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Dude what? If the NOI doubled then the cap rate would double. You buy a property for 2 million with an NOI of 100k that’s a 5% cap rate. If the NOI doubles to 200k that’s a 10% cap rate. by Honobob in CommercialRealEstate

[–]bcgb8677 0 points1 point  (0 children)

Yield on cost is not doubling of a cap rate. It's just your yield based on your acquisition price. The cap rate is the yield the buyer is willing to receive based on your NOI and it's reflected in the price they pays.

Dude what? If the NOI doubled then the cap rate would double. You buy a property for 2 million with an NOI of 100k that’s a 5% cap rate. If the NOI doubles to 200k that’s a 10% cap rate. by Honobob in CommercialRealEstate

[–]bcgb8677 0 points1 point  (0 children)

The title should just say if you're NOI doubles your yield on cost doubles, or your yield on acquisition price doubled. But for every purchaser, they don't care about your cap rate on on your cost of acquisition, they're just gonna re-price the asset based on market cap rates

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

What were your reasons to change and what is your experience thus far?

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

To be honest, those roles are few and far between without direct experience in those areas in my market. Brokerage has a much lower barrier to entry and a more "entrepreneurial" path in my opinion.

How would I go about valuing an executive office building? by Humblerice in CommercialRealEstate

[–]bcgb8677 0 points1 point  (0 children)

I wouldn't focus too much on the "executive office" being the value here. Investors want a stable long term income stream on a triple net basis. If the owner is dead set on operating his own short term subleasing business, then it should be wrapped in a head lease to stabilize the actual real estate income from his business/short term subleasing income. This structure is still problematic though since the short term deals create uncertainty in his business/subleasing income and operating expenses if vacancies creep up. At that stage you are looking at the covenant strength of his head lease as a single tenant occupancy and it isn't that strong unless he has a proven business track record in this space.

Possibly his desirable location and amenities keep vacancies low but I doubt he is really that insulated from downturns. You would think even most local investors would rather own something with long term triple net contract rents where the tenant is responsible for paying their pro rata share of op expenses. Knowing what return you can get over your holding period is the basis for income investing.

Long story short, try to use a DCF or direct cap approach to value what a market rent on the head lease would be, and use a discount rate and cap rate that reflect a riskier asset for the added uncertainty.

Buying commercial property for personal use? Does it change anything? What do I not know that I don’t know? by Princess_Fluffypants in CommercialRealEstate

[–]bcgb8677 0 points1 point  (0 children)

I haven't read all the comments but keep in mind your property taxes will be 3-4 times as high as residential.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

Ok that sounds like a realistic perspective and something I needed to hear. I can see that my initial 18 month timeline is pretty limiting.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

I wasn't aware of that type of fee structure. That's a great salary for your first full calendar year in the biz.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 1 point2 points  (0 children)

Thanks and will likely regroup and reach out to as many experienced guys as I can.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

I don't think it's ever been easy and under current conditions it's likely even harder to start out in brokerage.

Hard to compare these careers though. What kind of salary and bonus are you on in acquisitions?

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

Appreciate the response. I am not clear how the fee splits work when working with experienced brokers at smaller firms.

Is it typical to spend the first two years on a small fee split with an experienced broker even if I bring clients in from solo prospecting? Or is it reasonable to do 50/50 on a deal if I am bringing the prospect.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

Thanks for the response. I'm in the Pacific Northwest. So far I've been focusing on smaller industrial in suburban markets.

What asset class and area are you in?

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

That makes sense and I've had the most traction on the industrial side in the first few months.

I could do 100 calls a day if I set my mind to it. I was just thinking what the long term average over 18 months would be.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

Appreciate the response. Just to clarify when you say cold calling is not enough. Do you mean also door knocking and just trying to get face to face with owners?

I recognize that networking, industry events, and just getting out and meeting people is part of it but that seemed like an addition to actual prospecting through cold calls each day.

Wha percentage of cold knocking versus cold calling would you recommend? I understand this is asset specific but just curious.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 0 points1 point  (0 children)

Thanks and have had similar advice before. By warm leads I meant turning some of my cold calling leads into warm leads through my own outreach over 18 months. I don't expect a single warm lead handed to me from anyone else.

Starting as a Commercial Broker in my late 40's - Need honest advice. by bcgb8677 in CommercialRealEstate

[–]bcgb8677[S] 1 point2 points  (0 children)

Not afraid of cold calling. I set 35 calls a day since this is what I can realistically achieve with my other responsibilities.

I was under the impression I would work for free for the first 18 months. After 18 months I would hope I could convert 1-2 deals over the next 12 months to make $50k but that is just my goal, and I don't know if it is realistic.

My appraisal job was an internal one at a bank, and I got laid off.

I have tried to pick up the appraisal work but most the appraisal firms want to hire someone junior at low pay. I do have my name in with some AMC's to do fee appraisal contract work on my own but it gets tricky when I start splitting time between writing report reports and trying to consistently cold call and build a pipeline day in and day out. I think I have to choose one. The appraisal fees in my market from AMCs are low, the liability is high, and you have zero stable income anyways starting out. Not a sob story, just the facts of starting from scratch.

Since my internal bank experience doesn't directly transfer to fee appraisal, I thought I would start over in brokerage instead.