Is Price Everything?

 How much does price matter in terms of commercial real estate? As a kid, I was always told when I asked my dad for advice, “buy low, sell high.” If you’re using that as a way to buy commercial real estate, that’s a bad idea. If you buy low and try to sell high, you’re never going to buy the good stuff. You’re never going to buy good cash flowing properties that will appreciate in value over time. That’s not going to happen because you’re buying stuff that’s cheap, and nobody wants to buy cheap commercial real estate. This is just a fact, if you’re going to buy a yacht, you’re not going to buy a cheap yacht. You’re not going to buy a major league baseball team for cheap because it doesn’t exist. Those are not products that you’re going to buy that are going to be affordable because good products cost good money. 

Just like if you’re looking at apartment complexes or strip malls or good cash-flowing properties, those are not going to be cheap. So instead of saying, “buy low, sell high,” what I would argue is that you need to say, “buy high and sell higher.” Then you start to think about appreciation for the product. I will often tell our clients, if you see an apartment complex or an office building that has great cash flow and it has filled zero vacancies and somebody has an asking price that meets the criteria with the NOI, then by all means, pay the asking price. That’s because if that asking price is legitimate, then on the back side, over a course of time, you could realize some appreciation naturally. Better yet, if you’re talking multifamily properties, you can actually force appreciation and increase the value of the property. 

Don’t try to grind people. Look for great products at a good price and if it’s a list price and it’s a high price, but it’s a great property, I would advise you to pay the list price for that property and then realize appreciation in the future over time or through forced appreciation. 

 If we can help you with buying property or selling property or even leasing property on the landlord side or on the tenant side, please give us a call, (715) 450-4990, or email us at chris@stokesherzog.com. 

Stokes Herzog Realty LLC is Eau Claire, Wisconsin’s commercial real estate brokerage firm. Our team of professionals represent tenants, landlords, buyers and sellers in every facet of commercial real estate. Throughout the State of Wisconsin, Stokes Herzog Realty LLC specializes in tenant representation, property acquisition, surplus disposition, leasing services and investment sales. We look forward to working with you!