Commercial Investors: Share Your Experience!

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Attention Commercial Investors!

We want to know more about you! What makes you tick? How'd you get started? Why did you choose Commercial over Residential?

We're looking to quote you in an upcoming article on the BiggerPockets Real Estate Blog about Commercial Real Estate.

If you'd like to contribute to the article, please answer these 3 questions: https://www.surveymonkey.com/r/FS5WCP6

I purchased my commercial property out of necessity. I have several businesses so when I purchased my first commercial property it was because I needed a warehouse and space for those businesses. I had and currently have a towing company and a car dealership. When I first started out I didn't need much space however as I grew (i.e. buying more cars to sell at a time) I needed more space. At first I used a small space that I rented however I soon outgrew that space. So I just rode around in commercial areas and I stumbled on a warehouse in the city sitting on 1.5 acres. I saw an old sign so I took down the number. At this time I was still a full time agent as well. So I called a few commercial agents and asked them about the property and the owner. All of the answers that I received, was don't call the owner he won't sell the property. Several of them had tried to purchase the property and were unsuccessful. I figured because the building was a little run down they may have lowballed the owner. Which I'm sure upset him and they were rejected. I learned years ago if you need or want something like a property never upset the owner. I also knew the value that the building would bring to me would far out weigh the cost that the owner wanted. I called and made him an offer. Which was full price by the way. And I closed in 30 days. There is a little side note. I didn't use bank financing. I never do. Important piece of info: I offered him full price which was $58k I put $1,000 down and had him hold a mortgage for 7 years at 5% for the balance of $57k with monthly payments of $500 a month. And a balloon payment of remaining balance after 7 years if property isn't paid off. I paid him $500 a month for 3 years and I paid off the property. Just so you know when I say I closed. My attorney closed on the property my corporation was placed on the deed and the owner held the first mortgage position. when I owner finance properties my corporations name always goes on the deed if the property was owned free and clear.  

Originally posted by @Account Closed :

I purchased my commercial property out of necessity. I have several businesses so when I purchased my first commercial property it was because I needed a warehouse and space for those businesses. I had and currently have a towing company and a car dealership. When I first started out I didn't need much space however as I grew (i.e. buying more cars to sell at a time) I needed more space. At first I used a small space that I rented however I soon outgrew that space. So I just rode around in commercial areas and I stumbled on a warehouse in the city sitting on 1.5 acres. I saw an old sign so I took down the number. At this time I was still a full time agent as well. So I called a few commercial agents and asked them about the property and the owner. All of the answers that I received, was don't call the owner he won't sell the property. Several of them had tried to purchase the property and were unsuccessful. I figured because the building was a little run down they may have lowballed the owner. Which I'm sure upset him and they were rejected. I learned years ago if you need or want something like a property never upset the owner. I also knew the value that the building would bring to me would far out weigh the cost that the owner wanted. I called and made him an offer. Which was full price by the way. And I closed in 30 days. There is a little side note. I didn't use bank financing. I never do. Important piece of info: I offered him full price which was $58k I put $1,000 down and had him hold a mortgage for 7 years at 5% for the balance of $57k with monthly payments of $500 a month. And a balloon payment of remaining balance after 7 years if property isn't paid off. I paid him $500 a month for 3 years and I paid off the property. Just so you know when I say I closed. My attorney closed on the property my corporation was placed on the deed and the owner held the first mortgage position. when I owner finance properties my corporations name always goes on the deed if the property was owned free and clear.  

 Hi Mr. Wolfe, I am Mojid a Newbie to the BP Forum, I have quite an interest in getting into real estate, however one of my biggest drawback has been a lack of funding and seeing your accomplishment by talking with the owner, I was wondering how often do you see that happening in the market where the property owner allow you to pay it off or rent to own is the appropriate term

What are they typical terms from small commercial properties right now?  5-20 units?  I would love to househack a small apartment complex, but when I analyse properties it is hard to know what financing would look like.  Thanks

I was tired of paying rent for my accounting practice and I found a vacant 4-office building with a huge parking lot (parking is a challenge in my town). The building needed some work (new roof, complete remodel of two offices, new decking on the handicap ramps, etc.). We got a good deal because the lack of any tenants scared off other buyers. It took 1 year to get all of the offices and the 7 extra parking spaces leased out, but now it cash flows beautifully. 

Top 3 reasons I like commercial: 

1) $100/door/month is a depressing metric. 

2) Long term leases.

3) Forced appreciation. 

@Fred Johnson the building was being used as a storage facility. I knew from speaking with the agent and the owner that they were not going to provide financials. For the items being stored they had to pay $500 a month until the items were removed. They left the items there for about two months and paid a $500 clean up fee for the items left behind. How this property paid for itself. Since it was 1.5 acres in the city, I used it as a storage lot as well and companies that needed to store something I charged them $500 a month for a portion of the lot.     

@Mojid Salawu I see owners willing to "owner finance" not -rent to own- everyday. Owner financing is where the owner is acting as the bank they are holding your mortgage. With owner financing you close on the property just as you would if you received a mortgage from a bank. It is a numbers game, I send out about 30 offers before I get one owner willing to finance.     

@Peter Gill the property did pay for itself. it was 1.5 acres in the city limits so I charged companies with commercial vehicles $500 a month to store their vehicles on my lot. I also had a vending company using some warehouse space to store vending machines.   

@James Murphey when you go to an owner or an agent you have to create the terms. When I did my first deal, I made my offer sound great. I gave them what they wanted a clean offer. I got what I wanted a low monthly payment. you have to figure out what works for you and put that in your offer. 

Mindy Jensen- I did fill out the survey but not sure I did it correctly. My situation was like Henry Wolfe's. the first  commercial acquisition was due to necessity. I needed office space for my fledgling real estate office but didn't know I was going to end up with a new 30,000 ft.² vacant office building as my first entrance into commercial!

@Anvith Amin , my first investment was the four office building that my accounting practice occupies along with three other tenants. We all have adequate parking and I'm able to lease out another 7 parking spots to area businesses. It took a little over a year to be fully tenanted, but it now cash flows $2000/month. Bear in mind, however, that my accounting practice occupies the largest space and I'm in the business of tax planning.

You got it man Account Closed if you have any questions or common things you have your agent go over please let me know.

Hey Jessa, I tried a Realtor in Boulder regarding the Commercial Property in Longmont.. no response to the company invite. I have a partners investor with ReMax Alliance in Arvada have a lunch meet with here. I am not surprised.. I have seldom found realtors be of any help but rather the opposite. I have worked with very good realtors.. and they always become investors and retire over the years.. smart ones ! Will get back with ya on the Commercial vacant Land in Longmont after my conference. BTW.. the listing agent raised the price and mis-marked the actual plots on Zillow recently ! I am the only save on the property Zillow in over 900 days according the listing .. so it goes. Not deterred .. but fun !

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