All Forum Posts by: John McKee

I'm not happy about the origination fee but I'm dealing with a mortgage broker who in turn is dealing with the banks.  This 1.75 is split between them at a deal that will come in around $600K.  The few national retail lenders I know won't touch this mom and pop.

I"m actually looking as well for some cold dark banks on busy highways.  I've seen some converted over to TD Bank, but to Joels point the drive through is gold for a food concept!  Starbucks is closing a lot of their inline stores to focus on the drive thru model.  One of my customers who is a Burger King told me that about 70% of his sales comes through the drive thru.

You can look at biz buy sell for how much laundrymats are selling for.  Generally small business trades at 2-3 times income if it's a small mom and pop.

@Faiz Yusufi

Hopefully it appreciates through the rental increases built into the leases, but hey if it doesn't appreciate that much that's okay too because in 10 years you will have it paid off and have a nice diversified cash flowing asset in a Class A location.  Now go seal the deal!

I like your mix of tenants and the drive throughs.  That is what a good shopping center needs to create traffic.  A few of those will probably change hands over the next 5 years so you will have to release most likely.  Everyone wants a national tenant but it's much easier to rent to a mom and pop, so maybe in the future you can land a national as the area grows.  The question is how much management do you want to do?  You will have to factor this into your cost structure along with releasing costs.  I would be happy to do a lease analysis for you if you PM me, but I think your on the right track overall.

Well I finally found a lender, although I have to pay for it (1.75 origination loan).  The rate or this mom and pop is 4.25/5year/25%down and 25 year am.  I'm still looking around as I'm finding every lender has their own criteria.  

Supply chain issues have made it difficult for new housing to keep up, thus cost of new housing has escalated, making current housing more expensive. Very similar to what is happening in the auto industry. 

I like it on the surface!  Sign me up.  The good news is your on a busy intersection, new construction, hopefully high traffic, and a growing area.  Things you need to double check on with those leases are who is responsible for parking lot maintenance, HVAC, Glass window (who is responsible), Common lighting, landscaping, utilities.  Hopefully this is covered in the CAM fees you charge.  In addition to the CAM Fees is there a property management fee?  If so this could be additional revenue for you if you take on the management yourself.   I would also drive up and down the corridor to see how other strips are doing.  If you see a lot of vacancies in other strips you might want to pause for a minute on this deal.  Also what other kinds of competing developments are going on around your area or has your neck of the woods reached maximum development.  Also are their any anchors nearby or other well known tenants that confirm that the area is worth the investment such as a target, chipotle etc.  Anchors can also be Universities, Hospitals, and government centers.  Message me if you need any other advice.  

I spoke to 3 lenders that want 40-50% down range on a mom and pop bakery. Yes they are new, but have a 10 year lease with personal guarantee. It's a class A location. That's too much to put down as it takes away the leverage of real estate. Is this typical?

I’ve used a heloc to pay for a property. Half of it was cash and the other 1/2 was the heloc. I since paid it off, not because I had to, but because I had some extra cash sitting on the sidelines. Sometimes you forget that the heloc is all interest, so don’t get too comfortable with that low monthly payment. It’s a great time to get a heloc because home values are through the roof so take advantage of that access to cash while you can.   It’s much cheaper than a traditional loan.  I may have paid $100