Member: Marcus S.

Property Overview:

What type of property did you invest in (e.g., retail, office, industrial)? 

Medical: Urgent Care Clinic Bon Secours/AFC Urgent Care clinic

Where is the property located?

Greenville, SC (one of the fastest growing cities in the US)

What attracted you to this particular investment?

I liked that it was medical and has been an urgent care clinic for over 40 years already.  I also really like the geography in Greenville where we have strong migration trends, growing population, low unemployment

The Investment Decision:

What were your main objectives with this investment? 

My main goal was to get my first true commercial property (outside of multi family).  Admittedly, I still have some anxiety about being in another asset class but knew that I had to take the leap myself to test it out.  I wanted to ensure I was at least an 8% cap rate and this one met that criteria.  I had capital available that I really needed to get working for me and I had sold a multi family via 1031 exchange so needed to place that capital as well.  

How did you identify this opportunity? 

Direct mail to owners in that area highlighting my need to buy soon because of the 1031 exchange.

What criteria did you use to evaluate its potential? 

I used the commercial deal analyzer from Matt.  very helpful tool

Challenges & Solutions:

What were the biggest challenges you faced during this process (if any)? 

This was a fairly straightforward purchase because the tenant was already occupying the property with more than 4 years remaining on lease.  inspections and environmental all went relatively smoothly.  My biggest challenge is overcoming my fear of another asset class outside multi family.  I’m still anxious about how things will go when we approach the lease expiration in 2028.  

How did you overcome these obstacles?

Regarding my anxiety about the lease renewal in 2028, I’m saving some big improvements to the property for the time frame when we will be negotiating a new lease.  I have a parking lot that needs resurfacing (not just sealcoating) and an old ambulance covered parking spot entrance that needs to be removed or replaced.  

Financial Insights:

Can you share some key financial metrics from this investment (purchase price, renovation costs, NOI, etc.)? 

Purchase price $1,000,000.  No renovations but when I do the parking lot and ambulance bay estimates are coming in at a total of about $75,000.  NOI of $80,000.

What financing strategies did you employ to fund this deal? 

1031 exchange money plus cash available so no financing but plan to refinance when I renegotiate the lease in a few years.  hoping interest rates will be lower by then also

Do you have a proforma model you can share with us or a monthly P&L that shows income, expenses, and net income.

It’s a NN lease so no expenses.  I manage the property myself and the tenant has cushman wakefield as prop mgr so they even help me with estimates for capital improvements etc.  

Value-Add Strategies:

Did you implement any specific value-add strategies to increase the property’s worth or income? 

None other than renegotiating the lease.  I am getting about $18 per sq ft and a new urgent care clinic down the road is paying $35 per sq ft.  I don’t expect to get that high but I have room to increase the NOI significantly at the lease negotiation in 2028

How did these strategies impact the property’s performance? 

Lessons Learned:

What are the most valuable lessons you learned from this investment?

Collecting a coupon with no property management is so nice and easy.  NN and NNN is just awesome when you have good tenants

Is there anything you would do differently in hindsight? 

No

What was the BEST THING that this investment enabled you to do as a result of this investment? 

This investment hit my cash flow objectives of at least an additional $50k per year in cash flow.  In my case since no financing I’m getting $80k per year in additional cash flow.

Future Outlook:

What are your plans for this property moving forward? 

already discussed above with lease renegotiation

How has this investment shaped your future CRE investment strategy? 

It’s made me more confident to buy the next one, which I just put under agreement.