This is NOT to alarm you! But, if you are seeking an 8% Cap Rate or higher for commercial real estate in Las Vegas, "I laugh in your general direction!"
I was approached by a New York Buyer who had contacted many, many Las Vegas Real Estate Brokers because he thought that contacting more than one was going to get him an inside tract to a property where a Seller was dumb enough to sell a property at his purchase price.
I could not stop laughing. (Okay, I was smiling. But he couldn't see because we were speaking on the telephone.)
Anyway, he told me that he had found a property where the owner was willing to sell at a price that was more than an 8% Cap Rate.
I told him that, that property was hard to lease because finding a tenant to lease the property up was very, very difficult. I know this because the owner had owned the property for several years and struggled to lease the property because the area is NOT conductive to retail. Sure there are a few retail tenants in the area, but for the most part, a convenience store and a tattoo parlor are usually hard to find locations. So, they usually take any location they can find.
Anyway, since the property had vacancy, the New York Buyer said that the seller was willing to pay 1 year's worth of rent for the vacancy -- or until the New York Buyer was able to lease the space.
Okay, I had to be careful since the agent the New York Buyer was working with had told him that this was a good deal -- because the Seller would cover the rent for up to one year.
I told him that just because he was getting the property at an 8% Cap Rate, other bottom feeder clients I have passed on this property because they know that the space is impossible to lease.
But, he is from New York and he knows better than me. I only live and work in Las Vegas and I had, had the lease listing on this property more than ten years ago. (And, back then, I was not able to lease the property up 100% because the area the property is in is not conductive to retail.)
Lesson learned. Any questions?
Generally, right now in Las Vegas, most 8% Cap Rates are properties I would NOT recommend.
The problem is that the leases (usually) have less then 5 years remaining; or they are a church tenant; or they are basing the 8% on whether or not the new owner can lease the remaining vacancy up in a short time period (Not Likely).
But, since this one particular property had a price reduction to slightly higher than 7.5% Cap Rate, it amazed me the vulnerability that puts know it all New York Buyers in.
So, if you are a serious buyer with intent to acquire a long term solid investment; and are willing to pay slightly more for the solid investment, give me a call.
There are solid CRE investments in Las Vegas. Unfortunately, they are just not going to be sold at an 8% Cap Rate.
Contacting David Howes is easy -- either by: davidATdavidhowesDOTnet OR call him at: 70 25 01 93 88 AND Follow David on Twitter: @DavidAHowes
I was approached by a New York Buyer who had contacted many, many Las Vegas Real Estate Brokers because he thought that contacting more than one was going to get him an inside tract to a property where a Seller was dumb enough to sell a property at his purchase price.
I could not stop laughing. (Okay, I was smiling. But he couldn't see because we were speaking on the telephone.)
Anyway, he told me that he had found a property where the owner was willing to sell at a price that was more than an 8% Cap Rate.
I told him that, that property was hard to lease because finding a tenant to lease the property up was very, very difficult. I know this because the owner had owned the property for several years and struggled to lease the property because the area is NOT conductive to retail. Sure there are a few retail tenants in the area, but for the most part, a convenience store and a tattoo parlor are usually hard to find locations. So, they usually take any location they can find.
Anyway, since the property had vacancy, the New York Buyer said that the seller was willing to pay 1 year's worth of rent for the vacancy -- or until the New York Buyer was able to lease the space.
Okay, I had to be careful since the agent the New York Buyer was working with had told him that this was a good deal -- because the Seller would cover the rent for up to one year.
I told him that just because he was getting the property at an 8% Cap Rate, other bottom feeder clients I have passed on this property because they know that the space is impossible to lease.
But, he is from New York and he knows better than me. I only live and work in Las Vegas and I had, had the lease listing on this property more than ten years ago. (And, back then, I was not able to lease the property up 100% because the area the property is in is not conductive to retail.)
Lesson learned. Any questions?
Generally, right now in Las Vegas, most 8% Cap Rates are properties I would NOT recommend.
The problem is that the leases (usually) have less then 5 years remaining; or they are a church tenant; or they are basing the 8% on whether or not the new owner can lease the remaining vacancy up in a short time period (Not Likely).
But, since this one particular property had a price reduction to slightly higher than 7.5% Cap Rate, it amazed me the vulnerability that puts know it all New York Buyers in.
So, if you are a serious buyer with intent to acquire a long term solid investment; and are willing to pay slightly more for the solid investment, give me a call.
There are solid CRE investments in Las Vegas. Unfortunately, they are just not going to be sold at an 8% Cap Rate.
Contacting David Howes is easy -- either by: davidATdavidhowesDOTnet OR call him at: 70 25 01 93 88 AND Follow David on Twitter: @DavidAHowes
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