Wholesaling Or Flipping Commercial Properties...you Think?
I was just interested on what some of you thought about flipping commercial properties. It seems like to me, this would yield some pretty nice paychecks w/o a lot of the associated risks involved with owning. Is this being done? Are the contracts totally different from those used in the residential arena?
And also where would I look to find steeply discounted commercial properties either in foreclosure or needing extensive rehab??
Thanks
[addsig]
Flipping houses depends mostly on finding motivated sellers who either don't know what their house is worth or are willing to discount to get cash now-- i.e. because they are being foreclosed on or whatever.
Flipping commercial property is trickier. For the most part the sellers have a pretty good idea what the property is worth and they are less likely to take serious discounts because they tend not to get in tough financial situations or know how to skate through when they do.
That said there is a way to do this that makes good money. Find tenants for vacant commercial space. Buy the space on a zero occupancy basis and sell on full occupancy. This adds a great deal of value fairly quickly.
Not saying its impossible to find bargains and flip in the commercial business-- only that it is much more difficult.
Thanks for the reply CK. So do you think it is possibe to increase occupancy w/o taking on any risks? The reason I say that is b/c, my goal was to control the property w/o getting to involve w/ the responsibilities of managing it. But I guess if I find a vacant property, chances are slim that I will be able to avoid the responsibilities w/ managing it. OK lets say Im able to negotiate a contract w/ closing scheduled withing 60-90 days. How possible is it to occupy a property withing that 60-90 days in order to flip it for a handsome profit.
My whole strategy is to not have any obligations for any lenghth of time, w/ no risks and very little of my money involved. Any thoughts?? This is what I want to do.
[addsig]
Commercialking,
You are full of all kinds of good ideas. You ought to write a book or something.
Quote: My whole strategy is to not have any obligations for any lenghth of time, w/ no risks and very little of my money involved. Any thoughts?? This is what I want to do.
Well its a good plan. I would start by looking for commercial tenants. Put an ad in the paper saying you have odd spaces for rent. Simultaneously start looking at vacant buildings. Do financial analysis of asking prices/square foot, rental rates/foot. Calculate Cap rates based on various theoretical rental rates.
As always concentrate on motivated sellers: Buildings on the market a long time, people behind on their mortgage, Guys with personal problems, Building code cases.
Simultaneously build a database of motivated tenants. Know what they are looking for. Know what they are willing to pay. Pay particular attention to the guys wanting relatively small spaces and the sellers with bigger spaces. Sometimes you can rent 25%-50% of a building for 100% of the mortgage payment.
Bnorton-- I'm working on it. But books are more complicated than real estate deals.