There are always opportunities to be found in the real estate market if you know how to look. One area that is seeing a lot of growth is the office real estate market. Tapping into that is Lynn Yangchana of MGR Real Estate. A real estate broker in California, Lynn shares with us the current market situation in her area and how it squares up to investing in office real estate. She gives us a great view of how she assesses the office market to find where to invest in along with the crucial factors to look for in an area—from infrastructure projects to the presence of big mammoth companies. Get into this episode and learn about the unique aspects of renting and investing in an office space from this real estate goddess.

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Investing In Office Real Estate – Interview With Lynn Yangchana

On this show, we interview badass real estate investing goddesses and women that are crushing it in different areas of real estate investing. Our guest is no exception. I’m excited to be interviewing my friend, Lynn Yangchana, who is an amazing investor and real estate broker here in California. Since 2005, she’s been specializing in commercial properties. She’s been representing and providing advice to tenants, business owners and private investors with the leasing, acquisition and disposition of office and retail assets throughout the East San Gabriel Valley and West Inland empire sub-markets in Southern California. She is an amazing fountain of information about all things office, and I’m excited to have her sharing her amazing story with us and teaching us about this cool asset class. Welcome, Lynn.

Thank you, Monick. I’m excited to be here and I would love to share anything about the office and me. I’m happy to be here.

I’m happy to have you here. When we do this show, we always start at the beginning. I’m always curious to know how you get started in real estate investing. Why office space? That’s an unusual asset class for most investors, especially women. How did you get into that?

It’s going back in time a little bit. My family’s in Thailand and also started in real estate investing because my parents are entrepreneurs. They don’t go to work from 8:00 to 5:00. Growing up, I saw them look at properties, buy and own properties and buy and sell trading. I also remember growing up helping my mom sometimes go pick up rent checks next door from our tenants. The key thing that was imprinted in me from a young age was seeing my father having renderings of big office buildings and high rises on his desk. It was his dream and wish to build big buildings in the property and on the land that the family-owned.

When my father passed away when I was nineteen, those projects never started. Coming to America, after I graduated and working in the marketing business, I still felt like that’s not me. Those pictures in my mind from my father’s office and those rendering office buildings stayed with me throughout my childhood and growing up. I thought, “Why not go and try real estate?” Everybody in my family, at least most of them have their real estate and that’s how my parents sent me to school here. It was from real estate investments. I’m thinking, “I don’t think I want to do residential. If I want to own or be in commercial building and office building like that picture in my mind, I’ve got to learn how to manage, lease it and how to keep it full. Where do I find tenants? How do I manage it, and everything about it?”

At that time, I looked for commercial brokerage houses with multiple departments, not just only selling. I found the current office which is where we started MGR. I started there and I was still here because there’s much to learn in the business. It has the property management division and sales and brokers’ division. After I joined a company, within six months, I’m thinking, “I need to find somebody or the top person to mentor me.” One day I talked to the owners of the company who owns real estate and broker deals himself and I asked him, “Can I work for you? Can I learn from you? Can you be my mentor?” That’s how it started. I’m still at the same place, but my portfolio and the knowledge in my mind grows significantly. I’m still in love with this business every day.

That’s awesome. I love how you had the ovaries to go to say, “Will you be my mentor?” It’s because a lot of people are afraid to ask for that help. That was awesome that you did that.

One thing is I don’t know any better. If you want to learn, always go for the best person. Anywhere you go to the best person who has the best knowledge and who’s at the top of the game and go ask, “Can I work for you?” Most of the top producers in any category are lacking one thing. They lack time. You can always help them and add value.

That’s great. I love that you asked you’re focused on adding value to them because you’re right. People who aren’t doing what they’re doing at top levels are busy. They don’t have time. If you can help them with that piece, they’re happy to have you. You got into being a broker. I’m curious about your first investment and where you invested. What was that?

It’s because of the love of office building. It’s not like I have $10,000 to $20,000 or something I can invest in an office building. The dollars now are much bigger. I understand that and I thought that it’s going to take me time to reach that level to know which property to invest. I better know how to run it, lease it and what’s a cashflow. I thought that I’m going to give me some time to learn the business about office investments. I started with, how do I fill it? Which is leasing. I start with a leasing agent, so I know how to work in the office arena. On the sideline, I also during the last market downturn, we bought a few houses in Victorville. I don’t know if you know Victorville, but that’s on your way to Barstow.

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Anytime when people challenge me, “You can’t do that,” I’m always thinking, “That’s a good challenge. How can I invest in California? We know California.” There are so many other challenges and taxes and things that I need to deal with but that’s part of the process. In Victorville, we’re able to pick up quite a few houses from $90,000, $100,000 and $120,000. Now they’re $280,000 and I’m so happy. Our cashflow is still good and our tenants usually stay about 3, 5, 6 years. I had a turnover which caused me quite a bit of money but I prepare for it. It’s okay.

It’s awesome and you bought well. You bought houses that were on sale. That’s great.

I wish I could turn back time and buy more.

Don’t we all?

My husband, he’s in the government world. He’s not quite an entrepreneur because we always say that I’m the rabbit and he’s the sheep. He doesn’t show emotions. It took me some time to convince him to buy our first investment home. After that, the second one was easier and so was the third one. That’s when it was much easier from there. For investing, I’m in the longterm hold. Those are houses that we’re going to buy and we’re grateful that our tenants are helping us to pay for the mortgage, interest and all of that. Those will be our kids’ college funds or future investment funds for them.

That’s the beauty of the real estate. It’s being able to leave a legacy and have something that you can rely on down the line. I still see you as young Lynn in Thailand looking at your dad’s desk with those renderings on there. As an investment or asset class, how would you assess the office market? I’ve heard mixed things about it. What would you have to say about it as an area to invest in?

Everybody knows that real estate is localized. What’s out in media, it’s a more generic overall picture, especially commercial and office. We only have a certain amount of times every day. We can’t be doing it all because I also do some classes for our agents in the office. We have to focus on whatever you do. You can’t do everything, but you have to focus on what you’re passionate about, what you’re interested in and what gets you up in the morning to go in. If you’re investing, you want to invest in something that you love and passionate about that asset. When you go buy that property, it just brings a smile on your face.

That’s the key investing to me. In the office arena, we have everything in California. For what I do because I’m good at leasing, I’ve got owners who want me to do their leasing of the building. I’ve got myself to be part of the sponsor world in terms of when we acquire an office project and part of the ownership and part of the sponsor and promote side. The majority of our investment is in the Ontario Airport market. I don’t know about Ontario. Ontario Airport returned local control from LAX control. There’s a direct flight from Ontario, California to Taiwan. There are more Jet Blues coming. They readjust their flights in Long Beach. This are news that you can find in the newspapers and local media.

There’s growth here in this marketplace. Amazon came here a few years ago and had millions and millions of square feet of industrial warehouses. You’ll see it when you drive by the airport. You’ll see these a huge terminal for UPS. It’s a logistic hub here. A couple of years ago, we started seeing a lot of the big companies in Diamond Bar and East LA Park, Eastbound to Inland Empire. A lot of the reason is because of housing affordability. It’s way too costly to be living in LA or Orange County. Housing there compared to here is much different and they’re much older homes too. It’s much more affordable here. Also, in Ontario for me to drive to LAX, it’s going to take me a good 1.5 or 2 hours. It’s easier for me to fly. A lot of companies start having locations instead of centralizing Orange County or LA. They start coming to the Inland Empire. There are more rural small businesses that are coming in because all employees are driving from here to LA. Why can’t we have a branch here and give them a better lifestyle and still pay them?

It’s a better quality of life that we start hearing and seeing because every day I’m dealing with business owners. I’m always sitting in front and I walk the empty space with business owners and decide what the next phase of their company is. That’s when we start seeing a lot of people migrating. These are businesses that are migrating to the Ontario marketplace and Inland Empire. It’s closer to their warehouse and employees. That’s a big thing. In LA, Orange County and different parts, a lot of occupancies, vacancies are at 10%, 15%. We have over 1.5 million square feet of office buildings within a ten-mile radius and our occupancies are under 10%. That’s crazy. Every day my desk is filled with these files for all the tenant movement and because I have an ownership interest, these are my buildings too. I will do anything I can to make sure we have the best tenant retention and we get the best tenant mix the office buildings.

 

I want to highlight a couple of things you said, which are good. I want people to note and it’s not even necessarily the specifics about Inland empire, California and the office space. These are principles that will be useful for any type of investing. One of the things that Lynn said, which is awesome is that real estate is localized. A lot of people will look at these broad pronouncements about the housing market, multifamily, office, industrial or whatever the asset class may be and go, “It’s expensive. I shouldn’t invest real estate right now.” It’s so localized. Every city is its own market and there are sub-markets within that city. There are different asset classes. All of these things are running uniquely. There are always opportunities to be found if you know how to look. I love what you were saying about the different factors that you’re looking at. You’re looking at what’s happening with major infrastructure projects, with the airport, the airport going into local control and more companies bringing their operations into that area. Big mammoth companies can sway an economy like Amazon come in.

The demographics of people moving from more expensive markets like Los Angeles and Orange County and going into the Inland Empire where they can afford housing, if you look at these demographics and infrastructure shifts and what major companies are doing, you’ll find opportunities there. There are always opportunities to be found by looking at those factors. I love how you were sharing where you’re at and in that asset class is working. Whereas maybe in a different market, people are moving out of that market. Office might not be the best investment but where you’re at and because of the demographics and infrastructure that’s going on, it makes sense. That’s a helpful insight. I loved hearing how you’re thinking about it.

The local market here feels like an underdog a little bit. Nobody talks about it too much unless if you pay attention, live around here, or you’re a local here because we’re in tune with all of the business owners coming in, we hear and see. They call me up first when they need space and we’re the first to know if they’re looking to expand or downsize. These are large tenants that we’re dealing with. A lot of these are dealing with government contracts. It’s like, “That’s coming. This is happening.” We know about it before it gets on the news because we know, “This agency got this funding from the LA County and they’re looking to open operation here instead of LA.” That’s great for us because the number one reason is the labor pool. Everyone’s here. Everybody’s driving to LA. Why can’t we have a branch here?

In terms of office tenants, these are businesses and one of the nice things about office leases is they’re triple net leases. We talked about triple net least leases before. They’re paying the rent, property tax and maintenance. What are some other unique aspects of somebody who would be renting an office space, who’s been doing investing in residential and it was about residential may not know?

The office here in California market is more a full-service gross lease or a modified gross.

Tell me what that means.

A full-service gross means you have a money base rent, it covers all your utility and janitorial services. You do not have additional CAM charges or triple net charges. In Colorado, a few years ago, we invested money in a medical office building. All the tenants there have triple net leases. It depends on the market, but overall from all LA, Orange County, Inland Empire is mostly full-service gross lease. Most triple net are retails. Office building anywhere you go are most of the time full-service gross lease or they call it modified gross, which means they’re separately metered. You pay your electricity bills and you do your own janitorial services. That’s modified gross, but at the end of the day, triple net, modified and full service gross are all similar. At the end of the day, the tenants still paid for all the expenses. The difference is accounting.

This is a question that I always ask every show because I feel that we learn much more from our mistakes than we do from when things go well. What would you say was your biggest mistake and what did you learn from it?

The mistake for me is I didn’t start in real estate soon enough. I felt like after I graduated and if there’s a message from the sky or somewhere from a higher being, give me knock on my door, maybe I got a bunch of messages but I was clueless. I was having fun. I wish I started this business way earlier. I would have been way ahead now. Every day I learn so much. Every day I make mistakes but those mistakes give me better scar tissue and make me a stronger and more competent person in this business.

A lot of people wish they’d started earlier. At least you’ve been there since 2005. You’ve been in there for a while. What are you proud of?

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I’m proud of my family and overall where I’m at now. I’m continuing to improve myself and every day I work hard to also reach that goal from that piece of rendering on my dad’s desk. It’s stuck in my head while growing up from childhood. I’m proud that I’m close to that target and I live and breathe in that office world that my father wished he could have done in the past. It gives me a good income and allows me to give more for my family, my kids and be a good example. A lot of times I have to work. I’m a working mom and one of the secrets of California is because I’m a mom, I can’t travel much. I want to go pick up my boys. That’s why I picked a market that requires me to stay put. We used to have money outside of California, but I don’t have time to go. It’s too much time for me. I want to make sure I have enough time for my boys and my husband.

To what do you attribute your success?

Hard work and efforts and to never afraid to make a mistake. I’m never afraid to ask though.

That is golden.

When you do something, they don’t see how much effort and time you put in that. I want to make sure it’s ingrained or brainwashed that it’s about your efforts. When they have a good score, I say, “Why do you think you get that good score? It’s not how good you are. It’s because you worked hard on that.”

I’ll try to tell that to my daughter too, “I’m proud of how hard you work with this. That’s why you got a result. It’s because you worked hard.”

We’re proud moms.

We have good kids. What advice do you have for a woman who’s starting out in this field?

In real estate investing, it can go many different directions. I always end with happy investing. How do you get happy investing? You want to invest in something that puts a smile on your face. When you put in that money, when you drive by, when you go check on it, no matter how bad the problem is, it puts a smile on your face. That’s a great investment. I provide housing for that family. That’s two generations of that house that I provide. That’s cool. I’m part of that office building or that investment and so many tenants drive there every day to work in that building. Anything that puts a smile on your face could be senior housing, student housing, apartment complex or anything, the key thing is at the end of the day, what would make you happy?

That was spoken like a true goddess. It’s not about how much money you make. It’s how much joy can you get from it and pleasure and good that you can do. What do you wish you’d known at the beginning that you now know?

 

I still wish I started this way earlier. I goofed around way too long. It’s fun. It’s like, “What happened?” At the same time, I’m grateful for the time prior to my real estate career because that honed my communication skills. It prepped me before I’m ready in this business. In this business, it’s relationship building, communication and contracts. That’s what I love. When I have contracts, that’s when I make money. Communication and relationship skills are important in this business. I wish I started earlier, but I’m happy.

That’s great. Miss Lynn, before we end with our famed end-of-podcast trinity, which is a brag, a gratitude and a desire, how can people get in touch with you? What’s the best way for people to connect with you if they’re interested in what you’re doing? If they’re interested in maybe getting some office space in the Inland Empire, how can they connect with you?

You can email me or call me. It’s easy to google my name and find my phone number. When I opened my cell phone, I was like, “How come I have my face on my cell phone?” One of my twin boys said, “Mom, I just googled your photo and put it on all your phone.” How cool is that? You can email me or call me. We’re busy every day. Usually, you do other stuff and you put your website and your own things at the bottom of the list. Unfortunately, I don’t think our website is up to date, but you can always email me unless you want me to share my direct phone over here.

However you want. Do you want people to google you and find you?

Call me. My email address is [email protected]

It’s time for your trinity. What’s one brag?

Anywhere I go, I always brag about kids. I can’t stop bragging my kids. Somebody asked me, “What makes you most at ease?” I said, “After a long fun, busy day at work, the most fun and calm time is at our family dinner time.” Before, I have two boys, so we are all busy in the kitchen. When we all sit down and start eating, we share. My boys will go, “Mom, how’s your day? Did you make any money?” Also, “Dad, how’s your day? What’s going on with this and that?” That’s a time that I’m grateful for my family, our health, our wellbeing and for every day that I can be there with my family, especially dinner time. It’s my favorite time of the day.

Good brag. You have dinner with your boys and that they’re awesome. That’s a credit to you as a mama. Well-bragged. What are you grateful for?

I’m grateful for my family, my days in my office and all the investment I’ve done. They keep growing when I’m sleeping. I love it.

That’s the beauty. Last but not least, what’s one desire?

In addition to my family, health, good mindset, good attitude, kids and family, my biggest desire and my goal is to multiply my office investment. Every day I drive to work and see the skyrise. It’s not LA with a huge 20, 30, 50, 60, 80-story office buildings. The highest here is nine-story. That nine-story, I have a small ownership. I’m so proud when I walk around. I come here every day and I’m like, “I own this.” It’s such a great feeling. I love it.

That’s awesome. You have a desire for more office space ownership. So shall your desire be, or so much better than you can imagine. That’s a beautiful trinity. Thank you, Lynn. Thank you for that. You’ve got her email address if you want to connect with her. If you want to connect with me, go to REIGoddesses.com there you can connect with our community of women real estate investors from all over the world. You can also click on the Invest button and get on the list to find out about cool investment opportunities that we have for your goddesses. Connect with me more there. Subscribe to this show so you can read about other amazing real estate investor goddesses like Lynn who share their stories and their best advice. Join us next time. Thank you.

Important Links:

• Lynn Yangchana
• [email protected]
• REIGoddesses.com