today. From a residential broker all the way to opening your own commercial brokerage into then investing in multifamily assets. Starting a fun you've given us lots of things to think about even taking the one-on-one CCIM course I think that's absolutely fantastic. And we'll also look for your book there on Amazon and make sure we link to that in the show notes. If our listeners want to get in touch with you and learn more about you what is the best way to do that?
[00:18:31] Ariel Diaz: And just go to the website, www.pillarsofreal estate.com. And if you want to retrain, you can go to the website www dot pillars of real estate.com/invest.
[00:18:46] Sam Wilson: Fantastic. Ariel, thank you again for coming to the show today. I certainly appreciate it.
[00:18:50] Ariel Diaz: It was awesome. Thank you, Sam.