All Forum Posts by: Scott McElhaney

We own many retail properties. 

Retail is changing rapidly, but brick & mortar retail will always remain a component of a retailer’s strategy. This is why you see online retailers such as Warby Parker, Tecovas & Untuckit go from strictly online to an online brick & mortar business model. One thing the above mentioned companies have is data, lots of customer data that they methodically collect. They know exactly where customers are ordering from when they make online purchases. This gives them strong intel to pinpoint exactly where to open physical stores. It’s genius if you think about it.

Erin,

Transfer the property to an LLC with you & your husband as sole members. The LLC will sell the property. The new LLC will purchaser the replacement properties via the 1031 exchange. If you're buying out of state your LLC will need to fill out an SCC form giving it the ability to be a "foreign investor", which is a fancy way of saying your LLC can invest in another state. You apply for these foreign rights once you've determined what state you plan to invest in. Hope this helps!

I spoke with CoStar today. Their new minimum monthly fee for investor/owners is $850/month. It goes no cheaper than $850/mo.

Nicole, 

Can you elaborate on the deal you've carved out with the existing tenant?  Are you providing a Tenant Improvement (TI) allowance to the tenant?  OR have you agreed as the Landlord to renovate the space into an event space/beer garden for the existing tenant?  Lastly, what is the existing tenant's current business?  Is it hospitality/restaurant based?  Do they have a good track record in this line of work?

You always need to weigh the economical strength of the tenant versus the tenant specific improvements/build-out that you're considering spending cash on.  In other words, if the tenant is weak financially, weak in experience (for this given business focus) and/or weak in both... you need to strongly consider the "what if tenant doesn't make it" scenario.  The last thing you want to do is spend a bunch of money of a very tenant specific build-out, have them go out of business and then have to re-lease to a new tenant who will most likely rip out everything related to the last tenant's business concept.  Make sense?

Hi Jim, 

I'm not an expert on buying notes, but I see no reason for you not to flush out these deals despite the coronavirus pandemic.  I would have some further conversations with the note holder to try to best uncover how the tenants are doing during this unprecedented time.  If they're unable to pay in April and/or the foreseeable future you can bet the note holder has heard about it via the borrower.  Let us know what you uncover.

I continue to see and hear about folks looking for some sort of government mandate in order to get mortgage relief help.  This is simply not necessary.  Just pick up the phone and call your lender and ask "What Mortgage Relief Programs is your bank rolling out?"  Most have or are rolling out programs very fast.  I've been dealing with our lenders, both large and small, and all have been extremely accommodating.  On the private lending side, I would expect that private or hard-money lenders should be equally accommodating by offering either an Interest Only (IO) period or a deferral period....BUT you have to be candid with them as to your situation and state what you're specifically asking for in terms of assistance.

Joel, excellent insight.  I totally agree and can relate to what you've said.  Thanks for posting.

Scott McElhaney

Thanks Franky! 🤝😀

You’re welcome Abel! 👍

The retail and restaurant asset class will be fine once the coronavirus pandemic subsides.  Sure, some local credit tenants unfortunately might not have the wherewithal to reopen, but overall businesses will reopen and new ones will appear.  Some larger tenants, Cheesecake Factory possibly being one of them, will utilize this downturn as an opportunity for "lease optimization and restructuring" with their landlord.  Although this can be viewed as "playing dirty" on behalf of the tenant, it can also be an opportunity for a Landlord to secure a longer lease term or other more favorable terms.