All Forum Posts by: Joshua Kaufman

 Thank you for the response. I can always go back to our attorney and ask for clarification on the language, but following your thinking, this is what I'm coming up with.

Days 6 - 10 would be $1550 * 18% = $279 / 365 = $0.76 per day. 
Days 11-EOM would be $1550 + 5% = $1627.50 * 18% = $292.95 / 365 = $0.80 per day.

I'm having an issue with rent collection from a commercial tenant. I offer an online payment portal to submit rent payments via ACH or CC - they "couldn't figure out how to use it" so I set us up to accept Zelle payments. To make things as easy as possible, I send a monthly Zelle request about a week before the rent is due. I'm still finding myself chasing them each month. 

The first few times, I didn't charge a late fee. That didn't help so now I'm looking to charge the late fee and interest as allowed by my lease. The least states:

"Tenant shall pay a "late charge" not in excess of five (5%) percent of the amount in arrears for each month the arrears remain unpaid if any Rent is paid more than ten (10) days after the due date thereof, to cover the extra expense involved in handling delinquent payments. In addition, all Rent payments hereunder not made within five (5) days of the due date shall bear interest at the rate of one and one-half percent (1-1/2%) per month"

The monthly rent is $1550 so the late fee is easy - I've set the account to charge 5% if the rent isn't received within the 10 days stated ($77.50). The interest calculations is where I'm having some difficulty. Is it a straight 1.5% on the monthly rent after 5 days ($23.25)? Or is it calculated daily and the base rent increases after 10 days when the late fee hits the account?

If it's the latter, is there an online calculator that can help?

I'm looking to purchase my first commercial building and am in the process of narrowing it down and making the short list of which properties to pursue. My question is what do I ask for from the seller in terms of documentation and paperwork so I can determine if it's the right opportunity?

I've been reading different threads and have come up with the following so far:

- Rent Roll and leases (leases should answer the question below)

- Two years of utility bills (water, sewer trash) and who pays them. 

- Financials: tax returns, P&L, bank statements. 

- Three years of CapEx and Repairs.

- All permits/inspections for any work done.

- List of problems with the buildings (doubt there would be complete honesty here, but worth asking).

- Insurance policy.

If anyone has anything else to add, I'd love to hear it. 

@Jeff Kehl - Thank you for the response. You're correct that my calculated cap rate is a best case scenario if I can fully rent the lower unit, which could prove difficult at it's current square footage. It's current layout and design also poses potential issues with subdividing it - and the fees and hassle of doing so are not something we're looking to incur.

I've also been doing the research you'd suggested and see that the potential rent I've run my numbers with is well within range of what's being offered in the local market. 

@Jessica Zolotorofe - The property would be 90% vacant when the lower tenant moves out. I'm not 100% sure on the zoning and what acceptable uses are, but that's definitely something I'll look into. The building seems to be in good condition, but of course I'd have an inspection done to confirm. The location is solid, directly off an exit of a major highway and within 5 miles of 2 or 3 others. 

There is a shared parking lot and common stairway and signage. But other lobby and entryways are private. I'm pretty sure utilities are metered separately, but can confirm that easy enough.

We are represented by legal counsel for all our business transactions. It's worth the money to have the peace of mind that everything was done correctly.

The lower tenant is offering a 6 month leaseback, though at a below market rate. They're also willing to take back paper on the deal. I'm not sure if either are appetizing enough but there are plenty of options on the table to utilize during negotiations.

My brother and I have a private/hard money lending company. We're hoping to expand our portfolio and are looking at a commercial building. This will be our first foray into the commercial world and I have some questions.

The building is about 5200 sq ft with 4000 sq ft on the first floor unit and 1200 sq ft on the second (walk-up) unit. The building is currently owned by both tenants (legal firms) and is being sold because the first floor tenant is retiring and moving out of state. The second floor tenant will stay and is willing to take a market-rate lease. Because of the owner-occupation, there are no leases to examine as far as type, escalation, maintenance costs, etc. Is there a "normal" lease type that we should use for the future tenants?

We're looking at a cash purchase since the property is in a flood zone and any financing will require expensive flood insurance. The tenant that is staying may be willing to take back paper on the purchase. Running the numbers based off average market rents in the area, the building is between a 5% and 7% cap rate based on the negotiated purchase price. I understand just enough about accounting practices to be dangerous, but I know the cap rate can be effectively increased by depreciation, etc. Considering that we're in the Northern NJ area, is this worthwhile?

We're worried that 4,000 sq ft is quite a large space and as it's laid out, it's not easily divided. Any build-outs would come with some hefty costs. The broker feels she can rent it, but I can't imagine her saying otherwise and pushing me away from buying the building. Has anyone had experience with renting spaces on the larger end?

Thanks all - I appreciate the insight and help!

Here's the scenario:

I'm a licensed real estate salesperson in NJ. I also have a real estate investing company where we purchase a small 2-unit apartment building and partner with a contractor to convert them into 2 condo units. "We" is an LLC that has 2-3 members, of which I am one.

The contractor handles all the permits, drawings, work, etc. and then chooses the listing agent when the units are ready for sale. Another one of our LLC members signs off on the listing and I send a Referral Agreement to be signed. I receive it back from the agent with his signature only - no broker signature. This is my first referral agreement, so I don't know any better.

Fast forward a few months later and one of the units sells. I email the agent that I had the Agreement with and he tells me he's no longer the listing agent but another agent in the same office made the sale. I contact the broker, who is different from when the agreement was made, and she says that the Referral Agreement terminates with the listing agent and since it wasn't the original agent that sold the property, I'm not due any money. 

It's my understanding that the Referral Agreement is with the broker since it's their listing, not the agent's and that the agreement should be honored even though it wasn't signed by the broker in the first place (oversight on my part for not catching that). If it were a few hundred dollars, I wouldn't be chasing it, but this is quite a bit more that would be landing in my pocket.

Your thoughts? Thanks!