All Forum Posts by: Gabriel Graumann

Costar is the Goliath of the commercial property and company data. Solo brokers at a boutique may pay up to $650 per license, while those with bulk pricing at a major commercial firm can get it for under $400 per license. Crexi Pro has added features to their platform and the data is getting better, but it's no Costar yet. Yet, for the non-broker investor, what you can get off Crexi is likely a better option for most investor budgets. A few lesser names out there like RealNex have some features, but honestly didn't find much value there outside of their listing platform if you're an active broker in that space.

@Account Closed I would approach the tenants on either side of the vacancy and offer them the space at a substantial discount on a term matching the balance of their current lease. Elbow spaces are typically hard to lease if they don't benefit from additional frontage along the center. At 1,300 sf the space is too small to get frontage and visibility is the worst for these spaces, and nose in parking directly in front is often not available either (not sure if that is the case for your center or not. Ultimately, pricing wins the day, so at a certain price it'll lease. Canvas nearby centers for tenant's in elbow spaces and try to entice them to your building (since it sounds newer) with a TI package in-place.

@Nicolas Lam I love posts like this, 3 years old and still getting messages posted to the forum! I've represented commercial buyers in Kennewick and other Tri-City and Eastern Washington towns like Wenatchee and Spokane. Lots of potential in each of those locations depending what your investment goals are. I've seen some really good hotel/motel conversion to MF properties in Spokane lately, retail value-add in Tri-Cities and Wenatchee. What is your group looking for exactly?

@Loren Howe I love the post and your sharing of the process you went through. As a commercial broker and asset manger of 20+ years, along with personally investing in the space, I completely agree with finding the right broker. It makes all of the difference. It still amazed me how few real estate brokers, residential and commercial, simply do not answer their phones or reply to emails/text messages in a timely manner, if at all. And this is from a broker often representing a very well qualified and interested buyer of their property. The reality is, the 80/20 rule is still a thing in the brokerage world, and frankly there are thousands of lazy brokers out there in both sectors of real estate. This said, there are good people too that understand the challenges of the process and help investors navigate these waters. I know I'm one of them, but that was how I was mentored to be 20 years ago.

As for finding good deals, yes, you can find "pocket listings" and deals that stay somewhat in house, but that has more to do with the brokerage you're working with. In general, the major brokerages are somewhat greedy and they would prefer to keep both sides of the commission "in house", so before any new listing is posted to a site like LoopNet, Costar or Crexi, it is passed internally to every other broker in the office and then within the intranet for that company, to see if anyone has a party to do the deal with. This can remain the case for several months in some brokerages before the deal sees the open market. However, the listing agreement for any property type would dictate if this practice is allowed or not. What often happens in more of a "I have a client that would be willing to sell at ____ terms/price but he doesn't want to formally list the property, does anyone have a buyer for something like this?" That message gets passed around for months and eventually a deal is made in house. While I prefer to see properties hit the open market as that's often where the most value is realized, I have seen deals that made sense for all the parties involved that did not hit the open market.

For returns, commercial investments do operate differently than residential, and the primary difference I see is the emotion vs. numbers of the deal. SFH deal with schools, jobs, paint color, yard size, etc. All emotional and feelings conversations. Commercial deals focus on the numbers, location in terms of population density and logistics, quality of construction, etc.. Nothing wrong with either type, just very different "tenant" mindsets to deal with after the deal is done. I've found great residential brokers/owners/tenants and absolute jerks. The same for commercial brokers/owners/tenants. There is more due diligence to perform for commercial as there are can be a different type of lease for every tenant in a multi-tenant building, despite the spaces appearing identical from the outside. Lease language and terms often dictate how the center operates and the types of new tenants can join when a vacancy occurs, so read every line of the leases prior to purchasing anything. Good luck on your journey, happy to connect if that is helpful to you in some way!

@Jackson S. if this is a large hedge fund that is publicly traded, then they are working with numerous brokers and wholesalers alike to find and acquire deals. Have a solid NDA/buyer representation agreement on hand that is sent in advance of any deal you send to them. This document will memorialize the terms of your agreement, what your fee is, what your involvement will be, and dates for everything. More than anything else, you have to show you were the first one to show them the deal and that you had a pre-committed agreement and fee for bringing them the deal. If I were you, I would be marketing the same deal to numerous buyers in case the first one walked and you're on a timeline for wholesaling it. Good luck. Happy to connect if helpful.

@Jef A. The first question I ask of every investor, regardless of the amount or their experience level, is "What does your money need to do, how soon does it need to do it, and how involved do you want to be along the way?" How you answer this should direct you to the right investment vehicle. For instance, if you tell me the entire $100K is going to be needed in 2 years to be the down payment on your primary residence", I'm going to advise a different investment type than if you tell me "the money only needs to return me an annualized 8% gain, I don't need the money for at least a decade, and I want zero management or oversight." Two totally different scenarios and very different investment types that you should be considering. The "what" you buy is determined by the "why" of the investment dollars. Start there first. Happy to connect and talk through this in more detail if that's helpful, you can send me a DM or connection request if so.

@Charlie Brown Great question, and love to see you jumping in to an industry I've been part of for 20+ years! To clarify though, when you say "diving" into commercial real estate, are you referring to a career path or as an investor? Very different answers to your question depending on the answer to this one.

If for a career path, I would agree with @Michael K Gallagher and find a brokerage that is actively doing deals, has a property management division in house, and has brokers covering each of the key market segments - multi-family, retail, office, industrial and land. This will give you the opportunity to see how each of the disciplines are unique and different, and profitable for the time invested, and allow you the chance to decide which segment to become an expert in. I made the mistake of not specializing early and was more of a generalist for several years. While this gave me a good understanding of a lot of different asset types, it didn't make me the "go-to" person in my market for any one type, which ultimately hindered my growth for a season. Once I made a segment my focus, my growth and deal flow as a broker really took off.

If your goal is to be an investor, and you have a career outside of real estate, then I would focus on educating yourself on the different asset classes. There are pros and cons to each, and market cycles effect each differently, as does the metro you are in. Identify what you have to work with and which asset class gets your money working the way you want it to the best and go from there. Plenty of publications and journals to read on this, along with books and other print media. You can take courses such as the CCIM program to become an expect in running the numbers on deals if that is your goal, but you could also leverage others that are already experts in your preferred asset class to do the due diligence for you. Good luck and happy to connect if helpful.

@Sachin Amin based on the push back from the lender, it sounds like this is vacant land that you intend to develop into a multi-family building. Is this correct? There are numerous lenders who could get this deal done, assuming the financials check out, if they are already built and have tenants occupying them. The zoning wouldn't come into play.

So assuming this is dirt and to be developed, I agree with the poster who suggested that the highest and best use is likely a commercial oriented use. Look up and down the street it's on, who is next to you and what's missing? Find the type of tenant/business that makes the most sense in that area and build accordingly. Hopefully you're working with an industry pro in that specific market to guide you through this process.

@Camy Kwok Not sure how far along you are in this process already seeing how the initial post was 3 months ago. The question of "can you" related to all of the LLC and structure questions appear to have been well answered already. The questions I would be asking now are the "what" and "where" you should be investing with the 1031 exchange proceeds. When I'm working investors the first question I ask is: "What does your money need to do for you, how soon does it need to do it, and how involved do you want to be along the way? The answer to this question will take into account your mother's goals on how the money needs to work, transition plans in the future, risk tolerance, asset segment preferences (retail, industrial, MF, self-storage, etc.), and many other factors. Happy to connect with you to talk through some of these things if that is helpful for you or her.

@Charlice Arnold good question. I'm in the retail sector, primarily value-add product with a great location but poorer performance than the market average. We evaluate the asset off the current cash-flow, building condition, performance compared to peers, rent rates compared to market, and overall health of the local market. We target properties that meet the location and density requirements but have weaker financial performance than peer properties. Financing is always a factor, and we've had the best success lately with assuming in place loans and restructuring the terms following the turnaround of the asset. The same is true for owner-financed deals on a shorter term note, in the 3-5 year range.