Tommy Dobczyk analyzes an 8.5-acre Phoenix industrial lot listed at $1 million per acre in an opportunity zone. To hit an 8% yield, the deal would need $360k in annual rent or $314 per month per space. Access to Highway 60 is limited, and a comparable market analysis is needed to justify the $19 per square foot price.
Chapters
Are you a land shark doing deals?
A lot, but it has some actual foundation built to it, such as a gravel yard. It has fencing all around it, has barbed wire, and also has electric fencing to it as well. And it's in Phoenix, Arizona. It's also in an opportunity zone.
All right. So they want almost $1 million an acre. It's $19 a square foot for the land. To hit 8% yield on cost, you need to be around $734,000 NOI. The translation into deal right here shows that there's $314 per month per space, $360,000. Conventional local bank, local bank-backed commercial lending, the debt fund bridge loan, and then an equity partner with conservative debt or senior debt or maybe even equity. They want $8.5 million and it's a vacant yard. So again, like, they're basing it on raw dirt value. Let's go ahead and do a CMA analysis of this area for this property. I need to know like how badly we are being overcharged by having it at $897,000 per acre. I want to double-check and make sure that land around this area is selling for $19 a square foot. I do know that industrial land is expensive, but justify this price if you would, please. What I'm thinking is that let's pull a map, Google's map from it. So then do a screenshot of that whole thing right there and drop it in there and then give it— well, let it finish thinking about what it's doing. What you would end up doing is dropping that comp in there. Let's take a look at their listing real quick though. This'll be useful as well. You can see that it's off of Highway 60. This has got frontage road to Highway 60, but it doesn't have exit out the back, and nobody gets access off of Highway 60 anymore. So if it don't have access, this is why it's big and hot. Okay, so see here where you have to come off of 60 right there, go up, and then you get your entrance in here somewhere. It's not directly off of 60 anymore. But that's a big-ass lot, brother. Right? Like, that is a big ass lot. Awesome. So again, the downfall to this area is that it is, it is all industrial. You have no other choice with it, right?
Yeah.
And so, and they're not going to budge on the price. So you almost need to do a structured deal with them.
