All Forum Posts by: Paul Smythe

Doesn't hurt to reach out to a Broker and get an opinion of value, which is free. Whether you list it or they do, though, depends on your level of expertise in my opinion.

I'd think most offices can't be converted to attractive multifamily in a cost-effective manner. Hotels would be a more natural conversion, but even then you'll have a multitude of issues (zoning, location, conversion costs, hotel demand in your market) and it's probably not worth it.

Commercial tenants typically pay their utilities, but for this building it sounds like there's so many tenants that it would be a nightmare to handle billbacks. An all-in lease rate makes more sense from what I'm gathering.

The space you're looking at just depends on the numbers. I assume either you're looking at a larger building or it's an office share-type arrangement where individuals and small businesses are renting small offices/suites/desks. Either one can be attractive because you've got a lot of tenants, so your risk is spread out and it's not all dependent on one major tenant (I'm assuming).

Current office trends are a little worrying if you're an investor. There are signs of the market picking back up, but the general thought is your typical office user is going to want ~20% less square footage now than they used to if we're looking into the future. Doesn't mean offices are a bad investment, but people just aren't coming to the office like they used to. That could change over time, but a lot of companies are probably only at 30% capacity relative to their pre-pandemic levels.

That shouldn't scare you from buying entirely because what matters most is the terms of the lease and the credit/security of the tenant. That's where the building's value comes from. Vacant offices are now much more risky than they used to be. Could be some opportunity to buy at a discount if the office comes back strong. I'm pretty sure we're at the bottom of the office market right now and my theory is that it will recover. Question is how much it recovers compared to where it was at before March 2020.

Admittedly not even close to an expert in golf courses, but I bet Scott is right here. The lots are probably going to be worth more as buildable lots. Obviously a significant negative impact on the homeowners. To me, the effort on your end is two-pronged.

#1 - I'd assume the zoning dept would ultimately recognize the significant negative impact that rezoning would have, but you should fight them tooth-and-nail on it. There's a very real housing shortage, but I can't imagine they'd allow nearly 1500 existing houses to tank in value by effectively erasing the golf course. That's not ethical development/zoning in my view and shouldn't be allowed.

#2 - I don't know the price of the golf course, and it's basically guaranteed to be a major headache in terms of ownership/HOA coordination (maybe do a special assessment and the HOA purchases ownership of the golf course?), but I think you have to at least consider purchasing (assuming the Seller & developer don't already have a signed contract). Probably wouldn't be too hard to raise funds considering these are individuals who own real estate on a golf course. Does the HOA not have an email/mailing list? Best to reach out to as many homeowners as possible. If all 1452 homeowners were made aware of this situation, I bet you'd raise the money in a heartbeat.

Either way, you've got close to 1500 people who stand to lose significant equity in their houses if this goes through. Your best bet is to mobilize them somehow, either to stop the zoning or to purchase the land. The complexity of a purchase makes my head spin just thinking about it, but you might not have any other option if the city doesn't end up stopping it.

Some of the major Mexico markets are crazy. Same with the El Paso's in the US. Warehousing is unbelievable right now.

It's like a hot residential market in some areas, companies making offers to lease sight unseen in the craziest markets. Not saying it's impossible, but you're going to have a really tough time as a small guy competing in those markets (unless you find a specific, non-standard niche in warehousing). Don't let it stop you, but get ready to really fight. Plus you'll need to have some real money to throw around.

Respectfully, I don't believe the financial picture (personal or the property) you've outlined is even close to qualifying for an investment like this. As has been said, the income (3 cap, at best) doesn't come close to justifying the price. Regardless of the upside, I agree with the pipe dream comment. Way, way too much risk for a lender.

@Russell Brazil I don't disagree, but I think any investor with any experience at all will quickly "pass by" the rookie podcast, though I'm admittedly not a regular listener of it.

I've been an on again, off again listener of the BP podcast for many years as I've developed personally and professionally. It's been one of the best sources of information and inspiration out there for real estate investing as far as I'm concerned.

I've recently started listening again, and it feels like the recent episodes are a lot more focused on how successful Brandon and David are and how they're focusing on building their empires even more. The information is more on team managing (and, if I'm being honest, rich people problems) than real estate investing it seems. It makes sense why it's happening and I'm sure is just natural for them to talk about what is going on in their lives currently, but I do wonder if it's gotten away from the original formula that has worked so well.

I know there's a newbie podcast, so we don't necessarily need someone to teach us about the difference between gross and net income for example. I also recognize that there are only so many angles to talk about with real estate investing after hundreds of episodes, but it feels like we've gotten to the point where it's all about existing (Big Pockets) wealth and how to scale that even more. I'm wondering if I'm alone in noticing this.

Brandon/David, I have a ton of respect for what you do and have appreciated all your hard work for many years. I don't mean to speak negatively, I'm just maybe sensing a shift in what the show is about.

@William B. a couple questions:

What material is the exterior, any idea how long it's supposed to last?

Do you have a sq ft measurement of the footprint?

@Antonios Kranidis very hard to give any real advice here, but I'll try. Why not consider a business major? Gives you professional skills that might be a little more in line with RE investing. It'll probably also be a good bit easier than engineering.

I majored in real estate at my business school and loved every second of it. See if yours offers that.

Hard to answer, depends on a few factors. What kind of industrial? Warehouses are booming right now in a lot of major markets with intense demand and rent appreciation. There's a lot of new construction coming up, but it won't be too detrimental to existing I don't think.

As was said previously, what would happen if you have a vacancy for 6 months (or longer) while you place a tenant? You've got to be well capitalized in the commercial world to cover holding costs (and TI allowances). More money to make but also more risk than your standard residential.

Sounds like you've probably got a decent amount of capital given your portfolio, but I'd look long and hard at fully switching over and putting all your eggs into one or two baskets. It could absolutely work out, it's just a different risk profile.