All Forum Posts by: William Jenkins

@Scott Mac - The carriers have moved away from subsidizing or paying for in building systems. The ROI is not favorable for them. Take a 200 unit apartment building for example. Lets say 50 have AT&T, 50 Verizon, 50 T-Mobile, and 50 Sprint/other regional carrier.....

Each carrier would have to build out an in-building system to serve those 50 customers.  The cost to build out that system is cost prohibitive for that customer count.  They will focus on stadiums, convention centers, etc., but a typical apartment building is a no go.

Legitimate 5G is a number of years out contrary to the (misleading) advertising you are seeing, and even then it will not help the coverage issue in many cases.  Most of the deployed 5G spectrum will operate on higher frequencies and that spectrum is horrible at penetrating exterior building walls and low e windows. 

Unfortunately, the carriers will not save the day when it comes to poor in building coverage.  If it becomes an issue in terms of attracting tenants and lowering vacancy, the building owner is going to have to become proactive and solve the problem.      
 

@Bjorn Ahlblad - I'm not sure of your particular situation but I would highly advise you to reconsider leasing space on your property for a tower.  These deals are typically found money for a landlord, and done right it should not affect the value of your property.  I develop towers as well and lease them to the carriers.  If you would like to talk on it send me a PM.  I would be more than happy to look at your property and see if their is something I could do on it

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I'm an RE investor/broker and a major part of my business is developing, owning, and brokering wireless sites (towers, rooftop locations, etc.)  We have expanded our practice to offer in-building wireless systems that are designed to improve cellular coverage in mid to large sized buildings with coverage issues.  

COVID has certainly changed the work from home situation in the short term and it is very likely that the shift will be permanent for many industries.  With more people working from home, adequate in building cellular coverage is likely going to be a major factor in a tenant's decision to lease a unit.  

Question for the larger multifamily owners.....  With more of your tenants working from home have you been fielding calls or trying to solve tenant complaints regarding cellular coverage?  Is anyone out there concerned with cellular coverage factoring into vacancy?

I was acquiring up until mid 2017.  Since then I've been in a holding pattern, not because I won't or can't do a deal, but because I can't find anything that makes sense for my investment criteria.

In my opinion, this shutdown is going to have a major negative effect on our economy that will take time to infiltrate the real estate market.  I'm in the Midwest, which is typically a year or so behind the coasts so I am watching those areas carefully to see what is coming my way.

I've only seen two downturns in my adult life, 1999 and 2008.  What I remember about both in hindsight, is that the time to buy was when things seemed utterly hopeless.  I don't sense that at all right now, but that feeling takes time to root in a market.  

I think the prudent thing to do at this point is to focus on liquidity. You will need cash to weather the storm (especially if leveraged), and cash to buy deals if/when they become available. Important point to remember...... If we see something similar to 2008 traditional financing will get shut down (already starting to see it). Don't expect to go picking up the wreckage with low LTV bank financing or HELOCs.

I've got a property that I am interested in that was undermined with a room and pillar coal mine back in the 1920's.  There is an existing income stream that I am interested in purchasing that goes with the property, and I am just starting to look into what I can do with the remainder of the property. 

I'm well versed in land development but don't have any experience with undermined property.  The property is located along a major interstate on an exit ramp albeit in a more rural area.  I could easily see a future opportunity for a gas station, self storage, smaller commercial warehouse, etc., but I know the undermining will affect the attractiveness of selling later down the road for that.  The state offers subsidence insurance (even for new development), but it is capped at $500k (could cover a smaller metal warehouse building etc, but not a gas station, hotel, etc.) 

Anyone on here ever develop an undermined property?  What did you develop?  Tips, problems, issues, concerns, advice?

@George Blower - Correct.  I would not require financing for the deal.  Thanks for bringing that up though.  

@Brian Eastman and @Carl Fischer - Thank you both for the advice. Brian, if I am understanding your correctly, then there is a good chance that I could engage in this transaction and not be subject to UBTI, as long as it didn't became the long term intent of the IRA (i.e. multiple future flip deals). Am I summarizing that correct?

FYI.... This would likely be a one off deal for me in the IRA. Also, I don't have a SDIRA now, but would like to have one for more "traditional" long term RE investments.

I need a little tax advice on the use of a self directed IRA to flip a contract. Here is the opportunity.....

I've got a property I am interested in purchasing.  I am fairly confident that I can flip that contract immediately to a fund that I work with and then have them close directly on the property.  I would be looking to execute an assignment with an assignment fee to be paid to me at closing.  

I don't have any experience with self directed IRA's (I am sure I can figure this out), but was more concerned with the tax ramifications of using a self directed IRA to flip a contract. If I can make it work, it would save me a substantial amount of taxes.

I would then plan on taking those funds (profit from the flip) and either (a) investing it in other self directed eligible assets (RE, LLC interests, etc.) or (b) transferring it back to a traditional brokerage firm and to simply invest it in equities.

Questions:

1. I wouldn't be opening this IRA for just this deal or flipping in general (may invest in longer term assets later on down the road), but would this transaction cause any UBTI to me personally? FYI... I am a broker, but not in the state that I would be buying this asset in. I don't think I would necessarily be considered an active participant.

2.  Any other red flags you can think of from a tax or legality standpoint?

If I go though with it, I will be seeking professional tax advice beforehand, but just wanted to get a feel for what others with experience in this have to say.  

@David Kim - The cap rate was simply based off of what the property would likely trade at on the open market.  It was a class A property in a great area.  Cap rates are a quick calculation of what return an investor requires on an investment.... i.e. an investor for this property would pay $720,000 for $36k of annual rent.  

I would bet you that the carrier has the right to terminate this lease at any time so I would look into that before you determine that you have 3 more years by default.  The option renewals are 100% to the benefit of the tenant and not you.  

There is a possibility that you could negotiate more money for more equipment modifications but it is very dependent on how your lease is written.

Have you thought about selling the lease and keeping the underlying property/building.  I buy these types of deals if you are interested in talking on it.  

First thing first, your goal should be to not lose that tenant.....  Wireless income (towers, ground lease, etc.) is icing on the cake.  Don't lose it! 

Keeping in mind the first goal above, your secondary goal is to maximize any renegotiation that you enter into.  There is an art and science to this.  There is a chance that this is a pure bluff (There are companies out there that work on the behalf of carriers that simply call on these leases and get commissions based on any rental reductions).  Then again, there is a chance that it is not.  It could be either one.  

I was just talking today with a property owner that played hard ball with AT&T (before they called me) on a rooftop site and lost (i.e. AT&T is moving off the rooftop as we speak).  The property owner had no wireless experience (junior level property manager), thought they were in a stronger position then they were, and just lost AT&T as a rooftop tenant.  They were very caviler in the way they approached it..... (i.e. "If they don't like it, screw them.... we don't need their money...where else are they going to go...... etc. etc.).

Here is what they lost.....  ~$3000Mo Rent X 12 Months = $36K Annually / .05 (Cap Rate based on building and location) = $720,000.  Now this is a Class A building in a great area of the St. Louis metro area that is worth a lot of money, but still.....  That is close to $750k of lost value in a blink.  Wouldn't want my building managed by that property manager!  Its not like your going to fill that "rooftop space" with a law firm.