Stilp walks readers through the strategic procedures associated with buying commercial real estate.
Stilp starts this stylistically dry but substantive primer on purchasing real estate with some necessary groundwork—how to handle numbers. Even readers with math anxiety won’t feel overwhelmed as he explains the role of capitalization rates, determining value and net operating income, and accounting for appreciation, depreciation and equity yields in making a sensible investment decision. Just as critical, and potentially lethal, as the math is the paperwork. Stilp makes it palatable by revealing ways in which buyers can add profit-making clauses. There is an intriguing section where the author, who has been involved in these types of negotiations for years, draws profiles of typical personalities you will meet across the table during the sales process and offers tips on how to be the best people-person with each type. Using an apartment building in Chicago as an example, Stilp gives a complete walk-through—inspecting the building’s documents, the on-the-ground physical inspection of the property, arriving at a value, entering negotiations (“The buyer is penny-wise and pound-foolish to ever allow the seller to provide the ‘form’ of the contract.”), alternative financing possibilities and how to use leverage and compounding. At the end is an eye-opening chapter on keeping good tenants and getting rid of bad ones. This is one of those valuable tools that works two ways: by outlining the rights of the landlord for lawful debt-collection remedies, the rights of tenants are drawn into focus—and there are many. Anyone who rents space would do well to read this chapter closely.
Practical and realistic, these concise pages demonstrate that the prospect of buying an apartment house can be a nicely controlled venture.