All Forum Posts by: Jon Allen

Hi Karisa. The tenant is not getting double-charged. The CAM income you are referring to is additional rent paid by the tenant towards the expected total CAM for the year. The property management company should be preparing a reconciliation at year end showing the total payments Landlord received from the tenant vs the property's actual CAM (plus taxes and insurance) and the delta will be either refunded or invoiced to the tenant.

To answer the question in substance, a TI allowance is something provided by the LL. However, my typical approach is, make it both. Offer an allowance if the market dictates it (ask your broker), but make sure THEY also have skin in the game. You don’t want to give someone $70,000 to pay for 100% of the upfit. In the scenario you describe, you could offer them $40,000 so you know if they leave they are walking away from $30,000 of their own money invested in their own business.

Another key is often you can amortize TI allowance into their rent. Say you gave them $50,000 on a 7 year lease. Calculate the monthly principal & interest payments on a $50,000 loan over 7 years and add some of all of that number to their rent. Your broker will be a key partner in this discussion.

Investment Info:

Office Space commercial investment investment in Charlotte.

Ground leasehold interest serving as qualified intermediary for a 1031 exchange construction project. We are leasing land owned by a friendly real estate connection who has 1031 money and wants to construct an office building on land they own. We have a construction loan in our company's name guaranteed by the fee simple owner, which pays the lease payments. At completion, the fee simple owner will buy out the leasehold at a fee to us and utilize their 1031 money.

Investment Info:

Large multi-family (5+ units) note investment investment in Charlotte.

Purchase price: $3,250,000
Cash invested: $50,000

Note secured by 150+ unit MF property, purchased at a discount.

What made you interested in investing in this type of deal?

The note will be refinanced as part of a redevelopment project, and the developer's construction loan will take out our loan at the full principal balance, providing a capital gain in addition to the monthly cash flow from P&I payments.