Using A Better CRE Brokerage Model To Create Passive Wealth With James Huang
He was the former Sperry Commercial Global Affiliates and the principal and founder of BRC Advisors. He is also the CEO of BRC Bellaire Holdings, LLC, a real estate private equity firm established as a joint venture between BRC Advisors Commercial Real Estate and Bellaire Investments. Additionally, Mr. Huang is a shareholder and an advisor to real estate syndications firms and start-up technology companies to help consult, raise capital, and make connections to other private equity investors and family offices from Main Street to Wall Street. In October 2019, he was installed as national president of AREAA (Asian Real Estate Association of America).
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Using A Better CRE Brokerage Model To Create Passive Wealth With James Huang
BRETT:
brokerage career and kind of an introduction to investment real estate. He since went on from his career to form BRC advisors has brokered over about 1.25 billion in annual sales and had over about 160 agents. They're a national firm, but mainly focused kind of the Southern California western United States. He then went on to help run Sperry commercial global affiliates and since has now become the president of eXp commercial division, where he is overseeing and building and running the commercial and ancillary services to support the growth of commercial real estate both domestically and globally. Please welcome the show with me, James Huang. Hey, James, how are you doing?
JAMES:
Yeah, so I started in Wall Street. So I've always liked numbers and went into a kind of portfolio management, where we were the largest tenant and common company in the country. From that, I've learned that so many people were buying it from Marcus and Millichap. So I wanted to be a 1099 entrepreneur, not so much a W two. That's when I went over to Marcus. And I had that aha moment, the first year in trying to make those calls, set up those meetings, and I found deals, then I started acquiring and syndicating properties. In addition to doing brokerage, so much so that I said, Well, you know, I should start forming my own company, BRC advisors, where it did grow to be a premier, Southern California, but we did deals nationally with brokerage companies. And it was a fantastic journey from then it got picked up to run and form a company with Ramsbury, Sperry commercial global affiliate, it was a pleasure running that until I got moved over to now do it again. Third time's the charm to create eXp commercial, not only the foundation, domestically, but internationally, and all the animals, ancillary services that help all the brokers do better with their career.
BRETT:
Fantastic. And before we dive into how you're building that, and what that looks like, kind of some of the vision and some of the value propositions for what eXp commercial offers. I want to take one more so take a step back. And I'm curious, you know, who is James, you know, maybe college days, high school days kind of growing up? You know, I believe we've all been given certain gifts in this life. And these gifts are given to us to help bless others. And you know, in some cases, what was maybe like one or two gifts that you believe you were given by James, and how does it help how you help others today?
JAMES:
But that's a great question. So when I grew up, I grew up in Richmond and the Elsa Rito Bay Area. And that was one of the best experiences I had born in New York City. After my sister was born, we moved out to the Bay Area. From there, I grew up in a very diverse neighborhood where it was mostly African American, Hispanic, very mixture of all people. And I learned to understand everyone's culture because I would always call everyone to say, Hey, I didn't want to eat Chinese food, with rice and everything else for dinner. So I would always call up my friends and buddies and I'd say, Hey, what do you guys having for dinner? And when I found a place I wanted to I went over to their house to have dinner. So I believe I've been blessed by understanding so many different cultures and groups, and pairing and breaking bread with them. That meant a lot. So it helped me tip for today so I could adapt. I understand many cultures have a deep understanding of different relationships with different people since it wasn't just growing up with one ethnicity. I grew up with everyone I adopted to everyone's kind of personality struggles listening will happen at the dinner table. So much so that I do volunteer give up my time for dinner. Because obviously in commercial real estate, I sit on different boards, but also when it comes to the fight of homeownership, right fair housing, where everyone should have the right to live where they want to live by where they want to buy and keep that fight up. So everyone, as everyone knows their home is their single largest asset is to allow everyone to live and be where they want, without any kind of intrusion or bothering. So it was great to grow up very diverse. I mean, I didn't realize I was Asian until I went to college until I went to UCLA. So, you know, I think that was a big strength and a big. I mean, I just feel very happy that I grew up with so many people.
BRETT:
That's fantastic. Yeah, that is such a unique perspective, and being able to have that helps to be able to grow something on eXp commercial, not only domestically, but internationally. So let's dive into a little bit about you know, what you discovered with eXp commercial, you know, what, the biggest thing that's different? You know, it's different, you know, you're ultra-successful in real estate, owning real estate and brokerage, running brokerages, and growing companies. So what was the single biggest thing to say, you know, what the eXp commercial is my future and where I think the business is going?
JAMES:
What an excellent question. I've been watching and studying the brokerage model, commercial brokerage, and residential, I always took an example from residential, because residential was a little more forward-thinking and being disrupted much more quickly. And what we saw happening is technology has changed the way we do business in such a large way that I needed to find out how we could adapt especially in commercial real estate to get ahead of the game and find the best tech technology platform. And there were two or three that identified that would be a good fit, when I was running Sperry to match up with a residential commercial, they do work together in good synergies, how do you structure the companies? That is the one thing that everyone kind of throws out the baby with the bathwater, say, oh, you're residential? So no good? No, you just need to know how to structure the companies together using technology. So there's more collaboration, cooperation, synergies. So that's the way you have to think of it. But technology is the major thing. And obviously, with the technology that eXp world holdings have for Bella and other ideas that the leadership has acquired more technology companies, now how do you integrate? How do you organize all this and put people together with Human Resources using the technology so you don't bottleneck? You? You reduce cost, but you open up communication and collaboration. That's what I saw in eXp and I was so excited to come over and set something up based on the successful platform of what eXp has done and for eXp Realty and home for Bella's growth. I'm very, very excited about what we could do for the eXp commercial.
BRETT:
Excellent. So is it technology understanding and seeing, hey, how is the disruption already happening with residential which has been kind of turned upside down? If you look at all the, you know, we call the red fins or the Zillow or the instant offers or all of the things that are rapidly changing and looking at commercials and saying, hey, a lot of it's still kind of in the stone ages. Right, I mean, it's still kind of old school. Right? And so how do you connect it to? And then what was and then? And then how do you connect it to the commercial agent themselves? What about technology? And the actual model? What's the next step? Did you say? Yeah, I think he can be commercial makes a whole lot of sense.
JAMES:
So a lot of times, you know, what I was saying the target market, I always say is the middle-class people that have been disrupted through COVID. Right now, working virtual, this works, people now are getting adjusted to when I said I would normally have to fly across the country or sometimes the world to meet a client. They're so used to now using virtual technology like zoom like rubella to communicate. Now that I that they're used to it, they don't take offense, if I say hey, let's just go out on a zoom call. They said okay, let's just do that instead. But before we would have to fly across drive someplace to meet with them. Now, this is perfectly acceptable. Also, what's acceptable is now without having the brick and mortar office. Commercial agents are used to working this way, working from home using a wework or Regis, Ori, or another place to work rather than these big offices with big overheads. We see it now with the time of COVID and the remote working. It is so much more useful working in this manner, that many of the IOC, the middle class is very open to making the changes. Some people, of course, you know, are very stubborn. They don't want to make the changes. They say this is the way it always is. And I will say that is the kiss of death. Don't ever say this is the way it always is because that's when it's not and More. So you always have to be adaptable and flexible, and open-minded, understand new ways of thinking new ways of technology. And, and a lot of times, it just hasn't got there yet. But definitely during COVID, there is a segment of the commercial real estate market that is open and ready to make this change. And that's why I'm very excited by helping set up the eXp commercial platform, the value prop, to get these agents that want to make the change, and are already used to virtual working to come over to our platform to be much more successful.
BRETT:
No, absolutely. And by the way, I started Marcus and Millichap I can certainly relate, you know, it's, it's, it's tough when the splits are, are, are so weighted, where, you know, let's say 50%, I think a lot of them, at least when I was there for the first, you know, $100,000, or commissions go to, to the brokerage. And then if you had a mentor another 50%, you know, at least for the first three deals or so goes there. And so you're looking like about 20 25% and then and then connect it with you know, I then I would train and recruit and bring people in and, and they may be on my team, but they may only be on my team for three deals, and then they're moving on to the next one. So there's this, there's this big gap between, you know, I guess profits and where they're going and the value in which you're bringing. And it seems like the more I study the eXp commercial model, and since joining myself about six months ago, it seems like it's the Netflix versus the blockbuster, right, the old way of doing things kind of restrictive, really kind of hedged towards blockbuster, making a lot there. And then now Netflix is kind of a newer way tech technology-driven. But it's going to bring the profits back into the commercial agent. So would you just speak on just the opportunity? And what does that look like for commercial agents, especially if someone's hearing this for the first time that you've heard about the eXp commercial before?
JAMES:
Yes, thank you, Brett. So one of the biggest things that most I say residential companies that start commercials, it's their name, a residential company, just adding commercials does not make you commercial, we all know that. So the different things that we're doing at eXp commercials, we are a separate commercial broker record, we are organized differently with commercial leadership, those that have been mostly, you know, not always, but in the big companies with experience being experienced, being a commercial broker of records, being influencers, being leaders in the commercial industry, working together to create broker records across the country organizing that way, just like the big companies out there, like Seabury, JL, they're all corporate-owned, and how we structured is one of the big biggest strengths. So the way we run the company is it's separate from the residential, we'll collaborate and cooperate with the residential part of the company, but the leadership is separate. The other thing is, we will all have all the technology tools to become successful at the right price point right at the right price point because we don't have to add in the brick and mortar or the huge amounts of staff to run these operations. So our profit margins are compressed down so we can be more competitive, right, so the costs are squeezed down, so we can pass more of the savings to the agents. That's why the next part is our competitive splits. So competitive that people should ask that it is compared to a residential almost split, with all the bells and whistles of all the tools, the commercial tools we need. And I would say one of the biggest competitive advantages is now that we still may not even be able to get out to work, we have rubella where we can network, coordinate, have conferences, and interact, right, that is the biggest thing, we can now freely interact and get more business done. Plus, we will have like you were saying, Marcus and Millichap, we were splitting 5050 with the house and then 5050 with our seniors, we will also set up a training education platform, so people understand it. If you want to recruit commercial agents, this is how you do it. This is how you communicate in the junior-senior year. We will help you with the more experienced commercials to share our value prop. But also if you're a great commercial practitioner, a great commercial agent, we will teach you other ways of thinking, other ways of acquiring other ways of collaborating and cooperating across different product types. And industries I think are very valuable. And also we're growing globally. So eventually this is just the first part as we grow domestically. But internationally, the business will be coming in especially with the largest companies that the largest countries that by in the US which is the UK, Canada, Mexico, China, and India. We are focused on growing those international markets because we know many of the international investors come from those countries.
BRETT:
So we'll set in fire listeners on our rebel as fellows are kind of a virtual cloud-based world where you have you have opportunities to connect with people in a way that it seems if you know nothing's ever good in person, but you have to see, it's kind of like imagine being like the Stanford campus or a campus of a university. And you're, you have a chance to virtually be in these different places and have different meetings. And again, it's going to cut the overhead, it helps to scale, I think there are over 35,000 agents now, total, and growing rapidly at the eXp overall. And the commercial division is just launching right now. And we're hoping to see rapid growth as well, here in the future. That being said, one of the things that were always biggest for me, James, Marcus, and Millichap was learning how to get on the other side of the phone, right? So you always were all it wasn't just helping people and buy and sell, invest in real estate, but it was learning in serving them enough where you, you, you take that knowledge, and now you can go apply it and buy your real estate and get your cash flow and your passive income. And to build your wealth, you know, and what I'm seeing with XP commercial, it's sort of like getting on the other side of the phone with the model that it has. If you're a producing agent, and if you are helping others produce, right, but you're building your passive income stream versus just you know, helping someone else. So would you speak to just the opportunity and what that looks like for successful agents and teams?
JAMES:
So what is the best thing is because we have a competitive split, we then allow more collaboration, cooperation, when you do 5050. And then you do another 5050, most people cannot even survive. With the commission compression right now, right? There are commission compression and volume compression that you don't make as much as he used to add, add in 50% and 50%, you just can't survive. But under our competitive platform, it allows more flexibility to share, to work to collaborate, but also with what we're doing. Using technology and the verb Ella, and communicating what I want, more opportunities are going to pop up, right, because before we knew we were stuck in an office, we could only work within the Office. And then as we called and made relationships within our industry, we made some more friends. And then if you even went out to conferences, you know, not in your local region, but national conferences or international conferences, you've made even more friends. But the one thing that we're going to use for Bella is we're going to constantly 24 seven in time, constant communication, constant learning, constant networking, so we can allow more deals for more opportunities. So when let's say you're a transaction specialist, you need to work with the leasing specialist, you can match that up, maybe with the property manager with some of the ancillary services they're referring to, they're referring the leases to you now. And then when they're ready to sell after it's all the stuff now the transaction person, the finance of capital markets, lending and making money we all know about the capital Corp, you know, that was a big way that many of us made money is referring to get getting adding debt or refinancing the commercial buildings, right if they didn't want to sell. So by allowing all these different parts to collaborate using technology and rubella, we're going to constantly have people networking, talking, learning, and sharing ideas, so everyone can make more like that's the big way of doing it. Before we were just stuck in our offices. And we were limited, we were limited by their circle of how we can network with. But now as this opens up to a global web world, we're constantly networking and constantly meeting new people. So we can do more deals. Right, the more touches mean the more transactions you're going to get.
BRETT:
Excellent. Yeah, very well said so much there. And we're gonna have James back on future shows as well to dive into some of those, some of those details. But so now, what's been the maybe the biggest objection that you're receiving, though, when it comes to commercial agents, right? Are they saying, well, Tim, this is a residential firm or, or how do I know these things gonna work or Can't you know, Marcus and Millichap or CB Richard Ellis or Sperry Van Ness can't they just, you know, create their own rubella or crate, you know, and just do everything online to get rid of the brick and mortar walkthrough just how the history of eXp and what gives you the confidence that it's going to be very difficult to catch up?
JAMES:
So right now we're building on like I said, success, it did take from, you know, back in the early 2000s. That Glenn set this up and then obviously took years and years before he got adopted, I would say during the last two or three years, eXp has gone into some hypergrowth getting noticed. And during the time of COVID, it has accelerated remote working and working in this manner. Commercial agents I would just say are a little more old school and they want to have a brick and mortar but they don't understand the cost, right? The cost of the brick and mortar and everything is what makes the commission so high that they have to be 5050 or 6040. Right. That makes it very difficult when there's already commissioned compression. So those that are open-minded to adopt and you've tried it many other successful commercial agents and teams have already been using the eXp kind of model. They've been doing very well under this. But it takes time for people to get comfortable once it does. And I think success is going to be faster than the residential because of already the success, we do know how to set this up by having commercial broker of record, a commercial leadership team runs the company that differentiates it from the residential, or the adding just the commercial part of residential, we have good control, we know how to set this up, we've done it before. And then with the competitive splits, allows agents to collaborate and cooperate with all the tools that they need, with all the education that we have. This is what's going to make us very successful and very different from everyone else. And the other firms cannot copy us because that destroys their model. Let's say they bring technology into their system, are they going to reduce the fees to competitive fees, they cannot, that will collapse the whole system. Even if they adopt technology, which they probably will. They cannot adjust their splits because their splits are already ingrained. The minute they adjust their spreads their profit margins drop. So they cannot do that. It would be a total disruption. And this is what I said about like you said when you're saying blockbusters, like say Kodak, let's say a lot of the brick and mortar retailers. They already had the opportunity to use digital like for Kodak. Amazon went to Barnes and Noble and everyone else right as they started as a bookstore, blockbuster had the chance to do Netflix. They did it because what they said was it impacts our direct business. We can't do it, we're competing against ourselves. Yes, you are. Yes, you are. But you're hedging against the changes in the market. And now because they didn't do it at all, or partner with a company like us, and maybe some other technology companies, what happened to those companies, they're gone. There are no longer the companies that they used to be because they couldn't change. And that's the problem, their model was so stuck, it would disrupt the company so badly. So I think a lot of them just wrote it out. And maybe this is what's happening with the large commercial companies, they know that they can change that will disrupt their entire financial model, they have to just go with it to see how long they could adjust maybe in the next 10 to 20 years. So that's what I see what's going on. But those that are willing and able to make this adjustment or new dance partners to partner with, to add a little longevity to your life or your business while you're trying to adapt is what I think many need to do during this time.
BRETT:
Absolutely. So well said and the collaboration and then the culture and the leadership, what I found eXp has been so refreshing is it's actually like, Oh my gosh, I want to share all my secrets and all of my skill sets. And I want to do collaboration and training. And it's national, too, right. So somebody's in a different state who might have done a deal, let's say, New York, then deal in California. And they've already been collaborating and working together. Now they can join the eXp. And when they do that their team grows. And now it's almost like creating national franchises of your brokerage business, versus just being in your foxhole over here. And maybe just getting one referral fee, and actually creates an opportunity you want to give you want to make them succeed as much as possible. So they can, they can coach more people and train more people, which then creates more opportunities for more people to get what's called revenue sharing. So it's a why because of the profits, they're able to share that because it's cloud-based, right? All of the savings kind of like an Uber, right, Uber didn't go out and buy taxis they said look, there's already taxis out there. You know, in a sense, we have the verb, Ella, we have the internet, we already have the internet out there we have for Bella Uber created an app right, which uses the existing you know, inventory has not even taxis but they actually did people's cars, they're already using these cars, right. And it flipped everything upside down. And I think the stock market, which is really interesting, and I think it's really powerful too. I think it was $10 a year ago or $8 like two years ago, and now it's up to I think it went as high as 61. Now I think it's dropped back down about 44 on that range. But you're seeing rapid adoption of rapid excitement on the NASDAQ in the stock market. And you're seeing that rapid growth as well which is cool too because you have what's called, you know, stock sharing or stock options you can purchase at a discount as well as when you close deals then you can get you also get stock. So and essentially you're building your dream, right, your family's dream and your team's dream versus just building the dream for somebody else. Right is Is that a fair summary gem or anything to add to that?
JAMES:
No, that's a perfect and great thing that you said with their leadership. The leadership from my experience are so open-minded, so creative, so collaborative at the top. They're not in a silo. They're not sitting on laurels. They want to innovate. They want to make changes they want to disrupt, which I found very refreshing at the leadership. They're just saying, James, we're opening shares, what do you think you got? What do you think we can do? And we're all talking about how we make this company better? I found that very refreshing. Because when we do this, and we stay open-minded and nimble, we make these drastic and dramatic changes in the industry to keep on evolving. And like you said, we all own this company now, which is refreshing because a lot of times you work so hard for other companies, and you have nothing to show for it, except you're just running on that hamster wheel, trying to make that, make the rent payment, make that car payment, just, you know, paying bills, rather than building equity, building wealth for yourself. And I said, if you just do your job, don't worry so much about the stock. It's going to come by just doing well. You're going to be retired, you're going to be successful by just doing the job you're supposed to do. This is so much of a benefit. You know, in addition to collaborating with the residential area, getting a ton of referrals as we pass deals back and forth to each other. I believe there's just no better model in commercial real estate at this point. And very exciting to share for 2020. Greenly excited to get this out there. And already the feedback is tremendous of how many people would like to join this platform and grow with us in
BRETT:
Yes, very well said I can't think of I think it'd be an analogy Robert Kiyosaki book Rich Dad, Poor Dad. And I think we should write a book called rich broker, poor broker, right? Where where you can do you could do you have to you could have two things, you could sell another 100 deals in the next, you know, next five years, and you know, hundreds of millions of dollars in brokerage, and you can build a team on one side versus another side and see what those look like. And by the way, you can reach out to us, you can go to the expertrealtysecrets.com. And you can schedule a time to speak with me and also with James to learn more about it. So if you're a commercial real estate broker listening to this, we owe yourself the opportunity to underwrite the model, underwrite the model, underwrite the technology, underwrite the future of what we believe commercial real estate is going, and the opportunity to jump on with us right now. That being said, James, are you ready for the lightning round?
JAMES:
I am. All right. Well, let's do it.
BRETT:
Knowing what you know. Now, if you could go back to your 25-year-old self, what's the one Golden Nugget you would make? Sure you would do?
JAMES:
I would have joined eXp if it was around earlier. So I would have been retired by now. building my third company and I and like you said I plugged in all that knowledge. And what I did at those other firms. I would have been retired already.
BRETT:
Beautiful. What's the one book you've recommended or gifted the most in the past year?
JAMES:
Wow. Okay. The past year I. What is it? Ray Dalio. You know, The Principles? Yeah. I love that one. Yes.
BRETT:
So I am so good. They have they have the, the, I guess the children's book version, and I'm reading some my daughter's right now. And it's but I mean, it might as well be an adult version. It has the pictures, and it just takes it condenses the big book into you know, 50 pages, really, really good. I mean, amazing. Like, we're reading it all the time, and the kids dig it as well. So we highly recommend that version as well. Next question, what's the best negotiation tip as it pertains to commercial real estate that you've, you've tried to practice?
JAMES:
Really just listening, talking less, asking open ended questions and listening, and then taking the notes. But that's the biggest thing, talk less, listen, more
BRETT:
Excellent, best real estate decision you've ever made.
JAMES:
Okay, investing or partnering with other people to learn the business, right? So a lot of times, you may not have enough to buy the building yourself. Learn by best jumping into it and putting what you could afford in different syndications, to learn how you can make money and how the cash flow system works, how do you acquire building so just get started, just jump in. If you can't buy it, partner up syndicate, buy with other people, and you learn quickly how this works. Even if you lose money. We don't always make money. And usually in the beginning, we lose. But we learn. And when we learn, we get better at creating wealth.
BRETT:
I love that. What are you curious about right now?
JAMES:
Ah, I am curious about how now how we travel? How do we get around? You know, because I know that a lot of businesses have been disrupted. So I've always been making bets with different friends of what the future looks like as we come out of this pandemic with the vaccine. So that's what I'm very curious about. How do we evolve after the pandemic?
BRETT:
Excellent. And this is our last question. This is probably my favorite question. And it's centered around after all your success, James, you know, and and you know, the brokerages. You've built the Now future ventures eXp commercial and all the success that that is yet to come. All that being said, How do you stay centered in your values gym? And how do you stay encouraged to reach for massive new goals or massive new heights.
JAMES:
And this is the very important one, I'd say my best success was going broke 2009 it gave me a new perspective of life and what I needed to do, which is make a difference for others, you know, fighting for that diversity, fighting for that inclusion, creating a pipeline. And I did say too many if I ever got to this point and am still building that I would create a pipeline for all diversity, inclusion, lower income, those that don't understand commercial real estate and how you could create wealth, just like buying your first home, which is great. You know, buy your home, create wealth, transfer that wealth once you bought your home, income, income producing properties and learn how that business goes. So I do want to teach people, you know, how to be wealthy, how to save money, how to get involved, how to grow your experience, so you can make money, be financially secure. So then you can give back money and an influence and help others because now you have the time, you freed yourself from the nine to five, so you can help other people
BRETT:
Do beautiful love giving back and taking it from a tough personal experience. But now using all of that energy to help people escape feeling trapped, either financially or in the brokerage model. And so hey, I want to thank you, James, for being on the show. It's been a real pleasure to get to know you a little bit more. For our listeners who want to connect with you, James, what's the best place for them to find you?
JAMES:
Yeah, well, obviously on LinkedIn, but you can reach out to me at James.huang@eXprealty.net. So reach out anytime I'd love to hear from people who love anyone that wants to learn about this or talk to Brett about learning how to be you know, financially secure thinking outside the box, being creative, and collaborating. I believe in a good culture that we're trying to create now. Because I always said, it's always better when you go with friends. Even when it's bad. It's better to be with friends. But, when you're successful, it's great to be with other friends.
BRETT:
So well said and yes and feel free to reach out to James or me You can call me directly 916-886-2986 or email me at Brett@commercialrealty.com. Also, check out capitalgainstaxsolutions.com we are disrupting the way folks look at 1031 exchanges or alternatives to that by giving a backup plan. You can go to capital gains tax which is calm with that. Thank you everyone for listening to another show of the capital. Observe the expert realty secrets podcast. I have another podcast called capital gains tax solutions as well. And please please rate review, subscribe, and reach out to us. We shall appreciate everybody. Take care everyone. Bye now. You've just listened to another information-packed episode of the expert commercial real estate secrets podcast with Brett Swarts. We hope you enjoyed today's show and found it valuable. Visit expertCREsecrets.com to access the show notes and to access more resources. That's expert care secrets.com. Don't forget to leave a review and join us again next time.
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