Listing your Industrial property

Let's assume that you were just notified by your previous industrial tenant that they will be moving out at the end of their lease.  If you own an industrial property,  and have had a long term tenant,  there are several things to consider.

First and foremost,  make sure, you are not the reason they are moving.  If they are moving out because you refused to give them a break on the price,  then you might want to crunch some numbers before you make a hasty decision.  I will do that for you below.

SAMPLE NUMBERS

Consider a $1,000,000 property
Taxes sample $8,000
Insurance sample $6,000
Maintenance sample  $4,000
Interest  approximate $55,000
Total Cost  Estimated $73,000.

If you do not have a tenant,  you will pay over $6,000 per month out of your pocket.

If you are receiving $100,000 annually,  and your tenant wants a break on price, consider the net effect on your pocketbook.  You can say no to a decrease,  and hope for another tenant.  If it takes two months, then you lost $12,000, plus real estate commission.  If it takes a year,  you lost $73,000.  If you cut their price by $20,000 you covered your cost, and maybe have a long term tenant.  Remember,  any vacancy month is $6,000.  Any occupied month is profit,  tax breaks, and appreciation on your side of the ledger.  Keep that in mind in this market,  and work with your tenants

Second, good tenants are hard to find,  especially those who pay on time.   What you were receiving from them will not match the current market rate.  There will be a sticker shock on what your next tenant offers.  Third,  there are a lots of properties out there,  and even if yours is the best,  your price may not give your property a chance to prove it, as most people are shopping prices right now.

If you want to lease it right away,  then you make your property the lowest price in your area, for your type and size property.  If you want to be in the middle of the pack,  then you wait for the others to rent,  or the quality, or unique traits of your property to surface.  If you insist on listing above the current market,  then you must be prepared to wait,  and then negotiate if someone finds your property while driving by.

As with most owners just stepping back in the market,  you will see that all properties have dropped in price per square foot.   And there is much more competition.

Although I don't do this on every property,  here is a sample of some marketing efforts I have given my properties.  It will be listed on MLS,  and Loopnet,  the Commercial MLS,  as well as CBC worldwide. We have two different Commercial brokers meetings each month,  where all the area commercial brokers meet to exchange listings and interact with each other.  These meetings give us an opportunity to stand up and discuss properties with the 75 or eighty brokers present. Everyone in our database who has a business,  or expressed interest in Industrial property leases, will get an email or a call.  I can purchase a web address,  and provide the link to anyone on Linked-In and Face Book.  It will be listed on my website,  and I will also distribute the flyer to all of the CBC brokers as well as all CCIM's in SW Florida.

When you are forced back into the market, be prepared. Expect that the tenants will have the upper hand because there are less of them,  and more competition for their dollars. They will be ruthless, as you would be if the tables were reversed.

If you need help securing new tenants,  then call me.  Good Luck!

Heading the wrong direction, the right way.

My neighbor is moving North, from Southwest Florida,  in December.  He never does anything conventionally.  Yet he is a very successful salesman.  He is driven by a different and constant beat,  that most of us cannot hear, much less keep up with.

He is a Real Estate Agent, and before that he sold cars.  He's just a young guy in his twenties.  When he finished school,  he had some good jobs, but moved a few times, because he could not find anyone to give him a chance at sales, which is what he really wanted. He finally answered an ad to sell cars.  Within a month,  he was their number one sales person.  Within a year he was their finance manager,  and after another year,  their sales manager.

Eventually he talked himself into residential real estate.  I was surprised,  by the move,  because of his success.  He had a house, a boat, a Harley, a Corvette, a Cadillac SUV and a Rolex.  He had all the toys.  So why move to Real estate when most people are bailing out because they cannot make a living.  Some people, like this guy, can make anything work.  And he did.

He told me the car business was in shambles,  and he had gone about as far as he could there,  and he wanted a new challange.  You have heard the story,  "when others are selling,  you should be buying."  Well a guy like this can make money no matter what is happening.  In his first fiscal year in real estate, 2009/10,  he did about twenty transactions when veteran realtors were lucky to do ten or twelve.   He was buying houses for 'flippers, geting them repaired and turning huge profits for his customers and himself.  It was amazing.  I thought flipping was dead,  he knew better.

Now he is moving North,  just before our 'Season' begins down here,  and the snow buries the North.  Most Realtor's are looking forward to the influx of buyers moving south. He's heading North.  I have no doubt he will be successful up there.  Everything he touches seems to turn to gold.  I hope you can learn something from him.

He is shipping his vehicles North,  at a hugely discounted rate,  because the trucks are bringing cars south for the 'snow birds' but going back empty.  He makes money on everything.  He bought a box truck from a guy who had used it to move here but had no further use for it, so my neighbor bought it for a song.

My point in all of this, disregarding the fact that it is an interesting story about a truly amazing guy,  is there is always a way to be successful in any venture, market or investment. Make your goal to satisfy the needs of others, who's need, fulfills your need. Their win, becomes your win.  The truck drivers did not want to go back North empty,  my neighbor helped them.   The people buying fixed up properties could not afford to buy them at auction and fix them up,  but could afford to buy  a nice low price home with a mortgage. My neighbor helped them.

Learn from my neighbor.  You could do what he did,  or you could find a need,  that will help someone, which in return will help you.  Think about the commercial real estate in SW Florida.  Who can you help? You will end up helping yourself.