are you looking for distressed properties?

Mark Cooper and his team at kw commercial handles Commercial Sales, Leasing, and Real Estate Investments in the San Francisco Bay area.

A recent client requested "distressed" NNN investments, fully leased, with actual 7+ caps, in the 1m price range, in a good locations. Here lies the problem, "Distressed" implies a high vacancy rate, a loan maturing with little or no equity, or deferred maintenance requiring capital improvements.

In this case I would swap the word "distressed" for "home run deal".

We see gas stations all the time for sale cheap, claiming to be 12+ caps. Yes, the rent is high, but the cost of required updates to the station may very well exceed the purchase price.

Sure there are deals out there, some sellers, including banks have begun to sell off performing assets to meet federal reserve deposit requirements, but even those properties are sold at market. Instead of expecting a "home run", be open for a "double" or "triple".

Determine your comfort level between price, cash flow, and appreciation. Historically, properties with high cash flow have less appreciation, and vice versa.

When clients ask for a "good location" for an investment purchase, how many miles from their home should be considered for property search? 20,50,100,200 miles? Do they plan to manage and maintain the property themselves? If so, how many hours a week are they willing to spend, and is this the best use of the buyers time?

Be sure to factor in vacancy rates, professional management, repairs, and new property tax rates at the purchase price. Always work with actual rents, not projected.

Each buyer and property are different, one person's "home run deal" can easily be a "fowl ball" for someone else.

Contact Mark Cooper with Kw Commercial to discuss your criteria for Real Estate Investments in the San Francisco Bay area. 415-608-1036 or email markcooper@kw.com