Easy commercial holds?

Question

To me, I have considered laundrymats, coin car washes, and self storage units as ideas that might not take up a lot of time.  What am I missing and what are some other ideas of businesses that might not require a lot of time or energy?

Douglas Dowell · Answer

Have you considered NNN retail?

Jay H. · Answer

This is one of my biggest pet peeves. This is a NN deal. When they play that game with me I use Absolute Net as discription for true NNN.

Joel Owens · Answer

Yes these deals for strip centers with multiple tenants the sweet spot is about 3 million and up.

You can find smaller centers of 2 to 3 tenants for the 500k to 1million or so range. More mom and pop there and local bank to finance.

To CMBS lenders 2 million is really small. Some recently upped minimum loans they will fund to 5 million.

Joel Owens · Answer

Hi Pete,

I believe we connected awhile back. NNN retail multi-strips are really good.

Those other things you mentioned are more hands on and not passive where the operate more like businesses.

If you have any ? feel free to ask. 25% down we are hitting 15% COC going in on the retail strips. Professional commercial management company used managing millions in sq ft for the retail and you go over a report once a month etc.

Joel Owens · Answer

Strip malls are different than absolute NNN single building properties.

The strip mall even absolute NNN you have base rent per sq ft and then the CAM re-imbursement. Tenants put a cap on their pro-rata share these days. So while it is NNN there are some overflow costs that the owner pays some on.

I like strip centers because it is like apartments with breakeven occupancy versus a single NNN building.

If you are doing a vacant strip center it takes awhile from the leasing up to execution of the lease because of TI's to start the rent once occupancy occurs.

What kind of loan depends on the size of the property and quality of the asset.

Sellers and brokers market NN as NNN all the time. I spend time having to dig to see if really NNN, if there is a loan assumption that will kill COC because of equity down payment, etc.

Steve Olafson · Answer

I find that the majority of real estate investments that make a lot of money take time and effort.

I have been an apartment owner/operator for many years.  Management has always been an issue.  I came to the conclusion that I needed to have my own management company if strong success is the desired result.

The apartment market is too hot these days.  I have been switching over to strip centers.  One transaction has been completed with another in progress.  These are not passive investments though.  There is so much more money to be made if you buy with vacancy.

Ben Leybovich · Answer

@Joel Owens - I've been looking at some A Class strip mall deals that are marketed NNN, but the owner always seems to be responsible for structure and roof, which to me is not true NNN.  Is that normal for NNN, or should I keep looking?

Feel free to call if that's easier...

Jay H. · Answer

NNN will most certainly be the most "passive" source. You can find deals for under 2MM. heck, you can find single tenant deals for under 1MM. Just make sure you understand the credit quality. This is a game where you should hire a seasoned broker to help you navigate the process. Just my 2 penny's.

Jay

Jenna Stark · Answer

@Pete T. My family have been in the card system laundry mat business for 25 years.  They build them and also have a a few that we personally own as a family.  It can be an incredible business, but a little more hands on than what you are thinking.  Although my parents make it more hands on than what is needed by having the stores fully attended, I love that particular industry because I grew up with it.

But I think @Joel Owens nailed it with true passive income being in NNN retail strip centers. This is something my parents are also invested in, and it takes considerable less work for them!

Hope this helped!

Jason Carter · Answer

Curious, what is the ballpark price rang for the types of deal you mention @Joel Owens ? 2M+?

25% down we are hitting 15% COC going in on the retail strips.  Professional commercial management company used managing millions in sq  ft for the retail and you go over a report once a month etc.

Easy commercial holds?

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