Month: November 2025

No One Wants to Buy Your Property

To 99.999% of buyers in the market, your property is a pass. They simply aren’t even interested enough to notice it’s for sale. To that remaining .001% your price is too high, except for that single buyer willing to pay the price, clear due diligence, and follow through on closing the deal.

When searching for a buyer, it can feel like searching for a needle in a haystack. It’s even worse when a seller’s price expectations are above what a buyer is willing to pay. This has been the situation over the past 2 years in both commercial & residential. Most buyers aren’t willing to pay record high pricing, leaving us in a declining transaction volume situation.

That’s just how the market works. How many buyers were willing to pay more than $16M for our shopping center in Las Vegas? Only one. Thank God they cleared DD and closed. Money is in the bank & already re-invested.

How many buyers are willing to buy that freshly renovated house flip you have for sale? Well, in that Covid era of low rates, you might get threatened by many offers, but only one can actually close.

Now, in this more normalized market, I can tell you from the 235 deals closed this year, most deals went to closing with a single offer from a single buyer. Many Miracles. Thank God for every single buyer on every single one of those deals.

Most buyers pass on most deals because the PROPERTY is NOT a fit for them.

Buyer needs a house with 2 bathrooms, and yours has 1, it’s a pass.
Buyer buys shopping centers and you have a warehouse, it’s a pass.
Buyer wants more land than your .25 acre lot, it’s a pass.

Diamond Equity is a Market Maker

Our company, Diamond Equity, does not operate a “buy box” the way most buyers are constrained by. We are MARKET MAKERS. We will review any piece of real estate in the U.S. and MAKE AN OFFER. We don’t discriminate, we buy MANY properties which almost everyone would rather not own.

Diamond Equity IS that .001%, that willing buyer, for nearly any asset. Sure, there are some lots, buildings, & locations which are simply economically unviable for some reason, but 99% of the property that crosses our desk will get fully underwritten for an offer & closing. I know of no other buyer in the U.S. (and I know quite a few) who is willing to engage in such broad asset class targeting & ownership.

400+ Problem Properties this year, undesirable for some reason:

We bought them.

2 Bedroom house in a flood zone? We bought it
60,000 sq. ft. shopping center 60% vacant? We bought it
Undeveloped 1/2 acre land in a low income area? We bought it
30k Sq. Ft. Landlocked Warehouse? We bought it

I will not waste your Sunday with the endless list of 235 property examples bought this year. Instead, if you have a deal you want to exit, I invite you to email me the details.

PLEASE NOTE: We are VALUE ADD buyers. Any deal we make, we MUST be able to increase the value by adding value. Renovations, upzoning, entitlements, permitting, leasing at market rates are a few examples of value we expect to add. We may not be the highest “offer” you can extract, but what’s important is actually going to closing & collecting your proceeds! (not going under contract & re-negotiated before closing)

Have a Value Add Deal For Sale? Here’s our Buy Box:

Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
Mobile Home Communities (50 pad minimum)
Well located Retail Development Sites
Residential MFR & SFR
Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

2021 $54,615,000
2022 $54,547,000
2023 $57,489,000
2024 $52,164,000
2025 YTD $52,759,000

I Won the Award !!

Thank you Scott Scheel & the Commercial Academy Team!

This year I won the award for Platinum Member of the year acknowledging the growth & results of the past several years. Humbled to be acknowledge among many great operators across the U.S. who share their wisdom at these Commercial Academy Events.

Commercial Mastermind Take Aways

The Wall of Defaults – $1.5 Trillion in commercial real estate debt is due for refinancing by the end of 2026. Much of this debt is upside down: the buildings are worth less than the outstanding mortgage. I see dozens of these deals monthly, many with sellers who have no clear exit.
The Coming Interest Rate Reductions – Once Jerome Powell leaves his position with the Fed, a more dovish appointee will replace him. This is a 99% probability, in my view, signaling lower rates in 2026. Guaranteed (but NOT my personal guarantee…)
Buy VALUE, not cheapness – I’m naturally drawn to properties in the worst condition. I’m a real estate healer; I love transforming distressed properties. But in commercial, many GREAT DEALS are great properties with unlockable value, often selling at a price that isn’t considered cheap.
This time, it’s Different. – This isn’t 2008. Currently, we’re seeing rolling distress. The office sector is hit hard, multi-family is less affected but worsening, and many other asset classes are soft. In 2008, everything stopped at once. This time, it’s more of a wave. None of us know if this is just a large wave that crashes or a tsunami that simply overwhelms everything. Who knows? Perhaps a drop in interest rates will save the day.

Had a great time seeing all of my fellow Commercial Academy friends. Looking forward to catching up again in 2026!!

Have a Value Add Deal For Sale? Here’s our Buy Box:

Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
Mobile Home Communities (50 pad minimum)
Well located Retail Development Sites
Residential MFR & SFR
Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

2021 $54,615,000
2022 $54,547,000
2023 $57,489,000
2024 $52,164,000
2025 YTD $50,297,000

Forget “Flipping” – The Real Money is in the Yield on Cost

The Value-Add Playbook: Flipping Commercial Property – Yield on Cost

When most people hear “flipping,” they think of residential TV shows—a fast-forward montage of new paint, granite countertops, and a quick sale based on neighborhood comps. In commercial real estate, “flipping” is a different sport entirely.

You can’t “flip” a 50,000-square-foot industrial building with fresh paint. The value isn’t based on emotion or comparable sales; it’s based on math.

A commercial property’s value is a direct function of its Net Operating Income (NOI). The formula is simple: Value = NOI / Cap Rate.

Therefore, to “flip” a commercial property (what we call a “value-add” play), you have only two options:

Decrease the market cap rate (mostly out of your control, as it’s set by the market).
Increase the Net Operating Income (entirely within your control).

This is where the real work is. It’s not about cosmetics; it’s about executing a business plan to fill vacancies, increase rents, or cut bloated expenses. And the single most important metric for this strategy is Yield on Cost.

What Is Yield on Cost (YoC)?

Yield on Cost is the metric that measures the success of your entire value-add project.

It’s your future, stabilized Net Operating Income divided by your total project cost.

Stabilized NOI: This is the potential NOI you will achieve after your business plan is complete (e.g., the building is 95% leased at new, higher market rents).
Total Project Cost: This isn’t just the purchase price. It’s everything you spend:
- Purchase Price
- Renovation & Capex Costs
- Tenant Improvement (TI) Allowances
- Leasing Commissions
- Carrying Costs (interest, taxes, etc. during the repositioning)

The formula is: Yield on Cost = Stabilized NOI / Total Project Cost

This single number tells you the true return on all the capital you invested in the deal.

The “Spread”: Where Profit is Manufactured

Here is where the “flip” profit is created. Your goal as a value-add investor is to create a significant spread between your Yield on Cost and the market cap rate.

The market cap rate is the price investors are willing to pay for a stabilized, low-risk asset.

Your Yield on Cost is the return you created by taking on risk (construction, vacancy, market uncertainty).

The difference between them is your profit margin.

Let’s use an example:

You find a vacant retail center you can buy and renovate for a Total Project Cost of $2,000,000.
After 18 months of work, you lease it up, achieving a Stabilized NOI of $160,000.
Your Yield on Cost is $160,000 / $2,000,000 = 8.0%.

Now, you take this stabilized building to the market. Buyers for a fully-leased, safe asset like this are happy to pay a 6.0% Cap Rate.

New Value = $160,000 NOI / 6.0% Cap Rate = $2,666,667
Your Cost = $2,000,000
Your “Flip” Profit = $666,667

You manufactured over $660k in equity. That 2.0% “spread” (8.0% YoC vs. 6.0% Market Cap) is your reward for the risk and work of transforming an empty building into a stable, income-producing asset.

The Real Work of a Commercial “Flip”

This profit isn’t a quick hit. A residential flip might take 3 months. A commercial value-add project takes 18-36 months.

The “work” isn’t painting; it’s negotiating leases, managing construction, navigating zoning, and underwriting tenant credit. You are taking a high-risk, non-performing asset and absorbing that risk until it is a low-risk, performing one.

In commercial real estate, you don’t find value; you create it. Yield on Cost is simply the “report card” that shows you how well you did.

Have a Value Add Deal For Sale? Here’s our Buy Box:

Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
Mobile Home Communities (50 pad minimum)
Well located Retail Development Sites
Residential MFR & SFR
Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

2021 $54,615,000
2022 $54,547,000
2023 $57,489,000
2024 $52,164,000
2025 YTD $49,233,000

Jewels of Wisdom Newsletter – How Durable is your Income Stream?

The True Value of Commercial Real Estate – The Net Operating Income

In the world of investing, assets are valued on a spectrum between pure emotion and pure math. On one end, you have assets like fine art or classic cars, where value is almost entirely subjective. On the other, you have commercial real estate (CRE).

While a “trophy” property might have some emotional pull, the true value of an income-producing property like a retail center or industrial warehouse is driven by one thing: its Net Operating Income (NOI). The NOI is the engine of the property. It is the total income generated (rents, etc.) minus all operating expenses (taxes, insurance, maintenance). This simple number dictates what an investor is willing to pay.

Income vs. Emotion: A Valuation Breakdown

Not all assets are valued equally. The driving force behind the price tag changes dramatically depending on the asset class.

Single-Family Residential:

Value Weighting (Approx): 60% Emotion / 40% Income

Value is driven significantly by emotion. A buyer is purchasing a home, not just a cash flow stream. They factor in school districts, kitchen finishes, and the “feel” of the neighborhood. I ABSOLUTELY LOVE buying, renovating, & selling houses for this exact reason. You have a chance to sell to an emotional buyer on the exit.

Stocks (Publicly Traded):

Value Weighting (Approx): 50% Emotion / 50% Income

This is the ultimate hybrid. A stock’s value should be driven by its fundamentals—earnings, dividends (income), and future growth potential. However, the market is also a massive voting machine driven by daily news, fear, and hype. A stock with zero income can skyrocket based purely on market sentiment. If you can get on the right side of the buy-recognizing the potential for emotional expansion-you can win big. Think Tesla stock bought in 2020 or Netflix stock bought 2 years ago. Ah, but there is also the skill/luck necessary to “HODL”….

Commercial (Retail/Industrial):

Value Weighting (Approx): 95% Income / 5% Emotion

Value is driven by mathematics. A buyer is purchasing a business asset. The only questions that matter are “How much does it pay?” and “For how long?”

This fundamental difference is why NOI is the king of all metrics in commercial real estate. The entire valuation is an expression of the perceived risk and durability of that income stream.

Why Retail & Industrial Leases are Different
In the retail and industrial sectors, the lease agreement itself & the durable income stream it provides is the most valuable asset—even more so than the physical building. The remaining lease term is critical; a 10-year lease with a national corporation provides a bond-like, predictable return that investors will pay a premium for. A building with only one year left on its lease is a speculation, not a stable investment. In fact, it is viewed as completely vacant by buyers & their lenders. Impossible to get a loan=lower purchase price is needed.

Tenant Options Restrict Value

Furthermore, in strong markets, a lack of tenant options to extend the lease gives landlords significant leverage. If an industrial tenant has only one or two other buildings in the submarket that meet their needs, the landlord has immense pricing power at renewal. Properties with many extensions create challenges to unlocking the full value of the property by bringing rents to the true market price.

Releasing is EXPENSIVE!!

However, on the other hand, when a lease does expire, the costs to “re-tenant” the space are substantial. An owner must often budget for 6-18 months of vacancy-paying mtg, taxes, & insurance- hefty leasing commissions, and often tens or hundreds of thousands of dollars in tenant build-out costs to attract a new user. Obtaining that durable income stream-that tenant-often costs as much as 20%-50% of the value of the building once that lease is signed.

The best time to sell is when you have a fresh lease with long term.

When the NOI Fails: Understanding Tenant RiskThe subject of any email about CRE should be: “How durable is the income stream?” Because when the NOI falters, the property’s value collapses. This failure typically comes in two forms:

The “Credit Tenant” Bankruptcy: Many investors bank on the security of a large, national, publicly-traded company. However, as we’ve seen with recent large-scale bankruptcies (Rite Aid, Big Lots, Ruby Tuesday-to name a few), this “guaranteed” income can vanish overnight. When an anchor tenant goes dark, it can trigger co-tenancy clauses, allowing smaller tenants to break their leases, causing a catastrophic domino effect on the property’s NOI.

The Fragile Local Tenant: On the other end of the spectrum is the small, local “mom-and-pop” tenant. While they may be the heart of the community, their income stream is often fragile. They are highly susceptible to local economic downturns, new competition, or even personal health issues. A two-month dip in sales could be the end of their business—and your rent check.

We Buy Value Add Commercial & a Boat Load of Houses throughout the U.S.

(I Need a $3M-$9M purchase to close by year end.)