All Forum Posts by: Ryan S.

Hi everyone,

I own a commercial property (in an LLC along with one partner) in Tampa, FL and am looking for a new insurance provider. My current policy is set to renew/expire in December.

The tenant has their own insurance policy (we're a named insured on their policy) as we do have a NNN lease with them. Our current policy is likely a bit of overkill as a result. Along with some new quotes, I'd like advice on what we can do away with to get our policy cost down without putting my partner or myself at personal risk.

Here's some info on the property:

- Purchased in December, 2021

- Single Tenant NNN Lease

- Current liability coverage is $2mm (capped at $1mm per incident) with a $10,000 deductible that also covers myself and my business partner

- Property coverage is $5mm with a $25,000 deductible

- Our policy shows that we have replacement cost coverage on the building, although the stated amount is $1.39mm. We have the same $2mm/$1mm per occurrence liability coverage as on the tenant's, so I'm guessing that's more than we need.

Please let me know if you can help.

Hey everyone,

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*This tool is completely free. It is not monetized in any way. I'm just sharing my work with the community.*

@Joel Owens - Thanks for your feedback!

I would like to clarify a few items that you mentioned:

1) We’re not expecting public credit rated tenants of a Starbucks or Bank of America caliber. We’re open to smaller tenants as long as their financials are solid.

2) We're not exclusively looking at STNL. This was just an example of the lowest management direct commercial investment I could think of. We are open to multi-tenant and alternative investment opportunities. I believe in my original post I actually asked for recommendations on alternatives to NNN.

3) As @Bill F. mentioned in his response, I now realize my original post may have been misleading regarding timeline (sorry about that!). The timeline I set forth (“by the end of the year”) is an internal goal that we are using to motivate our team to go out and source deals, as opposed to getting stuck in analysis paralysis. If we can’t close until 2022, we’ll be ok.

Thank you again for your feedback! Happy to connect offline if you’d like!

@Bill F.

Thanks for putting this together!

I’m not afraid of assuming some risk. A 10+ year lease is not a requirement for us, nor is a credit rated tenant. These are the terms that we are most likely going to have to make a sacrifice on in order to achieve our cash return goals.

Also, regarding NN versus NNN- were open to it. The only reason I brought up NNN was because it's the lowest management direct commercial investment Im aware of but it's not a requirement for us. Low management is preferred but I imagine a NN would do just fine.

@Frank Rodrigues - The geographic limitations are solely based on proximity to where our team members live. We like having someone local just in case but perhaps in the case of a more hands off deal (NNN) we don't need to be located within driving range of the site.

Are there certain locations or MSAs you have in mind that would be a better fit for our goals?

@Bill F. - The timeline isn't terribly strict, it's just a goal we've set for ourselves in an attempt to move quickly. If we're only able to deploy a portion of the funds by New Years then we'll be ok. Either way, no pumpkins will be harmed in the process.

We don't have specific IRR targets outlined at this time but it's safe to say 10%+ would be sufficient. Our priority is cash flow. Target cash on cash return would be 8.5%+.

Re: risk tolerance- we are open to non credit tenants. Typically we request to review their financials and make a decision regarding their creditworthiness ourselves.

@Taylor L. - Good point about targeting cap rate vs cash on cash vs IRR. In truth, cash on cash return is our priority (dividend yield > appreciation for us). We just typically speak about prospective deals in terms of cap rate since it can be calculated quicker and cash on cash return can usually be inferred from it. Really we'd like to see a cash on cash of at least 8.5%+.

Re: insurance in Florida- this is a great tip! I appreciate the advice.

A portfolio of syndications isn't necessarily off the table but we wanted to explore direct investments first.

I'm working with a small team to invest approximately $2M cash into commercial property before this year's end. Here are a few highlights in terms of what we're looking for:

• Location: The northeast (NY, CT, NJ) and South Florida (Miami - Port St. Lucie)
• Goal: An “easy” acquisition (or a few) with the priority being stable long-term cash flow
• Target Cap Rate: 7% or higher
• Loans: Target LTV of ~65% (this is flexible)

This team is looking for stable, reliable investments where they can park their cash for 10+ years without worrying too much about managing or developing the property. The first thoughts that jumped into my head were STNL (or any long-term NNN leases, even if multi-tenant) and self-storage facilities. We are open (and planning) to get loans of up to 65% LTV on these investments to stretch the cash further.

I'm posting this for two (2) reasons:

1. Advice: I'm looking for advice from any experts out there. What types of assets would you recommend I look into based on our goals?
2. Networking: Are there any investors selling properties that might be a good fit or brokers interested in helping us find properties to invest in? Please feel free to reach out!

Thanks!

@Dave Stokley

Saw your post here on running STR properties and the common misconceptions. I'm trying to get into STR for the first time and am overwhelmed with questions. Any chance you wouldn't mind if I shot you a few questions every so often?