1. I've reached out to brokers on a few listed complexes. I've noticed some have financials available on their site and some don't. I've noticed some are very open to sharing those and others wants an LOI. Are there any formalities here? Must I send an LOI before I can have the financials to even analyze the deal ? You'd think to not waste anyone's time they freely give those up. - So I would say from my experience the Seller a lot of times is the issue with getting financials uploaded. That being said the Broker could not list the property until they get them. Also some brokers want you to call them directly so they can try to get both side of the commission if they can represent both sides. Regarding the LOI that is a way Brokers weed out the tire kickers if you won't put in some upfront effort then they think you are not serious Buyer. I personally only require a NDA in more cases prior to financials, and that should be sufficient to get financials an LOI is not usually needed.
2. I will not be syndicating, but would my complex purchase fall under Strict SEC rules the same as a syndication? I have 2 investors that have been private money for us before on residential, can they be the down payment if the bank finances the loan and simple as that ? Rehab and refi after a couple years and pay everyone off? - In my opinion (not legal advice) if you know your investors well you should be able to use their money with out doing the paperwork for a syndication.
3. What’s the best way to find deals, are listings and loopnet the stuff everyone passes up ? I’ve heard pocket lists and trying to find the mom and pop owners. Find good Brokers in the cities you want to buy in, and get on their off market lists. If you allow them to be a transaction broker and make both sides of the commission you will find them much more friendly and willing to do more work since they know they will be getting a bigger check at the end.
4. What’s the best way to find an areas market cap rate in order to make sure the asking price is aligned? I’ve found brokers don’t easily give that info away either - Some cities publish the data online. I don't much care what the city cap rate is...I want a certain return for my money so if I am not getting that I am not doing the deal. If I am getting my return I am happy regardless what the Average Cap Rate is.
5. Is it normal for commercial property to sit listed for a year plus ? If they are over priced yes, if they are in the center of war zone yes, if they have a really bad listing broker maybe - but if they are in Loopnet they typically will sell in under 6 months if priced right.
Last one..
I've noticed that on Commercial MLS listings that Taxes and Insurance are not included in the expenses NOR their Cap rate listed on the MLS. I recently brought this up to a broker that didn't include the 13k taxes into the NOI and drastically lowered the CAP rate in which I thought, this property is too expensive , which is maybe why it's been sitting a year ? Any input there? Always do your own proforma - Never expect the information from a Listing Agent to be accurate. The listing agent's job is to sell a property, and a lot of them will give you rainbows and unicorns to try and sell a property. All the information you need you can pull from either a P&L or you can pull it offline in public data sites.
