All Forum Posts by: Greg V.

So because I threw out the highest and best use comment, I thought about all the comments since then. In my mind, I already filtered out certain businesses. Maybe it was because of my upbringing, maybe it's pride, However, if we look from a pure money standpoint, I would define highest and best use across my entire portfolio. Meaning, if you rent to a marijuana store and the town hates you because of it, that may affect future acquisitions and getting tenants into multi tenant spaces for fear of you putting a marijuana store right next to theirs. Now if you specialize in that store then that's a different story. It also may affect your interactions with city hall, contractors, etc. Furthermore, what if you had other properties nearby, what would it do for those values. As an extreme example, what if Donald Trump started buying strip malls and putting his name on the side. It may diminish the value of his brand and decrease his other property values. Now let's say you have a possible restaurant at a lower rate than a possible financial consultant. There may be a trade off between lower lease prices for a restaurant that gives you a lot of good will in a town that helps with permits, filling other spaces, and future acquisitions. Where that trade off point is, I don't know. It probably depends on the size of your town, your financial state, and where you are in your real estate empire building.

So I would also say that it would be hard to trust a management company I haven't dealt with. Where I really see the good ones stand out is in filling vacant space. That involves negotiation, knowledge of numbers and markets, personality, motivation, and hard work. Once the deal is signed mine works with the contractors for the build out and makes sure everyone gets paid on time. I also get to see their accounting system. My advice is to start with working to fill vacant properties and have them sign on for management if they think you did a good job. Our leases are minimum of 5 years so you have a good income stream for a while. Just my two cents.

Don't discount Eau Claire for investments. I love that town. Yes the growth may not be as much as Madison but the investor money is also less. The college will keep employment stable. Riches in niches.

Thanks for the info on the equipment. I figured it was something like that. We were looking to convert an old bowling alley once. Same thing. It was a good deal if we could get someone to take the equipment out for free. Which tenant rep companies would you recommend? I invest in MN if that matters. I'm currently very happy with our team but am always looking for other referrals. Thanks.

If you do change, can you share how you sold the old equipment and how much you received for it. I'm a little curious if I can get some money back from that. Another idea, I forgot to mention, my management company also suggested I could rent the cooler space for storage to local businesses to keep documents. We have 4 large coolers so they could handle a good amount. Maybe there's a way to keep some of the equipment in place, make some money but rent out the rest of the space to a different tenant. Thanks for all the ideas.

I agree with all the ideas. I'm also not ripping out any restaurant equipment until I get a long term (more than 3 years most likely 5-10) non-restaurant lease signed. There's still a chance I can get a restaurant but the margins are so low in that business. I'm going to have cut my rent in half to allow the restaurant to make money. Turnover is a killer so I want them to be able to survive. Remember, highest and best use. You may have to change the space.

I should also say that there will probably be 2-3 tenants so the management will not just be collecting checks but paying landscaping, snow plowing, and any other maintenance of roof, HVAC and exterior.

A flat fee would make sense with larger single tenant properties and depending on the terms, $1000-$2000 would be a good rate for you. If it's NNN, I would be surprised if you put in more than 10 hours a month. That's just my guess. I don't have any experience with big box stores. If it's a multi unit property like a strip mall, I would probably scale your fee up. As an example, we just closed on a 16k sq ft property. When it's filled at $10 per sq ft, the monthly management of 5% will be $667 which I find reasonable for both them and me. After talking about it with you I think when the rate gets to $750 maybe $1000 based on lease increases, I'll go to a flat rate. Thanks.

I started with single family then went to multifamily then went to commercial office/retail/medical. I just got tired of residential renter drama. Plus this is much more lucrative. Forced appreciation is the name of the game. The big difference is that you need a lot of cash. It takes a lot for tenant build out and realtor fees. I always plan for a space to be vacant at least a year so you have big carrying costs. Payoffs are over years so it's a patient game.

Sorry about the repeating text. I'm still working through the bugs of the app.