I attended a real estate investing class this past week and here’s a few more things I picked up besides the possibility of double digit interest rates.
Lisa has been a property manager for commercial properties for about 20 years and she has a pretty grim picture of the commercial market. Tenants are renegotiating their leases. On the one hand, landlords don’t want to give up rent while the tenants want or need the rent reduction so that they can stay in business.
Another prediction she made is that many of the larger commercial brokers in Orlando will go out of business by the end of the year. Certainly sounds like the commercial market is in as bad a shape as the residential stuff
There was another guy who specialized in retail leasing who has been buying up small outparcel buildings adjacent to big shopping centers. He bought an old Pizza Hut building on the outskirts of Florida Mall, converted into a 4 unit strip center, signed up leases, and sold them for a profit in less then a year.
What a great idea, but he says the prices will not allow for this type of investment anymore. Prices will not support it and the banks will not lend the money. He says he did this project without any money out of pocket and it’s quick because the previous building was already zoned for a business.
Remind me to think about this if and when the economy gets good again.
The developer of the Millenia Mall supposedly did the same thing for years prior to developing Millenia Mall.
On a side note, there’s supposedly an old gray haired raggedly looking man that roams the streets of Winter Park. He looks like a bum, but supposedly is heir to the Maytag appliances fortune. There’s also a rumor that he visits the various coffee shops in the area and tips $100 after buying a $5 cup of coffee. There’s some characters out there.
Keeping with the bum theme, there was a guy named Chris in the class who develops and manages properties for ABC Liquor. Surprisingly, unlike most of the people in the class, it sounds like their business is doing quite well. He says ABC is a real estate company that happens to sell liquor. It reminds of a quote I read in Rich Dad Poor Dad from Ray Kroc of McDonald’s fame in which he states that he’s in the real estate business rather than selling hamburgers. My thoughts are that people are doing a lot more drinking with this economy.
One interesting tidbit I got from Chris is the criteria his company has for purchasing a property. They look for freestanding locations to accomodate a 12,000 square foot building on 1.2 to 2.0 acres depending on green space and drainage requirements. They don’t have to be on a hard corner, but can be 2nd or 3rd from it. Traffic count needs to be over 30,000 cars per day, require 2 entrances, population needs to be over 65,000 within 3 miles of the store, combined income of households needs to be at least $60,000, and there needs to be a clear line of sight from major roads.
It’s interesting to see the criteria larger companies have for properties. Heck, if you decided to do a project like that, why not use some criteria that’s worked in the past.
There you have it. There’s much more perspective and knowledge I got from this class and will probably share it in future posts. I went to this class kicking and screaming, but it turned out to be pretty cool. A real estate investing club might be in my future. It’s amazing what you learn when you get people in different facets of real estate in one room.