Creative Commercial Deal!

[Tanh Truong]

Investment Info:

Retail commercial investment investment.

Purchase price: $3,500,000

Off-market deal was presented to us through connections and relationships. Seller was heavily indebted having taken loans from loan sharks at high interest rates. We came in with capital to pay off the high-interest loans for a portion of the ownership. Financing was owner-carried and the plan is to cash-out refinance as we continue to fill up the vacancies.

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

The potential upside from the value-add.

How did you find this deal and how did you negotiate it?

The deal was found through networking and mutual connections.

How did you finance this deal?

Private money and owner-carry.

How did you add value to the deal?

Filling vacancies and optimizing management.

What was the outcome?

We're able to increase the value of the property by $2m and pay off our private money after a cash-out refinance.

Lessons learned? Challenges?

Be a problem solver to get deals done.

[Wale Lawal]

@Tanh Truong

Great deal!

In many of our commercial real estate acquisitions, we build our business plan around a value-add approach, which means that we purposely seek out properties with excellent locations and fundamentals, but also some level of physical, operational, or financial stress.

When we find these “value-add properties,” we perform a significant amount of due diligence on the property, leasing activity, operating expenses, and the local real estate market to determine the potential rate of return. If everything checks out, we attempt to acquire these properties at a discount to their intrinsic value and then apply our operational expertise to “add value” over the course of the investment holding period.

Tactically, the process of adding value just means pursuing strategies to either increase income, decrease expenses, or both. The exact strategy is unique to the property and its needs.

All the best!