How to source commercial distress properties?

[Rebecca Graziano]

Hi y'all!

I have been investing in residential and notes in the past; but given current market conditions, CRE is the more lucrative strategy, I think. I work FT and do this part-time to the best of my ability.

A few questions.

1. If I want to get into self-storage, how do I find potential sellers? 

2. How do I find distressed properties if I want empty office space?

I am looking for cash flow positive storage building in Texas, off a major highway, with value add potential, preferably in North Texas (Sherman/Denton/McKinney), Central Texas (Waco/Austin/San Antonio), West Texas (Odessa), or greater Houston area.  It can be small and I expand over time. 

For office buildings, Dallas has a significant amount of distressed office space with ARM loans coming due. I want to shop in the clearance aisle - how do I get access?

Thanks for your feedback in advance :)

[Bruce Lynn]

My thought is there is a lot less distress than people think there is in Dallas.  Dallas is pretty strong, but there is some distress.

How much money do you have to play with? CRE loans aren't easy these days. Probably need a track record, probably need 30-50% down equity to be a player. Need to have great reserves while you wait for the market to turn. There are some foreclosures if you have $20,000,000 in cash or maybe you let the lender take those back, but then you get class B office with 50% occupancy. How long can you make those payments when it is cash flow negative?

Very little is trading right now.  Owners negotiating hard with lenders to stave off foreclosures on what is distressed.  I think everyone hopes that another year and most distress will work out.  Banks are stressed and cautious too right now so lending is very tough.

If you have cash and time, then you can probably find some opportunities.