All Forum Posts by: Eric Gleason

@Account Closed
That would be amazing!
Appreciate it.
DM sent.

Maybe I'm focusing too much on the going-in ROI (at closing).
I'm thinking that way because that's how I'll qualify with my local credit union lender.
Unless I look for other options.

Should I just focus on the stabilized ROI?
So long as the holding costs to get there are doable, then I should find a way to move forward.

Good call on building in leasing commissions.
I need to check on what's standard there.

Right, I don't want to fully value based on proforma.
If I need to get it there, I don't want to give it away on the buy.

I usually am more concerned with CoC.
My use of cap rate was a way to normalize the offers.
In my head, based on price, I have some different lending options available.
And at a certain point I run out of cash, and need to find alternatives.
My exit cap is more of a stabilized cap since I plan to hold long-term (I've labeled them above as "cap once fully leased").

I feel like if I went in at the $1M price to appease the DSCR 1.25 requirement, I wouldn't even be close on price (based on current cap rates, $/SF, and upside on leasing that much vacancy). Don't think that's realistic.

I guess I'm struggling with the going-in ROI against the stabilized ROI.

Thank you for the feedback, Abhishesh!

On market.
Doesn't seem motivated.
Near Boston.

Don't have that cash but you're making the wheels spin.
I should at least look into a hard money / bridge loan (and would need to consider this risk in a shifting interest rate environment). Is this question a thought at making the offer appear stronger? Offer more than DSCR would allow? Or some other rationale?

Vacancy rate 3.9%
No improvements needed.

Thank you for the feedback, Scott!

How should I craft a fair offer price on a 15,000SF industrial property that is 54% vacant (6 of 11 units owner occupied)?

At closing, 6/11 vacancies
$83,436 NOI

Once fully leased
$179,208 NOI

$1,000,000 Offer
If I were to qualify for a DSCR loan (1.25) based on current/closing NOI the offer price would be $1,000,000.
- 8.3 cap at closing
- 17.9 cap once fully leased
- $66.66/SF

$1,670,000 Offer
If I estimate that properties are trading at a 5 cap, then the offer price would be $1,670,00.
- 5 cap at closing
- 10.7 cap once fully leased
- $111.33/SF

$2,100,000 Offer
Seen similar properties go for ~$140/SF.This property is 15,000SF which would make it worth $2.1M.
- 4 cap at closing
- 8.5 cap once fully leased
- $140/SF

What ballpark should I be in?
Trying to rationalize an offer that's realistic for the market while providing upside for the work needed.

Any feedback is appreciated!

Try Rockland Trust (a MA bank).
They were able to do one for an investment property (note: property was in personal name, not LLC).
Did this about 1.5 years ago.