All Forum Posts by: David Kim

Thanks for the insight, Greg.

I reached out to my attorney, he said that it's fine to let it lapse once you get into a year where there's no activity, and that in the unlikely case that it's needed, we can re-instate it.

I owned a commercial building under an LLC. I recently sold the property!

So now I have an LLC without any assets, from which I've grabbed the proceeds.

I'll keep it active at least until tax filing is complete for this year, to capture this activity.

The question is: Is it recommended to keep it active longer (e.g. in case any unforeseen lawsuit crops up, it'd be good to let the corporate veil be there and protect my personal assets)? Or, would you normally just get the LLC dissolved and not bother renewing the license, etc.?

Keeping it active for maybe 3 years seems wise, though the overhead of it being there (mainly the cost of tax prep for a "no-op" business entity) might be a little high, and I don't like the idea of burning all that cash for nothing.

What do you typically do with a leftover "123 street address, LLC" type entity after the property is sold, and what is your rationale for it?

Thanks!

I'm working on listing a commercial property for sale. One of the brokers I'm talking to prepared a doc showing a comparison between a comparable sales approach, and an income (cap rate) approach, to estimate value per square foot.

The two values are fairly different, with the income based one being the lower of the two, so they're recommending going forward with the comparable sales approach and listing at that price.

My concern is, what if those other sales that we're comparing to were sales to investors shopping on an income basis, which means it's really not an apples-to-apples comparison? How does one determine if it makes sense to go with that higher "comparable sales" value, or if the lower value is more realistic?

I'm leaning towards going forward with it. Worst case, we pivot and lower the price if needed. I just want to make sure they're not deliberately over-estimating, in an attempt to lure me into choosing them over other options. WWYD?

Awesome, thanks everyone!

Hi folks,

I'm looking to put my commercial property on the market. I've never worked on selling one before. I've been talking to a commercial real estate agent, and they sent me a sample of their contract.

Is there any common practice that's predatory, and that I should look out for and have them change if I see it on there?

The only thing that raises an eyebrow, looking at it, are the conditions under which the firm gets a commission. They mostly make sense, but this one seems strange: "(d) Seller withdraws the Property from sale, or otherwise prevents Broker from selling it."

So does thing say that if at any time I decide that I no longer want to sell the place (e.g. let's say offers are WAY lowballed and I decide to go a different route and not sell), I need to pay them a commission? That seems awfully unjust, especially since I can pretty much just... not withdraw, but not accept any offers, and run down the clock on the contract.

Thanks to all who replied! I got busy and just managed to check back in now. Sounds like I'm already leaning the way most are - don't use insurance for anything non-catastrophic.

That's a really good point about replacement cost, it hadn't occurred to me that if I want to rebuild, there's a business loss component as well. TBH in that case I'd most likely use the insurance money to pay off the loan and sell off the land. This isn't my primary source of income, and the logistics of executing on a rebuild sound like more trouble than they're worth.

Historically, I've been very averse to filing insurance claims for fixing things like broken windows, since I worry about premiums going up too aggressively, and the general ability to get insured at all. I just kind of think of it as an absolute last resort for emergencies, in the event of a catastrophe (e.g. building burns down).

I'm curious how others treat it. Assuming you have sufficient reserves to address things that come up up out of pocket (like bigger repairs), but are generally running pretty lean, do you just never bother with insurance claims? Or do you use them pretty liberally, and have found it's worth it, in that premiums increase much slower than the amount you save by filing claims? What's the sweet spot? Is it any different for commercial real estate than residential?

Hey, I'm curious what people's thoughts are on unsolicited cash buyers reaching out about commercial properties.

I'm at a place where I probably want to sell in the next 3 years or so, so while I'm happy to walk away from crap offers, I'm also starting to be interested in listening to them, doing some play negotiating to see how high I can pull it, and generally pay more attention to the market.

Every now and then, I get a snailmail that reads like, "I'm a small real estate investor, interesting in paying CASH for as-is, and a fair price - no escrow/title, no real estate agents to pay, we can get it done in less than 4 weeks."

1) Are these things even worth responding to, or are they pretty unilaterally bad deals where they try to majorly lowball you and it's a waste of time?

2) In the unlikely case you're actually interested in proceeding, how do you vet these kinds of folks? My biggest concern is that it might be an identity theft scam, since this kind of deal mightrequire a lot more personal information that I'd normally be interested in providing (though hopefully through the LLC, I don't need to provide things like my personal SSN, since there's no credit checks and background checks happening).

Interested in any thought on this. Thanks!

Hey folks,

I have a property behind which I'll have to do some construction requiring some heavier equipment. The GC says that to get the equipment in, they'll likely need to move some cable lines, which look like they might be feeding the tenant's internet. I'll have to double-check and confirm...

Anyway, assuming it IS their internet, it's probably not okay to leave them without internet for a week or so to get that work done. What is the standard way this is handled in the industry? Can you just get some kind of a temporary hotspot set up that they can use, for the duration of the work? Or do you work with their cable company to relocate the cables (temporarily or otherwise)?

Thanks!

One quick follow-up question about this piece specifically: Between the time that I take on a tenant, and the time that the insurance increases (~8 months from now)... if we need to file a claim, will the insurance provide reject it because there's a tenant and the increased coverage isn't in place? I would have thought we'd need to proactively make the change, and do some kind of prorated payment...