All Forum Posts by: Greg V.

You may have already seen my post on another thread but I'm paying $2 per sq ft to fill the space if realtor represents both tenant and owner, $4 if two different ($2 per realtor). Management is 5% of rent per month. I invest in suburb towns around the Twin Cities, MN no more than a 45 minute commute to downtown and are all on the thoroughfare in the downtown areas of towns from 10k to 50k people. Perfect place with not a lot of big money. Rents are running about $10 per sq ft so, depending on where you are, the lease fill rates may be different.

Our local bank will finance 80% with 20% down, 75% with 15% seller second and 10% down, and 70% with 25% seller second and 5% down. The bank loans are 20 year amortized with no longer than a 5 year fix and balloon payment or float at the end of the fixed rate. Usually in the 3-5 year timeframe we have the new leases stabilized and can refinance, pull money out and make another purchase. Banks usually need at least a full year (sometimes 2 depending on the business) of on time payments to consider the new income. Be careful though, prepayment penalties are more common in commercial loans. They usually decrease with the years in.

I'm in a similar situation although I bought the building vacant (16k sq ft, restaurant, bar, banquet center). I don't like the restaurant business especially the larger footprint ones although you hate to repurpose with all the coolers, water and possible equipment already there. I think I'm going to break it up into 3 or 4 tenants. The demand in my area seems to be at the 2k-4k sq ft range. We have a good lead with a gym and other possible leads with insurance, financial consultants and possibly even a dentist. The conversion is going to be expensive so I think I'm going to give them heavily discounted lease rate and have them pay for buildout. That way, if they go out of business I'm not out $100k.

You may have already seen my post on another thread but I'm paying $2 per sq ft to fill the space if realtor represents both tenant and owner, $4 if two different ($2 per realtor). Management is 5% of rent per month

To fill a space, I pay $2 per sq foot if our realtor is representing both parties. If the tenant has a realtor then I have to pay $2 per sq ft for each so a total of $4 per sq ft. I think that's where your money is made along with any purchases. For me, the management is much easier than a residential so I'm only willing to pay 5% of the monthly lease if I use a management company at all (I don't live in the same area as my investments). The 5% only covers collecting checks and dealing with fixes I'm on the hook for like the roof and HVAC. You may want to think about a tiered structure. 5% for check collecting. 7% for check collecting, and paying other recurring bills like landscaping, or any taxes or utilities the owner pays. 10% may be the "gold" level of service and may include yearly tax assessment evaluation and fighting with the assessor to bring down the assessment if needed. That may also include some other services I can't think of here. This isn't something that I've seen in the industry but I think it may make sense. I should also add that I'm in a suburb area that is getting $10 per sq ft in rent. Depending on the area, you may scale the fees I've listed.

To fill a space, I pay $2 per sq foot if our realtor is representing both parties. If the tenant has a realtor then I have to pay $2 per sq ft for each so a total of $4 per sq ft. I think that's where your money is made along with any purchases. For me, the management is much easier than a residential so I'm only willing to pay 5% of the monthly lease if I use a management company at all (I don't live in the same area as my investments). The 5% only covers collecting checks and dealing with fixes I'm on the hook for like the roof and HVAC. You may want to think about a tiered structure. 5% for check collecting. 7% for check collecting, and paying other recurring bills like landscaping, or any taxes or utilities the owner pays. 10% may be the "gold" level of service and may include yearly tax assessment evaluation and fighting with the assessor to bring down the assessment if needed. That may also include some other services I can't think of here. This isn't something that I've seen in the industry but I think it may make sense.

When I looked at FL (Tampa area), cap rates were really low. Too much cash floating around there. I can't compete with all cash offers that are only looking to beat Tbills. I'm having a lot of success in the Midwest although deals with 10% cap rates were everywhere 2 years ago for full buildings, they are floating down to 7%. Half full buildings are really the deals. You have to know the area and make sure the demand is there. A lot of older property owners or absent owners (living in Florida) that have let the properties degrade and will deal.

Like everything, it depends on the current state of the space and location in the country. On the low end, it will probably be $20k. On the high end, maybe $50k. Probably somewhere in between.