Commercial Real Estate in TEXAS

11 Replies

Hello everyone, I am currently looking for commercial real estate in TEXAS to purchase and am needing assistance with such.  I would like to speak with any and all "boots on the ground" in regards to purchasing.  Furthermore, I am ALSO interested in commercial property throughout the entire Midwest region!  

Does anyone have any trustworthy real estate professionals for me to contact? In specific, I would like a 10%+ cap rate.  I look forward to networking with you!

Highly recommend you dig a bit deeper and specify a market. Texas is an enormous place with a number of distinct markets. Very few assets are trading at 10 caps right now across most of the country. Brokers are typically the best sources for commercial deals. Narrow down, get ready to demonstrate that you can close, and start building relationships with them. They're out there every day calling on potential sellers.

I do not know what Universe you think commercial real estate stabilized assets are trading at 10% cap rates. I review about 1,000 a week for clients. I know about 270 companies for retail properties in Texas. No 10 caps there or even close to that. 6 to 7 caps for the nice stuff ALL DAY LONG. Buyers in CA are selling multifamily for 3 caps and doing a 1031 exchange to buy at 6 to 7 caps.

Only way you are likely hitting 10 cap is doing ground up development or taking a highly fractured development with some income and turning it around. 8 to 9 years ago at the bottom you could get nice stuff at 9 to 10 caps. Some higher risk office in the 15 to 20 million range with tenants vacating soon you might be able to get close to that. For cap to be high on stabilized there has to be massive (hair) issues on the deal. Nice stuff developers build for a 9 cap or higher break even and sell for 6 to 7 cap so they have 200 basis points of profit. Otherwise they convert construction debt to long term regular loan and have cherry tenants,monster cash flow, and at a 9 cap or better with long term leases.  

@Austin S. Pogue I agree with the posts above. If you are reading a book that is 9+ years old you’ll read about wanting a 10 Cap but sadly they are not on the open market nor even picket listings without you “making” it a 10 Cap down the road.

I can introduce you to a great commercial broker but please be very clear on what you want. There are so many tire kickers in the market today so especially in the commercial market a broker will only take you seriously if you are realistic and can show either history or proof of funds.

Alternatively are you looked at fractional investing ? There are able on BP.

DM me if you want any further info. Best wishes

@Austin S. Pogue I know the owner of a good Title/Escrow Co in TX they will have an awesome List of Brokers they can refer you. PM me for their info.

I have a GA Broker who is getting your desire cap rate in his investment portfolio he is in So Cal. If interested. 

I would rather have 7 to 8 cap in a GREAT AREA where land value gets more and more valuable then inferior assets in old town location in a weaker area that is a 10 cap.

The tenants trade out and don't last. It's just like owning cheap residential houses. The property is a headache and the cash flow isn't stable.

Good luck to the buyers chasing the Unicorns...………….. : )

@Austin S. Pogue like everyone else, we aren’t seeing 10% cap rates in Texas in decent cash flowing areas. They are great areas and commercial properties all over Texas and in the past we’ve been resilient during market crashes. You’ll have to be more flexible with the cap rate though. Too many businesses are moving HQs here so the market is hot.

Working for yield asset types can equal higher yield but BIGGER headaches.

Passive yield or almost completely passive yield can be not as big on going in cap rate but can have more headache free cash flow over time.

Less headaches equal more buyers willing to pay a premium. People that are already worth 10,15 million etc. care usually less about wringing out every last cent of return but HOW HARD they will have to work to generate a certain return. I have a family friend that has been in mobile home parks investing for over 50 years. There is nothing passive about it and on a comparative basis it doesn't compare to retail or other asset types that are less intensive to manage.

So it all goes back to again how big of a headache does an investor want? If they want max yield and are in the beginning of their life and investment cycle then they might want max yield and will take on the headache. Generally those with lots of money already move to less intensive assets where the hope is to have nice equity growth with some cash flow to outpace annual inflation.

Well this is my first day on the Bigger Pockets site and this is the first thread I found (because I'm interested in commercial real estate in Texas) and I'm shocked at how negative everyone is. 

The last 2 commercial deals I closed were 15% and 12.5% caps. I found them both through Loopnet so these weren't some hidden gems, one was on the market almost 2 years. My point is these deals are out there but you have to find and close them through tactics like looking in different markets (I happen to focus in rural towns), low balling old listings, calling on "for lease" properties, etc. 

I highly doubt there are very many people looking to "source" these types of finds for you though, so I would recommend asking for tips on finding these types of deals yourself and doing some hardcore wheeling and dealing! 

Being new here, I'm happy to share my stories and how I go about looking for these types of deals. I'm not an expert by any means but I have proven these types of deals are out there, and I think there are lots more!

Best of luck to everyone!

Rural towns do not compare to strong suburban to urban core properties. Different worlds.

Most of my clients out of state that look in other states want major metros not venturing too far out from the airports in a certain drive radius.

I can find high caps in rural areas. It's not uncommon. Rural areas have weak demo's. In cycles weak areas are first to fall and last to recover and appeal to mainly local investors that understand the nuances of those one to two economy type towns where just a few employers prop up the local economy.

It's like finding cheap houses in residential. People can find cheap houses in marginal areas most of the time. The key is to find properties with upside in great areas from strong suburban to urban core locations. That is much harder to do because of supply and demand from investors wanting the higher quality and more demographic dense areas. 

Welcome to the site and hope your purchased deals turn out as good as you expect.