Commercial Wholesaling - Good or bad timing right now?

Question

Hello,

I've been out of R.E. investing for a good while. Just before the current crisis, I was getting ready to start in Commercial Wholesaling.

Is it a good idea to still start now? ....or should I wait?

Thanks in advance!

Bridget

Greg Dickerson · Answer

That will depend on the type of property. There will be some opportunities and distressed properties from this situation for sure but type, location and condition will be a major factor. One thing about commercial is you need to allow time to close. You will not find buyers to close cash in a short period of time for commercial unless its something really special.

Todd Goedeke · Answer

@Bridget Dunlay , talk to potential buyers to find what they are looking for in terms of cash flow as it relates to lease terms.

Drew Holland · Answer

@Bridget Dunlay It depends on the asset class, type and market.  Green Street Advisors released a report a few days ago (May 6, 2020) that analyzes the state of commercial markets.  Industrial and few other commercial assets are performing well; others not so much.  Very insightful, with data through April 2020 and I've attached a link to the report below.

https://s3-us-west-2.amazonaws.com/gstqa-us-west/uploads/2020/05/05160502/GSACPPI20200506.pdf

Ronald Rohde · Answer

Can you explain more of what you mean by commercial wholesaling? I have not heard of anyone successfully flipping contracts unless they are putting down $10-30k in due diligence...

Todd Goedeke · Answer

@derek

@Derek Carroll, don t forget about insurance companies, family foundations and endoement funds wanting to purchase RE and triple net lease for the cash flow, yield, opportunity not for capital gains.

Todd Goedeke · Answer

@Greg Dickerson, if you line up your potential buyers list before you sign an option to purchase, there is no anxiety about speed of purchase. There are plenty of people looking to invest in storage rentals, campgrounds and short term vacation rentals.These people include IRA and Solo 401k investors wanting to diversify outside the stock and bond market.

Derek Carroll · Answer

@Bridget Dunlay

There are always buyers for wholesale opportunities. Commercial wholesaling is different than residential but the concept is the same. If you found a great commercial or multifamily deal and wanted to assign it to me or any other number of investors I’m sure you’d be able to.

The challenge right now is two fold; finding a seller to sell below market is much harder with sophisticated commercial investors, and also once an opportunity is found determining current value is much more difficult given all the uncertainty in the market. I suspect that most transactions taking place are investors taking a much longer view on hold horizon than in recent times. The 1-2 year rehab and flip strategy seems more risky and needs a lot more analysis while a 7-10 year hold in great market could overcome the short term blips.

Either way it’s all about value. If you were able to contract a property at a point where it’s a screaming deal, you’d have no problem lining up buyers.

Bridget Dunlay · Answer

Once again, thank you so much for your input!

Thank you Derek, Todd and Drew!

I really appreciate it!

Bridget

Bridget Dunlay · Answer

Thank you Greg and Donald,

Sorry, but maybe I didn't express my question clear enough.

I wasn't really talking about what kind of commercial property or what kind of specific deal ....I'm planning on putting commercial properties under contract and/or buying them myself to sell or lease to national NTs.

My big question is......Are there enough buyers for commercial properties at this time? OR are commercial buyers (investors and companies/corporations) more reserved due to the current circumstances?

Is it a good time to do this right now?

Again, thanks a bunch!

Bridget

Commercial Wholesaling - Good or bad timing right now?

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