All Forum Posts by: Cason Acor

To clarify, are you saying that your partner and the lender get to see the tenant financials, but you don't?

This question is very vague. You’ll get a much better response if you’re able to narrow down specific points that you want to know more about. For example: how to source deals in your market, how to analyze a potential deal, what makes a good tenant, what to look for in a lease analysis, etc. 

Sale leasebacks are extremely common in commercial real estate. As a broker, they’re my favorite deals to do. 

The reason a company would execute a sale leaseback is because it creates a cash-out event. A company could want that cash for any number of reasons. Get the mortgage off their books, pay down other debt, use the equity for business expansion, etc. It could also be because business is bad and they need the cash to stay afloat. As a buyer, figuring out why this company is wanting to execute a sale leaseback will be an important part of your due diligence. 

Remember, not every company wants to own real estate. And not every company operates like a real estate investor. If your core business has nothing to do with real estate, then your equity and cash is usually better spent on your core business activities. Why would I want $1 million in equity in a building I own when I can use that cash to increase my revenue? It’s all about cost benefit analysis. 

I would negotiate a significant price reduction because the property is approaching the realm of being undeliverable, unless you’re paying cash. 

Also in my state, lease succession to new ownership is automatic by law, no provision written in the lease is required. I would double check local law for where you are purchasing, because I’ve actually never heard of any law requiring a “successor and assigns” clause. But that could also just be my ignorance. 

They can try and offer you literally whatever they want. But legally they’re on the hook for rent until the end of the lease term whether they use the building or not. Most likely they would try and pay you off like you suggested. You’ll obviously want to negotiate for as much of the full remaining rent payments as possible. They could also try and sublease the building, if your lease permits it. 

I second the suggestion of looking into cost segregation. 

Using leasing agents, especially for retail properties, is really common. Most leasing contracts will have a clause stating a commission isn't owed if you find the tenant, or at least a reduced commission. 

I don't typically deal with blanket loans and don't have any experience with Red Star Mortgage specially. But generally speaking, 5% seems pretty high. Also, the terms this guy quoted you are all better than the terms Red Star has advertised on their website. They very well might be able to get you what you were quoted, but I would double down and make sure you have a clear understanding of the potential terms before committing to credit pulls and term sheets.

It will all depend on what the lease says. If the lease says the landlord pays for water, and the lease hasn’t expired yet, then there’s not much you can do. You can always ask the tenant to amend the lease, but they have no incentive to do that unless you offer them a sweetheart deal. 

If the lease is month-to-month then you can start charging back the water with proper notice, or start collecting a flat monthly fee to cover the expense. Whenever you sign a new lease, make sure it’s written in that the tenant pays for their own water, among other utilities, and that they should pay those bills directly. 

What property type is this? Demand drivers are going to be different between multifamily, retail, industrial, etc. Also how many total units?