Is the holy grail to buy distressed properties that you can pre-lease and then flip/finance them after closing?
This scenario would be most optimal when the real estate investor and the company can partner together.

1. A company should almost never own property, capital should be used for more productive things.
2. The largest greatest risk an investor of vacant properties can face is extended vacancies, and this is also the greatest cost.
3. Value creation of real estate occurs primarily and largely by its occupancy (and its timing), so it makes sense to compensate the company for 'choosing' a particular property.

Investor puts of cash for property, company pays investor for usage, property is sold or a loan is taken, investor and company split the proceeds equitably.

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I understand developers basically do this, such as build-to-suit.

How common is this practice when it comes to distressed properties?

What would be the recommended steps to secure the financing or a buyer in the shortest period of time (ideally a double closing)? What type of network needs to be activated to help accomplish this? Would [Ten-X.com](https://Ten-X.com) be satsifactory?

How can you overcome roadblocks associated with working with small or startup companies? Especially in the eyes of the ultimate buyer or lender.

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With so much potential upside, this would seemingly be used by entrepreneurs who need capital and need to expand their real estate. Partner with an investor, buy distressed, sell for 2x as a sale-leaseback or refinance, split the proceeds and repeat.

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This would also give a practical way for a real estate investor to transition into business investing. There are companies who would be willing to receive the appreciated value in cash in exchange of equity in their business.

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The numbers would need to be along the lines of:

Tenant pays 90%+ of market rents for same property, NNN.

Yield on purchase price needs to be at least 20%.

Could be a first mortgage with shared appreciation to the investor, or a lease with the option to buy the property so the tenant can buyout the investor and keep excess proceeds of a refinance, or from doing a sale-leaseback.

Target exit CAP would be ±12%.

Appreciation split highly depends on the two parties, the rents paid, yield, if any equity is involved, speed to sale, cap rate.

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What do you think of using this technique? What can go wrong?
[{"id": "eouvdzq", "text": "This scenario works in all aspects, not just distressed properties.  Having a tenant in tow will add value if you are buyingor developing space that is not currently occupied. \n\nIf you are sourcing the property, putting up the money and fitting out/providing TI, why would you give any upside to a tenant?", "replies": [{"id": "eoxq9fw", "text": "Just to secure the tenant's loyalty.\n\nIn this particular case, I am considering splitting the upside with the tenant in exchange of equity in their business, which I like on its own merits.", "replies": [], "depth": 2}], "depth": 1}, {"id": "eov6emi", "text": "Look up the RTP Campus deal in North Carolina that sold in 2015.  \nhttps://www.newsobserver.com/news/business/real-estate-news/article10865846.html  \n(Summary: The vacant asset was acquired in 2013 for $26 million and the entire property was leased to Lenovo, then sold in 2015 for $127 million)", "replies": [], "depth": 1}, {"id": "eoxsjiz", "text": "An executed lease can also secure the tenants loyalty....\n\nIf you believe in the company, getting a piece in the business for a piece in the property sounds like a reasonable way to diversify.  From their standpoint, doesn\u2019t that go against your point #1?  Shouldn\u2019t their equity be used for more productive things?", "replies": [{"id": "eoxvo4l", "text": "\"An executed lease can also secure the tenants loyalty....\" \n\nProbably true. I'm not as well versed about thinking from the standpoint of the tenant. It's surprising how different the perspectives are. Many are completely unaware about real estate valuation for example.\n\n&amp;#x200B;\n\nWe would give cash in exchange for the equity. The cash would come from realizing the property appreciation by sale or finance.", "replies": [], "depth": 2}], "depth": 1}, {"id": "eoxxqx6", "text": "I have only been on LL side.\n\nIf they are getting cash but only from appreciation, would that be in the form of pref equity or the cash today takes an equity position in the building?", "replies": [], "depth": 1}]