All Forum Posts by: Candice C.

Quote from @Mark Ainley:

@Candice C.

@Candice C. we are commercial investors, and also commercial property managers, so here are a couple of thoughts.   

1. I see corporate leases go sideways, so what is the opportunity to refill the space if this tenant left.  This is more of a question on how much you understand that particular village and the local economics that would make this location attractive.  
2. Cook county commercial taxes are a little crazy, especially in the south suburbs with a such a low commercial base.  You will have to contest your taxes every three years and there’s a cost of that, so make sure in the lease that is part of what the tenant pays for.

3. Have you pulled a freedom of information report from chicago Heights to find out history and if there’s any open issues with the village.

4. The rent is low for a reason and typically it is to offset how high the property taxes are per square foot. 

Happy to connect if you want to go deeper here. 

 Mark,

1. My broker said that it is 20 percent of the market rent in that particular area. However, there are probably nuances of that particular market that I am unfamiliar with. My broker tends to think that refiling this space at a better market rent would be ideal. This was before the property inspection and roof reports though.

2. I thought California taxes were high until I bought my first commerical property in Dolton, IL. I will never complain ever again. Your property taxes are exorbitantly high. The Napa Auto Parts tenant is responsible for a portion of the taxes. But yes, we are currently contesting this Dolton tenant's taxes. I am still in sticker shock. We will see the outcome of that tax appeal. Hopefully, they will be lowered. Luckily, they are also fiscally responsible for those taxes. However, it definitely directly affects future tenants who may want to rent that space.

3. I have not pulled the freedom of information. Thank you for bringing this up. Will look into it.

4. Your observation here makes sense absolutely. Thank you for your contribution to this thread. It is greatly appreciated.

Quote from @John McKee:

It's not bad, but the question you have ask is how easy is to backfill if the tenant goes dark.  In this case it looks very tough because it's not on the main drag.  So your traffic count is actually more like 7,500.  It's more of an industrial site with a single user.  Could be some opportunity in the future to convert It to several contractor garages.  

John,
My broker says that it is about 20 percent of the market rent. It should not be hard to fill if the tenant goes dark. The location and the under market rent was one of the primary reasons that the property was so desirable. However, after we got the general property inspection report and the roof reports back, he was quite turned off by all of the deferred maintenance.  It is a lot of deferred maintenance, too! 

Appreciate your perspective.

Quote from @Candice C.:

Quote from @Chris Seveney:

@Candice Chen

I would pass

There is no upside for another 8 years and only downside on the maintenance of the property. I also find the range of numbers being tossed around like hitting golf balls in the ocean. A range of almost 10x for lease numbers etc. How about some hard data / comps.

By time you repair this property it will be under a 5 cap.

 Hi Chris,

My broker wants to pass. He thinks that there are other properties that are less work for the same amount of resources invested. My husband wants to go further down the rabbit hole. We have already spent about 6K with contract legal fees, property inspection reports and roof reports. This begs the question as to which properties to put under contract and conduct due diligence? I would want to able to differentiate which properties to move forward and which to pass (before any monies are spent).If anyone has the answer, will be grateful.

Quote from @Lee Burns:

I actually went to highschool in Chicago Heights but haven't thought of investing there.  Not to say that it's a bad place to invest, but I'm not sure I would.  If you need eyes/legs in the area, inbox me.  Where I just bought my 2 unit isn't too far from there.

 Thank you Lee Burns. If it goes to that level, will keep you in mind. Appreciate the offer.

Quote from @Chris Seveney:

@Candice Chen

I would pass

There is no upside for another 8 years and only downside on the maintenance of the property. I also find the range of numbers being tossed around like hitting golf balls in the ocean. A range of almost 10x for lease numbers etc. How about some hard data / comps.

By time you repair this property it will be under a 5 cap.

I am going to focus on this case study on the Commercial Real Estate Investing forum.

https://drive.google.com/file/...

Allow me to share with you. Thank you for your feedback.

https://drive.google.com/file/...

Allow me to share this link as part of a case study, a teaching case. Let me know your thoughts.

To see the due diligence folder details (i.e. lease, inspection report), please direct message me.

I moved this thread to the Commercial Real Estate investing forum. I will post more details there.