Commercial Real Estate

Client Profile: A small investor syndicate exploring a 12-unit multifamily deal in Phoenix, AZ ​ Situation: The investor group has been presented a 12-unit property listed at $2.3 million. The broker pitch promises a 13% IRR, but the group wants an independent analysis. Challenge: The group lacks a full picture of realistic rent comps, true maintenance costs, and post-close capex. They need a neutral third-party to break down the deal. ​ What Liberty Clear Would Do: We build a full acquisition model including market-based rental comps, lease-up timelines, T12 performance, and DSCR sensitivity across various interest rate and financing scenarios. We also stress-test the exit assumptions and adjust for projected cap rate compression. ​ Example Outcome: The model reveals that the projected IRR is inflated. We show that with realistic rents, the IRR is closer to 11.5%. Armed with this insight, the group knows it will need to negotiate a $150,000 price reduction and restructure their financing.

Client Profile: A small real estate investor is deciding between plans to convert a small warehouse that is for sale into a co-working space ​ Situation: The investor identifies a warehouse for $1.2 million and receives a $410,000 renovation estimate. They anticipate high demand for the co-working space due to nearby startup activity and a sizeable remote worker demographic. Challenge: The client hasn’t budgeted for permits, change-of-use fees, or seismic upgrades. Their contractor has also failed to itemize soft costs for them in a clear manner, making it difficult to commit to the large capital expenditure required. ​ What Liberty Clear Would Do: We construct a full project pro-forma financial model, layer in municipal permitting costs, upgrade requirements, and tenant improvement allowances. We source local comps for similar commercial transitions and, at the client’s request, bring in an architect contact to validate scope. We use our local real estate knowledge and contacts to estimate time-to-revenue based on co-working lease-up timelines. ​ Example Outcome: Our model reveals that total costs could exceed $1.75 million, with risk-adjusted cash flows below expectations. They ultimately pass on the property and redirect their capital to a different opportunity to acquire a mixed-use building with built-in tenants. We build the financial model for the client after they source the alternative opportunity, which fits more in line with their return expectations and risk profile.

Client Profile: A first-time commercial real estate investor evaluating a strip mall in suburban Dallas, TX ​ Situation: An investor is considering the purchase of a partially leased retail strip mall listed for $3.1 million. The offering memorandum projects an attractive 9.2% cap rate and includes optimistic lease-up assumptions. Challenge: The investor has never owned a retail asset. With three of eight units vacant and several of the remaining tenants with short-term leases, they need help understanding the risks, realistic income potential, and long-term outlook, especially in a market facing retail headwinds. ​ What Liberty Clear Would Do: We build a full financial model for the asset, incorporating local market lease comps, vacancy absorption trends, and forecasted tenant improvement and leasing commission costs. We also run cash flow sensitivities around potential re-tenanting delays, rental rate fluctuations, and interest rate shifts. Our analysis benchmarks property performance against comparable retail assets in the Dallas-Fort Worth area. ​ Example Outcome: Our model uncovers that the true stabilized cap rate, accounting for conservative lease-up timing and tenant incentives, is closer to 7.6% rather than the 9.2% in the OM. We estimate upfront leasing costs of $220,000, which the OM underreported.