How do large firms find large commercial properties to flip?

Question

Large firms will flip apartment complexes, large retail buildings, large office buildings, etc.

How do they find these for sale? They are not listed on the MLS and wholesalers that I've run into do not deal in properties this large.

http://www.crainsnewyork.com/article/20160131/REAL_ESTATE/160129828/the-real-estate-flipping-craze-shown-through-four-big-deals-in-brooklyn-and-manhattan

Phil Christian · Answer

The closest thing to a commercial mls is Costar & Loopnet.  This being said, there isn't a need for larger transactions to be placed on these sites because there is no reason to alert the world to a project for sale.

The larger the deal size the smaller the buyer pool becomes. Even in SoCal there are typical only a small handful of buyer profiles for specific deals. Secondary or tertiary markets might only have a buyer profile of 2-3 groups that have the capability/experience/relationships/capital/free-time to purchase a deal.

Furthermore, brokers who focus on large transactions do not want to waste their time fielding phone calls from random people who are not capable. It's a time suck.

"They don't necessarily set out to flip, but they take advantage of a rise in market price when they can." .......

Yes they do... except its not called flipping (well it could, but not in the specific house terminology).  It all depends on the business plan for that particular asset.  Business plan can depend on a multitude of different factors; equity, debt, sponsor profile, company strategy, type of real estate, market conditions, tenant profile, etc....  It's an exit plan. 1 year exit, 2 year exit, 3 year exit, etc.... or long term cash flow.

Oftentimes, new players into a particular market will either have to parachute into a sub-market/brokerage community and aggressively buy a deal to get everyone's attention OR organically take the time to insert themselves into the community and develop relationships.

Joseph M. · Answer

@Patrick Philip , commercial is more about off market deals. There are sites like Loopnet but there isn't a commercial MLS like there is for residential properties.

This is kind of interesting this article is from back in 1999 and it gives some reasons of why there is no commercial MLS

http://realtormag.realtor.org/commercial/feature/a...

I imagine part of it also is that many commercial building owners might want to be discreet they are selling their property.They might not want their tenants or the general public to know it's for sale.  Similar to a business for sale , people don't really want to make that public and only want to release information to those that are serious ,qualified buyers and you have to fill out a non disclosure agreement (NDA) when buying a business as well.

Manolo D. · Answer

I don't play that big, but one thing I know is if they increase the bottom net income, prices will rise. It doesn't matter what you do to the building.

Patrick Philip · Answer

I'm talking investors with billions in assets. After doing some reading, I've found companies that they list through. I wonder if they buy through the same companies (brokerages).

I've also found that a lot of the "flipping" that they do is not forced appreciation like through renovations, it's market appreciation that they capitalize on. They don't necessarily set out to flip, but they take advantage of a rise in market price when they can.

Patrick Philip · Answer

Okay actually I've been looking on sites like LoopNet and TotalCommercial and I do see multimillion dollar office buildings.

I still think there's probably more to it, though. Perhaps big players get dibs on properties before they hit the public market.

Patrick Philip · Answer

What does that mean? Where would I go if I wanted to find one of these properties right now?

Phil Christian · Answer

The local brokerage community.