Chris Haas, founder, president and CEO of All Pro Freight Systems Inc., recently sold three buildings to a real estate buyer. He immediately got cold feet and started looking for another building, eventually settling on 125,000 square feet in Avon Lake.
“In an economy that’s going up and down, as it will because of whatever reason, I feel those uncertainties are what makes the commercial real estate business thrive,” he says. “People either can’t sell it, they’ve got to put it somewhere, or they need to make more because they’re selling it to fast.”
There weren’t a lot of people buying 125,000-square-foot buildings, so Haas felt he could get the right deal.
“I like to think of myself as somebody that can take advantage of something during a down time — not necessarily a pandemic, as we’re in — but from a real estate perspective, I think it’s all about the entry level,” Haas says. “And I’ve been fortunate to be able to stay in my lane with commercial buildings because it ties right into my trucking and transportation business.”
Haas spoke with the Smart Business Dealmakers Podcast about his latest deal and how it ties into his business, his dealmaking principles and his concerns about the economy. Below are excerpts from that conversation.
Listen to the full interview
What important principles you would recommend following if you’re looking to make a real estate deal during a time like this?
You have to think discount. I think your competition is less from a purchasing standpoint, just because people are saying, ‘Everybody wants the sure thing so let’s wait and see how this shakes out and then maybe we’ll buy it.’ Unfortunately, more times than not, you lose out on those deals.
There is some risk to it. But like I said, because I’m in the space I’m in, I think I minimize the risk. In any business or real estate or anything, it’s all about the entry price. People overpay for something and then wonder why they can’t make money. I like to think that I underpay and then turn it into a profit.
Again, you can’t purchase or buy real estate on what the potential is. You have to buy it on what the person’s doing, and then you should get in at the right number, and then you can turn it into a home run — obviously with a lot work.
But I really believe that the time to make a deal is when things are in distress. It’s just like your company. People get into trouble and they go, ‘I’ve got to sell my company.’ Well, you don’t want to sell it when you’re in trouble, you want to sell it when you’re doing great.
So, obviously you don’t want to buy when something’s doing great. Because you want to get a better price for it.
When you look at the economy, especially industries like sports or restaurants, how concerned are you about a quick recovery?
I’m very concerned about it because the longer this goes on, the longer the recovery period, I think, is going to be.
With those industries opening back up, I think there’s going a spurt of people that are just stir crazy from staying indoors. That might have a trickle effect to get us back to where we need to be. But I don’t know if they can sustain it because of the lack of dollars and the lack of money.
When you look at the restaurant business or the sporting industries, you look at those as can people really afford them? They’ve always found a way to do those things regardless of whether they had to put it on a credit card and borrow money. I think that is ingrained in people. Now, granted, it’s not going to happen overnight, but I think it will come back. And then as that comes back, obviously, the flow of money starts working in the economy.
When I say long term, I don’t think it’s a year to two-year recovery. I think, it’s more like a three to six months recovery. But the problem I think people have now is nobody knows when that is.