All Forum Posts by: Joel Owens

This doesn't add up.Even if the storage space was 1,500 sq ft to convert to an apartment you would have 4,900 sq ft rented for 1,500 a month.

That would only be 3.67 a sq ft. Industrial and Warehouse space can sometimes tread around that or higher for really large shell spaces but what you are talking about sounds way under market for the rent being charged.

I don't know your area so couldn't give a yae or nay on the deal.

One of my friends Brian Rodgers is one of the most best recognized marketers in the world.

He writes tons of copy and marketing for national companies.These so called squeeze pages for the internet and all of that type stuff he was doing in the early 90's.Many are just copying his stuff.

As far as mailers content and getting to the right market is key.Being consistent is also crucial as over time it's like a small ball rolling into a big ball and before you know it you set on auto pilot.

Many make the mistake of sending out a few thousand mailers and then having the wrong message or the wrong audience.They run out of money and poof they are gone.

A much better strategy is to mail to a small group and then track your response.2% is an average response,5% is doing well,8% and above you are killing it!

Your first piece sent out is the control.Everything after that you test and track against the returns of the control.Sometimes people do not respond right away so with each mailers you would need a code for that batch to track.

I do this with my commercial expired mailing campaign.I have spent roughly 40 dollars a month over a year and made 6 figures in commission off of it.I track the number of mailer sent monthly,the number of calls or contact received,number of appointments,number of listings,number of solds,and then track my time into each listing to get a return per hour on my time.

When you break it down to a science you will really see what works and what needs tweaking.Once you have a system down with an excellent response you just grow the volume and the market.

Hope it helps

Usually with a mom and pop you don't want to pay for any TI(tenant improvements). Instead they sign the lease and get free rent for one month while they are getting the property ready to open.

If they don't open on time that is still on them and the rent is due.You also have stated in the lease that improvements made to the shell that are attached stay with the property.

(I am sure evictions are much faster, big plus in Chicago)

What on earth would make you think that??

Commercial tenants can be credit rated tenants with corporate guarantees or the mom and pop type.The mom and pop type carry usually the most risk as a start up.

Franchised stores such as Quizno's or a Subway generally there is less failure as the corporations makes sure the operator meets liquidity and certain training requirements.What usually kills mom and pop type businesses is poor planning and making the same mistakes over and over again.

This is where a franchise is strong in that with their franchise fees the operator gets national and sometimes local marketing.They also get tried and true processes and systems to follow which greatly reduce them screwing up.

With a mom and pop you are going with an unproven startup which if fails has very little to no assets to go after.Sometimes a mom and pop will have multiple locations and be more credible with assets and experience that are less risky tenants.

When taking on a retail tenant that is unknown or not well known ask questions about how they will bring in business and their marketing plans.

Many start ups believe you open up and people will find you and the business will come flooding in.This is absolutely untrue.

I remember Papa Johns pizza back when I was working as a stockboy at Wal-mart as a teenager. That was the early nineties.Nobody had ever heard of Papa John's.They had to go in the area in the parking lot and hand out free pizza with coupons for the next month or two.

Commercial tenants you won't get the call that the toilet is stopped up at night,etc.

Different animal.

I remember watching about radiation and granite counter tops a few years back.

The tops had high levels of radiation which they attributed to what they were using to cut the granite slabs.They had a meter and above a certain reading was dangerous and could make you sick. About 90 percent of the homes tested came in at normal levels but 10 percent had dangerous readings.

I agree that I strongly dislike tiled counter tops.The grout is a pain to clean and it looks like crap.The only reason someone put it there is it is cheaper to buy the tiles.So when I look at a place I go what else did they skimp on??

A regular buyer will think this as well.The biggest sin I see is when a bathroom or kitchen is only half rehabbed.That is worse than doing nothing at all.If you don't have the money to do it right it won't be a benefit to a renter or a potential buyer.

Kitchens and baths sell homes and are not the place to skimp yet many do as it costs the most to fix up.

My friends have had Corian for years and it has held up excellent.It depends on what finish you get as well.They had the upgraded bull nose edging to round out the edges and provide a dramatic effect.

That makes me think about another question.Do you get upgrades for the edging on granite or leave yours plain.I could see in a high end rehab you might need the upgrade finishing.

Here is article on radiation.

http://www.graniteland.com/infos/home/is-granite-radioactive

Looking for Hard money lenders and private investors to share their views on loaning requirements.

I have access to many hard money lenders.

My questions are:

1.If all hard money lenders charge the same rates what is the difference between them all?? You would think if they were competing against each other there would be some movement on the points and rates.

2.What kind of reserves are you looking for?? Do you base on the purchase price or just a set amount??

Example do you require 10k of reserves on a 100k purchase price and 20k on 200k purchase etc.

I am going to start getting into rehabbing and start of with small 3/2's for about 30k purchase. Will make 3% or more commission on each purchase I do. That will offset the 3 to 5 points I will be paying upfront.

At first I will only have reserves of 19,000.

Have another listing closing in February for more reserves.

Will 19k in reserves be enough to start the process of doing the first flip??

I was going to do flips a year ago but I am glad I have waited as prices are very low right now.

Any input appreciated.

Thanks Chad I am looking it over. CBRE is a major commercial firm.

First discrepancy is your MLS says 6129 square feet and the listing broker says in the flier 7,000.

Also flier says CURRENTLY 100% occupied with currently being the key word.Discount crap words such as currently,potentially,etc.

It's nothing more than a listing broker trying to make it sound better than it really is.

I will respond to the other items directly to you.

What kind of lease is the Retail space on?? Are there restrictions on what type of retail can go in there??

If they leave how much would it cost to re-tenant the space??

If the rent is well below market than you should be able to get a new lease commitment before you purchase at a higher rate.Does the lease not have graduated payment clauses in there??

What about the current retail tenant are they a mom and pop or a credit tenant.If you got rid of a mom and pop that was there is this a location a credit tenant would find attractive??

Usually retailers make most of their money during Christmas.In fact many will make a profit or go out of business simply based on the numbers at the end of the year.If the strongest sales cycle has passed it might be hard to re-rent to someone else.

What are the immediate other retail spaces offering per square foot??

Where the updates completed up to code or would they give you future problems??

You can't base rent solely on sq footage.That is a massive mistake.

You can have retail spaces exactly the same and one is way off the corner and the other is close to the corner and gets 20,000 cars a day to your side street of 800.

There is a foreclosed strip center that is brand new put in a crazy spot that won't get close to market rents.

Have you talked to the existing tenant and do they plan to renew and if not what problems have they faced?? You need to see what is the highest and best use for your retail space and go after that tenant.Many landlords just rent to any retail tenant that comes along and that is where the big mistake happens.

Most businesses I know are trying to upgrade to the nicest,highest traffic count,with the best anchor for the least cost per sq ft.

You need to do much more research than just what you have posted.I agree the numbers are too light.

It works both ways.

When you look at solds in a neighborhood most are MLS listed and sold.

The FSBO's believe they can attain that price but do not understand that price includes paying a commission.When you take that away the sold price for that property will be lower.

So if a property is listed MLS at 140k and a FSBO lists at 140k the buyer will simply reduce down 6% right off the top as the seller is not incurring that cost before making that offer.

If you have a buyer with crap credit or a lease option then you might be able to achieve a higher price.

If you ask almost all new home builders most of their sales are not in house but with outside agents.

Investors will view buyers brokers many times differently than the home buying public.Many home buyers only purchase every 3 to 5 years and have limited experience with contracts,new laws,etc.

If you are an investor that purchases all the time and wants to go on their own that is fine.

I have found it just depends on the person what their comfort level is.

For some a vision of owning a property outright is the ultimate goal.They feel security in that the house is paid for.

My mother-in-law is 67 and her house,cars,everything is paid for and money in the bank.She doesn't live high on the hog but loves the security and "NOT WORRYING" about money.

On the flip side I see the money as rotting every year not doing anything.If anything the value is getting less as inflation goes up.

It's the same as saying if you save xx dollars in 30 years you will have 500k.That may be true but in that 30 years from now the 500k won't have anywhere close to the value it has today.

Now other investor clients of mine view it a different way in that rates are so cheap right now they jokingly refer to it as "ALMOST FREE MONEY".

Long term rates in the 4's to 5's and short term 3 to 5 years in the 3's.If you look back historically rates for borrowing money have never been lower over the years.

As far as using an agent if it is listed they are free to use.

Whether or not you will be a better negotiator has to do more with your skill level.

On the survey and all other inspections that is on you the buyer.You are obligated "with your right of your own inquiry" to perform all tests you deem necessary to feel comfortable moving forward and closing a transaction.

On all my listings it says "information deemed reliable but NOT guaranteed".

The reason is in reality the seller is not sure and is just passing information onto me to relay to potential buyers.

Always do your own investigation of a property. Remember "caveat emptor" buyer beware.