Commercial Buyers Be Prepared when Buying

[Joel Owens]

I thought I would put this out there. Many times a week I am contacted by potential purchasers of commercial real estate. Some have no experience in real estate at all and others are exiting the residential space or they are adding commercial to their real east portfolio and diversifying.

How does the process work is a common question.

First I analyze the potential buyer. What is it they are trying to do??

Are they a direct buyer with high liquidity and net worth and need help? Are they someone with limited funds and trying to syndicate with no experience?? Do they have money but are an overseas investor and will have many hurdles overcoming tax treaties and entity creation?? Are they a large institution or a group buying asking everyone to see what properties turn up??

The variables go on and on but I know from years of experience which ones have the most realistic chance of buying a property and closing on something.

In my view commercial real estate has some excellent buys right now. It's where multifamily was 3 years ago in some asset classes. The deals are in the market but they do not sit around and are gone in a few months time.

There are some CMBS lenders who will do non-recourse down to 1 million loan but they are pickier on the property. Generally as a direct buyer having 750k and up to put down is a good start in higher quality commercial assets. If a buyer has 50k,200k etc. then you are looking at lower quality assets to own directly with a personal guarantee or buying shares in a company or syndicate or partnering for a higher quality larger property.