All Forum Posts by: Ash Patel

Great question.  Snow removal can be a ridiculously large expense.  If it snows overnight and stops, no big deal, it should be a one time plow and salt charge.  The costs go up quickly when it snows steadily through the day and multiple treatments have to be applied to keep up.  This is also one area you never want to skimp on.  One slip and fall and you will wish you paid for the more reputable/expensive company.  Before you hire the lawn guy who threw a plow on his truck, think about the big storm.  I've seen businesses crippled because a big storm came in and serious equipment was needed.  I always make sure the people I hire have access to bobcats and dozers.

My experience is as follows: With NNN strip malls, I hire the best snow removal company I can find and pass the cost along to the tenants. With gross lease retail, I started out eating the cost but still hire the best. As the properties stabilize, I would have the tenants pay but with a cap. For example one tenant pays 50% of snow removal with a cap of $1000/season.

I've had another gross lease tenant that simply was not happy no matter which snow removal company I picked.  They were not there early enough or didn't put down enough salt etc.  I had him pick the company and I would pay for it.  This way if it was not done correctly he can call the company directly.  This may also help if a slip and fall case were to arise.

With office buildings, I pay for the snow removal and the heat.  As tenants continue to renew leases, I build in heat kickers where six months out of the year, they pay an extra $xx/month.  You can apply this concept to snow removal as well.  

Bottom line, don't skimp!

This should be a given but of course your offers are made to the listing realtor....right?

@Armando Payano - I have looked at all of the popular syndications and the best that I have found is @Joe Fairless.  I don't believe that he has a need to advertise but you can PM him.  I met him after he interviewed me for his podcast and learned about his offerings.  I have since participated in three of his deals.  They are typically 5 year holds.  

How do you get the seller and/or their agent to take your low ball offer seriously?  Offer a ridiculously large earnest check.  In addition I typically make my offers all cash even though I don't always have the cash.  I do have a grasp of the market and a good relationship with my lender.

Quick story:  I offered $400k for a $600k building with a $50k earnest check.  The counter offer was  I have to close by the end of the year (21 days away) or they keep my $50k check and the deal is off.  Luckily everything worked out. 

@Kyle Charles - I am assuming it is you that is apply for the loan and this is your project?  If so, YOU should put together the proforma.  You can certainly solicit help from other resources but you should know these numbers inside out and be comfortable with them.  Again I am assuming this is your baby.  I have seen several instances where smaller banks will do the proforma for their inexperienced clients in an effort to secure the financing.

Thanks for the education @Joel Owens. A lot of CRE investors want to become developers but rarely do they get the tough love you just dropped!

I have been putting all my money in syndicated multi-family. 20% IRR over 5 years and completely passive. I'm taking a break from commercial real estate investing until rates rise and prices come back down.

@Paul Fagot - if you are in a time crunch, partner with another wholesaler and offer them a small commission.  You could get a few bids from a contractor.  That will help you get a firm number on the rehab and make the buyers feel more comfortable.  Finally, you can put together a package deal for an investor where you manage the rehab.

Thanks @Paul Fagot.  I appreciate the offer but doing a $300k rehab remotely sounds like a lot of work.  Until rates rise and value's fall, I'm passively investing.

@Michael Le - it was Andrew Carnegie who coined that phrase. Warren is very diversified. Hard questions to answer without age, goals, need for income, target IRR, active vs. passive. If you want purely passive investment, I have done well lately with syndicated multi-family in the $20-$50m range.