Someone to talk through properties with?
[deleted]
[{"id": "g3cbjg4", "text": "Your agent shouldn\u2019t be your consultant, I\u2019ve never used a broker for investment advice. Ever. NNN is not a great space to get into right now, it\u2019s a super battered sector, who knows what happens if covid hits again, and it can be tough to finance which is tough shit because the only reason to buy it is to financially engineer it to a win. Pay the taxes and invest in a REIT sponsor if you want exposure but don\u2019t really know what you are doing.\n\nAlso buy side brokerage is a joke. Why would anyone pay some dude out of their pocket to bring you deals that you can get on your own but signing up for mailing lists. It\u2019s not like any of these guys have actual proprietary deal flow nor will any of them give you an inside deal.", "replies": [{"id": "g3cclhg", "text": "Some of them do have access to deals others don\u2019t. Also they are experts at analysis.  Lines of sight, which direction traffic is going (you\u2019d want to be on the \u201cgoing home from work side\u201d for oil changes, drive-through restaurants, etc.). Also the sellers pay the buy side. \nIt\u2019s easy to say \u201cpay the taxes\u201d but I\u2019m looking at half a million tax bill so I\u2019m not going to do it. \n\nNo offense, but your post doesn\u2019t really read like someone who has bought and sold NNN.", "replies": [{"id": "g3cfbi3", "text": "I\u2019ve bought a ton of NNN through a roll up, spent a ton on a master lease extension and hit a 2x unlevered on it. Brokers aren\u2019t experts at analysis if they were they\u2019d be in investments. Sometimes it\u2019s better to pay the cost then risk getting way in over your head and losing more, especially in a super fical asset class that\u2019s ultimately a credit spread and financial engineering play. \n\nAnd I\u2019ve never met a broker with true proprietary deal flow they\u2019re telling you and 15 other people that you\u2019re the only person looking at a deal.", "replies": [{"id": "g3ci01z", "text": "&gt; Brokers aren\u2019t experts at analysis if they were they\u2019d be in investments\n\nYour logic isn\u2019t sound on this one. Plenty of brokers are investors too. It\u2019s not mutually exclusive.", "replies": [{"id": "g3ciyso", "text": "That\u2019s fair, but they don\u2019t have the same level of operational / financial experience that someone on buy side has. You can\u2019t really do both...", "replies": [{"id": "g3f5k1y", "text": "Well if you're working with a broker that is on a good team, they have their own analysts working alongside them on deals and crunching #s for different projects. Which is a value add to the client for an investment sales broker. After looking at 100s of deals, you kinda get the hang of the analysis as well. No wonder so many brokers move over to the buy-side/principal/acquisitions role.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g3cbm3t", "text": "My boyfriend and his brother are brokers; they own a national boutique firm that specializes in NNN properties. If you need a consultant, his brother has done similar assignments before, mapping out a strategy for buyers. Shoot me a DM and I could connect you.", "replies": [{"id": "g3ccm8t", "text": "Awesome- this is helpful. I\u2019ll message you.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g3cf8vh", "text": "I will help you out. When you were completing the disposition of your apartments, why weren't you taking time to identify possible exchanges during the purchases DD? Most people in this market if they are going to sell and do an exchange, typically do not sell until they have some preliminary properties found that they want to trade into. Anyhow, lesson learned for you.\n\nNext up: NNN deals are not difficult AT ALL to assess. You're literally buying the lease and therefore, your decision about what asset to purchase should be made on the strength and credit of the tenant. Not rocket science. For example, in this market, pharmacies, auto repair, dollar general, grocery, are assets that are trading and in high demand. I'd look for a recession proof tenant that performs well in the highs and lows. Again, not rocket science. \n\nI see you spewing shit about line of sight and yadda yadda yadda, and while that is important (just like right in right out), whatever tenant is in there has already conducted numerous and rigorous studies to figure out an STA point and from there if they're open, then obviously the site works. The hiccup now with net deals is if the tenant goes dark, what is the asset worth? So while buying a DG in bum fuck Egypt may be good bc maybe you'll get a high cap rate, in 15 years if they don't renew what is the asset worth? \n\nWhat market are you located in?\n\nAlso in terms of financing, for these types of deals to work, you really need to be paying at least 50% cash and I'm not sure I believe your rates. Those are residential rates not commercial. Been doing this a long time and have never seen a 30 year commercial mortgage. Maybe an am schedule of 30 but not what you're quoting. Do not argue with me on that one because its just not real.", "replies": [{"id": "g3cgmus", "text": "OP is going to get creamed on this should just pay the tax bill.", "replies": [{"id": "g3chgq9", "text": "Why do you say this?\n\nI mean, you know nothing about me.", "replies": [{"id": "g3cja8h", "text": "Because you\u2019ve got a ticking clock to execute, not a ton of opportunities in the NNN space right now (spreads gapped out so not a ton of good product on market) and you\u2019ve never done it before so need to become an expert in a short period of time. I sincerely wish you luck but see more downside in rolling the gains to a product you\u2019re not familiar with and have a super short fuse to do something than I see upside.", "replies": [{"id": "g3d6o6t", "text": "Lol okay dude. I became a multimillionaire in multifamilies having \u201cnever done it before.\u201d  Imma go out on a limb here and speculate that if your advice is for someone to pay a half million in taxes instead of invest in NNN that you are not one to ask about investments.", "replies": [{"id": "g3d7hro", "text": "Look dude good luck to you. Multi is easy, anyone can do it and if you didn\u2019t make money this cycle on it you\u2019d have to actively work to Fuck it up. If you need to have a dick measuring contest but don\u2019t get that fundamental credit analysis of the T is what NNN comes down to good luck to you, I\u2019m not going to waste my time.", "replies": [{"id": "g3dazg1", "text": "Buh-bye", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "g3fop2t", "text": "Can\u2019t believe you\u2019re being down voted.  Must be the real estate agents.", "replies": [{"id": "g3gk5mk", "text": "Don\u2019t care it\u2019s this \u201cmulti millionaire\u201d guru\u2019s money he can light it on fire however he wants. NNN boxes only work if you have a ton of scale and can actually underwrite tenant credit, the rest of it doesn\u2019t matter.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "g3chg32", "text": "Thanks for the inputs. We were shopping for replacements during the sale. I have two under contract but I have to identify and purchase one more. I\u2019m in due diligence on the other two. \nAs far as not believing the rates, I have term sheets for exactly what I wrote. Also I wrote 30 year am. And yes I agree, rates are extremely low right now. Last fall I refinanced a property at 4.5% and now it\u2019s at 3.5% for 5 year lock and 3.6% for 7 year lock. It\u2019s crazy.", "replies": [], "depth": 2}, {"id": "g3cqdrq", "text": "I\u2019m a commercial mortgage broker and we are absolutely seeing most deals in the 3% range right now. NNN financing is obviously going to depend on the bond rating of the tenant and the term of the lease. \n\nIf you have a solid tenant and a 10+ year lease remaining, you\u2019d be looking at 10-20% down, a term that closely matches the lease term and an amortization of 25 years.", "replies": [{"id": "g3flhn3", "text": "What cap rate ranges are you seeing on investment grade direct or corporate guaranteed leases? For example, 12 months ago Dollar Generals were trading around 6.5% from what I saw. Now I'm seeing closer to 6%.\n\nI'm being told that people are actually paying a 4.5% cap for WaWa gas stations. It's a 20 year lease, 5% bumps in Y11 and Y16. I don't see how you make money on a 4.5% cap. I'm a lender, and I was going to need roughly 40% to 50% equity to make the DCSR work. \n\nAre you seeing cap compression on investment grade tenants?", "replies": [{"id": "g3ilsdi", "text": "Definitely cap compression. 4.5% is very aggressive but with COVID, A-AAA Tenant Credit is even more valuable. There are a number of brand name tenants that could fall into junk bond territory if things don\u2019t change.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "g3cvkqx", "text": "I agreed with everything up to the last paragraph, so maybe it's location based. We get rates similar to what OP was saying.", "replies": [], "depth": 2}, {"id": "g3dmo6t", "text": "I work for a lender servicing company. We have just over 300 banks and credit unions in our portfolio. My team focuses on originating commercial loans with our partner lenders. I feel that we see a healthy amount of transactions and are talking with lenders around the nation daily. We see a TON of net leased transactions. \n\nRates are believable - most quotes I receive are in the 3s to low 4s with a 25-30 year amort. Loan terms are typically up to 10 years depending on the time remaining on the lease. Down payment can really vary on a number of things. The Max LTV/LTC I have seen these days is 75%, but most NNN deals are DSCR constrained, especially for the higher rated tenants with low cap rate sales. I could see 50% being true for a CVS in LA. I saw someone mention 10-20% down, and have not seen it myself...sign me up! \ud83d\ude0a\n\nI have seen life company loans offer 20-25 year terms. Working on one right now for a retail strip in FL, but I think most life cos are looking at low LTVs - the deal I am working is 50% LTV Refi.\n\nThe DG comment made me laugh - had that exact convo twice on Friday with  a mortgage broker and then a lender.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g3cfqvt", "text": "IMO if you want to buy \"good\" NNN investments, you need 2-3 brokers keeping an eye out for properties for you.  Let them know the type of stuff you're interested in and then wait.  They'll occasionally hear about stuff and you'll get to see it before it even hits the market.  So many NNN properties don't even hit the open market, you have to have people with a lot of experience to have a chance that those properties before they disappear and you never even knew they were for sale.  My point is, no need to ditch your current person.  Keep that one and add several more.", "replies": [{"id": "g3cpnl6", "text": "I\u2019ve found that the specialists will only work with you if you sign an exclusive agency with them.", "replies": [], "depth": 2}, {"id": "g3djc41", "text": "Agent here. I had a client try this. It\u2019s not practical because you get no loyalty from the agents and they work with their exclusive guys over working for you.", "replies": [], "depth": 2}, {"id": "g3djdam", "text": "Agent here. I had a client try this. It\u2019s not practical because you get no loyalty from the agents and they work with their exclusive guys over working for you.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g3ckvd3", "text": "Really unless you can find someone in a Reit that\u2019s buying and selling stnl assets every day a broker in that focus will know the ins and outs more than most because they deal with the intricacies of tenants and their leases every day.  What about finding a specialized broker that will pay your other broker a referral fee?  I have a four person capital advisor group and we have offered this in these situations.  FYI my lead retail guy has done NNN sales in about every state with around 25 years under his belt. We would pay a referral but our consulting fee on a deal would be about what we would be making on a sale anyways otherwise why pay us to broker.", "replies": [], "depth": 1}, {"id": "g3dkaco", "text": "Here is a link to some really great free research.\n\n [https://bouldergroup.com/research.html](https://bouldergroup.com/research.html)", "replies": [{"id": "g3dnfye", "text": "Thank you! It\u2019s nice to get helpful links like this.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g3dkgfg", "text": "Even within the same brokerage firms, brokers will have specializations. Think of it like a law or medical practice - you wouldn\u2019t use a labor lawyer to structure an asset purchase agreement or a lung doctor for your broken leg. It\u2019s ok to use brokers for specific purposes - they should know it\u2019s not personal and should be willing to help connect you internally with the right brokers (sometimes they split the fee).\n\nI work with the largest institutional firms and use different guys depending on the work - could be product type specializations, normal debt brokerage, note sale specialists, etc.", "replies": [{"id": "g3dn84h", "text": "Yes, I agree. I\u2019m kinda in that tough spot where I know my agent isn\u2019t that specialist. He\u2019s very smart and a quick learner and been doing commercial in general for a long time. But not focused only on NNN. I\u2019d say he does multifamilies and commercial leasing the most. He\u2019s sold a couple NNN but not a specialist.", "replies": [{"id": "g3ds0w1", "text": "He\u2019d probably be willing to split the assignment in order to learn", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g3eg4iv", "text": "I\u2019m a commercial lender. Have never seen a 25 year term and 30 year amortization before personally, even on a national credit tenant property. But if you have any interest in looking at additional financing options in case that\u2019s bullshit (since it kind of sounds like it is) I can do a 5 year term and 25 year amortization at around 2.60%. Potentially 10 year term if the lease warrants it at 3.10%.", "replies": [], "depth": 1}, {"id": "g3ejb42", "text": "What market region do you prefer?", "replies": [{"id": "g3f5ysz", "text": "North Carolina, Texas, Arizona, Florida", "replies": [], "depth": 2}], "depth": 1}, {"id": "g3ezv0w", "text": "If OP needs more time to do DD I would check out Deferred Sales Trust as a backup option to the 1031", "replies": [{"id": "g3f5wh4", "text": "I\u2019ve only heard of a Delaware Statutory Trust. Is this a different DST? I\u2019m leaning more towards a Zero Cash Flow property strategy than a DST if I don\u2019t find a suitable third property.", "replies": [{"id": "g3f9oyi", "text": "No with Delaware I hear you need to rely on a sponsor where the sales trust you are in control", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g3fpp5e", "text": "What if your agent/you paid a referral fee to someone with more experience to have them as a reference point throughout the transaction process? Win/win. You both learn, you continue to build a relationship with one another.\n\nPrimarily a Residential Agent in MA &amp; RI that dabbles in commercial. Good luck!", "replies": [], "depth": 1}, {"id": "g3i5jyq", "text": "You should definitely check into some zero cashflow properties as there are some good opportunities right now.\n\nAs I understand it, say you sell your portfolio for $10 million and are looking to buy some Credit NNN Tenant deals. say you had $5 million in equity and $5 in debt on the property you sold and were looking to buy a Walgreen's with a purchase price of $10 million. As Walgreen's is a credit tenant you can likely obtain financing with an LTV of 80% meaning you put $2 million into the deal. Now since you exchanged, the remaining $3 million in equity from your previous sale needs to go into the new property as equity and will Temporarily pay down the loan to close. After you close, those proceeds ($3 million) can be taken back tax deferred meaning you leave with a tax deferred $3 million check and have a self amortizing property that will give you depreciation and likely tax write offs in the early years.", "replies": [{"id": "g3jgb0f", "text": "How exactly would you take $3m out of the deal, refinance? I'd be careful with the tax implications of doing this after an exchange. Walgreens corp debt was just downgraded, is this or zero cashflow (haven't heard that since '07) properties really a better idea than just paying the capital gains?", "replies": [{"id": "g3ln3o5", "text": "When you complete the exchange you are able to pull out the difference between current equity and your minimum LTV in the form of a tax deferred check.\n\nHere's a brief primer on how it works;  [https://www.nnnig.com/a-zero-cash-flow-property-zero-is-real-estate-property-where-the-net-operating-income-matches-the-debt-service-expense-on-its-mortgage-loan.html](https://www.nnnig.com/a-zero-cash-flow-property-zero-is-real-estate-property-where-the-net-operating-income-matches-the-debt-service-expense-on-its-mortgage-loan.html) \n\nWalgreen's was just an example, you see more of the Zeros as Walmart, Lowe's, Home Depot, etc. \n\nThey can be better for reasons mentioned above, if at all possible and you can find a decent deal, I'd much rather exchange into a property deferring taxes than pay capital gains. Especially if you plan on reinvesting the capital into other RE invesments.", "replies": [{"id": "g3mwiww", "text": "I'd get a tax attorney to look at this type of structure, despite the article on the brokers website above it's far from black &amp; white. One issue is the recalculation if the refi is considered part of a step transaction which could result in taxable boot.  The ABA has some good technical resources. I'm not arguing for or against this type of structure, just suggesting caution. I agree, if you are planning to immediately buy real property it makes the case for a like-kind exchange much more compelling. I'd still have a professional calculate the actual amount of capital gains and it's in-year impact to the taxpayer before making any decision.", "replies": [{"id": "g3t6vnf", "text": "As I broker I would never recommend against consulting with an attorney and accountant on something like this. Was simply providing an insight I recently learned about.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g3sjnbj", "text": "why don't you speak with the new agents and have them give your current agent a referral fee. It'll show that you value his time and knowledge and you aren't completely getting rid of him. Most brokers will accept because it's business they wouldn't have gotten otherwise. It's a business decision not a personal one.", "replies": [], "depth": 1}]