All Forum Posts by: Henry Clark

OP. I agree with @Rick Pozos.  A degree is a negative.  

Looking at your background I don’t see any deals.  Your best education will be to invest in a duplex up to 4 plex and live there.  If you’re a Pilot you’re in a white collar environment.   The path you mentioned is very dirty and blue collar.  Make sure your personality matches your path.  

If I had your background I would look at aquaculture.  Both from your Biology and your aviation experiences.  Plus your entrepreneur interests.  

OP.  As mentioned above, far too little info and data.

With that said I’m going to make a bunch of assumptions about you and your life.  The following is a potential path but maybe not yours or your outlook on the world.

1.  Stock market will crash 50%.  Your position won’t recover for 15 years.  Only have enough in stocks for Longterm investing beyond a 15 year horizon.  Rest in money equivalents.

2.  Sell your house if you have lived there 2 out of 5 years as a primary.  Take the $500,000 capital gain avoidance.  Then rent until the housing market crashes and you know your retirement plan.  Florida and DFW markets are already switching to a buyers market.

3.  Inflation will skyrocket in the 4th quarter. Don’t hold on to cash to long.  Keep cash in hand to cover your period of concern.  1 year up to 5 years.

4.  Your original question.  Housing will not be your answer for cashflow and a retirement lifestyle.  

5. Reach out to some of the CRE brokers on BP and look at commercial and industrial.

6.  Kids- don’t fund their college or weddings.  Tell them to join the military and buy a keg and shredded pork sandwiches for the wedding.  Your focus is retirement.

7.  Move to a lower property tax, insurance, cost of living, income tax area.  

OP you might research but I believe the Federal OZ program has sunsetted.  Unless you’re talking about some City specific program.  

OP

If you're doing Flex let's do a preliminary wholesale on me being the Buyer and also the seller.  Don't think of knowing or getting all of the answers to wholesale.  This will be a straight up listed property and a purchase just to see the process on a Commercial/Industrial property.  Then think through it from a Wholesaler standpoint.  The chances of you getting a property Wholesaling without it going through a commercial Agent listing is very slim.

1.  Flex property listed for $2,000,000 in Tampa Bay.

2.  Zoning is C3 whatever that means in Tampa Bay. You have to figure that out, relative to the potential buyers needs.

3.  It has been listed for 3 months versus say 2 years.  Means seller has not truly had the market do price discovery.

4.  A Commercial realtor is handling the deal.  And the Seller runs things through their lawyer.

5.  Property is on 2 acres.  Has 40,000 sq ft, with 8 bays of 5,000 sq ft.  Is Pre-1970.

6. Tenants are all market rate. 5 year leases. 3 are NNN and 2 are NN. They have remaining years on contract- 1 is 5 years, 2 are 3 years, 2 are 1 year left. All are local except for one is a national brand auto supply store, using this for a warehouse. Rest are yard/snow plow, plumber, electrician, hot rod enthusiast, and a regional Power drink distributor.

7.  You have to make a written offer.  I'm going to ask for either a $50,000 downpayment or a source of funds letter from your lender to cover this amount.

8.  You're going to negotiate for 30 days due diligence, 30 days to finance.  I'm coming back at 30 days due diligence and 15 days to finance.

9.  Do you have a due diligence checklist?

10.  Do you have the downpayment or funding letter?

11.  You just signed the offer letter and are on the clock.  You have to find a customer who wants this type of property.  They will want to also do due diligence.  The longer you wait to find the customer, the less time they have to do due diligence.  Plus, they need the 30 and then the 15 days to get their financing in order.

12.  Somewhere in the above you need to work in either Title search or Title insurance.

13.  This is a Pre-1970 property.  Any EPA issues or studies required for your financing?

14.  Any grandfathered items.

Forget whether you know the above.  It's part of the learning curve.  So you need to develop your checklists before you bring your first deal.  30 days is a very short time to execute and learn.

etc etc.

Use the above to start the development process for your wholesaling efforts.

OP.  Think you had a similar post somewhere else I responded to.

What type of Commercial/Industrial properties are you talking about?

As you're doing your research, the main difference you will find with a Commercial versus SFH/MFH is the due diligence time constraints. Also, the vetting process of you the potential buyer. You will most likely need to be a qualified buyer with a lending institution and/or put down a downpayment. These will put pressure on a simple Wholesale transaction.

OP.  You're going to need an Engineer anyways.  I would spend the $20,000 and have them spec out the site and also do a cost estimate.  The $20,000 would be for a pre-designed building footprint.  If you have them design the building it will probably cost another $40,000. You would have to figure out who does the engineering for the interior hookups and finishes.  Plus, your site prep and utilities costs are a bit undeveloped above from a discussion standpoint.  Just your parking and sidewalks could be $200,000.  Plus getting the utilities to the site, is different than hooking up the utilities.

You should also provide a picture of a similar building to show construction type and finish quality.  At 6,000 sq ft shell could be $900,000 up to $1,500,000.  Plus, the client will want you to finish the building out.  Which could be an open space Medical Equipment rental business, down to a Dentist's office with multiple room utility hookups.

You're going have to vet this to a lower level of discussion anyways.  Recommend you get the Engineer up front.

OP.  My brother who moved to Italy and I looked at this over there for a while.  Have not moved forward since he is still in the process of settling.  The key points we ran into, without getting too far into the weeds:

1.  We looked at both single ramp systems where you drive up to the second floor and also multistory.  The single ramp system we looked at is a temporary structure that is configurable.  You can also leave in place. There is one manufacturer in North America, but they tend to lease out and not sale these configurable systems.  

2.  Niche- to me it is a Niche product from both location/market and also prospective buyers.  There has to be an existing reason.  In Italy, they just don't have the parking space normally.  But normal Italians can't afford to pay the figures you would need.  And then they really don't have it during Tourist season.  So, your niche demand has to be significant enough to warrant the investment.

3.  Niche buyers- I don't think you will find any buyers until you have proven it a success for 2 or 3 years.  Even though this is a simple concept, I don't believe people can get their heads around the Market.  They would have to see your financials to understand the market.  By then why sale.

4.  As far as the automated systems you're talking about.  Google high end parking.  Your demand is going to be sports cars, high end vehicles, etc.  Where the owner doesn't have enough storage space, so it won't be short-term parking.  High end customers will require Concierge services.  So more of a hands-on business than a straightforward lease.

We haven't put any money down or invested, thus take the above with a grain of salt.

OP realize you’re itching to invest.   I would recommend you don’t do the deal.  Sit on your cash for a year.  There are so many moving balls in the air right now.   I would wait and cherry pick and opportunity.  

If your just dying to do a deal since your in Dallas and a large market.  Go find some of the best older neighborhoods for location, schools, etc.  Buy the worst house in the neighborhood and upgrade.  You will make money in the upgrade and also being in that neighborhood. 

If your able to move and live in the unit do that.  So you can get the 2/5 year primary in the capital gains.  

What type of returns are you planning to get in a $420k house or duplex?  

OP. For some reason I am getting you want to approach this from an emotional versus business standpoint.  So I will approach it from that standpoint.

STRs- if we have a downturn that will be one of the first investments to go down. Even if you are the master Guru in both revenue generation and value add for STR its a worse deal.

Equities- are set up for a 50% loss.  S&P 500 has been increasing 25% for the last 2 years each.   Not Earning.  P/E ratio shows about a 3% return.  MAG7 is a worse portfolio concentration than a 15,000 sq ft in Chicago.

You want to possibly use one of your STRs to vacation at. For $5,000 per week you can rent some really great vacation spots. Plus you're not tied to a specific property. Unless you are buying $1mm STR locations they can't compete with what you can rent for $5,000 any where in the world.

Without knowing your rent rates and facilities. As mentioned by others. There is a sweet spot for 2500 to 5000 sqft units. This would increase your rental rate per square foot.m significantly. You would need to do some Capex to achieve this. Look up Crexi or Loopnet in your area. Availability to buy or rent, rental rates, features.

Post some pictures.  We see what you don’t see.   How much external parking?  How tall are doors and wide?  How is water, sewer, electric and hvac distributed and located?  Etc etc.

Drive around your area.  See who the major RE agents are and call them to assess and look over your property.

Why are you trying to take a great investment to make worse investments either look better by paying off their high interest rates or investing into 10X far riskier investments.  

Disregard the emotion above.  Run the numbers.  For all I know you have two daughters getting married and need a bunch of money or they are about to go to college.   These are weighing on your decision.  There are other ways to address than selling.

FOMO-  commercial and industrial property is primarily value based on cash flow and not comparables like houses.  Your property can increase in value easily “if”: A.  You move to smaller units, which I wouldn’t if you have a great tenant., B. You have a lot of hard surface parking available to rent or build in., C. If interest rates go down just 1% point your value goes up.    Easy example.  Don’t need to know if it applies or not.  There are other examples.  Let’s say you can sell fireworks at that location. Just contact a company and rent a spot out for $25,000 for 3 weeks.   Pure profit.  Food trucks, ev stations, parking, etc.   

OP are you an investment banker?

Please post your due diligence checklist for the syndication investment you did.

The two responses above will determine if you should invest in Syndications.