Its a BIG Deal.

[Nathan Joens]

Hello BP,

I am a college student from Iowa who started a Real Estate Investing Club on campus and for my first club meeting I want to make a great impression on my club members by giving them a concrete case study that we can work through collectively. Before the meeting I wanted to get a wide range of views on the property that I have chosen for that case study as it particularly hits home for myself and as a BIG deal...literally.

The biggest focal point I want to pose for the club is who or what could go in the building? Which tenants would best fit the property or what would be the best use for the property?

Have any of you ever dealt with an empty large building and if you have what became of it?

Here is what the prospective property for the case study is like:

• Large commercial Big Box retail property (its a BIG place)
• Located in the suburbs of Des Moines, Iowa
  • Des Moines is one of the most up and coming business hubs in the country and is bustling with growth.
• Former American TV and Appliance store
  • They are the current owner and went out of business in this location about 5 months ago
• Directly off the interstate (I 80 35)
  • *** FUN FACT - Des Moines is the only place in the nation where Interstates 80 and 35 conjoin ***
• Directly across from a business park
  • Includes a hotel, restaurants, office space, a movie theatre, grocery store, bars
• Near residential neighborhoods as well (adjacent to my house)

Here are some of the numbers on the property:

• Asking Price: $7.2 M
• Previous Sales Info: Sold in 2013 for $5,310,500
• 146,003 Total Square Foot
  • $49/SF
• 10.21 Acres
• Year Built: 2000
• Current Assessed Value: $9.2 M
• Current Tax Information: $371,976 annual payment (EXPENSE)
• Water Payment Information:
  • Summer Months: $3000 (EXPENSE)
  • Winter Months: $400 (EXPENSE)
  • TOTAL EXPENSE UTILITIES: $450,890
• AVERAGE RETAIL RENT - DES MOINES METRO: $12.32 / Square Foot / Year
• PROSPECTIVE PROPERTY AVERAGE ESTIMATED RENT: $1,798,756 / Year
• ESTIMATED CAP RATE: 25%
  • Based on previous sales price during 2013 of $5,310,500

I wanted to first of all make sure I calculated these numbers correctly and wanted to get more opinions on what these numbers are like for a property like this and if anyone here has had any experience with a similar property.

Thanks for all your help BP!