I Bought a School (How Did This Happen?!)

by | BiggerPockets.com

Have you ever had a dumb idea that you thought was amazing—until you realized it wasn’t?

Those who said yes likely didn’t follow through with the idea. Well, I did.

Let me tell you about the most interesting real estate purchase I ever made.

It Started With a Story in the Newspaper

I can get erratic at times with purchases. This comes from my background in wholesaling.

As a wholesaler, you can take chances and then let your end buyer take the risk. Well, this purchase I was the end buyer—and man, was I taking a risk.

Before we get started, let me provide the backstory.

My wife and I were looking through the local newspaper. On the first page, there was an interesting article detailing how a local school district needed to sell or raze a turn-of-the-century school building.

I paid it no mind, but my wife is a property scout when it comes to real estate bargains. Her first comment was, “This is a very attractive-looking building. We should buy it.”

Related: The ‘Excitement’ Of Real Estate Investing — Really?

Smiling young girl standing at the kitchen in the morning, reading newspaper, drinking tea

No comment on what I was thinking. It’s the wife though, so I said, “Oh,” and didn’t give it much more thought.

“Why would she have found the article interesting?” you may be wondering.

Our family not only is involved in real estate but we also operate a successful non-profit about 45 minutes south of Chicago. It’s in a midsize, working-class community called Kankakee. She saw the former school building as an opportunity to help with the agency’s expansion into providing daycare services.

I have to say my wife, my mom, my brother, and my sister-in-law can always find ways to help people. I, on the other hand, enjoy helping others, of course. But my head is always focused on real estate.

Then My Wife Twisted My Arm

I figured since the school district had to sell or raze the building, it must be in serious need of repair. See, this is how it always happens. She throws out an idea, and I can’t help but to analyze it. My mind is just wired that way.

This was her first step in getting me to show interest. Verrry clever, Mrs. Maloney.

She spoke with the school district, inquiring about the building and gauging how they were receiving offers. The whole time she was working on this I had no clue. (Dumb husband…)

The school district was going to do a blind auction. But one of the school officials slipped and stated there were no offers on the table (so my wife says).

By then, she had pulled me in the building. Just from a walkthrough, it looked solid.

Related: The Best Real Estate Deal I’ve Done This Year

Then My Whole Family Peer Pressured Me

I couldn’t do what I would normally do in this instance—run numbers, create my exit strategy, create a rehab budget. You know, all the typical things a fiscally sound individual would do on a project. This was completely different and out of the box.

A day care?! What were we going to do with a day care?

african american man drinking coffee looking out a window

The other four (wife, mom, brother, and sister-in-law) said, “Fill it with kids. Let’s continue to help the community but in a different way.”

My wife and sister-in-law had experience running a daycare, and they saw the opportunity where I couldn’t see it. Mike (my brother) was on board once he evaluated the potential and did his research. I was still focused on the exit strategy and potential rehab and holding cost.

But eventually, they won. I decided to do it.

I focused on financing and the building rehab. They followed the pro forma they created for child care equipment, marketing, staff, and other essentials.

I Got on Board and Dove In

As scared as I was, I went to the blind auction. My wife was right; it was only me there.

So then, I really began to panic. “I’m the only one trying to buy this thing?! There has to be something the inspector and I missed.”

Suddenly, my investor senses kicked in. I had the thought that since I was the only one there, we could probably get the property cheaper.

I submitted the bid, left the auction, and drove straight to my new project—because I knew we were going to get it! And we did.

Now We Own a School

I’m glad we made this purchase. My sister-in-law runs a very, very profitable daycare. Once we purchased this property, it expanded even more.

When I’m in town, I always stop in on school days. I like to see the children playing on the playground and to witness how this place created jobs within the community. The kids are happy, my family is happy, and the property and the business are very profitable.

Fortunately, everything worked out.

What would you have done in my position? Do you have any crazy real estate stories like this? 

I’d love to read them in the comments below!

 

About Author

Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.

17 Comments

    • Marcus Maloney

      Andrew, Thank you for reading I really enjoy the community projects the most. I’m currently looking for another. I just finished a duplex but it was nothing like the school. We had community officials coming by to see the transformation. The ribbon cutting ceremony was really fun.

  1. Scott Rose

    Am I the only one that sees this story as a cliffhanger with a rushed ending. Great success story and awesome to see the value added to the community (and unconventional potential with REI), but would love to get more details about the project – timeline, rehab hurdles, etc. And what’s next? Has that been a stepping stone for more community project s in the same area?

    • Marcus Maloney

      Scott,

      Great comment, I’ll elaborate more in the next post. I wanted to add pics but didn’t know if it was possible per BP requirements. I will definitely add the details to the scope of the project and how this propelled into other projects in the community. I didn’t expound on that really wanted to keep it real estate related.

      Thanks again for your input.

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