Watched a buyer kill a 34,000 foot office deal off the rent roll alone

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.

Sable, the part that gets me is that she asked one question and the whole thing collapsed. My whole list building process right now is built on volume, and it sounds like on the commercial side you'd need maybe eleven buyers who each actually buy, and every one of them can end you with a question.

How do you even meet those people? Are they at meetups? I'm guessing no.

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.

Seen the related party lease twice. Both on small multifamily, not office, but the shape is identical. Owner's cousin in unit 4 at 1,850 when the building is a 1,200 building, lease dated four months before listing.

It isn't always fraud either, sometimes the seller genuinely thinks a signed lease is a signed lease. Doesn't matter. Buyer prices it as vacant and moves on.

From the tenant chair, I've signed a lease that was written to make a building look better than it was. Landlord offered eight months free on the back end and wrote 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 one I'd hunt for if I were the analyst. Ask for 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's right about the units. Two story 1980s suburban office, I'd bet on four to six packaged RTUs at end of life and a parking lot that needs more than a seal coat.

I walked one like it for a client last spring. The thing that scared me wasn't 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. You can't cut it up cheaply. Corridors, second exits, separate metering. That's real money and it doesn't show 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 the seller's counsel very often strikes free assignability or limits it to an affiliate under common control. If that wholesaler was marketing an assignment on a contract with an anti-assignment clause he had nothing to sell, and the analyst's rent roll question just got there first. I'd have asked for the contract before the T-12.

Also worth asking whether he had a right to market the property at all before closing, because how that lands can depend on brokerage licensing rules in your state, and those genuinely differ. 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.

On my last nine unit I made estoppel certificates a condition and two tenants returned them with terms that didn't match what the seller gave me. One had a verbal on a parking space, one had been paying 75 less than the roll said since 2022.

Small potatoes next to an 11,000 foot related party lease, but same lesson. 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. I'd have needed nine days and I'd still have missed 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.