All Forum Posts by: Jameson Sullivan

@Linda Chanthakhinh Why would an investor/agent (who presumably knows the EXACT value of what he's selling) sell the property to you at a discount when there is obviously buyers out there at full market price. Is this one of those "I'm wholesaling an MLS deal" deals?

Something is missing/wrong here.

I'm going through this right now! Had a Tenant say they wouldn't be staying because their roommate who originally had the W/D was leaving and I wouldn't provide them another set.I suspect this isn't  the only reason, of course, but it was one of the stated reasons. The house is set up to accommodate stackable OR side by side so anyone can bring their existing W/D. I COULD go buy a set for $250 and put it in there, but I think it's just another thing the tenant begins to take for granted and expect me to fix or replace when it inevitably breaks. Give a mouse a cookie, right?

We see the  "Four F's" backfilling TONS of retail space. Those being Food, Fun, Fitness and (F)Physicians"

Retail is moving to experience. Things you cant buy online. Trampline parks, doctors, haircuts, restaurants are making up a HUGE chunk now as well. Footprints are shrinking for soft goods, but gyms, trampoline parks and other "fun" are backfilling a lot of those boxes.

All that said, there is pretty strong data indicating that DTC brands begin to struggle with customer acquisition costs around $10MM annual sales if they don't have brick and mortar stores. That's not to say Warby Parker is going to rollout 500 stores in the US, but we are experiencing plenty of online retailers opening brick and mortar because they can't afford not to.

The opinion of one man, but I disagree with the premise of the OP. Retail isn't just going away, it's just forcing companies to change their tune. The store closures you hear about with these old school institutions closing is mostly bloated companies unable to be nimble enough in todays market place. I do think that mid to large size B and C class office will struggle as we start to see office users move to shopping centers (Amazon is converting a former Sears at a mall here in my market) The C Users move to B and B to A and A to new build or shopping center conversions. This leaves noone to move into C Class office. 

Thanks for the post, this is always a good topic. 

The credit of the tenants obviously will be a factor in evaluating and deciding if the price is fair. You should also look at scheduled increases over the remaining term AND the likelihood you can backfill these spaces if your tenants leave. These two use classes have relatively specific building types, particularly the car wash which may be extremely difficult to backfill if your current tenant leaves. The body shop may just be a simple light industrial or flex space, but you will want to verify that if they were to leave that you could expect to get equal or better rents from the next tenant. All of these are factors that need to be looked at when evaluating the property. Additionally, if it's a true NNN lease, the taxes will be passed through to the tenants so the 20k you referenced does not come out of the bottom line.

@Matt J. Yes, next Thursday! Same spot in on North I St. 

Another month of networking with real estate professionals in Tacoma!

Attorneys, Brokers, Investors, Newbies and anything else are all welcome to come. 

The event is very casual, just bring some beer or a snack and network with like minded individuals who are trying to do deals and be a little wealthier than yesterday!

Please feel free to call me with any questions or shoot me a message here on BP. 

Of course, I am involving my own tax professional for my personal tax returns but I wanted some insight from the rest of the community here. How do you look at your taxes in relation to the effect they have on purchasing power the following year? Do you keep your taxable income high to look better on paper or do you write it off as far down as possible to keep your tax burden low?

@Chris Williams Well, you can find data online showing RE trends, incomes, employment, etc. But if you are after more anecdotal evidence, go to malls, restaurants, and grocery stores. Pay attention to what people are buying. Obviously this is not a science and won't answer all questions, but personally I think consumer confidence and habits can give a lot of insight into the mid-term economic outlook of a given area. 

I would recommend, as someone else did, that you just start by looking at recently listed and sold properties that are similar to what you're interested in a begin to look for trends or similarities...For any credit tenant, your CAP rate is going to vary more significantly based on the Tenant than the neighborhood. Assuming it's not an absolute warzone. You're buying the future cashflows of the property so a corporate signature McDonald's is going to trade for a similar CAP rate across the country, all other things equal ( term remaining, scheduled increases, NNN or Absolute, etc.)

If you are looking at some kind of local single or multi tenant building, then your local market will have a larger effect to factor for likelihood of replacing a tenant should they leave. Ultimately though, a CAP rate is only an indicator of risk and the chance that the cash flow will remain and continue as scheduled. A higher CAP rate is not necessarily indicative of a better return.

@Diane G. We don't have any information on the tenant so it's impossible to comment on the effect e-commerce is going to have on the business. Retail footprints for anchors are decreasing and the uses are changing, however, retail demand is super strong it's just in different sectors than we have seen in the past.