Opportunity to help lease a small commercial property

Commercial Real Estate Investing
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Opportunity to help lease a small commercial property

Cody Steck
Residential Real Estate Agent · Salt Lake City, UT · Member since 2014 · 156 posts · 50 votes

I have been presented an opportunity to help lease out roughly 2,000 square feet of workshop space. It would most likely draw in a mechanic, smaller construction company, or something of the like. There will be parking and storage available. 

Would I be completely crazy for trying to attempt something like this? I am a residential agent and admittedly know little about the commercial side of things. Although I have no desire to move into the commercial space at this time, I would love the opportunity to learn more about this and feel like it would be a good starting point for a skill to add to my toolbox.

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Eric Odum
Commercial Real Estate Broker · Tampa, FL · Member since 2014 · 216 posts · 86 votes
10y

I don't think crazy is the right term, but I don't take on assignments outside of my area of expertise. i.e. I refer out all residential opportunities to agents that are proficient in the target market.  That is just my business philosophy.  I, personally, do not believe I can properly serve the client taking assignments in markets or asset classes with which I can't add add value.  

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  • Eric Odum
    Commercial Real Estate Broker · Tampa, FL · Member since 2014 · 216 posts · 86 votes
    10y

    I don't think crazy is the right term, but I don't take on assignments outside of my area of expertise. i.e. I refer out all residential opportunities to agents that are proficient in the target market.  That is just my business philosophy.  I, personally, do not believe I can properly serve the client taking assignments in markets or asset classes with which I can't add add value.  

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  • Howard Klahr
    Investor · Coral Springs, FL · Member since 2012 · 54 posts · 26 votes
    10y

    As a residential agent are you a Realtor member?  If so, you might want to look into Article 11 of the Code of Ethics

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  • Cody Steck
    OP
    Residential Real Estate Agent · Salt Lake City, UT · Member since 2014 · 156 posts · 50 votes
    10y

    Thank you Eric, for your thoughts.

    Howard, thanks for pointing that out. I have taken a read through that and at the very least, I would be asking for assistance through the commercial division of my brokerage. After thinking more about my ability to represent the client to their highest needs, it might be best to refer this one out. 

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  • Account Closed
    Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y

    Personally, I think it would be ignorant to hire anybody for something as simple as 2000 ft of warehouse space. That is the most basic thing you can rent. You don't need a broker for that. That's like taking a lawyer to small claims court.

    Also as somebody who has rented several such units for business purposes, I would immediately avoid any unit by anybody calling themselves a broker. No need what so ever to complicate such a simple property with something like that. It's a signal the price is too high and the landlord has no experience.

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  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Commercial leasing tends to be a low return activity for a commercial broker. Some do it as part of a package at some companies.

    I stay on the transaction side only as I enjoy that,syndicating deals for passive investors as a sponsor, and buying my own commercial properties.

    If you do not have leasing experience then really there is not that much value you can give.

    Workshop or warehouse space might be 5 a sq ft. Talking about 10,000 a year gross income from a tenant. If you made a 3% fee and they signed a 3 year lease you might be talking 1,000 before your brokerage split. You will do a ton of work.

    Again leasing is a low income activity compared to transacting. We are in a good transaction sales cycle now. If sales were to slow down and people moved to managing and audit control like the last downturn then I have passive income anyways coming in.

    People that don't plan properly for downturns then have to do things they don't want to for survival.

    Make sure the money you make from residential you are socking it away into investment bought right. The SFR cycle will start going down again. It's the number one mistake I see agents make.

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  • Cody Steck
    OP
    Residential Real Estate Agent · Salt Lake City, UT · Member since 2014 · 156 posts · 50 votes
    10y

    Hey Joel, always appreciate your comments. Thanks for adding this, I really appreciate it!

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  • Steve W.
    Middle Island, NY · Member since 2015 · 16 posts · 1 vote
    10y

    @Joel Owens what's audit control?

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    During the last downturn starting in 2007,2008 since a lot of transaction volume dried up and nobody knew where the market bottom was some companies went into commercial property management and also audit services.

    Audit services is kind of like property taxes trying to get a reduction. Someone would come in and review every single expense with the center and see where energy savings, contract service savings, etc. could be had. Basically when margins were tight  in a down market any way to save a cent the owners were after it. The companies doing the audits would get a portion of the savings just like the property tax attorneys do.   

    So some companies would do all of this stuff as they had large overhead to cover. I like staying very lean to flow with the cycles. I want to keep living my life doing what I want to do. Example if people didn't have passive cash flow coming in and a part of the cycle changed then they would have to move to doing what was in demand then at the time to pay the bills. Someone that has passive income can choose to ramp things down if they want and their life really isn't affected. They could keep on keeping on until the cycle changed again. 

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