All Forum Posts by: Dan Hennessy

Thanks all for the great advice

Greetings, I am looking at a multi state portfolio deal for single tenant medical office buildings. The locations are Ohio, Texas, and South Carolina. Does anyone have a referral for a real estate law firm with representatives in these three states?

Hello Vu,

If I were a new investor with 100k in capital I'd identify a submarket in my area and look to acquire 1 or 2 multifamily properties with a BRRR strategy, with caveats.

Develop local knowledge of the market through broker relationships and also property managers. I'd opt for a BRR strategy that requires relatively light rehabbing (no gut renovations) that could reasonably force appreciation and attract tenants. I would look for cash-flowing properties that I could outsource the property management and use my time and energy to building the relationships and strategy to scale my operation.

Take the first action, but balance with patience! Best wishes

I own 2 older properties in Worcester, MA, built in 1895 and 1923. For the 1895 property, the electrical was updated, slate rook in ok shape and foundation sound, yet it has asbestos shingles, an old oil boiler wrapped in asbestos, and lead paint. Going into the transaction with eyes wide open and, have thorough inspection and to maintain adequate reserves for the "unexpected." is critical

Great discussion thread. I've found that the valuation is a mix of the tenant, the lease, the property and the sub-market.

I agree with the comment earlier that "pay up or get out" is the wrong attitude. Being proactive about communicating both expectations, but also what are the options tenants should explore i they are having issues coming up with rent. This has worked well so far with 100% collected in April, 100% May (with 2/6 MF tenants delaying), 5/6 in June. I'm expecting tenant to pay by end of month.

My medical office CRE tenant has been on-time like clockwork.

Investment Info:

Office Space commercial investment investment in Dallas.

Purchase price: $28,300,000
Cash invested: $150,000

Portfolio of 10 dialysis clinics

What made you interested in investing in this type of deal?

MOBs are my focus. After the basic needs of food, water, and shelter; healthcare is not too far behind as a fundamental human need in the modern world. During the 2008-2009 financial crisis, 78 REITs cut or suspended their dividends and the normally low volatility REIT sector saw a peak decline of about 70%, worse than the S&P 500's decline of 57%. Medical Office Building REITS, however, only declined by 5%.

How did you find this deal and how did you negotiate it?

Networking

I’ve refinanced 2 multi families in Worcester with Penfed. Pretty easy to work with, just go to the website & with a little bit of digging you will find this product.

@Johnnie Hawkins

So many greats already mentioned, try the 4-hour workweek by Tim Ferris for a book that will change your perspective

Investment Info:

Office Space commercial investment investment.

Purchase price: $1,400,000
Cash invested: $400,000

Stable investment grade asset
Strong tenant with solid operational metrics at site
Built in 2005, the building has good bones
Long-term lease with extension options
Outstanding Location in Close Proximity to Centra Bedford Memorial Hospital
Property sits on 3.35 Acres, opening potential development opportunities

What made you interested in investing in this type of deal?

Having spent 24 years in the biomedical field and 11 years investing in RE, Medical Office Building Real Estate is a way for me to merge my passion for healthcare, bringing new technology to patients, along with real estate. As a first foray into CRE, a credit rated tenant with a long lease term provides stable and passive cash flow, income preservation, and all of the IDEAL benefits of owning real estate.

How did you find this deal and how did you negotiate it?

Working with a broker who specializes in medical office building CRE

How did you finance this deal?

A lender

How did you add value to the deal?

The potential value add lies in potential to sub-parcel 1.5-2 acres of land.

Lessons learned? Challenges?

The lessons learned is that there are certain aspects of real estate that you need to "learn by doing." Before partnering or syndicating MOB deals, it was important for me to do a deal soup to nuts from acquisition to underwriting, to on-site property inspection and meetings with clinic staff, along with the town zoning board officials. I had to put a team together: broker, lender, legal, and they did not always see eye to eye. I've learned a lot through this process.