All Forum Posts by: Brett Buchwald

David Faulkner well it doesn't necessarily mean "the economy is taking a turn for worse." This is a cyclical business. There are highs and lows. Typically yes, they run in line with the general state of the economy, but they don't have to. Currently prices are very high (meaning CAP rates are low) and many investors are passing on these deals because they think they're overpriced. I don't think there is anything wrong with the fundamentals of the market we're in. Take Atlanta for example: we continue to see job growth, office rents have reached an all time high for 2 consecutive quarters, office vacancy rates continue to decline and there is little office construction. The fundamentals are GREAT!! Yet we have seen a pull back in pricing and velocity. I think the velocity is an issue of supply; most of the good deals have been snatched up. I think the pricing is probably a combination of general caution in the market place due to cycle length PLUS most of the trophy deals have traded already (supply); so average pricing is lower because the product currently being traded is of lesser quality.

William Tong it sounds like you're building is in a good location. I would contact a local leasing agent with a strong presence in the market. Start with the guys that have the "available signs" out front of the nicer shopping strips with the tenants you're trying to attract. If you're dead set on doing it yourself then you can contact CoStar and LoopNet and put the building up for lease. Either way you're most likely going to have to pay a fee; it's rare that a national tenant is running around without representation and unless you have the most phenomenal location/building in the world the tenant won't move in if you try to stiff their leasing agent. If it's a mechanic shop and you're looking to change the use you're going to have to spend some money and you could even run into environmental issues. You could incentive the tenant to pay the full cost of buildout for free/cheap rent. I would highly recommend that strategy. Having a strong national tenant will greatly increase the value of the property, even if there's below market rents.

Offended! No but seriously it's nothing special. I just wasn't sure if its some guy flying solo trying to make a buck however he can. That makes sense that if its a company processing a ton of mail they wouldn't have the time for it. I'm going to check your site out and compare to others. Thanks for the feedback @Cody Alexander and @Ryan Dossey

@Ryan Dossey @Cody Alexander @Braden Smith I've been looking into a direct mailing service. One of my biggest apprehensions: what guarantee do I have that X company won't sell my list, or poach potential clients?

Braden did you have any luck finding a mailing service?

Michael Doherty 7 months reserve isn't enough if you want to start in CRE investment sales. You need passive income to pay your bills. Don't expect to make any money for 18-24 months. If you work your *** off doing 12 hour days, making 30+ calls a day, you might get lucky and snag a deal in your first 6 months. But I wouldn't say this is the norm. It took me 18 months for my first paycheck and it was only $7,500 after splitting with my team, firm and buyer's broker. If somebody tells you that you'll make $100K your first 6 months to a year, I would be extremely skeptical unless they're going to pay you a salary or will feed you deals. I started in June of '15 with zero experience and zero real estate connections. I've landed some really good MOB deals in the past 2 months, though. It has been extremely difficult and my current outlook is grim, as I'm going through split negotiations with my team and I'm not sure about my future. But I've put in too much work to walk away from this business. Something you said stuck out to me: "I'm going to try and make it..." There is no try in this business. You either stick with it until you succeed, or you give up and try something else. You must be 100% committed to success or you will fail as a broker. With all that being said, I'm glad I took the leap. I have a very high risk mentality though. I've learned so much information and I still have a lot of learning left to do. I've made some great connections that I never would have come across if I hadn't made this decision. I don't claim to know all the ins and outs of the business, but I've figured out how to make it. Feel free to reach out to me if you ever need advice from a young broker's perspective. At the very least, find a mentor and discuss any proposed employment opportunities before signing and committing to something so you don't lock yourself into a bad deal.

Jean Taveras my advice to you is to pick up the phone and start calling brokers. Most of them that you call will agree to meet with you for lunch or drinks or coffee. It would help to prove that you have a track record or you have the funds and you are motivated to do deals at or close to the market. Develop relationships and show that you're trustworthy of being brought off market deals; brokers are taking a risk chasing off market deals because there is a very real possibility that they will put in a lot of work and not get paid, either because the seller flakes or the buyer cuts them out of the deal. Our time is very important to us and must be protected. I've brought off market deals to buyers and they've tried to sneak in a brokerage fee, when they're already acting as principal. I won't present off market deals to them anymore. I have no problem splitting fees, but don't be dishonest with me. The current cycle has run past the historical average and I think it's safe to say we're in a transitioning market. With the new prez and talk of constricting regulations being lifted, it's difficult to say which way the market will go, but the general consensus is that these are good things. That being said, i have personally seen CAP rates slightly rise in the past 6 months or so. If you're looking for quality, 10+ years, credit tenant deals in south Florida at 7 CAP, those are going to be hard to come by. Try Atlanta, Nashville, Charleston, something more secondary than New York, Miami, or LA. Let me know if you have time to chat in the near future. Good luck out there.

Immanuel Sibero well the building doesn't really make more money the yield just increases. When a cap rate for a particular building is low, the price of the building is high. When the cap rate is high, the value is low. This assumes the NOI stays the same. If you're in a transitioning market and cap rates are increasing but your particular building continues to increase rents, your property value may stay the same (because of increasing NOI) or slightly decrease.

Do you mean retail strips? Those are great investments. Look for those along main commercial corridors or adjacent to a grocery anchored strip. Basically, you want them to have good visibility on a road with high traffic counts. If you can find one that's adjacent or within very close proximity to a grocery anchored strip, or a Walmart, Home Depot, or another well known big box store with non-credit tenants, that's a great investment. It's likely that rents will be below market and you'll be able (hopefully) to lease it to credit tenants in the coming years as well as raise rents.

Chris,

Unless its a high cap rate deal, with a great tenant in a great location, and you plan on holding for a very long period of time, I would avoid office condos. I'm a commercial agent in Atlanta and I just sold some office condos. It was quite a challenge and I would probably avoid office condo listings again in the future; they had been on the market for nearly 2 years before I got the listing. With this particular deal I was selling entire buildings, not just individual units, but they were within a condominium and still subject to association fees. They also had a NNN lease in place, meaning tenant pays for all costs associated with operating the building (including the association fees in this case). It was a great tenant, in a great location, and good cap rate, yet investors still scoffed at the idea of owning office condos. The reason is that you never truly have complete control over your real estate; you might have to pay for a portion of parking lot that doesn't serve your unit; there could be costly assessments that you're obligated to pay; maybe the roof of an adjacent unit has a leak and you get hit with higher fees to cover the repair; if you want to knock it down and build a new development, you probably won't be able to.

At the end of the day, I believe that people buy real estate for 2 reasons, one being more important than the other: cash flow and future pay off from a sale of the asset. Cash flow is great, but why purchase an asset if you can't sell it?? 

For these reasons, I would avoid buying office condos as an investment.