All Forum Posts by: Robert T.

All very good points. T.I. allowance is usually much higher than you mentioned. Also, vacancies tend to be longer than residential Higher risk for single tenant than multi tenant. BUT, when the assets are stabilized, it is a great income stream with few hassles. 

The land appears really cheap at about 30K an acre or 70 cents/sf; although I am not familiar with this area! You are probably right that if they leave, you can get at least that amount for the dirt, PLUS the building. Have you research any comparables?  As alluded to, the main thing is to make sure it has no contamination, and you may even need a phase 2 environmental. if I read you right, it is a 49,000 sf steel building, and @$50/sf replacement cost maybe 2.45M? The math seems wrong here, and too good to be true.  Why are they selling it so cheap? You cannot skim on the due diligence process if you are really keen on this property.  

Great conversation and advice @William Jenkins. In the past; we have been mainly buy and hold, with lease up and then 1031 exchange strategies. But, lately a situation led us having to re-develop a commercial building (smaller but newer than the one @Samuel Harden). We are in this process right now, but doing "pre-leasing" with tenants before the final build up. Also meeting with architects, GC , permits etc.  One of the ways to reduce risk is to get tenants committed before the redevelopment. Easier said than done, a lot of hard work and you have to have a desirable location. I believe there is no one way to do real estate investment, really depends on your skill plus luck & timing to bring it together and there are many ways to this food chain. 

Yes, warning to investors for long term corporate NNN leases. Even, the best like Walmart closes. Been there before.

http://www.costar.com/News/Article/Walmart-Closing-269-Stores;-To-Exit-Walmart-Express/178903

Firstly, congratulations!  It is rare to be able to own land that you can put a billboard in especially within the City of Houston. But the quote of 1000-2000 per year is low ball. If you sell, that piece of dirt might only be worth about 25,000 for a 6 cap. Where is it? Is it on a freeway or a secondary artery? Is it going to be one face or 2 face? 

As you know in Texas there is anti-billboard sentiments since the days of Lady Bird. The City is asking for a few billboards to be pulled down in exchange for something billboard companies want like electronic boards. Thus you don't see many electronic boards in Houston.  Also, the distance between each board is fixed, so you ended up with a jackpot if you have land that a new billboard can be situated.  We have dealt with a national media company and to say the least, it was a challenge. P.M. me if you want details. Look forward to connect in person as I am in Houston too. 

There are development courses you can take at Universities. One example is UCLA Extension. Urban Land Institute is a good resource. Also, network with someone who has developed in your area and get yourself under his or her wing. Mostly, you need time and connection to money. 

@KyleD We have leased land to a commercial tenant to develop a car wash in the past. It did not last too long and they defaulted on the lease because of permit and labor supply issues. They could not afford the drainage reconstruction needed by the City.  With a freeway location, is it too busy/fast for cars to turn in to have a car wash? Feeders into major freeways in affluent subdivisions may be preferable?  BTW 200-400K/acre for a freeway piece of land in my area is unheard of, unless it is in a really bad area (which is unusual by a a major freeway in a dense area).

 For those interested in buy & hold; the key to success in property investing is doubtlessly good property management. This is not usually taught at investment courses as it may not be as glamorous as how to get rich quick etc. 

Agree with @Jay Hinrichs. My experience too has been that you get what you work for. High cap rates means you put in more more in management or you put in the work to turn a distressed property around. Sometimes, you may get lucky and buy a high cap rate property that no one wants, but t is rare. In Texas, one of the largest challenge in CRE is the high property tax rates that is killing investors. Often, investors exit when they cannot keep up with such expenses as taxes and mortgage plus the inability to attract income through getting tenants. Currently, true corporate NNN leases have rock bottom low cap rates (4-5%), but are maintainence free till the tenant decides not to renew lease. Remember those big box Blockbusters and K Marts?