How to Win the Commercial Real Estate Acquisitions Game

Syndicated Post By Jeremy Cyrier

An investor called the other day and complained, "I've talked to a bunch of brokers, but can't find the deal I want. Can you send me a list of what you have for sale?"

We sent our list and asked the investor what he wanted. He said, "You know, a good deal. Something that makes sense. All I'm seeing out there are opportunities that are either overpriced or gone before I had a shot at them."

If you're an investor, here's some bad news. Investors call our office, make the same requests, get a list of what's on the market and complain about the unavailability of deals. We offer to talk through the requirement, but most say they're happy calling brokers because they'll get access to more deals that way.

Maybe, but aren't you just looking for off-market deals in on-market locations?

Remember, sellers hire brokers to represent them in the sale of their property. They want the advantage of exposure to the largest audience and to sell their property for more than they could on their own, which means when you're calling brokers, you're talking to the people that owners want you to.

Out of our own interest as an owner advisory firm, please keep calling brokers. We encourage it and we like the calls. It makes our owners happy because it proves that we're giving them great exposure and will eventually sell their property for the best price.

There are some investors, however, who refuse to limit themselves to the brokerage world. For those who choose to go off-market, we won't lie to you. It's hard work and it costs money, time, and energy.

One client came to us and required an industrial building in the greater Boston 93/128 interchange market. Out of 50 potential properties in existence, we sourced 6 sites that could be purchased, and the client selected 3 to seriously consider. Of the original 6, 20% were listed for sale by the owner or with a broker, while the rest of the properties were off-market.

The trick to sourcing and winning the acquisitions game is to know what you want, identify where it exists, and then work through the market one commercial property at a time until you find the motivated seller willing to work with you in a transaction. It's not difficult. It just takes time and energy to stick with program until you get the results you need.

Jeremy Cyrier, CCIM believes that actions without meaning are worthless. He is the President of MANSARD, a Massachusetts commercial real estate marketing and brokerage firm and is a member of the CCIM Institute faculty. You may reach Jeremy at Jeremy@Mansardcre.com or at http://www.masscommercialproperties.com.

Article Source: How to Win the Commercial Real Estate Acquisitions Game

Read more...

Why Commercial Real Estate Is Not a Hammer and Nail Business

Syndicated Post by: Jeremy Cyrier

You've heard the expression, "When the only tool you have is a hammer, everything looks like a nail." When you have one formula for capitalizing on commercial property investments, you try to make your deals work one way.

A broker called to ask how we sold a commercial property investment he had competed against us to list. We sold the investment for 35% more than he estimated based on his review of the property's numbers. It didn't add up.

He took the owner's gross income, subtracted the vacancy/credit loss and operating expenses to derive the net operating income. He applied a market cap rate to the deal, derived the commercial property's income value, made his recommendation and hoped to be hired for the listing.

They didn't like his price.

Here's why his hammer didn't work:

The owners were debt-free on this specific commercial property.
There were 3 stakeholders hoping to sell the investment for an above market value.
Cash flow was important to one because she was retiring during the sale.
The debt market was frozen and deals were difficult to finance.
One of the owners sought to pay off a primary residence mortgage with the sale proceeds.


After our stakeholder interest analysis, we presented a solution to the owners that allowed them to convert their equity to cash flow with an installment sale. To achieve above market value, we sold the commercial property with below-market financing terms that gave the new owner ample cash flow to operate the property, pay his annual debt service, and time to secure new financing once the property was stabilized at its highest and best use.

The recurring cash flow supported the owner looking for a retirement income. We bypassed the debt market because the sellers carried the paper. And we required the new owner to make a 17% down payment, which extinguished the other owner's mortgage obligation and paid for the cost of sale.

If you haven't done an investment deal lately or are having trouble finding the "right" opportunity, start by looking at the property investment strategies you've been using. Is there a pattern in your deals that could be your hammer and nail?

To get different results, you have to try different things. Put your hammer away and ask questions in the deals you're considering. You may find new information and new opportunities that will become new ways of making your investment goals come to fruition.

Jeremy Cyrier, CCIM believes that actions without meaning are worthless. He is the President of MANSARD, a Massachusetts commercial real estate marketing and brokerage firm and is a member of the CCIM Institute faculty. You may reach Jeremy at Jeremy@Mansardcre.com or at http://www.masscommercialproperties.com.

Article Source: Why Commercial Real Estate Is Not a Hammer and Nail Business

Read more...