Commercial Opportunity Strategy

2 Replies

I have a friend who has a sizeable commercial real estate portfolio. She and her husband, both in their late 60s, purchased a farm and plan on enjoying the rest of their lives together there. She reached out to me because she knows I'm an investor and primarily employ wholesaling as my strategy and asked if she could unload some of her properties onto me, of course at a discount because we are friends and the last national tenet just moved out of one of her properties. All my wholesales have been residential this far and I have zero experience flipping commercial properties. As I write this, I've been investing less than a year but things have been moving so fast that it seems like longer. Sorry to be wordy with this post....But any advice on how to approach this would be greatly appreciated 🙏

@Anthony L Brown

Selling a property to someone at a discount because of friendship is the same as giving that person a gift of the difference between the price the property could have netted and the price received. Many people don’t think aLong these lines because it’s somewhat disguised. An opportunity for the buyer ,IF the discount is real, and the buyer is competent in the type of property and is financially able to afford the property.

That being said, commercial is a different animal from residential, especially vacant commercial property. While most residential units can be. Leased in 30 days, some commercial properties take years to lease, and some are never going to be leased for enough to cover expenses, they are economically obsolete. Or need a new use, like many abandoned shopping centers.

Wholesaling in commercial properties is much rarer than residential. Commercial property owners don’t NEED a wholesaler to find them a buyer because (1) the lower end of the segment and the high rehab need commercial properties have not been abandoned by real estate brokers the way their residential counterparts have (2) commercial property owners are usually at least somewhat sophisticated and don’t need the “knowledge “ of a wholesaler to help them complete a transaction.

This is NOT always true, as I have witnesses a very competent and aggressive wholesaler involve herself in the wholesaling of a MHP and pocket $25,000. So it can happen.

Problem is you are inexperienced and probably lack knowledge in the commercial arena. This could only lead to miscommunication, disappoint, and a strain on your friendship. If you are a MD general practitioner and a friend comes to you with a heart ailment, would you attempt to give them medical advice, or would you refer them to a heart specialist?

Often what sellers consider a discount and what I consider a discount are Universes apart. Sellers want to discount (just a little) for major items needing to be fixed. Doesn't work that way. Either current owner fixes it and gets top dollar or they sell for a bigger discount where a buyer will take on the problem to see an equity gain for themselves upon resolution.

Nobody that I know is going to take on an issue for slight reduction off of market value. I typically have my stabilized property buyer clients, my true value add, and nothing in between.