Commercial Investors: Can I pick your brain?

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Commercial Investors: Can I pick your brain?

Jared Trindade
Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes

Hello all, 

I am looking to network with some commercial investors more specifically people who have experience with warehouses, and self storage. I am an agent in NC and I do sell commercial properties, but I am personally interested in connecting with people who would be willing to deep dive with me on strategies regarding commercial. The majority of my investors are residential, and I would love to get a better understanding of how commercial investors think/what they look for/buy boxes and I would love to hear from anyone who has done conversions on warehouses into self storage or other spaces. 

Please feel free to connect with me, I would love to pick some brains, my goal is to gain information from people who are experienced buyers in this space, to allow me to better service my investors. I have a few on my list that are going to be transitioning from residential to commercial, and the more I can advise them through that transition and into the next steps the higher quality service I can provide. 

I appreciate any and all feedback and advice. Also if there's any questions that I didn't ask that I should've please alert me to that as well. Looking forward to connecting with you.


Cheers!

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Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y

Self storage in a warehouse this climate controlled. You already have several big players in Fayetteville.  Would leave to them, unless it is a smaller location in a strategic location.  

Fayetteville has a capacity for 12,000 units.  You just need to take an inventory.  Let’s say they have 15,000 already. You can still build just need to find Black Holes. 

All about zoning. 
Google self storage Fayetteville.  Open the map.  Look for holes

295 north into Fort Bragg

East of 401 and 210

South of 401 Fenix and Rockfish 

Now do the same exercise Google Sparefoot. Fayetteville.  Same areas look open.    Doesn’t mean they are good spots.  Open the maps further and look for house blocks.  

You’re a realtor so you already know zoning in the city.  Look for special use and mixed use areas also.  

Drive up access is in the $130 range.   You can afford $100,000 per acre.  Climate controlled you can go up to $200,000 per acre.  Location matters. 

Recommend you stick with drive up. Unless you get a great deal on warehouses or closed retail stores.  

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  • John M.
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
    3y

    It seems like everyone is chasing warehouses these days so I'd be interested as well on a deep dive deal from a warehouse investor.

    1Reply
  • Jared Trindade
    OP
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes
    3y
    Quote from @John M.:

    It seems like everyone is chasing warehouses these days so I'd be interested as well on a deep dive deal from a warehouse investor.


     Now we wait, haha.

    0Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    3y

    Hello, I own both of those.

    We are looking for cash yield, long term demand and an exit. NNN for minimal management.

    "warehouse" is very broad, there's a ton of detailed information about asset sub types on YouTube, have you exhausted those first? 

    Follow Chad Griffiths online, #retwit on twitter, me, etc.

    0Reply
  • Jared Trindade
    OP
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes
    3y
    Quote from @Ronald Rohde:

    Hello, I own both of those.

    We are looking for cash yield, long term demand and an exit. NNN for minimal management.

    "warehouse" is very broad, there's a ton of detailed information about asset sub types on YouTube, have you exhausted those first? 

    Follow Chad Griffiths online, #retwit on twitter, me, etc.


    Thanks Ronald for giving me a direction point to start with, appreciate that. I will absolutely looking into those videos.

    Cheers!

    1Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    3y

    As Ronald mentioned what type of warehouse?  Or are you asking broadly

    0Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    3y

    General warehouse points.  Not market specific

    2,000 sqft. $12/yr sqft

    10,000sqft. $8/yr

    300,000 sqft. $6/yr

    Value- road access, location, zoning, utilities, ceiling height, door height, outside paved area, age, etc

    Commercial is more purpose driven. More of a buyers market versus a sellers. Buildings are worthless without a renter. A house you can always lower the price.  A warehouse price might not matter based on the value items I noted. 

    Example. 10,000 sqft.  10 foot doors, 12 fr ceiling.  Most applications can’t use it.  Right location a Fireworks location will die for it.  

    @Ronald Rohde can talk more to NNN and added value features.

    0Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    3y

    Self storage in a warehouse this climate controlled. You already have several big players in Fayetteville.  Would leave to them, unless it is a smaller location in a strategic location.  

    Fayetteville has a capacity for 12,000 units.  You just need to take an inventory.  Let’s say they have 15,000 already. You can still build just need to find Black Holes. 

    All about zoning. 
    Google self storage Fayetteville.  Open the map.  Look for holes

    295 north into Fort Bragg

    East of 401 and 210

    South of 401 Fenix and Rockfish 

    Now do the same exercise Google Sparefoot. Fayetteville.  Same areas look open.    Doesn’t mean they are good spots.  Open the maps further and look for house blocks.  

    You’re a realtor so you already know zoning in the city.  Look for special use and mixed use areas also.  

    Drive up access is in the $130 range.   You can afford $100,000 per acre.  Climate controlled you can go up to $200,000 per acre.  Location matters. 

    Recommend you stick with drive up. Unless you get a great deal on warehouses or closed retail stores.  

    2Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    3y

    Are there any railroads going through?   Get on the GIS map and see what land is still owned by the railroad. 2 acres or more square or rectangle. Bigger if odd shape.  Make them an offer. 

    0Reply
  • Jared Trindade
    OP
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes
    3y

    @Henry Clark

    Thank you, very much. Super valuable insight right there, and exactly the type of things I was looking for. I was looking for broad answers, and you gave me some great ideas there to work with. Typically we have pretty large sites that move, got an 86k sq ft one up right now. So that information can help me guide some understanding for investors who are interested in things like that, especially the ones who are moving in to investing in commercial spaces. 

    Massively appreciate you taking the time to respond. 

    Cheers!

    0Reply
  • John M.
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
    3y

    @Henry Clark or @Ronald Rohde

    Can you guys do a deep dive on a storage/warehouse deal that you did.  Price, loan amount, downpayment, how you found the deal, cash flow, value add, why you like the deal?, type of tenant, length of lease.

    1Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    3y

    @John M.

    We don’t do a combo of storage in a warehouse.  You’re playing with the larger REITS climate controlled.  If I can buy close to them I can bear them with drive up access location.  Cheaper and easier to move in out.  They are looking to maximize revenue per sq ft so they go for smaller sizes.  We can beat them on the larger sizes with price and ease of in out.  

    Plus when you say warehouse I think not optimal location.  If we did a pre existing building I would go after and old shopko, ace hardware, grocery store, walgreen building.  Closer to neighborhoods.  
    Less chance for competition to build due to zoning.  

    Right now definitely build versus buy.  Existing is going for two much of a premium   If I build a 150 to 200 unit location it appraises for $1mm day one  before I rent a unit 

    Size.  Square or rectangle 2 acres or more for drive up access.  Loose to much on setbacks and turnarounds on smaller locations.  Again if cheap enough do a small location if it’s in a good spot. 

    Financing go for interest only during construction and rent up phase.  Rent up phase I ask for 18 months or 65% occupancy before P/I payments.   SBA 10% or conventional 25% down.   Even if you do a conventional loan because SBA takes so long, you can do a SBA refi loan.   Can’t use the SBA property for collateral for future deals unless also SBA deal.  Also hard or impossible to do refi with SBA

    Is a deal feasible?  Matter of land price versus rental rates.  Buildings cost the same anywhere.  Also need to analyze market size and competition. 
       
    Success.  Phase 1 we size to 65% Cashflow break even.  Phase two 35% gets us to Cashflow break even  .  That includes paying principal so even at break even your building equity.

    If you have a specific item let me know.  

    Just because a town is saturated with storage I still would probably build.  Most people don’t think strategically about location. You can cut them off

    I prefer the BCD markets.  Risk is lower and I can make more money. We don’t think in terms of one location. We wagon wheel spokes or daisy chain locations.  We then control the areas rental rate and they can’t get away from us since we are in the next town also.  Far more secure investment versus in large cities with A players. 

    1Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    3y
    Quote from @Jared Trindade:

    @Henry Clark

    Thank you, very much. Super valuable insight right there, and exactly the type of things I was looking for. I was looking for broad answers, and you gave me some great ideas there to work with. Typically we have pretty large sites that move, got an 86k sq ft one up right now. So that information can help me guide some understanding for investors who are interested in things like that, especially the ones who are moving in to investing in commercial spaces. 

    Massively appreciate you taking the time to respond. 

    Cheers!


     2 acres? or is that the covered portion?

    0Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    3y
    Quote from @John M.:

    @Henry Clark or @Ronald Rohde

    Can you guys do a deep dive on a storage/warehouse deal that you did.  Price, loan amount, downpayment, how you found the deal, cash flow, value add, why you like the deal?, type of tenant, length of lease.


     I posted several of my deals under "did a deal" section, but I'm happy to do a writeup as a stand alone post.

    1Reply
  • Cody J Leivas
    Real Estate Consultant · Rancho Mission Viejo, CA · Member since 2018 · 41 posts · 36 votes
    3y

    If you want to chat, message me, and we can get on the phone. 

    I'll give you our buy box. 

    0Reply
  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    3y

    Industrial is a great asset class. Very competitive..just like multifamily. The biggest difference is understanding how NNN leases work. It all comes down to the lease in industrial.

    2Reply
  • Jared Trindade
    OP
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes
    3y
    Quote from @Brock Mogensen:

    Industrial is a great asset class. Very competitive..just like multifamily. The biggest difference is understanding how NNN leases work. It all comes down to the lease in industrial.


     Thank you, I appreciate the feedback from everyone here, some good stuff to look at and read up on! Thanks again!

    0Reply
  • Matt Moreland
    Realtor · Lubbock, TX · Member since 2016 · 165 posts · 155 votes
    3y

    @Jared Trindade! I have been the agent on just over 1mm sqft in industrial warehouse space over the last 5 years or so. Never done anything specifically related to converting industrial/warehouse space into self-storage but have certainly discussed it with clients who were playing with the idea or who have converted warehouse space into other higher margin-use spaces.

    Would love to chat and hear more about what you're thinking and what your clients are looking to do. I have personally invested in a little over 20,000 square feet in industrial/warehouse space so my experience from the investor perspective is more limited than from the agent side, but more than happy to help any way possible.

    Cheers!
    Matt Moreland

    0Reply
  • Jared Trindade
    OP
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes
    3y
    Quote from @Matt Moreland:

    @Jared Trindade! I have been the agent on just over 1mm sqft in industrial warehouse space over the last 5 years or so. Never done anything specifically related to converting industrial/warehouse space into self-storage but have certainly discussed it with clients who were playing with the idea or who have converted warehouse space into other higher margin-use spaces.

    Would love to chat and hear more about what you're thinking and what your clients are looking to do. I have personally invested in a little over 20,000 square feet in industrial/warehouse space so my experience from the investor perspective is more limited than from the agent side, but more than happy to help any way possible.

    Cheers!
    Matt Moreland


     Would love to chat, let's connect! Thanks!

    1Reply
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