These are the 10 best commercial properties among 300-400 daily listings between $1M-$30M in all 50 US states listed by CBRE, Marcus Millichap, SVN, etc. The properties are selected based on various criteria: price, cap rate, and more (please read "How properties are selected" article.)
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Apartments in Bradenton, FL: 191-unit bank-owned condos on 18.5 acres lot. New appliances and cabinets in most units. Proforma gross income of $1.31M/yr. $4.275M. Only $22K/unit.
Hometown Buffet Restaurant in Denver, CO: 8613 SF restaurant built in 2003 on 1.44 acres outparcel to a retail hub shopping center anchored by Walmart, Home Depot, Sam’s Club and Ross. 20 yrs absolute NNN corp leased till 2023 by a national tenant. NOI $299K/yr with 10% rent bump in 2013. $3.287M. 9.1% cap.
Family Dollar in Tucson, AZ: new 9180 SF single-tenant center on 1.89 acres lot. 10 yrs NN corp lease. NOI $129K/yr. $1.569M. 8.25% cap.
Apartments in Tucson, AZ: 45-unit apartments in 2 acres lot in a good area. 91% occupied. NOI $145K/yr. $1.6M. 9.09% cap.
Walgreens in Houston, TX: 14,490 SF drug store built in 2002 on 1.7 acres corner lot in a upper middle-class area. 25 yrs NNN leased till 2027. NOI $384K/yr. $4.8M. 8% cap. Buyer to assume $3.58M loan at low 6.1% interest fixed till 2027.
Zio’s Italian restaurant in Humble, TX: 7772 SF franchised sitdown restaurant on 1.09 acres lot on a major artery in Northern Houston. Restaurant has been at this location since 1995. 15 yrs absolute NNN corp with 13 yrs remaining. NOI $260K/yr. $2.736M. 9.5% cap.
Strip Mall in Elk Grove, CA: 9950 SF upscale strip 4-unit center built in 2007 on over 1 acres outparcel to a 250,000 SF Kohl's & Walgreens anchored power center in a fast growing high income (AHI $92K/yr) Sacramento metro. 75% NNN leased. Proforma NOI $188K/yr. $2.35M. 8% cap.
Advance Auto Parts in Owasso, OK: 7000 SF auto parts center on 1.12 acres lot in Tulsa metro. 100% NNN corp leased till 2021. NOI $135K/yr with rent increased to $149K/yr in 2016. $1.666M. 8.15% cap.
NOI: Net Oper Income—income after tax, insurance and maintenance expenses paid.
AHI: Avg. Household Income
NNN: Triple net lease in which tenants pay taxes, insurance and maintenance expenses
Apartments in Sacramento, CA: 95-unit well-maintained apartments on 3.89 acres lot near Florin Mall. 96% occupied. Gross revenue of $696K/yr. $3.699M. Just less than $39K/unit.
Walgreens in Lubbock, TX: 15,120 SF drug store built in 2000 on 1.4 acres lot at the intersection of 2 8-lane roads. Store with strong sales of estimated $11M/yr. 100% NNN lease. NOI $332K/yr. $4.0333M. 8.25% cap. Note: Transmercial believes this is a highly profitable location which means Walgreens is likely to renew the lease in 2021.
Shopping center in San Antonio, TX: 32,626 SF shopping center built in 2007 on 3 acres lot in a growing upper middle class area (AHI $98K/yr within 1 mile). 94% NNN leased. NOI $620K/yr. $6.2M. 10% cap.
Rite Aid in Burlington, NC: 10,980 SF drug store on 1.91 acres lot on a major artery near I-85. Long term NNN lease. NOI $320K/yr. $3.1M. 10.34% cap.
Shopping Center in North Port, FL: 37,476 SF upscale shopping center built in 2007 on 3.76 acres lot in Cape Coral area. 85% NNN leased. NOI $595K/yr. Price reduced from $6.349M to $5.5M. 10% cap.
Strip center in Fort Worth, TX: 9961 SF 2-yrs-old retail center on 1 acre lot near I-35W. 100% NNN leased by 4 tenants. NOI $177K/yr. $1.65M. 10.29% cap.
Apartments in Canoga Park, CA: 14-unit apartments in a strong rental market in Southern CA. 100% occupied. Gross income of $190K/yr. $1.67M. 8% cap.
Tutor Time Childcare center in Austin, TX: 11,000 SF childcare center in a wealthy North Austin area (AHI $87K/yr). 10 yrs NNN corp lease by Tutor Time, a national childcare provider. NOI $198K/yr. $2.2M. 9% cap.
Childtime Childcare center in Stockton, CA: 6354 SF childcare center in high income area (AHI $84K/yr). 10 yrs NNN corp lease by Childtime, a national childcare provider. NOI $104K/yr. $1.164M. 9% cap.
Automotive Center in Las Vegas, NV: 14,948 SF automotive center built in 1999 on 1.18 acres lot in good income area. 100% NNN leased by 5 automotive tenants. NOI $172K/yr. price reduced from $2.16M to $1.99M. 8.64% cap.
Walgreens in Lubbock, TX: 15,120 SF drug store built in 2000 on 1.4 acres lot at the intersection of 2 8-lane roads. Store with strong sales. 100% NNN lease. NOI $332K/yr. $4.0333M. 8.25% cap.
Walgreens in Atlanta, GA: 14,110 SF brand new drug store on 1.11 acres in an affluent Northern Atlanta with AHI over $101K/yr. 25 yrs NNN lease. NOI $565K/yr. $7.685M. 7.35% cap.
Apartments in Las Vegas, NV: 22-unit apartments on .35 acre lot in the upper middle class area with high AHI of $103K/yr. Renovated in 2006. 100% occupied. NOI $87K/yr. $1.14M. 7.7% cap.
Shopping Center in Tempe, AZ: 34,495 SF retail center on 2.98 acres lot in a middle-class area. Great visibility. 92% leased. NOI $391K/yr. $4.5M. 8.7% cap.
Strip Center in Cedar Rapids, IA: 11,520 SF strip center on 1.34 acres outparcel to Walmart supercenter. 80% NNN leased with 1 vacant unit. Actual NOI $108K/yr. $1.45M. 7.48% cap.
Apartments in Tallahassee, FL: 30-unit nicely-landscaped apartments on 2/3 acres lot. Near Florida State Univ. & Tallahassee college. 100% occupied. Gross revenue of $195K/yr. NOI $95K/yr. $1.333M. 7.5% cap.
Apartments in Santa Barbara, CA: rare 10-unit apartments in an affluent coast town (AHI over $143K/yr within 1 mile). 97% occupied. NOI $68K/yr. Only $849K. 8% cap. Location, location, location.
Staples in Woodbury, MN: 20,053 SF single-tenant 1-yr-old retail center on over 2 acres lot by I-94 exit in suburban St Paul with strong demographics (AHI $107K/yr). Near Sam’s Club and Wal-mart. 10 yrs NNN lease. NOI $320K/yr with rent increase every 5 yrs. $4M. 8% cap.
Shopping Center in North Myrtle Beach, NC: 90,722 SF 2-yrs old 20-unit neighborhood center in an affluent coastal town (AHI $108K/yr). Anchored by 48,520 SF Bi Lo grocery, a regional chain. 87% NNN. Proforma NOI $1.169M. $11.95M. 9.79% cap.
PepBoys Auto in Greece, NY: 22,277 SF single-tenant auto parts & service center on 3.4 acres lot next to in an upper middle class Rochester metro. 15 yrs NNN lease. NOI $209K/yr. $2.708M. 7.75% cap.
Retail Office Center in Santee, CA: 20,518 SF 2-story 24-unit retail office complex in San Diego metro. 80% leased. NOI $272K/yr. Price reduced from $4M to $3.4M. 8% cap.
Jack in the Box in Houston, TX: 2645 SF restaurant built in 1991 on .71 acre corner lot. New 20 yrs NNN lease with corp guaranty. NOI $121K/yr with 8% rent bump every 5 yrs. $1.73M. 7% cap.
PepBoys Auto in Staten Island, NY: rare 17,720 SF auto parts and service center built in 1998 on 1.1 acres lot in a growing New York area. 15 yrs NNN lease with 13 yrs remaining. NOI $444K/yr with 1.5% annual rent bump. $5.85M. 7.6% cap.
Big O Tires in Fountain Hills, AZ: 4740 SF single-tenant auto center built in 2000 on .57 acre lot in an upper middle class Phoenix (AHI $110K/yr). New 15 yrs NNN lease. NOI $135K/yr. $1.597M. 8.47% cap.
O’Reilly Auto in Simi Valley, CA: 5555 SF free-standing auto parts center on 1.09 acres outparcel to a neighborhood center anchored by Rite Aid, Big 5 Sports and 99 Cents Only. High income area with AHI over $104K/yr. 100% NNN lease with 5 yrs left. NOI $126K/yr. Firm at $1.687M. 7% cap.
Sola Salons in Las Vegas, NV: 5134 SF single-tenant 2 yrs old retail center just off Fwy 215 exit in an affluent area of Las Vegas with AHI over $97K/yr. 10 yrs NNN lease by Sola Salons, a regional tenant with locations in 17 states. NOI $156K/yr. with 3% annual rent bump.$1.98M. 7.5% cap.
Shopping center in Las Vegas, NV: 29,974 SF multi-tenant shopping center built in 1987 on over 3 acres corner lot with high traffic. 95% NNN leased. NOI $589K/yr.$5.9M. 10% cap.
O’Reilly in Atlanta, GA: 6800 SF new single-tenant auto parts center on 1.43 acres lot next to Walgreens. 20 yrs NN corp lease from O’Reilly (NASDAQ: ORLY). NOI $110K/yr. $1.375M. 8% cap.
Mimi’s Café in Brandon, FL: 7045 SF franchised sit-down restaurant built in 2003 near 1.124M SF Westfield Brandon Mall in Tampa metro. 20 yrs NNN corp lease with 13 yrs remaining. NOI $219K/yr with rent bump every 5 yrs.$2.743M. 8% cap.
Big O Tires in Surprise, AZ: 4845 SF single-tenant retail center in a fast growing Phoenix metro. Close to Target, Lowe’s and Wal-mart supercenter. New 15 yrs NNN lease. NOI $180K/yr. $2.1M. 8.57% cap.
Apartments in San Francisco, CA: 18-unit apartments, some with Ocean views in a wealthy area with AHI over $130K/yr. Gross income $284K/yr. $3.095M.
Bally’s Fitness Center in Dallas, TX: 15,000 SF fitness center next to Southwest Center Mall. 100% NNN lease with 5 yrs remaining. Tenant has been here since 1982. NOI $132K/yr. $1.2M. 11% cap.
Zios Italian restaurant in Webster, TX: 7055 SF franchised restaurant built in 1998 on 1.82 acres lot just off I-45 in Houston metro. 15 yrs lease from Zio’s with 15 locations in 6 states. NOI $260K/yr with 10% rent bump every 5 yrs. $2.736M. 9.5% cap.
Jack In the Box in Palm Spring, CA: 2636 SF restaurant on .64 acre corner lot in high income region. 18 yrs absolute NNN corp lease with 6 yrs left. NOI $134K/yr with rent bump every 5 yrs. $1.897M. 7.1% cap.
Sears in Lakeland, FL: 114,500 SF Sears department store on over 12 acres lot in a growing and high income suburban Tampa. 10 yrs absolute NNN lease with 9 yrs remaining. NOI $728K/yr. $8.324M. 8.75% cap.
Office building in Salem, OR: 7252 SF office building constructed in 2002 on ½ acre lot in a stable city. 10 yrs lease from State of Oregon Health Department. NOI $108K/yr. $1.175M. 9.26% cap.
Retail center in Portland, OR: 23,192 SF 5-unit retail center built in 1999 on 1.65 acres lot in a middle class area. 50% occupied. $1.893M. Priced below replacement cost. Strong upside potential when 100% leased.
Travelodge Motel in Tacoma, WA: 79-room motel near I-5 exit, Tacoma Dome & Convention center. Refurbished in 2008. NOI $432K/yr. $4.1M. 10.56% cap.
Days Inn in Spokane, WA: 89-room motel on 1.37 acres lot in a prime location in upper middle class area with AHI $97K/yr within 1 mile. Easy access to I-90. Renovated in 2009. Onsite restaurant. NOI $307K/yr. $2.95M. 10.42% cap.
Apartments in Whittier, CA: 11-unit apartments quite and high income area. 100% occupied. Gross income of $130K/yr. $1.499M.
Retail center in San Jose, CA: 7000 SF 4-tenant retail center built in 2007. Anchored by Chase Bank. NNN leases. NOI $217K/yr. $3.1M. 7% cap.
Medical Office building in Pinellas Park, FL: 7088 SF single-tenant medical office building built in 2003 in Tampa metro. 100% NNN leased. NOI $112K/yr. $1.25M. 9% cap.
Office Building in Santa Rosa, CA: 21,808 SF high-image class-A office building constructed in 1987 in high income area (AHI over $85K/yr). 100% leased. NOI $236K/yr. $3.095M. 7.65% cap.
KFC Restaurant in Las Vegas, CA: 2632 SF KFC Restaurant constructed in 2000 on .61 acre lot outparcel to an Albertson anchored shopping center off Hwy I-95. Long NNN corp ground lease. Buyer owns the land. Rent increases every 5-years. NOI $76K/yr. $1.096M. 7% Cap.
Retail Center in Tampa, FL: 13,000 SF recently constructed retail center on over 1 acre lot conveniently located at the entrance of Westfield Citrus Park Mall in a growing and middle-class area. 100% NNN leased by national tenants: Men’s Warehouse, Vitamin Shoppe and Casual Male. NOI $390K/yr. $4.875M. 8% Cap.
Shopping Center in Bradenton, FL: 37,000 SF shopping center on 3.45 acres of parcel along main thoroughfare with excellent visibility. 100% leased. NOI $323K/yr. $3.895M. 8.3% Cap.
Goodwill in Lancaster, CA: 11,311 SF recently renovated retail building at prime retail location across from CVS/DD’s Discounts with excellent visibility to Fwy-14. 100% NNN lease till 2018. NOI $196K/yr. with 10% rent bump every 5 yrs. $2.460M. 8% Cap. Recession resistant tenant.
Multifamily Buildings in Los Angeles, CA:16-units well-maintained with recent upgrades: new exterior pain, new roof can copper plumbing with great unit mix close to Ernest E. Debs Regional Country Park. 100% leased. NOI $151K/yr. $1.895M. 8% Cap.
Shopping Center in Indian Trail, NC:20,273 SF attractive shopping center across from Harris Teeter anchored center in fast growing Charlotte suburbs. 91% NNN leased. NOI $408K/yr. $5.165M. 7.9% Cap.
Strip Center in Decatur, GA:8828 SF strip center built in 1992 on 1.19 acres of land with excellent regional/local tenant mix in growing Atlanta metro. 100% leased. NOI $208K/yr. $2M. 10.40% Cap.
Medical Office Building in Atlanta, GA: 10,000 SF multiple medical office building with great tenants in affluent (AHI $142K/yr within 1 mile radius) neighborhood. 100% NNN leased. NOI $193k/yr. $2.2M. 8.8% Cap.
Apartments in Westmont, IL: 12-units apartment complex with many recent upgrades: new bathrooms, kitchens, flooring, water heaters, doors, lighting and landscape in a nice quiet neighborhood. 100% leased. NOI $83K/yr. $710K. 11.80% Cap.
Shopping Center in La Vista, NE: 54,122 SF 5-buildings shopping center built in 2001 on 9 acres corner lot in fast growing middle-class Omaha suburb. Property includes 4 single-tenant free-standing buildings: Taco Bell, Fazoli's, Long John Silver's and UNMC Physicians Clinic. 83% NNN leased. NOI $553K/yr. $6.65M. 8.33% cap. Buyer to assume non-recourse loan with 6% down!
Jack in the Box in Aurora, CO: 2771 SF new restaurant on .7 acres lot near I-70 exit in Denver metro. New 20 yrs absolute corp NNN lease. NOI $166K/yr with rent bump every 5 yrs. $2.38M. 7% cap.
Shopping plaza in City of Industry, CA: 41,395 SF shopping plaza built in 1988 on 3.25 acres lot. Shadow anchored by a grocery store. NOI $1.069M. $13.5M. 7.9% cap.
Retail center in Fountain Hills, AZ: 28,452 SF bank-owned retail center built in 2002 in an affluent Phoenix suburb with AHI $134K/yr. Shadow anchored by Frys supermarket. 52% NNN leased with actual NOI $290K/yr. $3.879M. 7.5% cap. Strong upside potential when 100% leased.
O’Reilly auto in Joliet, IL: 9500 SF single-tenant auto parts store on 1.2 acres lot in Chicago metro.100% NNN leased. NOI $208K/yr. $2.449M. 8.5% cap.
Dennys in Palmdale, CA: 4149 SF restaurant built in 2002 on 2/3 acres lot. 20 yrs NNN lease from 2007. NOI $138K/yr with generous 12.5% rent bump every 5 yrs. $1.97M. 7.66% cap.
Walgreens in Daytona Beach, FL: 13,905 SF drug store on 1.56 acres corner lot. 20 yrs NN lease with 7 yrs remaining. NOI $226K/yr. $2.585M. 8.75% cap.
Apartments in Houston, TX: 244-unit apartments complex built in 1983 on 8.69 acres lot. 93% occupied. NOI $363K/yr. $4.2M. 8.7% cap. Just over $17K/unit.
Shopping Center in Wilmington, NC: 44,180 SF shopping center on over 4 acres lot in a stable coastal town. Anchored by a 29,000 SF Food Lion grocery (grocery chain with 1300 locations in 11 states). 100% leased. NOI $360K/yr. $4M. 9% cap.
Buffalo Wild Wings in Austin, TX: 6248 SF brand new franchised restaurant on 1.23 acres parcel just off I-35 exit in a growing city. New 15 yrs NNN lease. NOI $226K/yr. with 10% rent bump every 5 yrs.$2.834M. 8% cap.
Cancer Treatment Center in Lewisville, TX: 18,000 SF cancer treatment center built in 2000 on 2.59 acres lot near I-35E and Hwy 121 in an affluent (AHI $113K/yr) Dallas metro. 100% absolute NNN leased to a subsidiary of US Oncology Holdings (ranked 646 among top 1000 companies by FORTUNE magazine). NOI $420K/yr. $4.946M. 8.5% cap.
Gas Station in San Jose, CA: newly remodeledindependent gas station on .4 acre lot with 6 dispenser islands, a convenience store and 2-bay service garage in a high income (AHI $111K/yr) area. Annual gross revenue of over $2.5M. NOI $168K/yr. $1.975M for both real estate and business. 8.5% cap.
Jack In The Box in Dallas, TX: 2481 SF restaurant with drive thru built in 1998 on ½ ac lot just off I-35 exit. 100% NNN corp lease. NOI $87K/yr with 10% rent bump in 2013. $1.095M. 8% cap.
Hotel Condo in Fresno, CA: 200-unit recently refurbished hotel/condo on 6.8 acres lot just off Hwy 99 exit. $4.9M.
Apartments in Rancho Cordova, CA: 64-unit bank-owned apartments on 1.95 acres lot in Sacramento metro. 50% occupied. $2.125M. Just over $33K/unit!
NOI: Net Oper Income—income after tax, insurance and maintenance expenses paid.
AHI: Avg. Household Income
NNN: Triple net lease in which tenants pay taxes, insurance and maintenance expenses
Bank-owned mini-storage in Tolleson, AZ: 234-unit (151 are air-conditioned & 83 drive up) mini-storage facility with 90 PO boxes constructed in 2009 on 2.49 acres lot in Phoenix metro. Many modern amenities: advanced security systems, 24-hr access. $1.13M.
Office max in Martinsburg, VA: 23,620 SF single-tenant retail enter built in 1998 on 2.11 acres lot just off I-81 in a prime commercial corridor in a growing city. 20 yrs NNN lease with 8 yrs remaining. NOI $307K/yr. $3.32M. 9.25% cap.
Franchised Motel in Houston, TX: 120-room motel built in 1995 on 3.35 acres lot with great highway exposure. Gross income of $1.19M/yr. $3.5M. 11.28% cap.
Shopping center in Bolingbrook, IL: 17,960 SF class-A retail center built in 2003 on 3 acres lot just off Tollway 355 exit in growing upper middle class suburban Chicago. Surrounded by Meijer’s, Macys, Ikea and Costco with over 1.5M SF of upscale retail spaces. 100% NNN leased by 12 tenants. NOI $475K/yr. $5.4M. 8.8% cap.
Auctioned retail center in Antelope, CA: 11,140 SF retail center built in 2006 on 1.2 acres lot in a stable middle-class Sacramento metro. 100% NNN leased by 4 retail tenants. Appraised at $1.68M in 2010. Starting bid at $700K.
Apartments in Ashbury Park, NJ: 17-unit apartments complex in high income (AHI $93K/yr) town 30 miles South of Newark. 100% occupied. NOI $88K/yr. $986K. 9% cap.
CVS Pharmacy in Baytown, TX: 10,906 SF drug store on 1.29 acres lot in Houston metro. 20 yrs NNN lease with 7 yrs remaining. NOI $220K/yr. $2.45M. 9% cap.
Burlington Coat Factory in Pinole, CA: bank-owned 80,008 SF single-tenant retail building constructed in 1996 on 5.84 acres lot just off I-80 in a middle-class San Fran Bay Area. Part of Pinole Vista Shopping center occupied by Target, Staples, Toys R Us, Food Maxx, Bevmo, Pier 1 Import. 15 yrs NN lease by Burlington Coat Factory. NOI $704K/yr. $8.8M. 8% cap. Note: this is the former Mervyns. It used to have a $17M loan, i.e. it was once worth more than $17M.
Designer Shoes Warehouse in Broomfield, CO: 35,000 SF free standing retail center across from 1.5M SF Flatiron Crossing Mall in wealthy Denver suburbs. 15 yrs NNN lease with 8 yrs remaining by Designer Shoes Warehouse. NOI $127K/yr with 10% rent bump in 2012. $1.475M. 8.61% cap.
Apartments in Sacramento, CA: 29-unit apartments with easy access to I-80. NOI $154K/yr. $1.8M. 8.57% cap.
Walgreens in De Pere, WI: 14,820 SF Walgreens built in 2006 on 1.7 acres lot in a middle-class Green Bay metro. 25 yrs NNN leased till 2031. NOI $310K/yr. $4.133M. 7.5% cap.
Auto Zone in De Pere, WI: 7370 SF auto parts store built in 2007 on .7 acres lot. 20 yrs NNN leased till 2027. NOI $102K/yr with 5% rent bump in 2017. $1.36M. 7.5% cap.
Retail center in De Pere, WI: 5862 SF class-A strip center. 100% NNN leased by 4 national tenants: Starbucks, Fedex Kinko, US Cellular, and Payday loan. NOI $166K/yr. $2.084M. 8% cap.
Strip Mall in Sacramento, CA: 7320 SF brand new retail center on 1.10 ac lot just off I-80 exit. 100% leased. NOI $177K/yr. $2.375M. 7.4% cap.
Apartments in Waipahu, HI: 6-unit apartment in Oahu island. 100% occupied. NOI $66K/yr. $725K. 9.2% cap.
Burger King in Vestal, NY: 2470 SF restaurant built in 2009 on 1 ac lot in a high income area (AHI $96K/yr). New 20 yrs absolute NNN lease by the largest Burger King franchisee (NASDAG : TAST) with over 300 locations. NOI $136K/yr. $1.7M. 8% cap.
Apartments in Houston, TX: 60-unit well-maintained apartments near Johnson Space Center just one block from Clear Lake and Christus St John Hospital. Wealthy area with AHI over $90K/yr. 83% occupied. NOI $180K/yr. $1.92M. 9.4% cap. 70% LTV owner financing available 6.5%.
Historically, commercial real estate values have been cyclical and will continue to be so in the future. The availability and cost of financing is a key component of these cycles. Available capital is affected by the economy, interest rates, supply and demand, and the perception of the market. Real estate prices fluctuate as these factors exert their influence.
To determine the best time to buy, consider where we are in the cycle. Then, see how your particular business or personal financial goals can be strengthened by considering the effects of the cycles.
There are four distinct phases to the commercial real estate cycle: Recession, Recovery, Expansion and Contraction.
Recession: The Recession Phase follows a market contraction, when the availability of financing become scarce or expensive and property prices have fallen. Properties experience higher vacancies and owners have difficulty refinancing, selling or leasing. Foreclosures increase and property sellers become motivated. Prices can fall below replacement costs, resulting in many opportunities for those with the liquidity and fortitude to take advantage of the market weakness. This is the absolute best time to buy.
Recovery: In The Recovery Phase, the market is improving and prices begin to recover, although some buyers are still hesitant to proceed. More tenants enter the market and property owners refinance as affordable financing becomes available. Owners tend to improve their property and work to maximize rental rates. Prices are increasing. This is a very good time to buy.
Expansion: During the Expansion Phase, the real estate market is progressing and expanding and equity investors are plentiful. Financing is readily available and the price of real estate may increase more than seen in previous history. Vacancies are at their lowest point and there is a general sense of well-being, prosperity and abundance. Everyone is talking about buying real estate. This is the time to sell.
Contraction: The Contraction Phase is when vacancies are increasing and prices begin to fall from the peaks of the Expansion Phase. The market has become oversaturated and financing is becoming more difficult or expensive. Investors begin to withdraw from the market as vacancy and delinquency rates rise and prices decline. Buying and selling decisions should be based on need, prime property availability and specific sub-market and individual opportunities.
The phases of the real estate cycle are always in the same order; the only variables are the depth and duration of each phase. By determining the timing of phases along with your own personal and business capability and goals, you can make the best decisions.
As a real estate investor, the most important question is, "When is the best time to buy?" This is when we realize we are either savvy decision makers or merely “one of the herd”. If the market is in the Recession Phase, the stage is set to reap the absolute highest profits by buying at a time when prices are at their lowest. When the market is in the Recovery Phase, it’s still a good time to expand holdings and find deals while building long term wealth.
We have all heard the phrase, “Buy low and sell high.” The best time to buy low is when the cycle is in the Recession Phase, when the lowest prices are available. In this phase, prices can be negotiated and many prime locations are available. The time to sell is during the Expansion Phase, when buyers can easily obtain financing and the market continues to expand. One way to think about this is when everyone is talking about buying, you should be selling. When everyone is talking about the doom and gloom in the Recession Phase, you should be buying.
The challenge with this strategy is that it goes against our basic instincts, even though logic and history dictate otherwise. Our “herd instinct” is affected by the people around us, the media and our resulting emotions. Although we understand that we should not follow the herd mentality, logic and emotion are in conflict. Unfortunately for most, emotion will usually rule over logic. This human tendency creates opportunities for the more logical and less emotional investors.
In this time of uncertainty, one thing that we can be certain of is that that cycles will continue to repeat. History has proven that those with the emotional fortitude and the financial ability to take advantage of the cycles will reap tremendous rewards.
Michael Bull, CCIM is a 30 year commercial real estate veteran and president of Bull Realty, Incorporated. Bull Realty real estate professionals help investors and companies maximize profits and build wealth through strategic real estate planning and services.
Apartments in Spring Valley, CA: 61-units well-maintained apartment complex with pool, three barbecue areas and basketball recreational area just minutes from San Diego Downtown near SR-94. NOI $461K/yr. $6.595M. 7% Cap.
Back Yard Burgers in Cordova, TN:2626 SF free-standing Back Yard Burgers franchised Restaurant on .68 acre outparcel to a 228,000 SF shopping center anchored by Kroger Supermarket along dominant retail corridor. New 20-years absolute NNN lease with 1.5% annual rent increases. NOI $ 90K/yr. $825K. 10.91% Cap.
Shopping Center in Downey, CA: 15,811 SF mature shopping center on over 1 acre lot anchored by Little Caesars Pizza and 7-Eleven at signalized corner. 96% NNN leased. NOI $367K/yr. $4.8M. 7.65% Cap.
Dollar Tree in Westminster, CO: 16,868 SF single-tenant retail building at highly visible corner location in fast growing Denver suburbs. 100% NNN leased. NOI $151K/yr. $1.898M. 8% Cap.
Multifamily Building in Houston, TX: 60-units two-story multifamily building with beautiful pool/courtyard and recent upgrades: roof, exterior paint and ceramic tile. 83% occupied. NOI $179K/yr. $1.920M. 9.4% Cap.
Apartments in San Leandro, CA: 5-units well-maintained multifamily building close to public transportation, park and school. 100% occupied. NOI $61K/yr. $700K. 8.8% Cap.
Apartment Complex in Long Beach, CA: 7-units attractive apartment complex near Colorado Lagoon Park just walking distance from the beach. NOI $70K/yr. $975K. 7.04% Cap.
Buildings in San Francisco, CA: 7020 SF mature buildings at corner location with two tenants: market and church. 100% NNN leased. NOI $110K/yr. $1.7M. 6.5% Cap.
Every day there are about 300-350 new retail and office properties between $700K to $15M on the market in all 50 states listed by various companies. Out of these hundreds of listings, only the top 5-10 properties make it to the list that you see on this blog. By focusing on the short list of best properties, you will save time and are more likely to be successful with your investments.
Below are some of the selection criteria:
1.Price range: most investors look for properties between $700K and $15M.
2.Property types: most if not all investors of eFunding want to invest in retail properties and office buildings where tenants sign long term low-risk NNN leases, i.e. tenants pay for property taxes, insurance and maintenance expenses, in favor of landlords. They prefer not to invest in apartments where leases are mostly riskier gross, i.e. landlords pay for taxes, insurance and unpredictable maintenance expenses. Besides, apartment tenants normally don’t have much money which may affect their ability to pay the rent on time.
3.Cap rate: the return of investment must be “reasonable”, e.g. generally higher than the interest rate. The cap rate is typically lower in CA and higher in other states. However cap rate is not everything.
4.Property condition: investors prefer properties with little deferred maintenance.
5.Demographics: the selected properties tend to be in growing, high income and bigger cities/metros as they have better chance to appreciate and easier to find tenants. Besides they are easier to sell if needed.
·You won’t see properties in an area where people are moving out, e.g. Detroit downtown. These properties are easy to buy but hard to sell. In addition, it’s hard to get attractive financing, if at all, for these properties.
·Properties in a middle of nowhere won’t make it to the lists. These are also easy to buy but hard to sell.
·Properties in cities where the average household income is way below the national average, e.g. $28,000/year, also won’t make it to the list as these are most likely high-crime areas.
6.Occupancy: close to 100%.
7.Good Visibility: properties tend to have most if not all units facing the road to show case the tenant businesses. Tenants love visibility. What’s good for tenants is also good for investors.
8.Great locations: properties on a major artery with heavy traffic, near the freeway exit, on corner lot, near a mall, on an outparcel to a shopping center.
9.Land: if land is not included then it does matter how beautiful the property is, it will not be selected. This is the type of property that is easy to buy but hard to sell.
10.Lease Type: most likely NNN leases.
11.Parking spaces: at least 4 spaces per 1000 SF of leasable space.. It’s hard to lease a retail property unless it has sufficient parking spaces.
12.Age: not over 20 yrs old unless the property is well-maintained or recently renovated.
13.Price per square foot: sometimes a property is selected because the price per SF is low, e.g. less than $200/SF for a retail property in California. The main reason for the selection is appreciation potential.
14.Low rent: there is upside potential if the rent is below market. When the leases expire, the rent is adjusted to market rent which increases the value of the property.
15.Financing: sometimes a property may be selected because it offers attractive financing. For example, the seller is willing to carry 80% LTV at low interest rate or buyer can assume a loan at 5.5% interest, fixed for 10 years. This in turn may increase the overall return or cash on cash. On the other hand, a property may be screened out because it is difficult to get reasonable financing. For example, in this tight credit market it is extremely difficult to get financing for a single-tenant mom-and-pop restaurant.
16.Misc: A property could be selected or screened out for other reasons
·If a property has a dry cleaner with onsite cleaning, it will not be selected due to potential soil contamination by a chemical called Perc used in the cleaning process.
·A property in an affluent Santa Monica, CA could be selected simply because it’s rarely available.
·A vacant restaurant in front of a mall in San Francisco Bay Area could make the list because it may have lots of interests from investors in CA.
If you are interested on a particular property and would like additional information, i.e. a brochure, please email to maria@transmercial.com. It’s good idea to provide Maria with:
The date the property was selected (not posted date.) This is on the subject of the post.
Name of the property, e.g. Walgreens in Dallas, TX.
You will notice that the properties are posted 2 weeks after the date they are selected. The reason for this 2-week delay is we don’t want other companies to take advantage of our research work. If you are an investor and would like to receive the list daily without two weeks delay, we invite you to join Transmercial investors club. The daily list of best properties is emailed to members by 6PM PST, Monday-Friday. The email also contains a 1-page flyer for each selected properties with picture, address, and a brief description about the properties.
Membership to Transmercial investors club is FREE. Click here for details. Don’t worry; there are absolutely no obligations of anything from you to us for being a member. Of course, we hope that you like our work and will eventually ask us to represent you. However, it’s all up to you as you have no contractual obligations to us for anything.
Apartments in Worth, IL: 32-unit apartments with 24 2-BR units on 1 acre lot in Chicago metro. 97% occupied. Proforma NOI $162K/yr. $2.075M. 7.8% cap.
Brand new apartments in Newark, NJ: 6-unit apartment building (2 2-BR & 4 3-BR units) with onsite parking & garages. 100% occupied. NOI $82K/yr. $979K. 8.37% cap.
Apartments in Santa Clara, CA: 26-unit apartments on .69 acre lot in a high income (AHI $105K/yr) rental market in Silicon Valley. NOI $231K/yr. $3.7M. 6.26% cap.
Pep Boy Auto in Kissimmee, FL: 21,615 SF auto parts and automotive center on 2.53 acres lot in Orlando metro. 15 yrs absolute NNN lease with 13 yrs remaining. NOI $269K/yr with annual 1.5% rent bump. $3.493M. 7.7% cap.
Rite Aid in Newport News, VA: 12,608 SF drug store on 1.4 acres lot. 25 yrs NN leased till 2021. NOI $186K/yr. $1.957M. 9.5% cap.
Asian Shopping Center in Doraville, GA: 51,205 SF shopping center in North Atlanta. Anchored by 99 Ranch Market. 100% leased. NOI $517K/yr. $5.169M. 10% cap.
Apartments in Wilmington, CA: 10-unit apartments in a densely populated area. NOI $72K/yr. $969K. 7.45% cap.
Apartments in East Palo Alto, CA: 20-unit apartments on ½ acre lot in a wealthy city in Silicon Valley (AHI $154K/yr). 100% occupied. Condo conversion possible. NOI $147K/yr. $2.499M. 5.9% cap.
Office Building in Austin, TX: 6136 SF office building on .86 acre lot with I-35 visibility in a fast growth upper middle class area (AHI $89K/yr). 85% leased. Proforma NOI $105K/yr. $1.15M. 9.13% cap.
I am the Chief Investment Advisor at Transmercial, formerly
eFunding, Inc., a Commercial Real Estate Investments company in San Jose, CA. I am in the top 5 commercial real estate expert author among over 500 on ezinearticles.com.
