All Forum Posts by: Cason Acor

 You hit the nail on the head. Building expenses that aren’t utilities, such as taxes and insurance, should be recouped from the tenants according to the square footage that they occupy. Example, tenant A occupies 30% of the total leasable area, therefore tenant A pays for 30% of the taxes and insurance. 

Since you’ll be mixed use, you could probably get away with charging only the commercial tenants for things like taxes and insurance. 

I would contact an attorney and pay them to write a lease for you. That will be infinitely more thorough than what you can find for download online. Also, why do you not want to make the leases triple net? Especially if you'll be separating the utilities?

I haven't personally owned properties with billboards, but I have brokered the sale of several. My advice from that experience is to 1) make sure you understand the market rents very well 2) include annual rental increases 3) DO NOT agree to give the advertising company a right of first refusal, and 4) sign an actual lease, DO NOT grant an easement for the billboard. I've seen so many situations where a billboard company took an unsuspecting owner to the cleaners and signed a perpetual freeway billboard lease for less than $1000 per year with no increases. I've also seen deals almost fall apart because an advertising company decided to play hard ball with deliberately ambiguous language in a right of first refusal. If you can avoid those mistakes, you should be good to go.

My advice would be to lease to a local advertising company. They’ll bear the cost of approvals and construction. Your rental income will be lower since you don’t own the billboard, but you also save on the cost and headache of setting it up yourself, finding clients to use it, etc. Plus, an advertising company will have all the processes and relationships in place already to streamline approval and construction.

I think developing part of the acreage and leasing out to a business that sells headstones and other relevant goods sounds like a great idea, as long as zoning isn't an issue. I have a client that makes custom headstones and he's busy year round. There's always a need for what they supply, and he can usually beat funeral homes on price because the markup is smaller.

The other option is slowly sell of portions to the surrounding cemeteries as their need arises. 

I would get in touch with a commercial mortgage broker. Virtually all of the major national commercial real estate brokerages will have people they can connect connect you with. 

Since your wife would be occupying one of the units, you could try for an SBA 504 loan. Those loans help fund renovation costs in addition to the initial acquisition. But the catch is your wife would have to occupy at least 50% of the square footage. 

The other option is to find a partner that can bring in the rest of the equity that you need to make the purchase. Because it's an empty building, plan on 35-40% down.

Without any further information, you appear to be in the right. Now you know whose lease to not renew when the time comes. 

CoStar and CREXI are the two programs I use the most. 

7% cap rate on a deal like this tells me the property is either in a terrible market, or there's something going on behind the scenes with the tenant company. Dig deeper, but at face value this is a no brainer.