All Forum Posts by: Damon Pendleton

We closed on a property last year and the lender asked for this. This was a local bank I wanted to build a relationship with so I agreed, plus they gave me a great rate. Fast-forward to a year later and they sent me 2 emails which I ignored until I had time (figured what would they do if I always pay my mortgage on time), then when I had some time I emailed them 2 docs. Easy enough. But the rep’s first question when he responded to my email was “are you working on anything we can help with?” which started another conversation. Not saying it’s right for your situation but it wasn’t anything that bothered me.

Hello my friend, as you know, strips can range from $500k to a $100MM+. The fundamentals of real estate investing apply to all of them. Start with Income - expenses. Also know your leases backwards and forwards. The loss of one lease can crush your cash flow if you have a business serving as an anchor (on a big scale think Toys-R-Us). And of course location is always important, but especially unforgiving in retail. Try to accurately project future maintenance cost and repairs because those get very costly on commercial properties, even the small ones. I don’t know any gurus but best of luck to you if you decide to make a play on a strip!

Aaron, I agree prices are high, sellers/brokers can be ridiculous on the prices, and some buyers are overpaying for properties, so it makes it all okay. Every buyer is not purchasing for the same reason so some might "overpay" and it still make sense for their situation but not yours (or mine). You can't really worry, or even compete, with buyers that don't require a decent return. But you are still doing the right thing. Continue to analyze with the caveat that an asking price is just an "asking price". We all see pro formas with numbers somebody pulled out their arse and those arse-numbers are used to support their inflated asking price. Your analysis will show at what price the property makes sense. It's fine to write an LOI based on the real math that make sense. Find that number that makes sense, go after that number, and if you don't get it, cool, next.

I was just on one of their sites the other day and it had a long list of lenders. 

Hello Vince and welcome. You should pay what something is worth, the asking price is irrelevant. Yes, it is very common for sellers to put property on the market with wishful numbers. It's also common for buyers to overpay for real estate. So you should be focused on staying disciplined to your investment criteria, whatever that may be. Good luck!