Should I invest in Southlake, Texas

Question

Asking for advice from fellow members. I have couple of Single Family homes in Oregon, and have been looking into a Commercial property for a while. It just happens have an opportunity to get into one but in Southlake, Texas. Will be going in with a close friend, who lives there, but is new in real estate investing, but very diligent and working with a local rep.

The property he has shared is leased, cap rate of ~6%, with a net investment of around $1.8million. What I am trying to understand if the person is making this much money why would they be selling it, as even in stocks this is not going to be possible for a bit.

Also since it is first real opportunity, will also like to get some suggestions on what we can and should ask, so we can have some more relevant data to analyse and look into. We will be getting leasing information soon, the property has 3 offices and are all leased, it is not listed for sale, so the RE agent has direct access. The buildings are class A/B. So few questions:

1) Anyone familiar with Southlake, Texas area, any suggestions on growth, prospects for CE there?

2) Besides cap rate and leasing information, what else should we ask for from the seller?

Ronald Rohde · Answer

I don't agree with some of your logic. 1 additional year is nothing, that is a very short period. Anything less than 5 years is not an investment--its a value add. No state income tax sure, but thats a minor factor compared to the short, risky leases. Southlake is a small town, but one of the wealthiest enclaves, there is a trend toward smaller offices located near people's homes. Its surrounded by DFW so the actual town size is less meaningful.

If you can renew and extend the leases, it makes everything more palatable.

Ronald Rohde · Answer

6% is high for office in post-covid. Who are the tenants? How long is their lease for? You need an attorney to review the documents or a broker at minimum.

Annu Zer · Answer

@Ronald Rohde @Lucia Rushton, thanks a lot for replies. The lease is through next year, so atleast 1 more year.

The reason for texas, I am in Oregon, very tough to find something local, and happen to have family member in Texas, working with him on this, also no state tax means less complications come tax time for filing taxes.

Are their any resources to check economic/growth indicators for Southlake. With a city of 32000 I am also worried about vaccancy rates. I am not sure if there is a way to find this information?

Also @Lucia Rushton property unlisted, so did not want to share info as am not sure why the owner ha snot listed, but will like to keep it private as is their wish. But this listing is close https://www.loopnet.com/Listin...

Account Closed · Answer

@Annu Zer

I'd consider buying a note secured by commercial multifamily in your backyard.  I have some projects I'm invested in and other projects coming if you are interested.

Lucia Rushton · Answer

@Annu Zer.

I personally like southlake but why are you considering office space right now if you are new to this market - both Texas and commercial? I would think office/strip mall landlords have been hit harder than MF in the last 90 days.

If you want to DM me the address I can look into it a bit more for you.

Should I invest in Southlake, Texas

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