In this episode of the Scottish Property Podcast, we are joined by Jerry Alexander, an experienced commercial property investor, to dive deep into the Commercial Multiple Occupancy (CMO) strategy. With over 20 years of experience, Jerry shares valuable insights on how this model works, the benefits of reducing risk with multiple tenants, and the potential for significant cash flow. Whether you’re new to commercial property or looking to scale, this episode is packed with practical advice and strategies.
Episode Highlights:
- Introduction to the CMO Strategy:
- CMO involves renting a single commercial property to multiple tenants who share common areas.
- The model reduces risk by spreading the income across multiple tenants, unlike FRI (Full Repair and Insurance) leases, where one tenant occupies the entire property.
- Benefits of CMO:
- The CMO model provides flexibility, allowing investors to adjust rental prices and quickly fill vacancies.
- It generates better cash flow and reduces vacancy risk, as losing one tenant doesn’t significantly impact overall income.
- Challenges of Managing CMO:
- CMO properties require active management, as investors need to handle day-to-day operations and tenant management.
- Scaling is essential to making CMO more manageable, as smaller properties can become time-consuming and operate like a full-time job.
- Tips for Getting Started with CMO:
- Jerry advises new investors to start with a building that houses their own business, making them both tenant and landlord.
- He suggests looking for properties that are partially tenanted to secure income while completing renovations.
- Financing and Scaling CMO:
- Investors should engage brokers early and explore private finance options for greater flexibility.
- Larger properties tend to generate more profit as they spread operational costs over more tenants, making them easier to manage and scale.
- Common Mistakes to Avoid:
- Jerry stresses that size matters—smaller projects can become a job, while larger ones offer better returns.
- He also warns against neglecting to reinvest in properties, as failing to upgrade can lead to lower rental returns over time.
- Future Projects and Long-Term Goals:
- Jerry shares his passion for historical and character buildings, which he’s focusing on for future projects.
- His goal is to build a property portfolio that runs independently, allowing him to step back from day-to-day operations.
Tune in to hear Jerry’s expert advice on mastering the CMO strategy and learn how to build a profitable, scalable commercial property portfolio!
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Follow Jerry Alexander on Instagram @jerryalexander.commercial for more insights, and check out his Commercial Property Investor Podcast for additional resources and episodes on commercial property investing.
