All Forum Posts by: Pat G.

Xanah:

Congrats on the opportunity. I would first call around the commercial brokers in the area to see who works with franchises such as burger joints, etc and tell them what you have and get them to come out and give you their "professional" option on the parcel. Have several brokers do this to get a good idea. 

I think 1000 SF is small for a fast food, I know that a Biggby Coffee requires at least 1,500 SF or more. Also, make sure that there is enough room for a drive thru, most fast food or coffee places require that. (makes your parcel more desirable.)

Get the daily car counts for the street you are planing on building. That will help sell the project. Go to your counties road commission website or call them and ask for the daily car count. I had to do all this and more when I tried to sell off an out-lot when I owned my strip mall. You may also have to get a architect to draw up plans so that the buyer can visualize what they are buying. 

What you want to do is get a franchise to agree to take the space before you sign the PA, make finding a tenant contingent on that. Unless you can afford to do the building and hold for several months while you look for a tenant. 

Good luck and keep us posted on progress.

Pat Gage

Matthew:

Over the years I have owned 2 billboards. Neither of them were digital but both on main road ways with great daily car counts. 

In my experience most of the ones I have marketed to are not on an easement (separated from the main property it is on.) So what I did is drive around and got the address of where the billboard was located and mailed the owner of that property. 

As far as returns, that is really up to you as far as what type of return you want each year based on the cash flow that the billboard throws off. 

In my experience the current owners don't push for the max they could get from a cell tower of billboard because it usually not their primary business, just a extra income source.

I would research your State Laws on billboards and see what you can and can't do first. I know here in Michigan they are not allowing any new permits for billboards, last I checked. And then if you do find an owners who wants to sell you their sign, you have to make sure that you can get an easement (separate parcel ID for the sign itself) from the other property it is one. Now, if the property has a mortgage on it, getting the mortgage company to break that part of the land off the mortgage can be a trick.

The cash needed to invest varies, based on the seller and what returns you want to obtain. I paid several hundred thousand dollars for both of mine. I don't remember the exact numbers, sorry. 

Also look for billboards owned by companies like Lamar because they typically will pay a higher monthly payment. 

To find them: Check out this site for a place to start building your list of signs. Check those for sale as well as lease. http://www.outdoorbillboard.com/ and drive around your area, mostly by freeways and obtain addresses. Then go to that city/town's online property tax lookup and find the owner from there. Now, most of the properties may be in a name of a LLC or Corp. so from there go to your state's corp lookup to get the owner of the corporation.

Hope that was not overload. Let me know if I need to cover anything more. 

Hope that helps,

Pat Gage

Pavel:

Thanks for the video. Contact the Economic development for your town and ask them along with the Chamber of Commerce. Both would know what new businesses are coming or thinking of coming into town. 

As far as the roof, either you fix it or the buyer is going to get a reduction your choose. No way around that. I would choose to fix it myself to save money. 

Good Luck,

Pat Gage

Mark:

Get a real estate lawyer in your city and ask him. If he has not done exactly what you are looking for he has his network to pull from. I am guessing here but unless you own your office building you are then leasing from the owner, and then you would be sub-leasing to the people who are wanting space. 

You have to get the wording correct because "professional tenants" will take advantage of you in court. 

Hope that helps,

Pat Gage

Rob:

I agree with @BrandonHicks. You need to find out where the Sales Price came from, a listing from a broker, a pie in the sky figure, or what it was worth several years ago. 

If you explain your offer to the seller based on numbers, they will either agree and ask for a counter offer based on the numbers, or they will think you are crazy and walk away. If they walk away, that is OK because you didn't get yourself into something that you will stress out about for a long time. Ask me how I know that??!!

We also have not covered the Debt coverage ratio that the banks are going to be looking for of 1.25 when you finally cash the seller out in 3 years down the road. 

Again all these figures or indicators will be shown with a good deal analysis software. It is hard to give you pieces of advice without all the information, but we all tried.

Rob:

Congrats on opportunity. when dealing with multi-family here is a quick formula learned.

Put in a vacancy factor of 10%, expenses at 50% of rental income. So given your numbers it looks like this:

5250 x 12 = $63,000

Vacancy 10% = $6,300

Expenses @50% = $31,500

NOI= $27,900

Now if the expenses that they gave you are higher use their number. What Cap rate is it advertised at? You can take this NOI figure and determine the value with this formula:

Value = NOI/Cap Rate (Their Cap Rate) - for this you would use the new NOI as figured above. I can guarantee that they didn't show a vacancy or if they did they said 3% or lower.

Don't shop this around to every bank, as each time will be a ding on your credit. Try to raise private money for the down payment. The seller is your bank, and then in 3 years when you do go to a bank you will have that experience and track record and the bank will fight over you. 

Do you have some sort of deal analyzing software from the likes of a Dave Lindahl, Lance Edwards, Michael Blank, or Ron LeGrand. If not you need to get one quickly. Lance specializes in small apartment buildings so if you are going to stay with that he may work for you. What the software does is lays out all the needed information in one place. Dave has been around for a long time and was trained by Ron. I think Dave is up to 7000 units.

Also, with those courses they would give you a due diligence checklist to start with. There is too many things to look for to list here. 

Anyway I hope I helped more than confused. To start use these simply formulas to get a better read on the deal. Keep me posted, here to help!

Pat Gage

Eric:

Congrats on the success so far. I don't think you need a commercial real estate coach, you need somebody whom has a successful rental business. You are going to need a property management company to manage what you are trying to do, that typically doesn't fall under commercial. 

I don't know anybody off hand, but maybe check your local REIA for somebody. You can as well check rent.com or other rental sites and search for houses for lease/rent and then notice the companies that are coming up more often and then contact them.

Good Luck,

Pat

@Dominic Lucarelli

Sounds interesting. I would go to the City building department and see what the property is zoned first. Sometimes when the Govt. does things they over-ride local law or it was built before certain laws. Ask the city officials what they would like to see in that space to get an idea of what they would "approve". Make sure the building is not historical in nature which would limit your use. 

What are you planning on putting in there? Retail and what kind? Is there a need for retail in that area? "D" markets are a hard sell for anybody but local retailers, small mom & pops type of stores. 

Pat

Nicole:

Welcome and you have taken the correct first step. As @RichardFields stated gain some knowledge about being a landlord from BG as well as your local REIA of Real Estate Investment Association - clubs that meet in your area that you can attend and talk with other landlords and get the skinny about the biz. Also can learn about what works in your area.

Good Luck

Pat

Brad T.

Thanks for the response. The game plan is to increasing the marketing, raise rents, increase capacity and sell in 5 years. 

George:

Thanks for the response and input. Congrats on your opportunity, please keep me posted on how it goes. 

In a Master Lease with Option to Purchase I would lease all property from the owner and then turn around and sublease to all the tenants. In a Master Lease I would not have equitable title.

Thanks guys