All Forum Posts by: Derek Bell

Why aren’t more developers building commercial/industrial flex warehouses? It just seems like a no brainer to me, but is that me just being naive? 

I am a developer/builder. I am soon to start a 20k sf warehouse. Either I am just really naive, or plain crazy, but I think the flex warehouse market is great. It’s not sexy, but its good business. 

@Thomas Wright

Please don’t work any further on this venture. It’s way too ambitious. Start with a smaller project and work your way up. Trust me. I started years ago with small projects and worked my way up to the multimillion deals.

It takes one wrong move to lose your ***.

Dont get a partner on this deal. Just find another deal you can work in. Something around 500-600k.

@Vincent Pollitto

Get it rented first with reputable tenants.

Give them a few months free in order to raise the Noi.

@Bruce Woodruff

Unfortunately or fortunately, depending on how you see it, the requirements are not as rigorous in the state of Tennessee. The exam is tough but passable. I think the toughest part of being a start up contractor is having the connections with subs. That’s worth it’s value in itself. The stressful part of being a contractor is dealing with codes and permits. I enjoy being a developer, but I am starting to think I won’t enjoy being the contractor.

And, at the end of the day, is it really worth going through all of that just to save a 8-15% profit off the build.

I guess the answer is starting to look clearer.

So, I develop flex warehouses. Usually around 15k-25k sf with 6 identical units. I find the land, go through all the work w my builder/architect/engineer, get the property leased, then sell.

I may try to be the developer AND builder down the road. Don’t have my builders license yet. Don’t have the contacts like my builder has for subs etc.

I am just curious about other industrial/commercial developers on here and their opinions.

Is it really worth the savings and added stress of becoming the builder as well? Dealing with codes, subs, insurance, permits, etc etc

@Taylor L.

You are totally right. I don’t mind a 1031 buyer but I think it’s a little counterproductive on my side to get into a sales agreement that is really all contingent on the sale of his property.

I am wondering if I should:

A) just put my property back on the market to find another buyer

B)having them do a cash purchase and then they can do a reverse 1031 once their property sells

C)have them sell their property and then come back to me to buy my property. (If it’s still available) Then I wouldn’t have a contingency other than due diligence.

I have a question. Should I enter into a sales agreement for a property of mine when the buyer wants to buy my property via 1031 exchange contingent on the sale of his property??

If I do it will tie up my property for 4 months thus allowing him to back out during due diligence and/or if his property does not end up selling.

@Jordan Murrell

Sell it ASAP and never do a flip out of state. I would probably even look at putting it on the auction block.

why do you say that spec going up now is a bad idea. I am putting up a 15k sf steel fab in nashville. Price was not too bad but for sure a tad higher than the last one I bought. 

I bought a 1.3 acre IWD parcel in 2018, built a 15k sf warehouse in 2019. 
I will be selling the property this year. Will I pay long term capital gains tax on the earnings or will I have to declare the earnings as income and pay the higher percentage in federal income tax?

The business that I have set up that holds the mentioned property is an LLC in the state of TN.