All Forum Posts by: Greg Dickerson

 You should be able to determine the going rates for commercial land in your area based on recent comps and current asking prices. Values will vary greatly depending upon the location, use, capacity, topography, availability and cost of utilities and other development requirements such as access etc. You could talk to commercial brokers in the area to find out what land is going for.

Ty I am happy to help but would need more details. What are you trying to determine? Capacity, value raw, value developed? Feel free to reach out anytime.

Ross - see answers below,

How would you come up with a long-term vacancy factor? 

Depends on the size of the building and how many spaces you have as well as market demand.

Larger tenants are always NNN, but does that equation change when you're carving up the space more and more for smaller tenants? No. the smaller tenants will be NNN as well. You bill on pro-rata share or meter the spaces separately depending on the size and type of building. You have the most flexibility on ground up as apposed to carving up an existing building.

As the rented space shrinks, do you get more rent per foot at some point? (I.e., with multifamily the smaller the unit, the more rent per foot generally.) As a general rule yes the smaller the space the more you can charge but its all about demand in your market and competition.

With our multifamily, vacancy has been predictable and low. And with so many units, if something causes a unit to sit vacant for a while, it's a small percentage of the portfolio. If we get into flex industrial, there are going to be fewer tenants, and we're more nervous about taking more time to re-tenant a unit, especially with fewer total units. How do you mitigate this risk? Again this all depends on the size of the building and how many spaces you have and the demand for those spaces. I would not do a project like this unless there was a strong demand for it or if you can get a really good price on a vacant building. 

What is your role?

I haven't seen that model but it looks like its a simple IRR calculation over the 1,3 and 5 year hold periods.

You can google the address of the subject property and use google street view to check out the surrounding houses and buildings. Also check out local crime reports / maps they are usually available on city websites orby googling that search.

Ty,

You don't need to be local to determine highest and best use and analyze deals. What are the demographics? Surrounding commercial developments? Whats the demand in the area?

Ben,

I would need info on surrounding demographics like rooftops, traffic count, surround office and retail etc. One thing for sure is the build it and they will come is not always the case.

That doesn't sound like a good opportunity. Very small lot in rough area. Limited upside.

I agree with Jay' comments. 

The whole situation sounds a little off to me. If the home sells during construction it will not close and fund mid stream. There would only be a contract to purchase a complete home so the house will need full funding to completion by you before they can close with a buyer's funds and pay you off.

The subs only get paid when they finish the work so the builder has plenty of time to get a draw for work completed. The lender will do weekly draws if the builder wants it that way but only on work completed. Sounds to me like the builder is having cashflow issues. I would stay away. There are plenty of other deals you can get into with much less risk.