Problem properties are the answer when looking for true opportunities in commercial real estate.
The marketplace is full of buyers chasing large properties with compressed cap rates and thin margins. To compete and win, you need to become an expert in identifying problems.
Sellers with problems want to be rid of their problems. These property owners are the focus of Tyler Sheff’s commercial real estate investment strategy. He has found there are multiple opportunities in every market, if you recognize the problem and can offer a solution.
Tyler’s team has identified multiple problems that are clues that the property owner wants out of the property. The following are some treasures of opportunities:
- Properties owned by an LLC: Most buyers assume that because a property is held in an LLC, that the owner is a professional firm that knows what they are doing. Tyler has found this is not the case, especially with smaller properties. Look for LLC’s that missed their renewal registration. It is a clue that someone is not paying attention.
- Properties owned by a Trust: If the property is held in a trust that includes the name of the individual, this is a clue the ownership is not a professional group. The first rule of a trust is to hide the owners name. Look for trust in the name of an individual.
- Properties with larger than average water bills: This screams problem! Contact the local water utility and ask for a list of properties with a higher than average water bill. This is your list of prospects with problems waiting for you.
- Properties with tenant complaints in the property forum: The internet is the place where unhappy tenants go to scream to the world how unhappy they are. Fortunately for you, small owners are not looking online for the problems under their nose. If the tenants are unhappy, there are likely other issues like deferred maintenance problems waiting for you.
- Tired owners: If the owners are self managing, and have been for a long time, there is a good chance they are tired and looking for a solution. You are it.
The Answer is Right in Front of You
Find out what the tenants want and need. Remember, if they are upset and telling the internet about it, they probably have not been asked by the owner or management what they want.
Spend a little time getting to know what the tenants want can go a long way to making the property more enjoyable for them. This is an excellent opportunity to establish good will with the tenants and make certain your efforts get the reception you want.
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