All Forum Posts by: Christopher Telles

I'm a SoCal CRE professional.

What product type specifically are you looking for in SoCal? 

What structure do you use for buying e.g. Individually, partnership, syndication?

Do you have feet on the ground here?

Atypically that's way to small a project for an experienced builder or developer to even think about jv'ing.

Find a builder who will work on tiny projects and also does in house architectural. Figure out the maximum build-able SF. Simultaneously research rents, and separately sale prices for similar properties.

These data points will tell you whether it's feasible to build on the site. In many instances for small parcels it doesn't make sense to build for investment purposes. 

@Benjamin Cowles yes that's the inverse of what I was conveying. You can use .20 as the expense base, for example, which is .80 of gross rents.

This is only for cursory review to see if a property is worth spending more time on analyzing it further.

Its not opinion. It's fact. 

One of the brokers who worked for me was a former executive VP at a local Los Angeles based cell tower developer. He had a hand in all aspects of the process from site acquisition to permitting to carrier negotiations.

He gave me the straight dope on cell towers when I wanted to erect some on my excess vacant land holdings (nine in total up and down the state of California). All cell towers erected are based on need. An developer or cell company must prove to the municipalities there is an absolute demand for a new tower to provide coverage to local residents and businesses, this is in addition to their own internal financial needs.

Getting these erection permits is no small task. It takes enormous amounts of time and the costs can be extensive. There are many cities that have moratoriums against the construction of any more cell towers. 

In some locations it almost takes an act from the heavens above to get a new cell tower permit.

There are two or three cell site operators that I know of that located potential cell tower sites, negotiate a lease or buy the property, erect a tower, and then either sublease to a cell carrier or sell the lease or property to a cell carrier.

The issue with cell towers is it is all based on the needs of the cell carriers. If carriers have adequate coverage in the area of your property then its unlikely you'll find there is interest in your land location. 

Looking through my files I have two I can give you:

Sprintsitesusa.com

americantower.com

Verizon also has one too, but I only have the receipt from the submittal but no url on the receipt.

Go to these sites, and follow the directions to submit the sites. Include as much detail as they ask for and as you can with each submittal.

Investors. Hard Money (they'll probably want at least 10% of buyer capital in the deal). Buy it on a land sales contract. Buy the property using a lease option to purchase contract (Master lease w/option to purchase).

These are just a few thoughts, but really you don't provide much information for others to way in an opinion.

The buildings systems (HVAC, Elevator, Sprinkler, Electrical) are the main concerns for older properties. You should ensure that they are not only operational, but in today's energy efficient world know how antiquated they are compared to other newer'ish buildings, and what the cost is to upgrade or replace these systems. 

How are the common areas? Dated, adequate, renovated, a shambles? These are all areas that may need to be upgraded to attract new tenants into the building. Does the building compete with other newer multistory office buildings for tenants?

When it comes to older office, in particular multistory office buildings, the challenge is often looking beyond 'it pays a decent return' and digging in to understand what is required to day to keep vacancies low, and equally or more importantly what will be required tomorrow to attract or keep tenants?

One thought, I've been involved in an older office building, a mid sixties building, and the lobby (renovated) and common areas needed to be addressed, at least for budgeting. In addition, the individual offices were of the old style were the office walls were something of a flimsy somewhat portable walls. To combat this, and also upgrade systems as larger vacancies occurred the ceilings were removed, the HVAC ducting removed, the concrete was stripped via a sandblast, and then attractive and exposed HVAC ducting was installed. The office walls were demoed, and conference room(s) constructed. 

With the flimsy walls removed the offices have an open space plan, and with the ceilings exposed the renovated offices emulate a loft space. Not only was the creative renovation cost effective but higher rents were achievable for more desirable office space.

@Bee-Bee Liew

Send me a Colleague request and in the message remind me you're looking for an analytical tool for an office building. I can send you an excel file that will allow you to look at office space from a 10,000 foot view to get to a return. It can be modified for more extensive analysis, but its what I use to underwrite a building to see if I want to pursue it. 

I have more sophisticated analysis software for in-depth analysis but its mainly for managing operations. This is not something I can send. 

I think your question is searching for a way into the deal with a limited out of pocket downstroke. If this is indeed the case then yes its very doable. 

Lenders who will lend on this structured finance purchase will most likely require the buyer to have at a minimum 10% of the purchase price into the deal in the form of a capital downpayment. The Seller carry will need to make up the difference between the buyers capital downpayment and the lenders required downpayment e.g. 20, 30, 40%, etc. The deal will also need to cover DSCR (if it doesn't, try getting the Seller to carry the 2nd where interest accumulates with no payments due until a balloon payment date in the future; be careful, know you have an exit when it balloons).

My interpretation is that @Eric Schleif is looking at this from the perspective of a CRE lender whose job it is to obtain the very best financing package for his clients. He's correct its not the best in terms of outright lending options.

@Joel Owens I've seen this first hand. Not only was the owners equity wiped out, but because their very large mfg business had special very specific grandfathered AQMD permits which where nearly impossible to relocate anywhere in California (heavy derogatory element output) their business also faltered when they could not afford to move the operation out of state.

The job loss was in the 200+ hundred range.