All Forum Posts by: Cody J Leivas

Sounds like you know your risks. 

Go for it if it makes sense to you. Don't get over your skis but if there is excess capital in your investment, this could be a good way to make use of it. Lenders may make you put some new money in the deal as well, fyi. 

Good luck levering. 

Depends on your strategy. It should spell it out in the lease and typically the tenant is the one that needs to provide notice to exercise a renewal option. 

If you would like them to renew or extend, you'll want to be proactive. 

If you believe that the space would be easy to fill at a higher rent then you should wait to see if they reach out. If they pass the 6 month notice date, you will have more leverage and have the ability to begin marketing the space. 

Tom Calahan - Partners Bank of CA

I worked with him for 5 years. Him and his team can help. 

Principle paydown is for banks to make more money and will not help your returns compared to IO. 

If you were only to compare IO with principle paydown while keeping term and rate constant, the following is true:

- IO will give you more leverage over the hold period.

- As a percentage game, less equity means higher cash on cash return, more tax advantages, and a better rate of return. 

- More liquidity. 

The challenge is that the terms are never the same, so more analysis is needed. 

If you want to chat, message me, and we can get on the phone. 

I'll give you our buy box. 

@Amanda Nardo 

If you purchase an office or office condo, you can use an SBA 504 loan. It's a loan program that allows you only to put down 10% of purchase price. They will want to see some track record. 

You can rent out space as well as long as your business occupies over 50% of the property. 

Hello Chris, 

You have leverage in this transaction because the tenant is month-to-month. I think it would make the most sense for you and the new owner if you could negotiate a new lease before the sale of the business is completed. The new owner would be comfortable because they would be able to know the cost of running the business from this location. 

If you were to end the month-to-month lease, the business seller would have difficulty selling the business. It seems to me that you are vital in this transaction and should be working with both parties. The seller may try not to "muddy the waters," but you don't want to keep the business m-m when you could get a longer-term lease. The buyer will want to know this new cost. 

You can begin the process of ending the lease and put out an offer to lease the space at new terms. If the new owner guarantees the lease, you can request all the background needed. Before you take this step, I would try to see you all of you can get on a call and talk about the process and expectations in moving forward. 

Property Management typically costs 3-4% of Gross Rents. The property manager will charge to fill units or you can work with a leasing broker. The cost to fill the units varies from 3-8% (total rents for the term) depending on the size. The smaller units with shorter term leases will be more expensive proportionately. 

This has been my experience in the midwest. 

I work on a team of about five, managing about 90 industrial buildings in the Midwest for our investors. We have been having trouble determining what pricing structure we should have for the following:

Property Management - We have different pricing for our clients but have charged 3-4% of gross rents. (Our multi-tenant buildings typically get reimbursed by tenants) The scope of the work includes invoicing, bookkeeping, paying bills, oversight on light repairs and maintenance, and communicating with tenant requests. 

Asset Management - Banking/lending, entity creation/maintenance, accounting, taxes, and giving quarterly updates/distributions. We have not been charging for these items. 

Construction Management - We have not charged extra for managing general contractors and subcontractors on larger projects. We will get many bids depending on the project and work with the GC or subs to complete the job. I would say that this falls outside of the scope of a property manager, but please let me know if you would disagree. I would say an 8-10% markup on cost is fair. 

We have enough volume to raise our price but don't want to overcharge as we make the majority of our money acquiring industrial buildings for investors. 

What are the typical fee structures for Property Management, Asset Management, and Construction Management? Our average building size is 50-100k SF. 

@Tony Guarino

Hello Tony, 

I have the same background and was able to start a side hustle that become my full-time hustle. 

I don't know of positions like this but do know you can create a business around it. Message me.