Hey there BP,
I wanted your opinion on a property I’m looking to partner on. The building was appraised 6 months ago for $800k, we are picking the deal up off market for $350ish if we close in the next 3 weeks.
The building is 19,090 sqft of brick and in need of a roof (maybe a patch job), 50 windows, electrical, heating and flooring estimating around $350k.
At $700k project cost + holding expenses, our goal is to flip the property and provide a vanilla shell to the county/city courthouse, laws offices or medical offices. Our goal is to sell in 6-12 months for $1.8M, our only concern is that this market overall is a little sleepy and slow. Do you ever invest in a deal because the numbers make so much sense even when the area is not up and coming?
The property is zoned downtown business residential and is located downtown right next to the county courthouse, hospital and other local government agencies. The town is in Vernon Rockville, CT about 20 mins outside of Hartford and away from UCONN. Thank you for the input.
IF the numbers make sense and you can rent it out to a rock solid tenant like a government agency, then should be easy to sell if the end numbers are good.
Figure out the CAP rate and if that is a good number for that area once the building is fixed up and good operating cash flow.
End long term Investors like to see a few years of operating history and for you its best to sell after 2 years so you can do a 1031 exchange otherwise if you sell in less than a year you'll take a big hit on taxes.
Can you fix and refinance and offer that financing assumable to new buyer, sometimes those brickers are hard to finance.
Thank you for your input. This is a cash deal so refinancing is not necessary.
I’m expecting us to close in 1.5 weeks. Because this is a smaller deal we are doing it and taking the hit on taxes, using the capital alongside his 1031 money he will have in 3-6 months when his commercial property sells for around $4M.
For me it all comes down finding a tenant that would pay a minimum of $1.8M so I am targeting businesses and agencies that would be able to perform.
Because we are looking at several other projects, let me know if you see anything off market/steeply discounted that doesn’t fit your criteria. Thanks again!