Secrets of a Real Estate Hedge Fund Manager

On a weekly basis I get questions from my student-investors who need guidance about their deals. These questions vary from what terms should be included in a contract to what strategy should they use when dealing with commercial brokers or the sellers.

Knowledge is power. If you want to find out answers to these questions and to learn how to flip commercial real estate check out this recent webinar I did.


Question:
1. How do you determine the "right" low price to offer a Seller/broker of a vacant single-tenant retail property?

Answer:
You may never truly know the best exact low price to offer. In my opinion, whatever price the seller or listing broker is asking for the property is almost irrelevant. The entire strategy is based on your ability to line up a national tenant with an LOI that will increase the value of the property and will create a spread between price under contract and value with Tenant’s lease.

Question:
2. What are the steps to get the property under contract at a lower price and than implement your strategy to increase its value by getting a Tenant lined up with an LOI?

Answer:
- Identify the vacant property and their listing/asking price
- Look for the neighboring for sale vacant properties and what they are asking for per square foot (to sell)
- Look for the neighboring for sale occupied properties and what they are asking for compared to the income they receive to figure out the cap rate of the area
- Look for neighboring for lease vacant properties and what they are asking for per square foot (to rent)
- Figure out based on these comparables what would be a realistic lease income that a national tenant would pay yearly
- Divide that net income amount (NNN) by the cap rate of the area to come up with the approximate value for the property once the lease would be signed
- Negotiate a lower purchase price (Register for one of my FREE webinars)
- Call tenants following the system I give you, until you have an LOI from a national Tenant with the lease terms I share with you. (Register for one of my FREE webinars)
- Assign the purchase contract to my fund and get an assignment fee based on the spread between the lower purchase contract price and the new increased price of the property based on the added value of having a national tenant lined up to lease with a corporate guarantee for 10+ years etc. (Register for one of my FREE webinars)

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