A rent roll can kill an office deal faster than any inspection

Oh I've been the guy still talking to nobody. Different asset class, same feeling.

I tried one commercial deal, a small retail strip, because I thought my buyer list transferred over. It doesn't. My residential guys want to know what it comps at and how much the roof costs. The commercial guy wanted three years of CAM reconciliations before he'd even walk it. I didn't know what a CAM reconciliation was, which he figured out in about a sentence.

The part that gets me is when one sharp question collapses the whole deal. On the commercial side you need a short list of buyers who each actually buy, and every one of them can end you with a question if the rent roll doesn't hold up. How do you meet those people? Investor meetups, brokerage relationships, and closed deal rooms tend to be where they surface. Cold volume usually isn't.

What I want to know is who prepared that rent roll. Somebody made that screenshot. Somebody sat down and decided a related party lease at 40 percent over market was going to survive a professional reading it, and then went about their day.

A related party lease is a pattern worth watching for, and it shows up on small multifamily as often as office. A lease to an owner's relative priced well above market, dated a few months before listing, is the classic shape. It is not always fraud either. Sometimes a seller genuinely believes a signed lease is a signed lease. It does not matter either way. A careful buyer prices it as vacant and moves on.

From the tenant side of a lease, it's common to see a lease written to make a building look better than it is. A landlord offers several months free on the back end and writes the face rent high. Face rent goes on the rent roll. The free months live in a side letter nobody hands the buyer. That's the piece worth hunting for as an analyst. Request every amendment and side letter, then ask again in writing.

I've been circling commercial for about a year because my residential margins keep compressing and everyone tells me the fees are bigger up there. Threads like this are the counterweight. Fee is bigger, sure, and the number of ways to be embarrassed goes up faster than the fee does.

Sable, did the wholesaler have real earnest money in it, or was it one of those dollar contracts?

51 percent occupied suburban office in 2025 isn't a wholesale deal, it's a renovation project wearing a suit. Somebody's going to spend 40 a foot on TI and corridor work before a single new tenant signs, and that's before they find out the rooftop units are all original.

The assignment fee is the cheapest line item in that building's future.

Harrow is right about the units. On a two story 1980s suburban office, expect four to six packaged RTUs at end of life and a parking lot that needs more than a seal coat. A walk-through of a similar building last spring made the real risk clear. It was not the mechanicals, it was that the building was designed for one big floor plate tenant and the market only has 2,000 foot tenants now. Cutting it up is never cheap. Corridors, second exits, separate metering all add real money, and none of it shows up in any comp.

Can somebody explain the 8.5 in plain words? I get that NOI is income after expenses. Is the cap rate just what the buyer decided she wanted to earn, or does it come from somewhere outside her head?

Ember, roughly: divide the yearly net income by the price and you get the cap rate. 148k divided by 1.74 million is about 8.5 percent. Where the 8.5 comes from is the argument. Buyers pull it from what similar buildings actually traded at plus what they think the risk is, and a half occupied office gets a much higher number than a full industrial box, which means a much lower price.

Somebody correct me if I mangled that.

What did the purchase contract say about assignment? On commercial paper, seller's counsel very often strikes free assignability or limits it to an affiliate under common control. If a wholesaler is marketing an assignment on a contract with an anti-assignment clause, there was nothing to sell, and a buyer's rent roll question would only confirm what the contract already ruled out. Asking for the contract before the T-12 is the right sequence. It's also worth asking whether the wholesaler had any right to market the property before closing, since how that lands can depend on brokerage licensing rules, and those genuinely differ by state. That's an attorney question, not a forum question.

"We don't buy comps" is going in my notebook and I don't even own anything yet.

Half empty office on an oversized parking field in a second ring suburb. What's the land worth? Sometimes the answer to that building is that the building is a liability sitting on the actual asset.

Depends entirely on zoning, obviously, and on whether the jurisdiction has any appetite for a change of use. Some don't.

Take a nine unit deal where estoppel certificates are made a condition of closing. It's common for a couple of tenants to return them with terms that don't match what the seller's rent roll shows, a verbal arrangement on a parking space here, a tenant paying less than the roll claims there. Small potatoes next to an 11,000 foot related party lease, but the same lesson applies either way. Ask the tenant, not the owner.

No lender was funding that at 2.45 anyway. Debt service coverage on 148k of real NOI doesn't support the loan the buyer would've needed, so even a buyer who liked the story would've come back to the same number from the financing side. Terms and appetite move around a lot right now, so anyone actually pricing this should get a real quote in writing rather than trusting a rule of thumb. The wholesaler's problem is that he underwrote a building for a buyer who has a bank behind him.

Nine minutes is fast work. Most operators would need nine days and would still miss the cousin's LLC.

Quill, you wouldn't necessarily. The tell was that the entity name rhymed with the seller's, which is a five minute search on the secretary of state site in most states, and free. What separates the analyst is that she does it before the call instead of during.

Sable, the thing I'd want to know is whether the buyer told the seller directly afterward. I've been in a deal where the buyer went around the wholesaler and bought it at 1.8 six weeks later once the contract expired. Nothing improper, the contract had run out. It just ended that relationship permanently.