First Commercial Listing(s) ...

[Josh LaVerdiere]

Hi there,

This is my first post on BiggerPockets but I have been a long time lurker! I currently sell residential R.E. and I am about to list my first big commercial properties. I have tried every which way to find the value of the properties, but there is a very large gap in the numbers. What I am trying to figure out now is "What would an investor be willing to pay for these." The short run down is this... There are two Rx properties that have NN leases where owner just has to plow and maintain parking lot.(New England) The net income is 340k a year combined for both stores. What would your average buyer be looking for? The leases are good for another 5 years and both stores just had major overhauls by the tenant. We have had offers pre-listing for over 4m but I cannot seem to get a solid number as to how high an investor would be willing to pay, although I know it is all speculation until it closes! Well sorry for the long post but thank you in advance!

JL

[Joel Owens]

So with NN and only 5 years left an 8.5 cap sounds about right depending on demo's and which pharmacy Walgreens, CVS, Rite Aid.

Per the leases do they disclose sales?

Typically pharmacy has flat rent.

1031 buyers tend to pay more because of a closing deadline. People sitting with cash want to maximize yield more as they are not looking at  a ticking time clock with a tax penalty if they do not close.

Funds buyers almost always close but they want above market yields. If you want market rates generally they will not pay that pricing.

It's up to your seller how fast they want to sell and what they will accept. Sometimes a certainty of close with a strong buyer is worth more than a faint maybe at a higher price.

I question I always ask the listing broker or seller is if you get  an offer in an acceptable range will you take it or are you looking to push the market and do rounds of bidding to get 20 basis points higher on the sale? If they say wait to extract highest I wish them well and bow out. We do not play those types of games and only want sellers who make a choice and follow through.