All Forum Posts by: Russ Kitzberger

If you are just a one off landlord with a single space, your best bet is to hire a broker to market the space and advise based on a deal by deal basis as you negotiate with prospective tenants. It is all area dependent; A solid tenant may require TI whereas a local startup may not be able to command it.  


The % you are going to spend with a contingent commission agreement can be significantly less than your time and actual costs will be trying to get a handle around the retail market for just one space that is ancillary to your expertise in residential rentals.  I tell new and aspiring commercial real estate agents: the cost to get into the data to participate in the market is $10-20k. You have to have volume to make the numbers work.

For instance, you may spend several thousand dollars for marketing your first space. You will have attorney fees for each LOI you get from a prospective tenant. Then there is vetting the tenants, co-broker compensation, finding contractors, zoning issues, tenant mix, permits, etc.

Alas, if you decide to market this without hiring someone to give you specific advice and good marketing; my suggestion is to put a for rent sign up and allow tenants to propose terms to you. Let them hire the expertise and pay nice broker commission to entice agents to give the tenant advice.

I have land listed for sale for redevelopment that is part of those grant programs.  You are probably going to need a Pub private partnership, pm me your email and phone number and I'll connect you with someone who can facilitate in your market.

ADU's are a residential term that are zoning specific but the lenders started to mix into residential appraisals to fit them onto the single family residential appraisal form.

For Commercial Valuation: Adding ADU's would simply be adding (residential rental/leasehold) units to a commercial property.

If it is a parcel or ownership rights split and resale of ADU's or commercial spaces from a property, you have a development analysis.

Pointer Appraisal 866-495-4990

Analyze/Underwrite based on market vacancy and market cap rate.  If you desire a discount for finishing the projects or lease up, place that into the projections.  

Every lease is different, NNN is becoming more common in my main market in most asset classes, but office can be MG in oversupplied areas. Lease terms eb and flow with supply and demand. Pricing and terms are submarket and asset class, tenant class based. You may give a deal to get a great tenant, but a single location tenant may need to have a different lease structure reflecting tenant risk.

If ROI is cap rate, yes, very few MF 5+ unit assets in many markets will produce over 8% cap rate. With current rates, may not even produce that leveraged. MF has been the hottest asset class for a decade and in many areas it is still rolling along.

If you are applying for a loan that requires ARV, the appraiser will generally be asked to provide the ARV/NOI based on the scope of work/architectural design you provide to the lender.

The appraiser is not going to do the ARV for a standard appraisal/loan.

There may be something to gained such as parking or ability to expand the main building. However, the cost might not equal value if you are creating surplus land for rather than adding to the highest and best use relative to the price of the additional lot.

Get an attorney involved to ensure you are covering your due diligence.

One item that comes up is if zoning/land use law requires to parcels under common ownership to combine to one parcel or be for the same use. So consider your legal options for how you hold title to the adjoining parcel.=attorney opinion.

Usually SBA requires owner occupancy, provides little to no benefit for rental income, and the reason to use it is low equity injection requirements.  

As far as a separate loan; I haven't been SBA deals allow for investment in rental real estate, only for real estate used for the small business the loan is for.

Best to ask your SBA rep.

If your caps are running similar for A and C classes, or you are estimating large IRR for class C, there may be an issue with the replacement expense/reserve projections.