All Forum Posts by: Mark B

Bill makes a good point that I have not seen mentioned here much. Commercial can be a riskier game because when a unit is vacant, it can be much harder to fill. For a given residential unit, there are many potential tenants - if you have a good price, you can fill it quite quickly. However, with commercial space, depending on how unique the building and use are, you may have to wait for the right tenant to come along.

I have a 5000 sf commercial building that is somewhere between office and retail and warehouse. My first tenant moved out suddenly (mid-lease) and I marketed for about 12 months before I got a new tenant. I also had to lower the rent quite a bit to seal the deal.

Meanwhile, right next door, I have a 4-plex and one unit became vacant at the same time. I advertised on craigslist, had an open house, had 12 showings, and 3 qualified tenants the first day.

All that being said, I think I prefer commercial believe it or not. Once a building is filled with tenants, it can be more profitable. I also agree with many posters that dealing with commercial tenants is usually more professional than dealing with residential tenants (less drama, less personal.)

Mark

@ Tod R,
I noticed that you mentioned that after you develop the apartment complex, you look for a buyer. Is that always the case for you, or do you ever just hold as an income property? I'm interested in hearing your thought on this, specific to medium-sized apartment complexes (15-30 units).

The reason I ask is that I am at the very beginning stages of puting a devmt deal together. I have the hard money lender, and I am tageting this type and size of project, but still wondering what the exit strategy is.

Thx,
M

Yep! I started an Albuquerque group in BP. It is just for online connecting, but if there was interest could develop into face-2-face. I'm a relative RE beginner, and I have no interest or time to organize the meetings, but would be happy to participate.
M

Hi. There are a few I know of: IRIN, Invest in Debt, and a couple of Cashflow game meet-ups. Email me if you need help finding them.
M

Thanks Dan!
I did it today! I sent out 82 letters to the owners of 4-plexes in my target area. I went with a handwritten note - short and to the point - pastel envelopes and specialty stamps. Everything handwritten.

I'm going to keep track of the results and will let you know of the success rates.

thx,
M

Hi everyone. I'm getting ready to send out some letters to property owners and I have some specific questions that I would appreciate your feedback on.

Up to now, I have identified my target area and property type (small multi-family) and have a list of property owners and their addresses (about 150 owners total.)

I could google and try to find phone numbers for them - I imagine I could find 25% or so.

1. Should I search for the numbers?
2. For those that I find, should I call first or mail first, with a follow-up call?
3. For the mailings, I understand hand-written addresses are good. I have also read that unusual envelopes (color, shape) are good too. Any ideas on this?
4. The letter, I cannot see handwriting all 150 letters. Any ideas on how to personalize them?
5. The content: should it be formal, informal or somewhere between. In other words, should it say, "Hi. I'm Mark, an architect here in Albuquerque, and I am interested in buying your apartment building..."
and "Dear Mr. and Mrs. ____________. I am writing you in regards to your property at 123 Main St. I am a real estate investor here in Albuquerque and your property matches our, blah blah blah." Should it come from my name or my real estate company's name?
6. I guess I need to include a card. Is it OK if it is my primary business card (from my architecture practice) or is it better to be a RE Investment card?
7. Do you have suggestions on language or ideas to include. I have heard to say that I can offer "cash to seller" and "fast closing". Any other ideas? Any ideas on what NOT to say?

Thanks a bunch. I am interested in hearing your thoughts.
Mark

Thanks Don.
I found out some more detailed info about the expenses and then did as you suggested; i backed into an offer price with an 8% cap rate. Cashflow is good too. Offer was 158k, but owner came down to 195 and is firm. I guess I'll let that one go.

Thanks for this tip. I agree. Can you tell me some of your methods for finding properties pre-foreclosure?
Thanks,
Mark

Another tip is to drive the area. Basically, you want to buy where apartments are all occupied. Simply look for the tell tale "signs" - literally. If you see alot of vacancy signs and the yellow banners that say "first month free", or even bigger promotions, this will tell you what you need to know. It won't be an exact percentage, but it will giev you an idea of that specific market.