All Forum Posts by: Sarah Moore

@Sarah Moore Some great advice here from @Chris Mason I'd also add that like any other asset the underlying demographics of the market these buildings are in can tell you a lot about the office demand as well.  You might also see if any of the vacancy's are currently listed and how good their marketing is.  Not saying this is the case all the time, but often times they just have poor or little marketing, and no follow up with prospective tenants.

I'd also consider any "alternate" uses, for instance its currently an office building, but is there a different use or is it in a location that lends itself to say medical office more than trad office, or is there a way to retrofit for a coworking kinda set up.  if the fundamentals on the market and location are sound there is always a way to creatively work through and imrpove the operations.  

Commercial leases are in the 3-5 year range. So most of the pre-covid ones have already rolled.

I'd focus on the ones that are about to roll. The business who signed a 5 year lease in August of 2019, that's up in August of 2024.

I'd go walk my happy butt into that office space. I know a commercial tenant (colleague) who is paying to rent an office space big enough for 40 employees, but only 5 people are willing to go to the office, so it's a ghost town, obviously they will not be renewing. If a potential buyer were to walk in there, it would be obvious that this tenant isn't renewing, and they'd be a fool to include that rent in their own underwriting numbers. 

Be cynical and conservative, subtract out the rent from any ghost office. Consider making judgement calls beyond just the obvious ghost offices, too.

At this point, since we're at about the 5 year mark, I think things are mostly stabilized. And if that means it's "stable" at 35% vacancy, then don't pay a dollar over what makes sense with perpetual 35% vacancy. The listing broker is going to have a proforma assuming 10% vacancy, throw it in the trash, which is EXACTLY what we are doing on the lending side. 

If that 35% vacancy ever shrinks to 15%, hey, that's your upside, that's why buying an office in 2024/2025 is going to be like buying homes was in 2009/2010 at the bottom of the market. More millionaires were made by those bottom of market home purchases than most other times, I suspect that's what we're looking at for offices this year and next.

Let me know if you want to run financing numbers. 

Hi Sarah,

Meetups are great for building long term connections. If you go to/host the same one every week, even better. I would also check to see if there are meetups already on websites like BiggerPockets, Meetup.com and Facebook.

Have you checked into whether or not there is a meetup already established in your area? If so, you might be better off going to one of them unless organizing events is in your skillset.

Hi Sarah, I haven't had experience with this myself, but I do work with an investor that's actually focusing on those types of investments right now considering them to be more stable because of the guaranteed rent deposited through section 8 housing. There's typically less turnover with tenants, and it's easy to fill when they do turnover. I would definitely start by checking what % of units are receiving some sort of housing stipend or what programs may be available to them. The downside to this approach being less upside potential on raising rents over time if rents continue to climb. Hope this helps!