I have noticed that many of my students have a fear of talking to Commercial Real Estate Brokers. Maybe they are afraid that the broker will think that they are not a seasoned investor. Fear no more, the real way to feel confident with a broker is to speak their language. Believe it or not you will get to a point where the broker will become pesky creatures bothering you too much once you convince them you are a real buyer with your lingo! Here are some phrases to use with commercial real estate brokers that will separate the men and women from boys and girls…
- “Could you send me the 12 month trailing, current rent roll and your property package?” – 12, 9, 6 and 3 month trailing refers to the operating expenses over those monthly durations.
- “How much ‘trading’ is going on now in the market?” – Trading refers to the buying and selling of apartments.
- “I realize the physical occupancy is 95% what is the economic occupancy?” – The economic occupancy is what income is actually collected, really more important than the physical occupancy.
- “What are the dial in numbers?” – Cost per unit to fix the deferred maintenance or to rehab the complex.
- “I am looking for B and C properties with some upside potential with a unit price between 20 and 45K per door.” – A great statement when they ask what is your buying criteria. Change it around to fit your market.
- “I am not afraid of a repositioning, however I do like to buy at break even at least” – A good rule of thumb and really defines how much of a turnaround you are willing to do. Warning: Buying at a break even is still a big rehab and should not be something you are looking for as your first buy.
- “I like to buy with some value play” – Value plays are an upside potential the property has that you can improve to increase income, like low rents, low occupancy etc… It suggests a deal more stabilized than a repositioning.
- “What’s the market doing right now in ________ City?” – Let the broker give you a run down of what is going on in the market, after all he should be an expert on the market conditions of that city.
- “What is the current mortgage? Is it assumable? Is there a prepay?” – Knowing the current mortgage balance and terms will help you structure the deal.
- “What do you think is the strike price for this property?” – The strike price is the lowest offer the owner will accept for the property. Hint: This may or may not be accurate, remember in most cases the broker is working for the seller.
Now get out there and call some brokers with some confidence, because once you speak their language they assume you are a player!!!!
Your Coach, Sue Nelson
Sue a mom of three, starting as a struggling art teacher in a CT local high school. Sue Nelson began investing in real estate to provide a better life and security for her and her family. She realized she had a lot of catching up to do and was attracted to the big profits that could be realized quickly in commercial real estate. Sue quickly discovered and created little used techniques that allowed her to take control over many commercial properties. Today she and her partners own over 1500 commercial units and now one of the worlds leading experts on Commercial Real Estate. Sue Nelson is a regular guest speaker at CT REIA. Go here for the current list of upcoming real estate investing seminars in Connecticut.