All Forum Posts by: Adam Craig

I am currently doing the BRRRR method on commercial real estate. I have been raising funds for each deal paying my private investors 10%.

I got great traction on my lending pool for the first 10 or so investors. Now that I am out of my close network, I am getting a lot of interest when I post a deal but not much follow up after that. So I need to sharpen my syndication skills (I am essentially a rookie). 

Realizing that more funds are going to be needed on bigger deals I wanted know if there are many non bank lenders out there that do commercial bridge financing on vacant or nearly vacant properties and what points and rates might look like.

I have tried to get traditional commercial bank financing with some of my small lenders that take the deal after its stabilized, but it seems to be an uphill struggle. 

We are raising approximately 600K for a commercial project. The estimated ARV on 8% cap rate for this building is 1.4 million. So there is plenty of cushion for lenders and its a very strong deal.

In the past, I have always offer my private lenders a flat 10% return. Simple and easy.

10% excites some people but not everyone and I am trying to come up with partnership ideas for an investor who is willing to invest a large sum in return for a piece of the pie. 

What are some ways to structure this? I was thinking something like 5% interest and a small equity position. But I am not clear on how a lenders equity position would be valued after the new appraisal? For example, if I offer 5% equity, does that mean they own 5% of the new appraised value and cash flows?

Some ideas would be helpful

I have a felling others have not chimed in because the answer is subjective. It seems sometimes investors finish space and other times they dont. I feel on this building, the price we got it at and the ARV warrants the ability to finish some of the space pre-leasing.

If others chime in I might rethink it but for now we will market the first floor as is and finish the second and third. It worked well on our other buildings

I just closed on my 4th commercial building - its a 23K sq/ft vacant 3 story building in the downtown of a C+ or B- city.

I picked it up at a great price of 190K. I estimate 350-500K in repairs and the ARV based on conservatives numbers at 8% cap is around 1.6 million.

I have been "winging" it on my previous buildings to an extent but all of them turned out great with excellent cash flow and big forced appreciation. Because this is my biggest project to date, I am hoping someone with more experience can review my plan on this building and let me know what you would do differently - mostly with to rehab or not to rehab before tenants.

We are replacing some needed items for sure -roof, some HVAC, windows and other mechanicals. Here is the idea for the rest...

1. First floor - this was an old bank approximately 7000 sq/ft. We are going to demo what is left and market it "as is" to restaurants. The city is pushing very hard to get a restaurant, but at end of the day we will take whoever is qualified. Because its store front/restaurant space, rehabbing it would not be ideal since we have no idea what is coming in. 

2. Lower lever, 2nd floor, 3rd floor - this is all former office/flex space. Some of it is finished and some is not and most in poor condition. Similar to my other buildings, we were planning to finish the space and then lease it out.

Is it a bad idea to finish the space before and not have tenants do it?  I get mixed opinions on this. My thinking is, the city I am in is not so desirable that people are banging on the door to get in. Based on the experience from my previous buildings, its so much easier to lease the space when its finished and we do a good job. We are not taking down walls or making huge changes, just flooring, ceiling tiles, lights, ect...  There seems to be plenty of room for us to pay for some rehab and still extremely well.

I appreciate your thoughts on this. The building photos are below.

 Not bad thoughts but our plan is to rehab/rent the third floor. Maybe that is why know one prior to us ever bothered to lease it but its 8000 sq ft so we hope to lease it

 This is a 1900 building and its going to be office space, not residential. 

Just purchased a completely vacant 3 story, 23K sq foot retail/office building on the edge of a decent downtown area in a medium sized city.

We are going to rehab the whole thing but still undecided about an elevator. It is a 1900 building and never had an elevator. From the few companies I spoke with, they assume somewhere in the 150K range without seeing it.

I would hate to have business on the upper floors that cannot accommodate clients that canon use stairs but is a 150K+ expense worth the result?

Bought the building for 190K. Rehab without the elevator is somewhere between 300-400K. ARV somewhere around 1.4 million conservatively.

Posted in wrong forum. Reposted in correct form "commercial real estate"

Thanks for the input ! I will definitely skip Loopnet on my smaller commercial buildings going forward based on your advice.

I am not new to real estate investing but I am newish to commercial real estate. I purchased my first commercial office building in 2019 and have purchased 4 since and might never purchase a single family home ever again because of the excellent returns on commercial.

I don't use a broker we list everything ourselves through an in house employee and myself.

We leased up all our buildings much faster than expected and 95% of them came from Facebook and none of them came from Loopnet/Crexi.

Facebook does not have a commercial listing option so we listed it under apartments and we are getting several inquirers each day compared to LoopNet where we only get a few each month.

I dont see any other brokers on Facebook, probably because its not technically designed for commercial listings.

Is anyone else listing on facebook and experiencing these results?