All Forum Posts by: Tanh Truong

Quote from @Scott E.:

Quote from @Tanh Truong:

One of the pros I also see is the creativity in it - you're able to structure leases in so many ways. 

 What do you mean by that?

For example:
- lease lengths could range
- renewal options could be given
- there could be co-tenancy clauses where a tenant could pay half rent if a neighboring tenant vacates
- responsibilities of maintenance could fall on tenants versus landlord (ie. tenant responsible for repairs of HVAC and landlord is responsible for replacement
- you could negotiate free rent for a period of time
- option to purchase
- option to move to a more favorable unit

I'm sure there are other ones out there that I'm missing

One of the pros I also see is the creativity in it - you're able to structure leases in so many ways. 

With the FED's latest rate hike and anticipated to raise rates a few more times, how do you see this affecting Commercial REI? In addition, what are your plans going forward?

I'm curious to hear about the pros and cons of Commercial REI from the rockstars out there! Doesn't have to necessarily be commercial vs residential, but more so why Commercial REI was chosen as a vehicle along with the cons you've seen with it.

I echo what @Andrew Moore @Brad Hayden said. 

I'll even add to factor in the location. Will the property survive over x amount of years? Do the demographics support growth?

This sounds like an interesting building. I, too, am not sure on the concept you're proposing and would echo Trent. Maybe you could make it an arcade? 

Aside from the SBA loan, the only other thing I can think of is Hard/Private money. But, with that being said you only have 6-months until the balance is due. Higher risk IMO. 

Investment Info:

Retail commercial investment investment.

Purchase price: $5,050,000

This was a property I found listed on-market but marketed very poorly. It was neither marketed on Crexi nor LoopNet, but solely on the broker's website. After analyzing the property, I put in an offer and eventually got it under contract. The brokers were unsophisticated to say the least, which was a great thing because we got a great deal! The worst part was not getting the requested items in a timely matter. As a result, we were under contract for over three months!

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

Mentor and Mindset

How did you finance this deal?

Syndication

How did you add value to the deal?

Lease up, creating an out-lot, and capex

What was the outcome?

Numbers:
$1.1M raise
$1.005M DP
Initial COC: 18%
Proforma COC: 26%

Additional upside:
Creation and selling of an out-lot: $500k
Increased valuation: $2-2.5M after 3 years

Lessons learned? Challenges?

Lots of attorney paperwork. Due diligence is very important in larger properties like this. You also have to review the lease in detail because all leases are different.

Tim pretty much nailed it in a more detailed fashion. Quick and dirty, I usually account for 5% capital expenditures, 5% vacancy, 5% repairs. If there's property management I usually add in 8-10% of gross income. 

I will echo what @Jason Moore has mentioned. On a recent Best Ever podcast with Neal Bawa, he mentioned that suburban office buildings are the fastest growing RE asset class in the last 12 months. 

Yes, you would submit the purchase & sale agreement along with the assignment contract with your cash buyer to the attorney. The EMD will need to be sent in by the end buyer. It's important to get the EMD as soon as possible. The disclosure is that I've not wholesale'd with only an attorney, but with the title company's I've used I've always dealt with the attorney at signing.