Need Help In Structuring A Large-size Commercial Deal.
Hi all,
I wasn't sure if I need to post this in "Deals In Progress", but technically it's not in progress yet.
I have a bit or two of knowledge about residential, but completely new to commercial. I have leads on two deals in the midwest for 5.25M and 6.9M. I have never dealt with that many zeros. Gurus say there's no difference, but I beg to differ. I don't have a $100,000 earnest deposit that sellers want on each property. I have potential lead on a buyer in Chicago, but herein lie my questions. Should I try to put these properties under assignable contract myself, and then try to re-sell it? If so, how do I get around earnest deposits? Or should I instead just get the seller and a buyer to meet, and ask for finder's fee in the process? What would be a reasonable finder's fee that won't scare or offend people? Should I collect from seller or buyer? Both deals are CAP of 8-9%, managed, and 100% occupied. How should I search for more buyers if my buyer won't come through? Put it up for bid on a Website? Newspaper advertising?
Any and all advice would be greatly appreciated. PLEASE HELP.
Won't anyone please help? Commercialking, LarryNut... I know some of you guys and girls out there have experience with this.
. . . - - - . . .
:cry:
Well, Lou, its not just more zeros (in spite of what they say) . . . .
Is this property listed with a realtor now? If not, why do you believe that the seller wants to sell? If so what do you add to the deal that the broker isn't doing?
Sounds like what you would like to happen here is you collect a bird-dog fee. Bird-dogging is, of course, illegal. People routinely ignore that on small deals but as the deal gets bigger they are more likely to notice.
That said the real issue is what value do you add to the transaction? If you bring a deal to the table thats just average then the buyer is reluctant to pay you a fee on the grounds that he can find average deals all by himself. If, on the other hand, you bring a better than average deal then paying you starts to look easy.
The ultimate version of this is a development deal where you bring the idea that adds value and the skill or management to make that transformation happen. In that case you can get a very large split of the profits, even with no cash in the deal.
An 8 cap deal is just an average deal (perhaps not even that good). You're going to have to add value someplace.
I knew I could count on your infinite wisdom! *BOW*
Quote:
Is this property listed with a realtor now? If not, why do you believe that the seller wants to sell? If so what do you add to the deal that the broker isn't doing?
Seller is a broker. I know of his intent to sell, that's not at question. But I do agree 8-9 CAP is not all that exciting.
Quote:
Sounds like what you would like to happen here is you collect a bird-dog fee. Bird-dogging is, of course, illegal. People routinely ignore that on small deals but as the deal gets bigger they are more likely to notice.
What if I put it under contract, and assign?
Quote:
That said the real issue is what value do you add to the transaction? If you bring a deal to the table thats just average then the buyer is reluctant to pay you a fee on the grounds that he can find average deals all by himself. If, on the other hand, you bring a better than average deal then paying you starts to look easy.
The ultimate version of this is a development deal where you bring the idea that adds value and the skill or management to make that transformation happen. In that case you can get a very large split of the profits, even with no cash in the deal.
An 8 cap deal is just an average deal (perhaps not even that good). You're going to have to add value someplace.
Any suggestions on a 100% leased commercial property? No more land left to build on, unless you go - 2 story (above existing tenants). So I can't really offer an improvement in management, adding tenant, or development. Or am I not being creative enough?
[ Edited by LarryNut on Date 02/03/2005 ]