All Forum Posts by: Andrew Holder

Agreed. We are all committed to what looks to be a 5 year+ plan on this one. I loo at things short term as well just in case we need to bail out sooner than that.. We will refinance somewhere in that time frame as well. Hadn't thought about a BRRRR for this one. Wonder how that would look with the 3 parties we have involved in the investment...

@Bob Langworthy Much appreciated. That was what I thought as far as NOI/cap rate for valuation, just didn't know if there were any other factors to consider. I really like what you said around evaluating based on 100% occupancy even if it isn't full. Hopefully we are going to be able to really get specific on the lease agreement to make it more appealing long term. The variable for me is the age of the building, but I'm confident in the growth potential. Thanks again, Bob.

@Bob Langworthy @Kevin K. Greatly appreciated Gentlemen! It is, in fact, vacant. So we are starting with a blank canvas here. We have been pretty conservative on all of our numbers thus far to cushion us, which is why I am reaching out here to make sure we aren't missing anything substantial that could bite us later on. Your input is very helpful! The building is over 100 years old so we hiked up our maintenance expenses as well as some other areas just to be safe. We are almost certainly going to be a full service lease type, but we are prepared for any option I think. The play is definitely long term as we have a continually growing market in OKC. Much of which is focused on the Urban Core where this property resides. 

One more question... Let's say we get the building 85%+ occupied and decide we would want to sell it. How does one go about evaluating an increase in value based on an income approach that most commercial properties are based on? I know it partially is based off of length of lease, terms, etc.... but is there a generic formula for that? Thanks again!!

I may want to pick your brain, @Rhett Tullis  Wild West in the commercial world it seems. Have you found any particular evaluation methods better than others? Or any rules of thumb like the “50% rule” that BP discusses oftentimes? 

Closing on our first commercial property (Office Space) in Oklahoma City next week and I can't help but think that there could have been a more efficient/better way to really analyze a good deal vs a bad deal in the commercial world. I've got 4 SF houses and that math makes much more sense to me being that I'm in the residential RE business. However, I'm also aware of the incredible opportunity that the commercial sector provides. I've been able to garner some different pro forma spreadsheets from a few places, but none of them really helped walk through the nitty-gritty of what kind of expenses to expect and what percentage of monthly income to assign to certain expenditures. I would love to hear more about what other investors are using to evaluate commercial property and also what they use to determine appropriate lease structures? There are many options for lease structures on residential, but it seems that there are just ENDLESS structures for the commercial world. I'm sure some of my "woes" are just to be expected when diving into the unknown, yet I want to set myself up for success the next go around. Rule of thumbs, percentages to go off of, tricks for determining best leasing types, etc. I'm new to the BP world and this is my first discussion to start, so be gentle on me! ha! Thank you.

I've heard the Executive Director of the district speak there recently, and they are certainly beginning the processes of revitalizing the area. There are a few key commercial investors buying up anything and everything on the main strip to renovate. They are purposefully working to maintain the culture of the area without running off current demographics. 

As far as the revitalization goes... I think it's got a lot of work to do before the area starts to emerge. If you are banking on that ROI after the fact, I would only suggest going in if you are looking to buy and hold for quite a while.