All Forum Posts by: Joel Owens

I pay all cash double digit cap rates with NNN syndications. Buying in this way can weather cycles for optimal timing to exit and 1031 or refi with low debt. I have not been a believer in massaging debt to make the capital raise pref look appealing to accredited LP investors.

A bunch of years ago I sold some apartment buildings. One client had about 230 units across 7 buildings. The portfolio was being dragged down by the bad buildings taking all the good buildings cash. So they were doing a bunch of work for nothing. That taught me don't buy just to buy. Purchase based on feeling very confident and conservative about the deal. The portfolio might not scale as fast but the quality should be there with less headaches and more equity upside yields. Everyone is different that is just my approach. I remember me saying on here somewhere in a post many years ago that cycles can be a game of musical chairs when no more spots the investors crash. There was one investor who took short term 3 year debt so he could shave 30 basis points off the rate versus the 10 year fixed. Now the rate has over double and paying many millions more a year in interest because he got greedy.  

I can offer a unique perspective. I have been a NNN real estate broker for 20 plus years. I am also a syndicator as well where I am GP on value add and stabilized syndications we typically take down all cash.

I have been on this site a very long time pretty much since the beginning and have seen it change a lot over the decades. 

Unless you have developed software or paid someone to do it people often do not understand the cost involved. I am currently building a back end NNN software for my website at an initial cost close to 100,000. Even when it is completed there is ongoing monthly cost to keep the code from breaking and keep it secure and updated. This does not even cover more costs to keep improving and adding to the software. You can get software built cheaper overseas initially but it is often junk and you still end up paying the same from all the ongoing fixes and have less adopters use the software because of the initial problems. Coders overseas know many businesses want something for cheap cost so they slam out junk with lots of bugs and then charge them over time to fix it.

So when you build software the money has to come from somewhere. The users and or sponsors or BOTH have to contribute to keep the site going.

For syndicators you can put everything out there for diligence and accredited investors still invest with some groups I would not invest with. The LP investors thought process is they make millions per year at job or business and do not have time for deep dive into every nook and cranny with a syndicator offering. They put 100k here plus here and there over dozens of deals and hope the portfolio average stays positive over time.

I know I deal with very wealthy people on a daily basis and have talked to thousands of millionaires over the phone through the decades. I am wealthy myself so I know how hard it is to earn the money and make the money. What people need to watch out for is newer syndicators with little experience trying to build teams and have to keep doing mediocre deals to feed their team to survive. Also syndicators massaging debt to make deals pencil to entice LP investment and are now struggling with existing deals blowing up. I like buying all cash because we can decide when to use debt if any and when to sell. We are not chained to debt markets or what lenders want for our business model.   

Mohamed,

Each situation is different. Starter NNN deal for one of my clients is 3 to 4 million purchase price single tenant NNN property putting 35 to 40% down. For good areas strong suburban or better. That's about what they cost for quality. You can sometimes find one at low 2 million in good area but get gobbled up by cash buyers at 5.5 cap rates using no debt. Those type of buyers are trying to beat the bank for yield they can get there.

I typically ask what a potential clients goals are with their current income from a job or business, age, family info, how much passive income they want to eventually achieve annually, current net worth, and liquidity levels. Based on those answers we hop on a call,

If they are not accredited investors want to buy 1 million type retail condo I don't have time for that.  

I am talking in generalities. Lots of MF syndicators are getting hammered by massaged debt and rosy pro-forma's to be able to exit or refi in the future from planned improvements and rent growth.

Instead pay all cash and you can decide when time to refi or sell and not your lender telling you what to do. It's what we do on our NNN syndications stabilized and value add. We raise all cash deal to deal.

WHY do people use debt then for syndications? It allows them to pursue bigger deals for less of a raise and stack lots of properties hoping some will be winners and not losers.

Hopefully you did not pay too much for the dirt. 1 acre is optimal these days because of desired double to triple drive thru for QSR.

It can become a problem because if they make the building smaller you get less rent but they do more sales.

Example a QSR used to be 3,000 to 4,000 sq ft but now instead wants double drive thru's as not many go inside for fast food like pre-covid.

If you get 1,000 a foot less at 30 a foot you just lost 30k NOI and now at 5 cap example paying all cash NNN once developed you have lost 600k value.

It can fine as long as you do not overpay for the land. If you paid like 750k or 1 million that could put you in a bad spot if tenant wants to own the dirt rather than lease.   

Hi Christian,

Sorry just seeing this post. NNN 20+ years

People work with me exclusive with written agreement to buy NNN.

If people want to just talk, explore NNN rate is currently 1,500 for 30 minutes or 3,000 for 1 hour on the phone.

If they sign agreement and buy something and we close where I make my fees then I give credit for consult fee.

My time is very valuable.

Good luck  

NNN 20 years + investor and broker.

Usable dirt it sits on size ( 1/2 acre ok, 3/4 acre good, 1acre plus best ) and parcel shape (most of it road frontage for land or is it narrow and deep? regular rectangle or square size or irregular?)

Tenants are looking for parcels that fit in their ideal box size layout for building and parking spaces requirements with any drive thru's wanted. The tenant is not as much focused on rent when they are strong regional to national in nature but the best spot they believe drives the most sales and profit annually.

It's the lesser quality smaller tenants that are more sensitive to rents because their model is not often proven with scale or over time as much.

So you have to know what you are buying and what to do with it.

I buy same stuff for cash but I am the GP on the syndications and my LP's put in minimum 200k per deal as accredited investors.

To convert the bank to medical would be very expensive. If the bank is a certain age of construction most tenants want it torn down and build new. This all comes with time and experience. After you buy many dozens of these nationally you learn which ones are hero's and zero's.

If you take 750k of your money to buy cash but you have little experience your risk profile is very high. If you invest with someone doing it for decades at 200k or more your risk can often be way reduced due to the knowledge of the sponsor. You can learn from the sponsor on the deals and then go out on your own if you desire or later decide you are happy to keep investing and not put in the work yourself. It is WORK to turn these properties around. Often not as much as retail centers with lots of property management but still takes work, knowledge, and skill.

I have a whole process I have developed to assess risk.

Hope it helps 

Steve Mashura,

NAR partners with businesses to peddle whatever wares to newly licensed agents as a benefit that sucks them dry of any start up money.

NAR has some lobbying efforts that help with legislation from time to time but other than that pretty worthless.

I was REALTOR first year in business over 20 years ago and saw no value. Have been principal broker in commercial real estate for decades.

Moderators are volunteer. We have no say in matters like these. That would be for Scott Trench the CEO to comment on.

Josh the owner of the company Bigger Pockets is retired for the most part. 

Bigger Pockets can't stop sponsors from going on other sites (podcasts). It's up to the individual accredited investor to perform research and make an informed decision.   

Here are 4 levels lowest to highest.

1. Property management - major time suck and investors constantly want the world for service and low money

2. Leasing residential or commercial - pays decent but often in commercial longer timelines to make money as tenants can take awhile to decide on a location. Residential you can get capped on how many rentals with time you can do.

3. Brokering sales commercial or residential. Top residential brokers without teams on sales typically do about 300k to 500k ( New York and CA would be different as more money made but also lot more money spent on listings not sold so can lose your butt or do well). Commercial individual can make millions per year as a broker with experience.

4. Syndicating deals as GP with LP investors ( Make money fees buying and selling along with management, some of the cash flow and upside as well.

My brokerage it's just me because I did not want to babysit lots of agents it's not my thing. I know some brokers that take support calls for their agents and make 200k to 300k a year and play golf and vacation rest of the time.