Pushing Dirt

NAI KLNB is pleased to offer attractive I-2 zoned space in Beltsville, Maryland that features retail exposure!

Suites are available from 3200 square feet and up. 18′ clear ceilings.

Great for users with a an industrial/warehouse use but that requiring retail exposure.

Email or call Alan Coppola at 443-574-1404 for more details.

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My overseas telemarketer is averaging 1 to 2 leads a day. These are decent leads - out of 6 total there were two prospects that indicated an immediate need to lease about 10,000 sf of warehouse space each.

A commission on a 10,000 square foot warehouse lease might conservatively be $10,000. Generate 12 of these leads — I’m imagining some will be bigger and some will be smaller) and the gross result is $120,000 less my split with the house. I’ll give 1/2 the commission away to another broker and let them do the bulk of the work and make $60,000 gross. Split with the house (figure I make 65%) and that’s $39,000. The cost of the campaign (which the company may pay all or 1/2 of) for a year is $10,000 for the dialing and $7300 for the lists. So a profit of about $22,000 for little to no work. I can only hope things work this well. If so I could see myself hiring a whole room of telemarketers and expanding the operation.

doing a test run with an indian telemarketing firm to identify users of search for space to lease or buy.

I wrote the script and provided the list (from dun and bradstreet, or rather d&b). The price?

1000 names and numbers from d&b at 14 cents each: $140

40 hours of telemarketing time at $4.95 per hour (firm projects they will be able to call and speak to or voice mail all prospects in this time frame) $198

For a grand total of $338.

they are appointment setting calls (i.e. ‘would you like to hear from an agent about space opportunities…)

should be interesting…even one lead — one that i could refer to another agent for a 25% referral fee — would pay for the effort (or rather lack of effort) many times over….

I’ll keep you posted.

This is a complete generalization. Fees can be higher or lower. Just thoughts about the appropriate range:

Up to $3 million - 6%

$3-$5 million - 4% to 5%

$5 - $10 million - 3% to 4%

$10 - $20 million - 1.5% to 3%

$20 million to $40 million - .5% to 1.5%

over $40 million - .75% or lower

Fees tend to top out (with sophisticated sellers) in the $500,000 to $1 million range. That said I have heard of much larger commissions being earned.

Market rent growth is as important, if not more important, than in-place cash flow. Novice buyers focus solely on barometers of the “here and now,” e.g. capitalization rates and in-place returns. Learn to make cash flow projections and calculate an internal rate of return. You can buy a fancy program from Argus or you can do it in Excel. Don’t know where to start? Take the ccim 101 class. Take all their classes for that matter. They will pay for themselves many times over if you are making a career in real estate. Doesn’t matter if you’re flipping houses or buying million square foot warehouses, it’s a great program.

at the end of a long meeting yesterday with a very kind and soft spoken prospective buyer eager to buy one of my listings and cull information out of me, he pulls a 4 inch crumpled number 10 envelope and shows it to me: a big wad of cash. “Get me the deal and this is yours: ten thousand dollars.” Promptly stuffs it back in his pocket. Never seen anything like that happen before. I wonder how many agents have taken money like that. I’m sure it happens all of the time in other pars of the world….

1. Find a tenant that needs space. Find a building to buy. Contract to buy the building, write the lease. Finance based on the credit of the tenant and the cash flow.

2. Buy Veterans Administration homes which can be bought by investors with 5% to 10% down.

3. Get a real estate license. Find a niche with little competition (car washes? Mobile home parks? small multi-family buildings? little strip centers) and excel.

4. Think big. Find a bigger opportunity. Joint venture partners will contribute 95% of the equity required if the deal is a good one and give you much of the upside. It takes as much work to do a big deal as a small one. You do have to bring some expertise to the table to pull this off.

5. Be contrarian. Now that everyone is down on real estate, start thinking about buying it.

6. Look for sale leasebacks: an owner and occupant of a building who wants out but will continue to occupy the building and rent from you.

Google Base is in beta. On full launch, and with some minor tweaking, it could be the commercial real estate category killer. Really a three way killer: it has all the functionality of craigslist, ebay, and classified ads in one site.

There’s next to no property in there, but give it some time…it’s only in beta.

You can create your own Google base home page and Google will also make sure whatever you put in there is search able on Google. You can mass-upload your listings. You can sell stuff. You can tag everything. wow.

There is a lot of hype swirling around foreclosures…gurus who imply there is easy money to be made by buying foreclosures.

The most conservative play is to bid on REO (”real estate owned” by the bank) try to get a discount, spruce up and sell. Banks have gotten smarter about their REO and now almost always use agents to market the property widely (where they used to quietly sell the properties to investors they were tight with).

Or you can buy at foreclosure auction which means rolling the dice even more - buying a house without ever seeing inside it.

Whatever method, the truth is you will have to kiss a lot of frogs and weed through lots of market priced houses to find a a great deal. I did well with my first foray into this approach years ago, buying a condo in Washington DC owned by the US Department of Housing and Urban Development (HUD). They post their homes on their website; they contract with a real estate agent that is supposed to list the homes on the multiple list as well. The agent dropped the ball and failed to post my condo; I found it on the web and was probably the only bidder. HUD home bidding is initially open only to owner-occupants so what’s left for investors is somewhat picked-over. If you’re prepared to live in an investment house for a year you might find something interesting.

More interesting to me are homes owned by the Veterans Administration. Ocwen disposes of the homes and the VA offers very attractive investor financing - 0% down for vets and 5% down for everyone else, plus some fees. It’s hard to get so much leverage on investment property anywhere else, especially in this lending climate. check it out.

You know the bubble has burst when people start suing the salesmen. Real estate agents, prepare to join stock brokers on the firing line of the blame game.

The lesson? Brokers do not give “opinions of value.” Only appraisers do. Do not let these words appear in the same sentence. Share the facts and let your clients draw their own conclusions.