All Forum Posts by: Bob Solak

Getting rid of abandoned cars can be a real nightmare. In order to sell a car you will need title to it.  You don't have that, so I would not even go down that route.   I was once on a job site in the middle of nowhere that had the decades old rusty remains of a truck chassis and cab that was blocking an area where work had to be done.  To (properly) have the car removed and scrapped required a weeks long State Police VIN number search before we could be approved to proceed.  I know that's not your case here, but it just serves to point out that these things can be complicated. 

There may also be local laws about towing that apply here (in some areas, you HAVE to have a sign posted that identifies the towing company otherwise you can run into trouble).  And if you didn't meet those local requirements when they were parked, you might cause yourself a headache moving them now.   Time to call your attorney.  

Also, be careful with the line of thinking that "she owes me X grand so I'll sell these cars to make it back".   Your lease is your contract.  The contract and applicable State law determine your recourse for getting money out of her.   Taking her cars to sell (without her agreement/cooperation) is the wrong avenue for you to get your money out of the situation.   You need to proceed down the right paths, especially if at some point a third party (judge) is deciding who is in the wrong.   You want the dispute history and paper trail to point only toward her. 

I was under the impression that losses from passive income (on the properties you still own) could NOT offset capital gains (on the one you sold).   But I'm not a CPA.   It may be different if you are considered a real estate professional. 

Are you truly being impacted by inflation?  If you have triple net leases, your tenants are already bearing the major brunt of inflation, why should their base rent go up as well?.  What is the true impact of inflation on you as the landlord?   If you are leveraged, is your interest rate fluctuating with inflation or are you locked in for your term -most people are locked.

I guess my short answer is, sure, you could come up with some kind of inflation match language, but as a tenant, I would ask what is your justification?  And also, are you willing to let the door swing both ways?  There have been years when the CPI has been near zero.  Are you willing to decrease your annual rent increases when inflation is low, or even negative if we were to ever have a deflationary period?

Also, I've always viewed the year over year increases as keeping up with market rate increases.  There is probably some indirect tie to inflation in that, but I never thought of the sole purpose of that as a peg to inflation.  

Usually restaurant rents are a bit higher per square foot than office, but not always.  Really depends upon your local market / comps.  I think office is a bit scary still, post pandemic.    People are still resistant to go back to the office, depressing demand.   

As others have stated, if you've got restaurant infrastructure in place (plumbing, fire, hood, triple traps, etc.)  that can be very helpful for the next restaurant tenant to get up and running. 

Personally I'd keep it restaurant if I could.  

Every two weeks is probably not necessary.  If you have to do it every two weeks, there may be something else wrong with your pipes (like a leak in the P-trap).   The actual time interval would depend on a number of factors (e.g. humidity levels, air flow, etc.) that might quicken the drying process.    I would proceed by trial and error.   In an unoccupied, enclosed space like a riser room that no one goes in very often, I would expect you could go months without an odor issue.   So maybe try one month, enter the room and take a whiff.  If no smell then dump some water down it and then try a two month interval.  Keep doing that until you find what your magic number is.  Then subtract a month to be conservative and make that timeframe your routine. 

Derek, what has been your all-in cost per square foot for building these?   When purchasing existing flex/small bay in the Chicago metro area, it seems to us that we need to be below $70 per square in order to get the returns we are looking for.   That is way less than we could build it for and I think that is why more builders aren't doing it.  That, and the even hotter demand for large warehouse space is keeping them focused on that.

It kind of depends on what you are after, Eric (e.g., cash flow, appreciation, development, etc.).   My partner and I are interested in cash flow/cash-on-cash return.  So the very basic analysis is (income - expenses - financing costs) divided by cash invested  = cash on cash return.   Anything else like appreciation is just gravy for us.  

Your lenders will be interested in not getting left holding the bag if things go south.  So they'll look at the lease terms and lengths, sale cost per square foot etc.  They'll adjust their loan offer to you to offset their perceived risk when they compare it to other similar properties in the area. 

You wouldn't be able to get a true Phase I done without access to the property, past owners/employees any way.  What you might do is get a consultant to do a cheaper environmental screening.  That will query all the environmental databases that would be queried when a true Phase I is run.  They can also get old aerial photos, old city directory listings and old fire insurance maps.  That may give you some insight into what has been at the property and what the possible issues might be.

You might try the models at Adventures in CRE.

https://www.adventuresincre.co...

Hi Bart, 

We've got about 30K sq ft of "flex" type space in a couple buildings and actively looking for more. These are the smaller (1,500 - 3,000 sq ft) type spaces but multi-tenant. Some of our stuff is NNN but most is modified gross. We love this type of market/tenant. I'm not sure if you are looking for a group just regionally or not. But if you want to connect, hit me up!