All Forum Posts by: Jameson Sullivan

Thanks for the input. I am looking at doing just that. I like the idea of at LEAST pre-showing it virtually to minimize the exposure on site. 

@Kelly N.  You're showing occupied units? So you're taking people through someone elses unit before they move out? That seems more dangerous. What am I missing?

I have been planning to have an open showing at a rental next week prior to accepting any applications, however, in light of all that is happening I am having second thoughts. Not only should I not have too many people in one place, but it dawned on me that it may not only be a concern for the people at the showing, but for the tenant that ultimately gets the unit. The unit will be cleaned PRIOR to the showing, but not after. There likely will be more than a week between the showing and tenant moving in so I will need to look into that further, but wondering if anyone else is changing their showing/renting process in light of current events?

As you said, you'll need to look at the Leases to know who is responsible for what. If it is NNN then a lot of the expenses accounted for in the "50% rule" are already passed through to Tenants. It very well may be NNN, but not Absolute Net, huge difference. I don't think this calc will get you anywhere near a realistic answer. Wait for @Joel Owens to chime in.

While I think owning equities in the market can be a great asset, and way to gain net worth, for the educated individual. There's two quotes about the market that always stick with me. 

1. "Mr. Market is an emotional man and you have to be less emotional than him to win" (Paraphrased. Can't remember if this was Buffett or Peter Lynch)

2. " The stock market is the only place where someone can cheat on his wife with his assistant in New Jersey, and I lose money in California"

The stock market is a beautiful place, but certainly not in the same way Hawaii is!

Our retail landlords are not just going to give in to requests for rent reduction immediately. For good Tenants who have always paid on time and in any other situation would continue to be great additions to the shopping center, they are first going to direct them to the SBA office. Additionally some insurance policies have lost income provisions and given that the government here in WA has mandated closures for lots of different use categories, they may be covered under those provisions. If all else fails, most of our Landlords (those who can , anyways) are willing to consider rent abatement but will be requiring full proof of loss including P&L's year over year, current YTD and MTD cash flow, bank statements showing reserves, etc. They will also want to know what they Tenant has been doing to bring in business. If the Tenant isn't taking proactive measures and just want to hit the easy button, then no way.

I'm not from the area and don't have a lot to add on that front, but based on the provided, you're bringing a good chuck of cash to deal, is there any particular reason you're choosing to focus in on only 1 to 4 units, knowing that youre goal is to put together a portfolio of a lot more in a short period of time? Unless I'm misunderstanding, $700k goes a long way towards that portfolio...

Short answer: It depends. Honestly though, for $1.2 million I would stay in the multifamily space. A decent STNL asset with decent term left is going to start in the 1.5 range. Sure, you can get something for 1.2 but I think you're better off sticking in multifamily. Especially if what you're saying is you're going to leverage $300k to buy a $1.2million retail property. Retail properties take a lot of cash to operate and a vacancy could crush you especially if it's caused by a general economic downturn.

What type of use and what market? You may want to consider including a local broker. The Tenant likely isn't going to sign a NEW 10 year term at the option rates. If they chose to sign a new deal, they will ask for new deal terms including CURRENT market rents (which may be higher, or could also be much lower than their option rent), TI and free rent. I don't think the 250 bps are going to convince them. But again, ask a local broker.

I think there's a lot of good thoughts here, my favorite of which is that this agent does not know you from Adam and you basically gave him the exact same criteria that everyone else has given him for the last 3 years. It's not your fault, but if you work with an agent and expect to get "value add deals", my opinion is that you need to prove your ability to close and be a serial purchaser. As someone above mentioned, time is money and right now an agent is able to choose with whom they work and if you simply want to buy ONE value add property, they aren't really incentivized to work hard at that and likely are going to send those kinds of deals to their serial investors first because they know they can close and they know they will get continued business from them.

In regards to your first question, the Lease is law. What does the Lease say about this?

Second questions, Tenant SHOULD be required to hold occupancy insurance but if it's not in the Lease, you're out of luck until renewal.