All Forum Posts by: Kevin Olson

Adam I would echo Joel's words above. I own a historic building and even though every municipality is different, typically these buildings cost more to maintain and require to have a "higher level" product installed compared to say vinyl windows.. With that being said, commercial can be a great investment avenue. Much different than investing in residential where you're dealing with business owners in an office space rather providing a place to live. I'd recommend you do your research and know the local market, asking rents, availabilities, demand, etc. Typically we see longer lease terms which is great however longer "lease up" periods or holding costs. A balance you have to manage and prepare for, Good Luck and look forward to hearing how you make out. 

@Bradley Bissett Congratulations! Sounds like an interesting investment. With the smaller office spaces totaling just under 17% of your building and in multiple locations (therefore cannot be made contiguous for 2,500 SF?) it may be best to target professionals looking for their own space close to home. I.E. Attorneys, CPA, insurance agent, etc. 

Typically these people like a place out of the house, but not too much overhead. In my area, Loopnet, MLS, and craigslist are probably your best bet for smaller office suites/tenants. If you network with local chamber commerce meetings and Commercial RE brokers you should generate interest in no time. Good luck.

@Joel Owens I appreciate the feedback, thank you for taking the time. 

From an overarching perspective I definitely agree and understand your comments. Ownership would not be trying to push rents, if anything learn how to provide a better product and/or provide rent incentives as you mentioned to keep them happy and in place long term. Rent credits or a reduction in % of annual increases. The tenants have 2+ yrs. so I understand it will not be renegotiated now, but more just want to understand their pros and cons of this space and business plans for the future.

As you mentioned, it is a niche market with medical office, there are only a couple competing properties within 5-10 mile radius however tenant pool is naturally smaller as well. Rent is market to slightly above average, but property in great shape and convenient location mitigating some of that risk. Also, personal guarantees are signed which is great to have.   

Acquiring property in double digit cap rate range, therefore investment perspective is to provide better mgmt product and services to the tenants to retain over long haul. Potentially adjusting rents and lowering the overall return slightly to mitigate vacancy in the future. 

Therefore this introductory meeting is to go over management procedures, future improvement of those systems, etc. 

Hi BP - Had a question / request that I wasn't sure could be answered here as its typically Residential based. However, acquiring and managing a commercial RE property, Medical office building with 3 existing tenants whom have term on their leases. 

My question is, what are the most important questions, and/or is there a template/rubric you follow during tenant interviews?

I'd like to get a feel for these tenants, discuss pros and cons of building & mgmt, etc. Potentially begin discussion of renegotiation of leases, any input would be great, thanks!

@Tzook Bar Noy in terms of commercial real estate, what sort of asset are you looking for? I know you mentioned SF and duplexes in GA and FL (not commercial) but what are looking for in terms of bigger investments. I am a commercial RE advisor North of Boston, mainly office & industrial product, however Retail NNN investments in the 5-7% cap rate range can be found in various locations across the country. Good luck, look forward to hearing more.

Miles. welcome to BP, I see your tag as you live in Hawaii or Boston? Would be interested in your news site and what you see for hotel trends in certain markets. 

@James E. I have to agree with what has been said thus far, I know coming from our area seeing anything less than $100k per unit seems like a great deal but it is all relative once you start backing into the #'s. I've looked at investing out of state or from afar and my advice is you can defintely do it and make some great returns but you need a team,system in place at that location. Someone with boots on the ground that you can trust. 

If you're willing to invest in riskier neighborhoods then others, you can find similiar #'s in areas of western mass, RI/CT and along northern MA/southern Nh border. At least this would be driving distance from Boston. 

Good luck! Look forward to hearing your strategy moving forward. 

@Nick Romano I think the comments are steering you in the right direction, as a local investor/ realtor in the north of boston area in today's market we often try to make a "bad" deal a good one. Its important to calculate all of the future expenses, including a little something for property mgmt in case you want to someday step away. If you stick to your #'s and keep analyzing deals you'll soon refine criteria quickly to know when it is a good deal and jump on it. 

Good luck! 

@Peter Groh I have worked with a 1031 exchange specialist locally here, Patricia Flowers of Investment Property Exchange Services, Inc. She is great to work with a simplifies most concerns regarding the process. 

Hope it helps. 

@Jonathan Z. I think thats a great play, if you are set with your rental income in the property you're holding (ideally have it pay back the line of credit) it can be very advantageous to leverage. I am in the process of this with a 4 family property I have, I am inexperienced in this refi strategy as well but if used correctly could be a great tool. I am very conservative by nature, so I want my investments to be paying back or down this line of credit as quickly as possible after I access it. Depending on your current loan terms and your bank they'll want 25%-30% LTV minimum on the property you're refinancing.

Good luck, and touch base on your progress as I will do the same.