All Forum Posts by: Steve Morris

Most syndications are groups of 10-20 passive investors.  They're in it for the income growth.  The first 7 years you can play games like interest-only loans and cost segregation to bump up the return instead of a longer hold.

Also, most loans are for a 7-year balloon.  Add in that keeping 10-20 people on the same page for 7 years is a major achievement.

In almost all syndications, you're in it for life of the project.  If some guy wants out, the main option is the remaining partners buy him out.

"This could be a rental, but I really think that the real value is in converting it into a TIC."

If you do a TIC, be careful on all the partners since it's an arranged marriage. You'll need some protection in case one gets divorced and their partner gets the share.

If it is that good a deal, maybe more of a lending group than equity?

"However, how do you value the property if the tenants leave (empty commercial building)? What factors?"

Well, depends on the building.  If it's single-purpose (like a drive thru burger joint), you only have historical $/SqFt.

If it can be re-purposed easily, vanilla shell with zoning that can handle variety of tenant types, then I'd add some more to the empty $/SqFt.

In any case, you're going to need to know sales comps.

Well, am a broker. If I represent a seller, to determine legitimacy of the offer (unfortunately people have tied up property without funding) I'd ask for POF in an amount = down payment + closing costs.

Get an account statement from where you keep your funds at on their letterhead.  Black out all ID numbers besides your name and I'd accept that.

"After all, deductions, what percent of cashflow is worth going through all hassle"

I think > a real 5%+ on CFBT/Down actual numbers when you buy is reasonable.

Another factor you may want to consider is ratio of (expenses+debt)/gross income.  I've told people it should be <90% to allow for "emergencies".

If you want the book. send me a DM and I can eMail it.

As BROKER:  No problem with off-market deals.  I don't have the control with a listing, but there is a lot less hand-holding and marketing and sorting out good from bad I have to do.  Usually it means I don;t have to work with other brokers, which TBH, are my biggest headache sometimes.

As BUYER:  I think the odds of you being the only guy making the offer and no immediate competition, works better for you price-wise.  Depends on how well informed the seller is.

As SELLER:  I've always told sellers, you increase your odds of getting the best price with a well-advertised listing.  However, you are marrying your broker for the period of the listing.  I've also told sellers, that if you sign a listing, have the broker send you a link to the property advertising it that ANYONE can access.  I have an issue with some of the bigger houses that want both sides of the commission.  I don't know how best to handle this, so I usually have 2 comm rates, co-op (w/ buyer broker) and NO co-op (only the listing broker = 50% of co-op rate).

Since I get these letters, couple of things:

1) Make it so it ISN'T a form letter.  Sign it in ink.

2) QUick and to the point, we own property nearby at xxxxxxx, and would like more in the neighborhood

3) Full contact info phone/eMail/Mail

4) Letterhead and biz card makes you seem more certain

6) I don't know if I'd throw out a price unless you're 90% sure it'll stick

7) Anything to tell me you've got the money and this is not some jerk-around.

Well, my wife uses it since she's worked with Q/B forever.  For accounting and tracking stuff by tenants, if you have it setup (I think QB has a landlord version now), it works great excepting 2 things:

1) You need to get it set up right up front since changing basic stuff is a hassle AND

2) Most importantly, is document control for tenant paperwork (like leases and notices).  As a landlord, your main defense any more is well-document and valid paperwork and following service/notice guidelines.

Forgot, it the price they charge seems high, call another 1031 guy.  In OR, they are not that much (like $5K/transaction).