Wholesaling Commercial Property

[Brian Murphy]

I'm a newbie wholesaler and I was just contacted by someone with a commercial property for sale. It's an 8 unit retail building/strip mall. I know values with commercial are based on the property's income, not by the appraised value of the real estate alone. I haven't talked with the seller yet to begin negotiations and I'm stumped as to how to proceed. Advice from someone experienced in wholesaling commercial property would be greatly appreciated.

[Bill Gulley]

Well, I applaud your drive and enthusiasm!

Your comment isn't really correct, commercial properties do go with an appraised value, the appraised value includes and usually leans toward the income approach to valuation.

So, yes, the first thing is to see what the rents are.

Brian, you're new here and I have no idea about your experience. I'm just guessing you are brand new and this is your first commercial find.

If this were an 8plex residential I'd be inclined to move forward here, but it isn't. A strip-center of retail, while probably not a large deal, is no place to start, like elephant hunting with a slingshot if you don't have a good business and RE background.

I understand you'd like to wholesail the place, I'm usually called negative in many posts but I'm in reality, to flip this you will need to value the property, the due diligence extends from the physical aspects of building to the leases, to the types of business being conducted, risks assumed, financial strength of tenants, sales data, traffic count and comparable properties all to arrive at an offer, at least to justify a good offer. You can begin with a letter of intent with an offer pending subject to the due diligence. But can you do this?

Do you know a buyer? If not, I'd think this would just spell trouble, sometimes owners don't want tenants knowing the place is for sale and just advertising has pitfalls and if you tick off an owner of a commercial listing, take up his time, have him jump through hoops and mislead him making him think you are a buyer, I know many who will just call thier attorney and look for some reason to clean your clock.

I'm trying to keep you out of trouble, keep you from wasting your time and the owner's. If you know a buyer, get with them and see what they want, see if you can get a deal with them to find them a deal. Sorry to pop the dream bubble.... :)