All Forum Posts by: Ken Naim

@Dale Hanson the formula for cap rate doesn't change across asset class. Its NOI/ purchase price. What a good cap rate for a mixed property is up to the beholder and area.

@Loren Thomas I'm not familiar with the area your in, but id look for a warehouse district in a not so good part of town where you can either rent a small space or share a space with someone.

@Mrunal Panchal 10% cash on cash is achievable, 100% passive less so. I'm in contract on an office building that has no deferred maintenance and just needs some lease up, 16% vacant. Coc is close to 15%. With $6m you may need to purchase several properties especially if you need to replace debt as well.

@Ryan Ivemeyer Possible yes, but not every lender will accept it.

@AP Horvath large short term rentals

@Marshall Smith dont discount sign in front of the property, Facebook local groups, Facebook paid ads, and craigslist. They work. Get them in the door then validate they meet your criteria.

You can also target business you'd want as tenants. Contact the owners directly and make an offer.

@Nathan G. I did a $200k reno last year. The architect cost $3,500. It really depends on how much time the architect needs to put in and if you choose a big firm, or an individual and your needs are. A $200k sea wall vs. a $200k condo reno will have very different architect costs.

@T Jones you need to get in contact with thier location scouts. I haven't done it myself, but my agent has direct contacts for 7-11 and others. Not sure about t-mobile but he has access to several websites where sites can be submitted as candidates.

Sites can be submitted as build to suit, ground leases etc.

7-11 will draw up thier own plans and will guarantee a certain cap rate post construction, give you a few builders to choose from.

I don't what market your in but try some local commercial brokers and ask if they have direct contacts.

If your in Florida I can refer you to my agent.

@Joseph Lyons if you plan on refinancing soon after the rehab a shorter term loan is the way to go. You want the loan term to be inline with your exit strategy. Most commercial loans have prepayment penalties and sometimes they can be substantial depending on how they are calculated and the current market rates.

Without a prepayment penalty I'd take a loan option that is the next one down the list from your plan. So if you think the rehab will take 18 months and are considering a 3yr loan, take the 5 year option. Life happens and things take longer than expected, rates fluctuate, bank become more conservative, so it is good to be covered for a little longer.

With prepayment penalties you have to do the math and make sure you can live with the penalty in various scenarios.

@Brad Birky loopnet will have contact information for the listing broker or you can have your broker reach out to them.

Commercial real estate is valued 3 ways. Based on the

1. Net Operating Income, NOI

2. Sales comps

3. Replacement cost

Short term rentals are part real estate investing part business, so it is a hybrid model. Pricing a str based on the NOI will have you overpaying as business typically sell for less than real estate for the same NOI as it is much more active. Also str can vary widely between the off season and season. Price based on ltr with a premium but make sure it makes sense if the str doesn't work.