Sales due diligence for Retail Trade

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oh i love italian this is italian white bread i love italian white bread nice and fresh yeah you're not having that you're having this so what [Music] all right we're here at panera on 4th street in st petersburg it's an outback it's a panera a glazing place financial advisor and a food store so we are here because we're buying this place hopefully at like a six and a half six eight cap we need to inspect this place 100 so that we know every skeleton in the closet it can't be no hidden things because i don't want to hear my dad saying you didn't know about that okay you didn't know about this you didn't know about that so i got to be my ass out here today and find everything about the property today because we're closing on this thing probably in 10 15 days this is a quick fine quick buy we got to move quickly and that's how we got the deal because we move quickly so now we're out here quickly inspecting the place to make sure everything's okay so i brought mike bonus and julio here today yeah i bought mike to get me water that's what he's here for no mike knows about retail he's in construction he's he's done build outs for me he knows roofs he knows electrical system he knows about aefus that i don't know about and i need my team without my team i don't know you know i'm learning every day see that sprinkler right there the cup's missing around it it's indented that's a violation barcode it's common people don't pay attention to it but it means something because when the fire inspector comes through that's the first thing he's going to do is look at these sprinklers he's going to make us take that towel down and put a couple around it even though the tenant is responsible for everything inside this place you know we still have to double check everything and make sure that we look at everything because if this tenant moves out then we're going to be responsible for releasing this place so any defects that are here right now we have to make sure we know about because this lease is coming up to expire soon so we need to know if something's defective inside this building because if we have to go release it then we're going to have to fix it and deliver it to a new tenant to go in and look and look at every single square inch of this place we have to look at the fire rooms we have to look at the elevator rooms we got to look inside every office inside every bathroom what's cooking i'm just kidding what are you guys scared to get in the elevator come on hold on here eleven we're not even near capacity we could do double this oh there we go we could do 15 people in here i don't think 15 people are fitting here [Music] the first thing i see with the roof is that i hear creaks in it which means the underlayment might be a little bit loose but that doesn't mean that it's leaking it just means that it's might be a little loose it's a flat mark but it's got a good pitch see now this the beginning of delamination the roof starts failing so it already had a patch on it so you got to identify these type of issues these bubbles immediately cut them out and put a new patch on it so that it seals to the underlayment perfectly we're going to get our roofer out here to find out exactly if the roof's good we're going to do a core test this is a key thing that we do on roofs basically the roofer comes in he drills down into the core of the whole roof makes a hole in it then you get to see all the layers of the roof you get to see if anything is wet he's going to tell us what this roof is made out of how long he thinks it's going to last [Music] oh here's the title that we need i just broke it where the hell is my pro forma five million three hundred thousand dollars that's what we're paying for this place it's gonna net us about a 6.8 cap can anybody tell me in the comments what's the noi on this place if i'm paying 5.3 million and it's gonna get me a 6.8 cap comment below tell me i'll see if you're right show me the parking lot i didn't know we were coming with it was coming that would be nice who knows the hole in the parking lot are you gonna put a hot tub in there that's what i'm watching i got we got car damage from them i got something from me upstairs okay i got somebody coming here for three weeks i got them i hope the new owners you guys are new owners are better than old owners and better property managers completely unresponsive okay all right so i hope that hopefully it will improve he put the water cooler there i like that guy that guy i like already i like him he's no he'll get along good with us because we don't play that non-responsive and all that you call my cell phone i'm here well go get me six seven bags uh throw it in the back of the maserati and we'll be done with this in ten ten minutes we can fill this hole i'd be shocked if they would if they would push back hard on this this is first of all it's a tripping hazard or something comes out they're drunk and they walk across there okay they're gonna sue you let's go look at the parking lot over there will eat that up there those see the drains yeah there's there's water getting in that wood so and like i told him the district manager of outback or the regional manager when they come here they should have to ask the landlord to fix that that should be fixed we have to replace that stuff it's exterior it's you all right that's easy fix then yeah and a julio did all the underwriting on this place for me okay so julio knows the numbers on this place he knows what we did what we proform it out for what we said is this in the budget did we miss anything so now that he's heard the whole conversation about everything and be going through the manager now we'll go back to the office we'll sit down on our pro forma we'll make sure every last cost that we didn't know is in there from the package that the broker gets gives us we didn't see all the costs now that we've talked to the manager we know what cost we have now we can go home and put those into our pro forma and make sure it's still a 6.8 cap i think this one's six eight i got too many deals mixed up in my head this one's a six eight you're going to get a better cap rate on this one because the leases are expiring soon so panera has an option but they don't we don't know if they're going to take that option outback has an option but we don't know if they're going to take that option so we're getting a higher cap rate on this place because there's a chance that all these people can move out so that's another reason why we're here making sure that everything is 100 because if we got to release these spaces we need to know about them and that's pretty much all you need clean title phase one survey roof inspection electrical inspection and now you know your asset is safe it's going to be there for a long time then you get insurance in case a catastrophe happens like a fire or something like that once you got all those safeguards in place then you should feel comfortable buying this asset i feel like this is going to be a good property it's at an awesome location i mean you got a lake behind you got brand new condos this is what people want they want to go to panera they want their croissants they want their coffee they want their big ass steaks in the afternoon this is what they want and they're millennials goddammit and they deserve it i hope and i hope they're just because he's a millennial so you guys tell me i'm out here sweating my balls off i brought rafal with me today to teach you guys something to show you guys something let me know if you like this type of comment or do you want to see my dad out here picking on me and yelling and cussing that might be the thing i like it too sometimes i watch it so it's pretty funny but i figured today we get out here and show you you know some some nitty gritty of real estate and show you some some tips and tricks on how to buy and purchase triple net real estate so that's we're here today like or comment subscribe do whatever you got to do but let us know what you think about today's video if it sucks i won't do it again i don't give a i got real estate to do i'm just doing this because you guys wanted you we need to teach you guys all right before that is c i g 5. explain what's going on because we live on the ocean and the salty air and all that plus they a lot of this wasn't that great i'm sorry to say the door mechanisms in this house are half of them fall apart so we had some guys come over try to fix and spend some money but then i said wait a minute what brand are they and i'm sure they were a big company let's get them over here because i think we need to start replacing some of these so i call up and they say they have a 20-year warranty matt get on the phone and use the warranty instead of spending money on people coming over here fixing and now he's on the phone and getting numbers and trying to set up to where we'll get this fixed and maybe they'll eat it because if they don't eat it i'm gonna let it be known that their product is fancy as they claim it is to be ain't that goddamn great but anyway so he's working on the warranty to get all these damn doors fixed they're all tightened up and locked down locked down now we will not be going out for lunch today because carla decided to cook lunch what she's cooking who knows what's for lunch today hamburger yeah no bread for you you know no bread so how do i eat it with a fork you got a whole loaf of italian bread here look at that baby italian this is italian white bread i love italian white bread nice and fresh yeah you're not having that you're having this so what what the hell is that a taco i'm not eating this plant power sandwich tins how about a bagel thin that's fair you gotta learn to compromise if the whole world would compromise the world will be a perfect place this is what you want to be a burger on yeah is it cheese flavored it looks like it yeah it's i'm not eating yet what's the latest news on the warranty on fixing these doors they're all up i never liked it so these people built the house in 2015 your doors are from 2009. what that's when they made them they still got 20 years that's still two what glass has 20 years you know matt you got no good news man that's these doors can't be that old he said that they're probably gonna have these are custom there's no way that they sat around and made this before the house of design just to get them to come out here and do an inspection and then they'll go from there but he's going to give me a price right now it's been over at uh that little house you build the 1700 gold boulevard hey do me a favor you know all the locks have fallen apart in this place so we're on the phone with anderson they claim that all this stuff was made in 09 is that possible so what's the story matt uh it's 310 for them to come out here we have to pay it today to get on the schedule just do it get them over here pay the goddamn extortion everybody wants cheese everybody wants bacon what about your housekeepers you got enough of them you sure because i could eat something else what about tomato in your burger bag no thank you i'm trying to cut down tomatoes have a lot of sugar in them that's a lot of vitamins too [Music] do i look like i need vitamins [Music] look at this stupid thing [Music] two potato pancakes but it's not potato it's plant a plant the burger the cheese and the onions are great and she had to screw it up with this goddamn panera bread was a lot of dough why don't you read the newspapers did you see the article on it what did it say but you have to explain that i got to explain the numbers the numbers all right the clock was ticking the 10 31 clock was ready to go ding time's up but no oh that's my bad hand what do you want to know you want to know the numbers on the deal i'll tell you the numbers ain't nothing to hide matt give me the numbers on uh fourth street property buyers and sellers combined closing statement summary of buyer's transaction summary of sellers transaction is split in half the buyer the seller all right we paid five million three the settlement charges came to thirty five thousand dollars gross amount due this plus this equals this i own five million three hundred thirty five thousand one hundred eighty six dollars fifty cents escrow deposit from exchange i had five hundred thousand dollars left in the exchange money and typically the reason why i only had that much left is because i only really needed to spend two million and i spent five i went over so therefore we're going to do a reverse exchange on part of it we got county taxes these are credits so i had a deposit down they got to give me credit for the first year of uh you know the first part of the year of taxes that he owned it i got to get a credit for that because i gotta pay the tax bill for 2021 at the end of 2021. so he gives me the part that he ran up on a tax bill and then i'll pay the difference security deposits hundred dollars we all know that is tenants got security deposits may rent may 3rd through may 31st it was prorated so we received all the rent that he collected at the beginning of may he gave us credit for that 42 155.83 what else we got here my lawyer stuck it to me for 15 grand title insurance was 15 grand i talked to my lawyer he's getting kind of expensive there because you know lawyers make money on title insurance all right they buy it cheaper than we do why because that's the game that's the rocket baby don't ask me i'm not a lawyer survey 2100 dollars entity setup could throw that in for the 15 grand give me a break you know yeah know his lawyer charging 25 grand these lawyers are making a racket all right so what else you want to know people want to know like how much you're going to make on this we make nothing we're just buying it because we got nothing else to do we brought up a 5 million three we bought it because we were told and believe that it's gonna give us a six and a half cap three hundred forty four thousand five hundred dollars a year five million three times eighty percent we're gonna have a loan on it for four million two hundred and forty thousand dollars i know i'm gonna get it for two and a half percent that's a hundred six thousand dollars a year in interest and i'm gonna get interest only we said the property's gonna make 344 minus 106 equals 238 000 we're gonna get 238 000 a year in income we paid 5.3 times 20 percent 1 million 60 000 is going to give me 238 000 a year one million sixty thousand thousand a year that's like more than twenty percent all right give or take i got a cushion there at twenty percent all right if you if you're you're born at twenty percent you're a greedy you know twenty percent is is good that's the story simple clean if the purchase price is a million dollars and you got a six and a half cap you get 65 000 a year in income now you go out and use most of the bank's money at all right i get really great rates but even if you get a four you're still gonna be making 15 return on your money that's what you do that's the only game right now everything else is overpriced you can't buy nothing if there is a deal out there there's a million people bidding it up so it's not a deal anymore you're buying triple nuts would you buy a trip on that outside florida you know if i can't find a deal in florida and i got to start looking then i will if i get desperate enough i will if it's that out of the park deal i will but i prefer not i want to be close okay at least a short plane ride away and we just closed another big one right after that one i hope you like seeing one of our most current deals and if you like it then like it if you got a deal that you're working on or thinking of putting together go to benemala.com go to consult with ben and we'll get on the phone and we'll make sure it's the right deal and the real deal i'm talking like you know helping people out i got a guy right now i just put him on a phone with a banker to help him get a loan i get a lot of people call me up uh continuously because i help them they make money and i'm happy to help we're still waiting for more applicants for the american dream but you got to go get fha approved we can't help you unless you help yourself first it's like the 1031. it's a tool like we're a tool so shoot the video to us get your fha approval send a copy to a file and let's get you in that new house and stop paying rent adios amigos [Music]