Commercial Real Estate Investing From A-Z Top Tips From Commercial Real Estate Conference
The information in this post were my notes from the Women's Real Estate Investment Summit by Beth Azor. I highly recommend attending this next year.
You can read this entire episode here: bit.ly/3QbW8KF
Lending
Because self storage is a business, you can do an SBA loan to purchase. Make sure to go with a lender that is experienced in SBA loans in order for it to take the least amount of time. You will find these lenders at industry specific conferences, you should also ask your network about them.
It was recommended to never to do a CMBS loan, even thought the rates are great, because you are stuck with it for 10 yrs, there's a prepayment penalty, you cannot put a second loan on the property, and it gets sold multiple times over the life of the loan, and you don’t have a direct contact. They can foreclose on you very quickly.
Make sure to ask lenders if they service their own loans.
Look at NOI/debt amount. Lenders like 9% and above debt yield ratio.
If you're syndicating a deal, documentation on capital call is important for banks. Also, the controlling interest should stay with operator (this will also be required by the bank).
Finding deals
Call brokers regularly so they keep you in mind.
Deals are getting done because of Linkedin. People are meeting people online, they are becoming influencers in their specific real estate field, and they are finding deals because of that, as well as growing their network.
Purchasing properties
Let/make brokers invest in the deals that they’re bringing you. They will be very honest with the value of the deal they are investing in, they are also a great resource for any questions, and they understand the industry.
Best practices
Do a stress test analysis on your underwriting (and your existing properties) to see how the potential property would survive in an economic downturn. For instance, what would happen if 10-20% of the tenants left, what would happen if rents decreased by 10-20%.
By the numbers
Women outperform men in real estate investing by 2x1. I say this knowing that my audience is 65% men, and I love men. I say this because I want all the guys here to be mindful and purposeful to partner up with women. It has been proven over and over again that diverse teams in all industries do much better than non diverse teams.
Beth asked lenders how many women have they lent to in their entire careers, they said between 1 and 3 women. That's an average of one woman per decade.
Retail
Beth’s #1 acquisition strategy: 100% leased centers (rents are too low).
Never vacate old tenants before new leases are signed.
Watch out if a business is being sold to an EB5 person who is just buying to get a visa. If that happens, they will likely not run it properly and will close the business after they get the visa. So you need to start thinking of who may take over that space.
When you paint a retail center, calls from leasing brokers go up 20%, every time!
When your tenants call asking for something, give it to them, but ask for something in return (like a waiver).
For retail signage, have white letters on dark backgrounds, it jumps out in retail.
Metro PCS is known for not paying rent.
Join the conference next year here.
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