All Forum Posts by: Greg V.

Sean S. We're further out than that near Hudson, WI. Not quit as big a project as are done in the cities but touring those areas gives me some ideas on layouts and square footage.

I have a couple options I've been thinking of. I have someone that is looking to run the venue and he would do very well. I think he would also be amenable to going into business together because of the large space and the high rent I'll charge. With this arrangement, he would do the work and we would provide the space and split the profits. We could also do something in the middle where we have a minority interest with a lower rent. Thoughts?

We're looking into our first large (for us) historic rehab where the 2nd floor of a 1900's commercial building is essentially a total gut job. Our two thoughts are to convert the space to either loft apartments or a wedding/event venue with a roof top deck.  Does anyone have experience in these and care to share any insights?  Thanks.

I should add that I really only look at value add properties that are half vacant to fully vacant so listed cap rates matter even less in those.

Nope. If you know your target area well enough, you know the prevailing cap rates and what you can get for rents. Once you get the leases and tax returns from the seller, you can calculate yourself. I don't even look at what the seller lists as the cap rate.

Is there a location that you like to visit every year for a vacation or family. Personally i decided to invest in an area that I cared about and visit often anyway. I started out looking for the hot markets but couldn't keep interested enough in those markets to become an expert in a given area. Once you have narrowed that down, search for members on here in that area. I haven't had much luck with REIAs for meeting retail/office investors. You could also look at who is the broker with the majority of the listings in that area for the type if property you are looking for. Ask them for investor contacts.

Loopnet is the most common along with Costar.

Wow. With that size space Joel's your man for advice. That is a large space for your first commercial. I wouldn't personally feel comfortable with that size as my first commercial but I guess it depends on your bank account. With 77k sq ft, personally my wife and I would need at least $250k to $500k cash reserves to sleep at night but it would depend on the tenants. As far as DSCR, I should have mentioned that banks look for 1.25 but I've had them go down to 1.1 if there's empty space that can be filled.

With the market right now, I probably won't be paying for any tenant improvements unless it's a national tenant with a 10 year lease. Right now we're repurposing a family restaurant and banquet center to multi unit office space. We priced out the cost to section off the space and have that in reserve. For us, assuming a certain TI is tough because everything's a negotiation and we're looking long term and value stable tenants. I want to have the best negotiating position if we get in a bidding war with another landlord.

As far as rules of thumb, look up cap (capitalization) rate and debt service coverage ratio. I think there are way more "diamonds in the ruff" in the commercial space but I might be biased. I'm also talking about retail and office spaces that are smaller in size maybe 30k sq ft or less. I haven't dealt with big box stores. My impression is that the big money with cash buys those to make above Tbill returns. I need a little more to overcome a mortgage cost. I love half vacant properties. A lot of them are from older owners that don't really care anymore. The great thing about commercial is that you buy it based on the rents. If you fill the vacant sections, the vale goes up something we call forced appreciation.