All Forum Posts by: Ryan McGowan

The client seems to be skittish on development in general, as they are outside the building industry, but I am completely open to taking on a senior living project. They bought the lot not intending for senior living, and it was the only path moving forward that I could see to help them recoup the costs they (over)spent on the property. It seems like a great market to get into. It's a growing industry, and even when there's overall declines across the country, there's still areas that are underserved. The city was ecstatic about getting their first senior living project.

Part of the Cap Rate is figuring out capital expenditures. An older building is going to have more costs here, but they should also be figured into new construction as well. Cap Ex is more than just age. There's also physical damage, wear, short-lifetime assets like asphalt paving, bulbs, paint, etc.

You need to get a reciprocal access agreement with the neighboring property, and a site plan modification or revision. Every city calls them something different, but they are basically an application to change the site. If the neighboring property has different operating hours, you can justify less parking required.

If you already have a certificate of occupancy, there's no need for a variance because you're just purchasing the property. A variance comes into play when you are modifying the property, and are asking to break a rule in the municipal code because of some unavoidable condition.

Are there existing leased-out units in the same project? Seek out complementary services, and keep an eye out for established businesses is lesser-quality locations that could benefit by making a step up.

Don't be swayed by the complexity with commercial leases. There's some great advantages. With residential, you're agreeing to a habitable residence, and the laws in most states weigh heavy on the tenant when it comes to evictions, habitability, etc. Commercial properties are for business use, and the threshold for what is incumbent on the landlord is lower. For instance, most commercial property is just a shell and a restroom that is occupied during daytime hours only, so there's no midnight calls for fixing a toilet or unclogging a kitchen sink.

Ontario Airport just went to Ontario's control this week. It was owned by Los Angeles and resulted in traffic being diverted from regional areas into LAX. Now that Ontario controls the airport, airlines are already planning to add more flights to Ontario. I have a project in Ontario, and that's all the talk right now.

Leave that up to the tenant. You have space that is available and can be marketed to retail, office, AND food service. Spaces that can market retail and office space have less potential demand than one that can also include food service. It is much harder to convert a space from retail/office into food service, so if a restaurant owner wants to lease, they have a slight advantage if they can make it mostly turn-key. They have the grease trap, the parking ratio is already there, etc.

Usually the owner will give an allowance for the T.I. and leave the remainder up to the tenant to come up with. Besides, a Quiznos is going to build out a very different setup than a Coffee Bean. I would liquidate the equipment, gut anything not bolted down, and just market it to everyone. Leave the hotline hood and the dishwashing sink. Those are really the only equipment that ever seems to get reused.

Technically, what you charge is the full resell of the property. Whatever you got the deal for is your costs. You could tell him you charge 10-20% below retail. If you picked up a $100k property for $10k, you wouldn't "charge" $5k and sell it for $15k. You'd still sell it for a discount to retail price. 

No one asks McDonald's what their profit margin is for a hamburger. 

Get on Yelp too. Probably a good idea to do that after you have made the upgrades. There are auxiliary businesses that can be run through a storage location such as truck rentals and moving supplies. Don't do any "first month free" deals. That just attracts the worst customers and you'll have to deal with kicking them out. A better deal would be gift certificates to a popular local steakhouse with a lease. You could advertise that on the radio.

They seem like a great niche. No leasing, very little maintenance, predictable. Ontario airport is going international soon and there's still land available for decent prices. Charging a little under the airport's parking fees should bring in the cars.