All Forum Posts by: Ash Patel

I purchased a strip that had a turn key end cap bank with drive thru.  My tenant made it into a deli and the drive thru is outdoor covered seating for now.

Most banks hate mixed use buildings.  Find a local lender.

30% - 4.25% 25 year am, less than 10k closing costs.

When I started buying vacant retail/warehouse/office 10 years ago, it was 30% down.  After a few turnarounds I got it down to 20%.  Now I am at 15% down (which is unheard of) for any deal and 4.25% 25yr am.  Get in bed with a local lender.

Always a local lender 

The lender will go off the appraised value.  I get 10 year locks with 25 yr amt and 15-20% down on all of my deals even if it is a vacant/value add play.

You can also have individual subs do their own drawings.  My guys don't charge me if I do the work through them.

@Mel Park - For me, its hard to park money in land unless there is a solid plan.  I would ask the seller if you can market the land for 3-4 months with a preset purchase price.  Essentially an option on the land, at the end of that period, you either purchase the property or walk away.  Let them know what your plan is and how you will bring a lot of attention to their parcel.  Its a long shot but worth the ask.  

I started out 10 years ago purchasing $200k commercial buildings and have moved up to $5m strips.  I have learned a few things the hard way:

Go bigger faster
Managing a $5m property often takes the same effort as managing a $500k property
Build a team to exponentiate growth

Best of luck brother!  

 @Mel Park - Most developers would tie up the property for several months. I would try to do the same and see if you can attract a national tenant. If you put a ridiculous amount of earnest money ($100k) down you may be able to get it done. Obviously the earnest money doesn't go hard until the very end. If that doesn't pan out, I would advise against buying it and sitting on it. John Mcnellis wrote a great CRE book and this he has been a developer his entire career. He strongly advises against buying land and sitting on it. You also have to wonder, if this is a great piece of land, why is it still on the market? Price?

Mom and pop tenants are awesome.  You rarely have to give them a TI allowance and they will improve your space on their dime.  I would prefer established businesses vs. startups.  Even though I have a personal guarantee in my leases, I have an unwritten rule:  If you need to vacate your space, we will both try to find a replacement tenant and you will have to pay rent until we do so.  I'm note going to sue someone who just went out of business.  Much different than a corporate guarantee.  If you treat them well, they will be great long term tenants.  

I have never put more than 20% down on any commercial deal including vacant buildings.  4.25% interest 25 yr amt.  Recently put 15% down on a smaller strip.  Most of these have some value add upside to them.

I have a 15 year track record with the same local lender. I think having a lender as a business partner is the most valuable asset in CRE.

Adam, thinking of your lender as a business partner is also quite valuable.  I have been with the same small lender for almost 15 years and they will finance anything I bring them at the same terms.  It did take a few deals for them to learn what I do and get comfortable with some of my riskier deals.