May 28, 2013 – New York City
Tamir Daniel, founder of Daniel T Enterprises
As a boutique commercial real estate investment sales brokerage firm, we deal directly with sellers and buyers on a daily basis, looking for potential commercial real estate sales and investment opportunities for our clients. While this is not an easy task, the harder the task, the higher the reward.
In general, investment sales involve analyzing property’s information. Property’s information such as size, zoning, building class, available development rights, and financials as well. Financials include real estate taxes, rent roll, lease expiration, current and projected income, and property expenses.
Real estate professionals have fiduciary duties to both sellers and buyers. Therefore, analyzing a property’s information has to be done accurately as there is no room for mistakes. Both sellers and buyers are very sensitized to mistakes, as it may lead to misrepresentation, and will reflect upon your professional expertise regarding the potential sale price and investment upside.
The role of a real estate professional is also to add value for the seller and buyer as well. This often happens at the closing, where there is a meeting of the minds between the seller and the buyer, but not always.
Recently, in one of our dealings with a prestigious landlord in the city, we approached this landlord regarding an “off market” sale of one of his properties. He was very skeptic about our ability to deliver the deal. At the outset, this landlord was uncooperative and unpleasant to talk with. But, eventually, using our best social and sales skills, we were able to convince him to provide us with the complete property sale information.
As we started reviewing the information provided, including studying the long-term lease of a major tenant in this property, we immediately noticed that we were missing valuable information. Based on our review of the lease, the tenant was responsible to pay 100% of the increase of the base real estate taxes on the property. However, we were not able to find what were the base taxes in the lease. Since it was a long-term lease, this was essential to determine the existing property income. When we contacted the landlord regarding this matter, the landlord was very quiet for few moments, and then the only thing he could tell us was “you may be on to something. I will get back to you”.
A few days later the landlord called me cheerfully, “I have good and bad news for you.” “Go ahead,” I replied curiously. “The bad news is that I am no longer a seller,” and the good news, he proceeded to explain that thanks to my advice regarding the real estate tax increase, he indeed found out that my tenant had not paid the increase of the base taxes for over 20 years! He then matter of factly said, “My tenant already acknowledged it and is going to send me a check. Thanks to you, I have just made $500K!”
So, although you were probably expecting to hear how YOU can make $500K, this story is all about our client. Well, suffice it to say, we are still very satisfied with the results achieved from our services, and proud that we were able to add value for the landlord.