r/CommercialRealEstate

When you’re evaluating a tenant’s ability to support the proposed rent, how do you treat the sale proceeds in your underwriting?
Specifically, if the company is receiving, say, $10 million from the sale, do you build a pro forma post-closing financial model that assumes the debt is paid down (reducing interest expense), or do you underwrite strictly off the historical financial statements?
In other words, where do you incorporate the new cash from the transaction? Do you adjust the balance sheet and interest expense based on management’s expected use of proceeds before calculating metrics like FCCR, rent coverage, and leverage, or do you rely solely on historical numbers?
Curious how institutional buyers, private credit funds, and net lease investors approach this.

Yes I used chat gpt to help ask this- I’m tryn 2 figure this out

Also can you tell a SLB tenant what you want them to do w the cash infusion or no?

Called an owner of an industrial building who is wanting to sell and retire and has another broker in his words ''on his a**'' about listing the property.

He basically just ranted the entire call. Suggesting brokers are overpaid doesn't want to do seller financing, wants a clean transaction etc.

How do you get through to people like this? Do you suggest meeting in person?

Its a small deal anyway but I'm just curious what methods have worked for a client like this...

Anyone have any idea?

Any takers?

Just wrapped a full year of running an off market commercial acquisitions pipeline and figured the arc might be useful to people here, because most of what I read online skips the ugly middle part.

Two of us. The goal was straightforward: find owners who might sell, get them into a real conversation, and work the good ones toward a deal. Over the year that turned into about 640 deals worth roughly $600M in aggregate value across 195 priced opportunities, averaging around $3.3M a deal. The path there was not clean.

Months one and two: the outsourced high. We paid an outside sourcing shop to fill the top of the funnel. Month one we did 73 deals, month two hit 122, our best month on record. Felt great. It was not.

Months three to five: the crash. Volume fell off a cliff. 59, then 40, then 19 deals in a single month. A 74% drop from peak. When I actually pulled the outcomes apart, the sourcing was mostly junk: about 43% of deals were dead on arrival and roughly a quarter of everything came back a flat "not interested." We were paying to fill a leaky bucket and mistaking motion for progress.

Months six to nine: the rebuild. We cut the external sourcing, pulled the whole pipeline in house, and spent four months rebuilding the process and systems while running at about 24 deals a month. It felt like going backwards the entire time.

The last four months: recovery. The rebuilt system started producing again, 88, 78, then 63, pacing near 80 a month. The difference this time was quality, not just volume:

• Closed lost rate dropped from ~43% to ~23%
• "Not interested" replies fell from ~24% to ~6%
• Active pipeline retention rose from ~57% to ~77%

The thing I actually care about is why deals die now. Before the rebuild, most losses were "this was never a real prospect." After, the losses are valuation gaps and sellers deciding not to transact. We shifted from chasing bad contacts to losing real negotiations, which is the version of losing you actually want.

A few lessons that cost us real money to learn:

1. Volume is a vanity metric until you tie it to disposition. Our best "volume" month was one of our worst quality months. Track why deals die, not just how many you sourced.
2. Outsourced sourcing optimized for the number in our contract, not the quality of the conversation. When we brought it in house, output dropped but close relevant activity went up.
3. A rebuild feels like regression while you are in it. Four months under trough volume is a long time to hold your nerve. The leading indicators moved before the headline number did.

Curious whether others here have gone through the outsourced sourcing to in house transition, and how you measure lead quality beyond raw pipeline count. Happy to compare notes in the comments if any of this is useful.

Edit: We use the words leads and deals interchangeably internally. Minor confusion in word choice for some of you. I'm chatting our lead gen engine not our closed deals or how we build packages.

This off market gem just came across my desk today.

Almost 1/3 of an acre in downtown of a very prominent Northbay city.

The property has a 5000 square foot Restaurant that needs updates and hasn’t been functioning for some years, with a giant parking lot behind.

2 blocks from the train station and a picturesque Restaurant neighborhood with some of the best in the area.

This property is zoned for a 7-23 unit development.

Owner had it appraised for $1.4 Million back in 2021, tried to sell it a few years ago with no success (priced too high).

Today, they are willing to take $750k cash or hard money.

In this area, homes sell for $400+ per Square foot.

Cost to build something like this will likely be $250-300 per square foot.

Keeping the restaurant in place and renovating could also net around $6000+ a month rent for the space.

Welcome to the Monthly Commercial Real Estate Broker Q&A thread, your spot to get answers, give advice, and sharpen your edge in the business.

**Now MONTHLY too keep the conversation going**

Whether you're new to brokerage, stuck in the mud, or pushing through your first big listing, this thread is for you.

Use this thread to ask:

• Career advice: Breaking in, making a jump, building a book, choosing a firm
• Deal structure: Commission splits, LOIs, TI packages, creative leasing, 1031s
• Daily grind: Cold calls, canvassing, CRM tips, time management, burnout
• Market strategy: Specialization, asset class focus, territory management
• Exit strategies: Going in-house, building a team, pivoting to ownership

Brokers helping brokers. No fluff. No guru talk. No pitch decks.

Reply directly to questions or drop your own knowledge. If you're asking a question, give context: market, asset class, experience level, help others help you.

Let’s keep it useful and keep it real.

Give this and any replies an Updoot to increase visibility.

Has anyone done a multifamily deal recently with seller financing? If so, what structure?

For context, this would be an 80 unit townhouse deal built in the late 90s.

Hey, I want to ask if you guys working as investment analysts at a real estate fund get involved in OAs. What kind of tasks do you do with OAs? I feel I was very randomly assigned to work on the OA stuff recently. When I work on it, it feels more like legal team work, and I would love to know if this is actually part of what an investment analyst needs to do.

Curious from both LP's and GPs as both would have a good look. Would like to hear what was personally put into the deal from the GP (dollar amount or %) and what the end result was.

Obviously running numbers through a waterfall is one thing but actually seeing a cashed check from a big deal is another.

I’m curious what others believe the norm is for a sponsor to put into a development deal and how much they are expected to put in to have enough skin in the game for LPs to take it seriously.

I’ve seen deals that are multi million dollar deals and the sponsor has less than 1% of the total cost and less than 5% of the total equity, which seems pretty small to me.

I asked Claude and it says 5-10% of total equity is considered the norm so I want to verify if that’s the case.

Reformatting original post to keep this short

- I want to buy commercial land and build a small shopping plaza

- Land has massive 1 acre+ water retention basin in addition to buildable land.

- Agents are being shady, will not disclose expenses current owner has paid for yearly maintenance for decades. It has been 2+ weeks of asking and no answer still. They are being very dismissive about costs involved.

-Paperwork deep inside the massive packet of papers tied the land show an agreement with the city and this commercial community that states whoever owns the parcel of land that the retention basin is on, is 100% responsible for the costs to maintain the basin.

- Online I am seeing yearly maintenance costs of $6-8k for just this stupid pond and every 15-20 years needing dredging that costs $200,000+. That is insane.

- Do you have a water retention basin on your land? How big of a pain is it?? Should I buy an adj parcel for 1.5x the cost to get away from the pond?? Or am I stressing over nothing?

Please share your stories and experience below! Thank you for your help and guidance in advance! 🤝🙏

I'm a building owner that is about to fork out ~$700k in unamortized TI on a $8m 20 year lease. The Tenant rep is going to get 4% all the way up on base rent which comes out to over $300k. I just got word that an inspection the tenant performed is calling for a new roof. They are requesting for me to pay for a new roof ~$100k. Who thinks asking for a commission reduction to help pay for some of the roof is a bad idea and who thinks it should be done?

We started testing a few AI tools for CRE underwriting a while back and I thought model accuracy would be the biggest debate. Turns out it wasn't even close...

The bigger challenge has been compliance, security, legal, and basically everyone who gets nervous when borrower financials are involved.

Every discussion eventually comes back to data residency, VPC deployment, vendor reviews, where the data sits, whether documents leave our environment, and so on. Anyone here get one of these platforms approved at scale? Or is AI still mostly living in demos, pilot programs, and internal experiments?

Trying to go after a pretty much off market deal (one broker brought it to a couple groups) and I presented to a number of LPs to gauge interest and hopefully work on the deal with where I would be the GP. After the call for offers I found out that one of the LPs I talked to, who had shown interest and then gone silent on me, issued an LOI themselves.

This is a large deal and a pretty sizable fund who is trying to screw me. There's a lot of secret sauce I gave these guys, and to go around my back is just so unprofessional and disingenuous. Not sure how much legal room I have but going to look into it if they win the deal. I don't have an nda or non circumvention signed.

Any thoughts on how to approach? Has this happened to anyone? Shocked a group this large would do something like this.

I am seeing more and more off market sales where the buyer has grossly overpaid for a property.

From what I can tell it appears to be mainly existing tenants buying directly from landlords without any broker involvement. One of the buyers was a city government. The others were hair salons and a Mexican restaurant. Both small local businesses.

For example the Mexican restaurant is a 1,400 SF building that sold for $685,000. At a 7% CAP rate the effective base rent would need to be $34.25/SF.
Average sales price for the area is around $300/SF. Similar existing restaurant space is available nearby for around $20/SF.

Has anyone else been noticing more of these types of sales in their area?

Any ideas what special circumstances might make this make sense?

Hello, I’ve been doing property management for the past four or so years. Primarily small strip centers that my family owns. I grew around the business and started working in the office in high school, but didn’t officially get my real estate license until four years ago. I worked while I was in college, primarily doing all the leasing. I’m 24.

I’ve decided it’s time for me to move on as there is no room left to grow. My family isn’t interested in expanding. And I don’t make much money. ($40k last year before taxes)

I’ve been applying for jobs with other brokerages and including other roles. such as analyst positions. I haven’t had much luck. I ended up shooting an email to a brokerage that I had worked with previously on a deal. 3 interviews later, I was offered to join them. They’re a retail specific brokerage with good market presence. I am unfamiliar with brokerage splits so I wanted to ask here. The splits are 50/50 up to $150k, 60/40 up to $250k, and 70/30 past that.

My general impression is that they would be a good fit. I would work under a senior broker for a few months. I would be focusing on Landlord rep as that is what I know best. It was a good sign to me that they don’t expect me to bring my family’s business with me. And I could still help them to some degree completely independently. Just wanted to get others thoughts on this.

Here in my country coworks are gaining traction among companies, and I see brokers getting closer to them.

I wanted to know the experience for those who’ve already been or witnessed those deals, how were they different from regular leases and how did the landlord (aka the cowork company) act.

We all know location is a critical factor in CRE and that access to the highway network is particularly important for warehouses and distribution centers.

The question: would you buy a WH/DC that is 7 miles away from nearest highway ramp? Assuming that the route from the property to the ramp is workable for trucks, you are buying at a basis that allows you to target a rent well below what more optimally located competitor properties are asking, and you can underwrite significant downtime (1-2 years).

Of course every deal is different, but I’m curious if this is a binary thing for some investors or if you’re more willing to consider it if the basis is right.