All Forum Posts by: George S.

@George S. - I own a Triple Net Industrial and I will say a few things that I don't believe have been covered yet:

(1) Anything NNN in Industrial or Retail you have to be a sector expert for the prospective tenants. You have to KNOW their business. SWOT. I just came back from an investor summit where every syndicator who does retail NNN (including small markets you're looking at) made an extremely compelling case for the strength in retail vs. what the news is covering. They're having a hay day because everyone thinks the market is collapsing and it's creating massive buying opportunities. They know their tenant as well as anyone. I think there's incredible opportunity for triple net from a cash flow (and overall return) perspective however I think it takes a very experienced sponsor or investor to do them well and with extremely conservative underwriting standards.

(2) ST cash flows are more supportive than some traditional MF and due to the LT nature of the leases, you don't always have the turn and burn you get in MF. What I mean is MF investors typically like to get in and get out. That creates capital events, paperwork, hopefully profits but then taxes if you don't complete an exchange. 

(3) I second the cap rate comments (way too low) and I'd second shopping other syndicators or fund managers and get a better handle of the industry at large. 

Best of luck to you. 

@George S. - I own a Triple Net Industrial and I will say a few things that I don't believe have been covered yet:

(1) Anything NNN in Industrial or Retail you have to be a sector expert for the prospective tenants. You have to KNOW their business. SWOT. I just came back from an investor summit where every syndicator who does retail NNN (including small markets you're looking at) made an extremely compelling case for the strength in retail vs. what the news is covering. They're having a hay day because everyone thinks the market is collapsing and it's creating massive buying opportunities. They know their tenant as well as anyone. I think there's incredible opportunity for triple net from a cash flow (and overall return) perspective however I think it takes a very experienced sponsor or investor to do them well and with extremely conservative underwriting standards.

(2) ST cash flows are more supportive than some traditional MF and due to the LT nature of the leases, you don't always have the turn and burn you get in MF. What I mean is MF investors typically like to get in and get out. That creates capital events, paperwork, hopefully profits but then taxes if you don't complete an exchange. 

(3) I second the cap rate comments (way too low) and I'd second shopping other syndicators or fund managers and get a better handle of the industry at large. 

Best of luck to you. 

@George S. 

I like triple net lease properties and have them in my portfolio. However, as a conservative investor I would not be comfortable with holding just one (or even two), because if one of them goes dark it will have a substantial hit on your returns (and may possibly negative if you have retenant). Personally I like to invest in the asset class through a diversified fund. There is one that I am invested in that markets under 506b so they cannot publicly advertise. But the portfolio has hundreds of properties across the US, the principals have full real estate cycle experience in the asset class, and it's the only private REIT that I know of that has an investment grade rating. If you want more info on them, PM me.

George I believe you have e-mailed me and I sent a response back. I have certain requirements before I work with an investor and take them on as a client.

I can tell you in a nutshell the difference between what I do which is not typical in the industry and what the commercial real estate industry does in general.

Unless an investor is in the trenches day to day they do not know how things operate. Let me pull back the curtain some.

Typical brokerage model is they are LISTERS. They list everything under the sun whether that is a good,bad, or crappy property. They set up teams of brokers/agents. So if commission was 100,000 to the listing side on a transaction 50k generally goes to the brokerage then the other 50k is split among usually 3 people on the team. Top person gets maybe 25,000 and bottom person 8,000.

Conversley when I close a deal representing a buyer exclusively and it is my company I keep it all. Those listing agents have to run really hard on that hamster wheel 4 to 8 deals to equal my ONE transaction. This is why listing brokers typically send a property and say (what do you think?) They really do not have time for anything else as they represent the sellers. Most want a REIT, fund, or syndicate to buy because these seasoned buyers already have their own process to purchase. The listing broker says here is the property go under contract and do your thing. I will check back in 3 to 4 weeks to see if it closes or falls out etc.

The commercial buyer broker specialist has a whole network for that buyer of retail property management companies, 1031 exchange companies, vendors for reports (environmental phase one, appraisal, property condition report, ALTA level one survey), capital markets lenders, commercial retail attorneys, proprietary on and off market properties nationally.

When  a buyer wants a commercial broker to evaluate properties using their knowledge for guidance they have to make an exclusive commitment to that broker.

Some of my friends run listing brokerages and have meetings every week with junior agents and then do tons of listings at reduced commissions to try to make it up on volume. Head person at the company might be pulling in 800k to 1 million a year or so after splits and expenses.

I choose to work on the buyer side as I enjoy that more. Contrary to what some might believe listing brokers do not really want to deal with buyers. They do not have time to hold their hand and give them all this intensive information and help. They make so little per deal they do not have time for that. That is why the listing brokerages love someone like me. They know I have a reputation and system for helping the buyers and they only have to interact with me which makes their life easier and they know I have already qualified the buyer  and they want to know I work with the buyer exclusively.

Nothing sends off FLAKE signals to a listing brokerage or owner directly faster than hearing a buyer is all over the place who they are working with and what type of asset they are buying. The brokers want a buyer with FOCUS, CLARITY, COMMITMENT.  

George I believe you have e-mailed me and I sent a response back. I have certain requirements before I work with an investor and take them on as a client.

I can tell you in a nutshell the difference between what I do which is not typical in the industry and what the commercial real estate industry does in general.

Unless an investor is in the trenches day to day they do not know how things operate. Let me pull back the curtain some.

Typical brokerage model is they are LISTERS. They list everything under the sun whether that is a good,bad, or crappy property. They set up teams of brokers/agents. So if commission was 100,000 to the listing side on a transaction 50k generally goes to the brokerage then the other 50k is split among usually 3 people on the team. Top person gets maybe 25,000 and bottom person 8,000.

Conversley when I close a deal representing a buyer exclusively and it is my company I keep it all. Those listing agents have to run really hard on that hamster wheel 4 to 8 deals to equal my ONE transaction. This is why listing brokers typically send a property and say (what do you think?) They really do not have time for anything else as they represent the sellers. Most want a REIT, fund, or syndicate to buy because these seasoned buyers already have their own process to purchase. The listing broker says here is the property go under contract and do your thing. I will check back in 3 to 4 weeks to see if it closes or falls out etc.

The commercial buyer broker specialist has a whole network for that buyer of retail property management companies, 1031 exchange companies, vendors for reports (environmental phase one, appraisal, property condition report, ALTA level one survey), capital markets lenders, commercial retail attorneys, proprietary on and off market properties nationally.

When  a buyer wants a commercial broker to evaluate properties using their knowledge for guidance they have to make an exclusive commitment to that broker.

Some of my friends run listing brokerages and have meetings every week with junior agents and then do tons of listings at reduced commissions to try to make it up on volume. Head person at the company might be pulling in 800k to 1 million a year or so after splits and expenses.

I choose to work on the buyer side as I enjoy that more. Contrary to what some might believe listing brokers do not really want to deal with buyers. They do not have time to hold their hand and give them all this intensive information and help. They make so little per deal they do not have time for that. That is why the listing brokerages love someone like me. They know I have a reputation and system for helping the buyers and they only have to interact with me which makes their life easier and they know I have already qualified the buyer  and they want to know I work with the buyer exclusively.

Nothing sends off FLAKE signals to a listing brokerage or owner directly faster than hearing a buyer is all over the place who they are working with and what type of asset they are buying. The brokers want a buyer with FOCUS, CLARITY, COMMITTMENT.