Posted a couple months back that I bought my first major office building. Now I’m trying to rent it out and would appreciate any critiques on my listing, tips on marketing, or a tenant if you got one! 🙂
[{"id": "e2mjgzh", "text": "Are you not hiring a broker? I assume you accounted for TI/LCs in your proforma?\n\nI don\u2019t think residential brokers are worth their commission, but commercial brokers often have connections with tenants/companies you will not.\n", "replies": [{"id": "e2mk5pg", "text": "Exactly, you may also think about some big firms like CBRE or Colliers, they offer really nice brokerage services, buth they require Leasing Fees, which will be Non-Recoverable cost in your business plan. I think they are worth it, since they have connections (as previously said) and can cut on your vacancy time significantly.", "replies": [{"id": "e2mkwze", "text": "That\u2019s interesting - what would you say they have that I as an independent broker would not?  I was able to lease my other building (although it was smaller at 8000 sq ft) through signage and loopnet/costar...\n\nWouldn\u2019t a broker representing a tenant automatically look into sites like loopnet?", "replies": [], "depth": 3}], "depth": 2}, {"id": "e2mksmw", "text": "I am a commercial broker and am self listing ", "replies": [{"id": "e2ml3vq", "text": "Gotcha, well I\u2019d start calling as many tenant rep brokers as possible? Idk I work on the debt side so probably not a ton of help here.", "replies": [{"id": "e2ml9hm", "text": "No worries I appreciate all input.   Btw... you looking for some office space???  I know a guy... \ud83d\ude0f", "replies": [{"id": "e2mldgk", "text": "Ha! Curious - what is in-place vacancy at acquisition? What is your projected stabilized? Same with rents??\n\nTrying to understand strategy and type of investment you have here. ", "replies": [{"id": "e2mllcz", "text": "If you look at my previous post here I go into a lot of details.  I got extremely lucky with this deal - 2.25M with about 500k needed in repairs.  At half full it nets about 4-5k a year right now AFTER my debt service.  Fully rented at $18 a sq ft (well below market rates) and I\u2019ll have NOI of approx 600k.\n\nThe previous owner passed away a few years ago and left his estate in disarray with many fighting siblings and ex wives.  They were running out of money and we happened to make an unsolicited offer at just the right time.", "replies": [{"id": "e2mm0hw", "text": "That is an absolute grand slam of a deal. Will have to read your other post when I get home. Well done sir. ", "replies": [], "depth": 7}, {"id": "e2n2jtq", "text": "Holy shit. You\u2019re cash on cash is stupid high. ", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "e3hw4ig", "text": "THIS!!!!!", "replies": [], "depth": 2}], "depth": 1}, {"id": "e2mjyq5", "text": "Definitely hire a broker.", "replies": [], "depth": 1}, {"id": "e2mk6qb", "text": "I would also hire a broker for something like this but beyond that, two suggestions:\n\n1. For about $100 and an hour or less on a ladder, you could put new ceiling tiles into the spaces in the ceiling that are missing them and make the space look much better for the picture\n\n2. I'm never a big fan of hyperbole (eg \"before rates skyrocket\").  Maybe it's just me but that puts me on high alert about the pricing.  ", "replies": [{"id": "e2mkzmb", "text": "Fair points.  We currently have a large crew spending about $600k in improvements and repairs so that\u2019s definitely on the docket.  In the meantime I put in those renderings to show what\u2019s in store...", "replies": [{"id": "e2nc1g7", "text": "I\u2019m a believer of less is more when it comes to pictures.  Include a couple quality exterior and interior photos.  If you decide to include pictures of the suites make sure its pristine.  Also, hire a broker asap.  The commission you\u2019ll pay them is well worth the return.  Find out the top listing brokers in your area, its going to be the brokers representing competing properties.   Thats going to be the broker you should hire. ", "replies": [{"id": "e2nrgmm", "text": "Good points I\u2019ll remove the third floor pics with no ceiling tiles.  As for the 4th I want to keep that raw pic as it really shows the potential of the space.\n\nAs for a broker - I am a broker of 9 years and I have a pretty good network.  That said I\u2019m open to considering a brokerage firm...  but I\u2019m going to go it alone for a bit as I was able to fully rent my other building (7500 sq ft) by myself in under a year.  Brokers search out space for their tenants, and my listing is on costar and loopnet (and several other sites).  I see no reason why any of them would \u201cskip over\u201d or simply miss my listing.  Right?", "replies": [{"id": "e2nyyuy", "text": "If you're not going to hire them, you should at least market your space to them.  Consider doing a broker event when it is complete.", "replies": [{"id": "e2nz7cq", "text": "Great idea - definitely would love to do a brokers open on that 4th floor all day that bleeds into a party at night.  Any excuse to drink I\u2019m all for it!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "e2n8edj", "text": "Point 2 is exactly what I was going to address. Those types of statements dont read well to potential tenants.", "replies": [], "depth": 2}], "depth": 1}, {"id": "e2mrrij", "text": "Congrats on the purchase! The plans for the site looks great and definitely will attract customers. What % down did you purchase with? \n\nCan I correctly assume 5% cap rate meaning the building costs around 7.5-8.8m? How much investment are you going to put into renovating the space? What are your expected leveraged returns?", "replies": [{"id": "e2msvhi", "text": "I put 25% but it was a unique deal.  We had a purchase price of 2.25M, but the bank wrote the deal at 2.75 with the seller crediting us back 500k at closing (for these repairs and renovations).\n\nBecause of the situation (owner passed away in 2015 and estate slowly ran out of money) we were able to kind of put them up against a wall.  Basically they were so broke that if they had not sold to us they would have gone into bankruptcy pretty fast.\n\nThat said had they had any sense they would have actually listed the property and properly marketed it, and could probably have gotten 4-5M at least.  Their loss I guess!!", "replies": [], "depth": 2}, {"id": "e2n4glb", "text": "Who would pay a 5% cap on a building that\u2019s just over 50% occupied?", "replies": [{"id": "e2n6rx2", "text": "Anybody. That's a huge value add. ", "replies": [{"id": "e2n7e5x", "text": "Huge value add. Especially with the $500k in repairs! ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e2n6kxt", "text": "Does the tenant have to bring his own ceiling tiles? ;)", "replies": [{"id": "e2nr5qd", "text": "Yeah good point - maybe I should delete those photos?  I was just trying to give tenants an idea of what\u2019s on the third floor...", "replies": [], "depth": 2}], "depth": 1}, {"id": "e2n81cd", "text": "My thoughts:\n\n1. Is loop net the widely used marketing platform in your market? Does CoStar not have a presence? In my market loop net is mainly for tenants and costar for brokers. Always good to cast a wider net.\n2. Hire an architect to create some hypothetical plans. Totally worth the $0.15/sf for a hypo test fit. A lot of tenants don\u2019t have the imagination to visualize a buildout like us brokers. Maybe even take it one step further and build out a spec suite (move in ready suite). This way you can illustrate a finished product with the building standard finishes.\n3. Offer a broker bonuses. Offer a gift card for touring (as long as you\u2019re there, and you get the tenants name, timing etc), no matter how big or small a tenant is, at least one of the guys on my team will always tour the tenant and/or broker through. Being able to tell the whole story, answer any questions on the spot and ask the tenants questions are all crucial to make it to the next step.\n\nI\u2019m sure our markets have different norms, so i hope this helps.\n\nPS: great looking building, floor plates look efficient, great window lining, and love the ceiling height. I\u2019m located in Southern California, and landlords here try to replicate that look. However, having original bones make the building have more character...", "replies": [{"id": "e2n8yem", "text": "My understanding is that LoopNet Free displays only on LoopNet, but with a premium ad it gets posted on CoStar too. I use premium ads on major listings and it drives a huge amount of traffic from brokers compared to non-premiums.\n\nLook at purchasing 1 premium listing. It\u2019s $828/yr each and you can move it to different listings all year. ", "replies": [{"id": "e2nbdlh", "text": "It\u2019s interesting how the CoStar group has structured the platforms to cross. A bit of a monopoly if you ask me. My firm subscribes to CoStar and pay a hefty monthly fee, but we also subscribe directly to loopnet premium for certain assets to gain more traffic directly from tenants. Seems almost as if CoStar is double dipping. I do admit we use CoStar for a lot of their market analytics and pull reports for tenant assignments; it has a much better user interface than loopnet.", "replies": [{"id": "e2np6ya", "text": "Our firm has discussed getting CoStar for about two years now, but the price does not seem worth it to us yet. We used LandVision last year to gather bulk property information and it was only $6000. It doesn\u2019t have anything near the CoStar info, but it made me plenty of money", "replies": [], "depth": 4}], "depth": 3}, {"id": "e2np4tp", "text": "Costar is free to list, pay to search\nLoopNet is free to search, pay to list.\n", "replies": [{"id": "e2np8ol", "text": "But you can post to LoopNet for free? I\u2019ve never been on CoStar because I don\u2019t have an account. ", "replies": [{"id": "e2npgrg", "text": "You have to pay now for any listing to be marketed on LoopNet. If you don\u2019t, the listing will only appear in Costar. When a Costar user signs into their account, they will be able to see your \u201cstandard\u201d  free listing, but if someone searching on LoopNet for free clicks on your property on the map, they will be prompted to access Costar to see the listing. \n\nYou can log into LoopNet with a free account and access/ make edits to your active listings.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e2n9e76", "text": "Nice looking building!  You could change the caption on the photos to describe what I'm looking at.  Page 4 of your brochure should be scaled down to 8.5x11 so it doesn't appear so out of proportion, I can tell you merged 4 different PDFs together instead of doing it in publisher or InDesign", "replies": [{"id": "e2nr93m", "text": "Good points - actually that brochure is not mine (it\u2019s from the previous broker) and I can\u2019t seem to delete it.  I\u2019ve asked loopnet to remove it so hopefully that is done soon.", "replies": [], "depth": 2}], "depth": 1}, {"id": "e2n9wjv", "text": "what about approaching a We Work or some other kind of coworking space that needs a large space to rent?", "replies": [], "depth": 1}, {"id": "e2onqxv", "text": "Go for one large tenant based on the demographics of your market and spec one of the spaces to attract smaller tenants to fill up the rest of the space.  If you can get one tenant to take that 18,000 sf space, you now have an exit for an owner/user opportunity which always prices higher than going with another option.", "replies": [{"id": "e2oxbc3", "text": "Great - you got a 18000 sq ft tenant for me? \ud83d\ude02\ud83d\ude02", "replies": [], "depth": 2}], "depth": 1}, {"id": "e3hw1pm", "text": "Hire a broker!!!!! I know you are probably a successful businessman but brokers are specialists in this area of office leasing. It will pay off time and time again. They know the market, they know the tenants and they know real estate backwards and forwards. Hire a broker!!!! Hire a broker!!!!! Are you worried about having to pay their fee? What about when you mess up and have to pay for something that a broker would have caught? Put your ego aside and hire a specialist!!!! ", "replies": [{"id": "e3i2fqm", "text": "Appreciate the advice but I have said a couple times now that I am a broker...  ", "replies": [{"id": "e3i44pr", "text": "As am I. I did Office and industrial tenant rep for years before becoming a full time investor. I went in to the market thinking I could do it myself but i realized i didn\u2019t know the most important thing which is the market on the ground floor and the tenant base. Being a broker you should know as well as i do that it\u2019s the guys that are out working the market day in and day out who become the most valuable person to the landlord. Hiring brokers and putting what I think I know aside has saved me a shit load of money, time and headaches. Hopefully it\u2019s different for you and you know all this stuff inside and out but when I left that world and got on the investment side I slapped myself across the face because it all changed and changes daily. Being a broker doesn\u2019t mean a damn thing when you aren\u2019t working it and using it 24/7/365. You\u2019re a debt guy. I know debt backwards and forwards but I\u2019m not going to place it myself even if I had the licenses. I would, and do, hire specialist in debt placement because they deal with it 24/7/365. I only deal with it when I need it a few times a year.", "replies": [{"id": "e3i472g", "text": "I know I should just STFU but I have seen this go South more times than not for guys who just want to do it themselves.l and it makes me cringe when I see it. ", "replies": [{"id": "e3i6wn8", "text": "Totally get it man.  To be honest if this were a little larger I\u2019d probably hire another broker.  That said I was able to fully rent out my other building (8000 sq ft) within 6 months all 5 year leases.  I\u2019m pretty confident in the market and area.\n\nGood advice though - if I\u2019m sitting here with my thumb up my ass in 3 months I\u2019m going to have to rethink that.  The building pays for itself right now so I\u2019m in a good position.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "is8gh6q", "text": "Gorgeous place, congrats", "replies": [], "depth": 1}]