Best Quality Investment
I won’t hold anything back! These are the exact software I use to find commercial deals in Texas. Like the previous blog post, I do not buy real estate at retail price. I always buy at a discount with add value possibilities! In no particular order as I believe every software is necessary to me finding great deals. Do not depend on a real estate agent to tell you if it is a good deal or not, you must understand what’s a good deal or not. I always use real estate agents as a second opinion but not the final word to if I would buy the commercial property or not.
KNOWLEDGE AND TECHNOLOGY IS THE NEW CURRENCY OF TODAY’S WORLD!
Reonomy/CoStar
You must be able to get the lease and sold prices of similar properties to the property you are analyzing. Reonomy is the cheapest option ($600 for the whole year for the whole USA) but has the least data compare to the other options and only includes sold properties. Costar is expensive ($1,000 per month for only one city) but has more data that includes lease and sold comparables. More explanation of property comparables will come in a few weeks!
Excel
Excel allows you to quickly be able to type in the revenue and expenses with excel doing all the calculations for you. Although you will have to spend time learning excel and writing the calculations within excel, it will make your life easier for you. I would suggest making your own excel sheets involving calculation, so you know it my heart, instead of following a template from online. Yes, a lot of time will be done in making the excel sheets but will be very beneficial to you! Your investors or cash buyers expect you to know how you got numbers such as COC, Net Income, or CAP rate.
Don’t worry, I won’t hold anything back. I will release the exact excel sheets that I do for many commercial assets including Gas Stations, Hotel, RV Parks, Multifamily, Strip center, and Warehouses.
Google Maps
This is very helpful so you can use the street and aerial view. Usually, the best places to buy real estate is where google maps are updated and have a street view of the property. But there are always exceptions to this rule! Google Maps allows you to not waste your time to physically drive the area before you and the seller agree on a price. I always drive the area when the seller and I have agreed on a price or if I see a good amount of motivation screamed by the seller. Underwriting a deal should not involve you actually driving the area, but Due Diligence does! I would suggest of whatever asset type you are going after, to go see at least 10+ properties of that asset type so you can have a good idea of what the asset should like in bad or good condition.
Podio
A CRM, customer relationship management software is very much needed to manage all your leads. There are many real estate specific companies that make their own software to manage but I love Podio since you can make it how you want it to be! Finding deals is a numbers game. The more sellers you talk to and the more offers you give, the higher your luck is in finding a great deal. Podio or any CRM system allows you to be organized with all the leads you have!
Central Appraisal District and Property Taxes
Every county in Texas has a database involving every property in the county. This is valuable as you can see the description of the property including appraised value, age of the building, square feet and when the title was last transferred. Go to the property taxes of the county and search by the property address. If the address is not found, use the owner’s name which could be an LLC and not his actual name. Look to see if the taxes are paid. Even if taxes are paid, doesn’t mean the seller is not motivated. Always give an offer even if motivation seems low, you will never know until you give an offer.
If taxes are not paid, the owner may be motivated. How long has taxes not been paid? If 1-2 years, then it might have some motivation. The longer the owner has not paid taxes, the more motivation I see in my eyes. If taxes are not paid for a year, it might not even be the fault of the owner, but of the tenant who is leasing the property on a triple net lease. A triple net lease is where the tenant is responsible to pay for property taxes, insurance, and the maintenance.
LoopNet
LoopNet is the commercial website that people openly list commercial properties for sale. No, you do not want to call these leads, as they mostly sell for market value and no discount. Although some postings may be from owners you may be able to get a good deal, it will be very rare.
The goal of LoopNet is to see what active prices are looking like. You should also call agents and ask for prices if they are not listed to see where the market is going. Remember active property doesn’t mean sold property, so do not get active property confused as the value of the property. Always use sold comparable as the value of the property, not active properties on the market.
City-data
I use city-data for my demographics of the zip code I am looking at. Demographics include population growth, age, race, gender, annual income, education, and much more! I always use city-data as my initial research into the area and zip code, but once a seller is willing to reach a price I like, I will do more research on demographics of the area from other sources. Just search on google, “city” demographics, and you should get plenty of data from many sources. City-Data allows you to understand how wealthy the area is and what it is made of. Depending on the asset type you are going after, specific demographics favor that asset type!
Conclusion
These are the computer tools I use to quickly analyze a commercial property and give an offer in 5-10 mins. Now, if the seller is willing to meet my price or be close at it, I will then do a deeper analysis of the property. If the sellers show motivation, then I also do a deeper analysis of the property, to get a firmer number to offer. Do not waste your time on unmotivated sellers, unless you want to buy properties at retail! 😉
Sameer Bhalesha
CEO
Best Quality Investment
Sam.Bhal@BestQualityInvestment.com
832-718-2295