New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
I found a 57 unit $4mil property in default, as a newbie should I. I have read all the particulars, analyzed and analyzed. I figure I can get investors to hold the $4mil for 4 years and I sweeten the pot somehow. All of the buildings are very nice and in a good upscale area. Rent is not cheap. It seems the owner tried doing things he should not have and got in a little trouble. The property is more than $4mil it's only in default for the $4mil. it's more of a $8mil property. I have been studying and learning since December 28th, my daughter says I should start small. Am I shooting to big or not? I have a couple of people in mind to bring aboard to help my Dream Team. At 55, an army vet I don't have fear of the unknown, at the same time I want to know what others think. I am sure I am not the only one who had a very large first deal. I do have another smaller one, but for some reason that seems like it is harder to get anyone to invest in. Ahh haa, the higher the risk the greater the reward. Please give me your thoughts. Thank you.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
I will be the naysayer - I am a bit doubtful that you have found what you say. If it is an 8M property defaulting 4M why would the lenders and owners allow it to be sold that short?? That is a huge loss of money and people dont give away 4m
IMO there is a lot more to this story and the info provided tells us not much.
Commercial lending is very different than residential. The big boys want real money, real experience etc.
You have not said anything about the financials which is how it is valued.
Anyway, suggest you find a good commercial agent to help you as there is a lot to lose and also a lot to win.
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
6y
@Account Closed There's nothing wrong starting off with a deal this size if you feel that you can handle it. You have to honestly assess your knowledge and skill level and determine if you will be able to successfully acquire and operate this asset. If you've done your homework and you have the right people on your team, then you can definitely do it. But don't be overzealous by doing it solely because it's bigger because that'll ruin your reputation and perhaps your finances quicker than just about anything else.
Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
6y
Originally posted by @Account Closed:
I found a 57 unit $4mil property in default, as a newbie should I. I have read all the particulars, analyzed and analyzed. I figure I can get investors to hold the $4mil for 4 years and I sweeten the pot somehow. All of the buildings are very nice and in a good upscale area. Rent is not cheap. It seems the owner tried doing things he should not have and got in a little trouble. The property is more than $4mil it's only in default for the $4mil. it's more of a $8mil property. I have been studying and learning since December 28th, my daughter says I should start small. Am I shooting to big or not? I have a couple of people in mind to bring aboard to help my Dream Team. At 55, an army vet I don't have fear of the unknown, at the same time I want to know what others think. I am sure I am not the only one who had a very large first deal. I do have another smaller one, but for some reason that seems like it is harder to get anyone to invest in. Ahh haa, the higher the risk the greater the reward. Please give me your thoughts. Thank you.
Hi, Sharon, it's hard to know how good of a deal it is by your post.
New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
6y
@Charles Seaman thank you. I believe if I had the right people beside me, ie lawyer, accounting firm, a good analyzer and negotiator, maybe one with fear and one with no fear it could be pulled off. I think I have met you before and one of the networks in Dilworth and if not I apologize.
Well you can pull anything off if you have someone who can market with creative content such as After effect videos to enhance video quality and show of property in a stylish yet creative manner, building a logo/brand for you business isn't hard these days with mockup.
Once you do get the property designed and fixed it up I'd advice you get someone to build an automated system, this way all the tedious things will be done with.
Wholesaler · Los Angeles, CA · Member since 2020 · 4 posts · 2 votes
6y
Hi @Account Closed, while I'm not a seasoned investor, I have some advice that I think most would agree with. As is said often on the BP RE Podcast, "50% of a good deal is better than 100% of a bad deal". If you think you've found a great deal but don't have the means to handle it, consider seeking the help of an experienced partner. Good luck!
Investor · Ormond Beach, FL · Member since 2019 · 78 posts · 73 votes
6y
@Account Closed Sharon, congrats on looking for and successfully finding a potential deal. It's commendable that you are trying to improve your life through real estate investing. Rewards await those willing to work and maintain their integrity.
I advise you to first find someone with real estate investment experience. Someone you can trust. Real estate is risky. Debt is a loaded gun and can do serious harm for those who do not know what they are doing. You need guidance. Partner with this person(s) or figure out a way to compensate them for consulting/mentoring services.
This person can then help you actually execute the deal while teaching you along the way:
Look your deal over from top to bottom and determine if you have a "deal" (run the numbers, do local market due diligence, property due diligence, etc.)
Conduct and-or participate in the negotiations
Assist with the team building process (property management selection is absolutely KEY)
Create deal package/loan request package to help raise the equity and the debt (not so easy anymore)
Help guide both you and the deal through the acquisition
Help initiate and execute the business plan, working closely with the property management company
Assist/teach you how to asset manage
You can start looking for that person right here on BP. Look at profiles, read their forum responses/posts, call and interview them, etc.
Investor · Apex, NC · Member since 2018 · 253 posts · 215 votes
6y
Hey @Account Closed, congratulations on finding what sounds like a great deal! That's often the hardest part of this process and can really help with things down the line.
As others have mentioned, PLEASE make sure you have somebody that has done it before take a look at your deal and make sure you know where all the risks are. Hopefully you have people in your network that you can ask a favor of w/o strings (I'm in NC and would be happy to take a look if you DM me).
Otherwise, I wouldn't let the size scare you off. There's not a huge different between a 20-unit and 50-unit. Either way you're going to be learning a TON on your first deal!
New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
6y
@Ryan Daigle sounds like a great idea. It's really frustrating finding deals, then to have people fall apart or disappear when you need them, yet they claim to be so "successful" in the very thing I am doing. Ryan I am like a dog with a bone, hungry, in it to win, creative, and there is no such word as "no" or "can't". I have found about 10 more deals last night. I only went to be at 6:30am this morning and at 10:45am I am up and at it again, had to literally "hunt' for an owner of a property who wants to cash sell a property, nice one and in very nice downtown, historical area. So, if you are serious in looking at anything I would be greatly appreciative.
New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
6y
@Account Closed thank you for so much valuable information. Yes, this is not easy, it is complicated, and you can't count on people nor trust everyone. Life is sad lol. I do know one thing I will not put myself out there to lose all that I have gained. It would be a beautiful thing to close on a deal like this, yet if it is not correct then I am moving on because I know just be all the research I have been doing while I have been learning since December, there is no shortage of real estate. I thank you for all of that information, I definitely need to remember all of it. Thank you
New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
6y
@Alan Van Gorder Amen. I have met some investors up and down the east coast and on the west coast who can handle it because that's what they do. Even if I gave it to them, I still would get a finders fee. Thanks
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
I will be the naysayer - I am a bit doubtful that you have found what you say. If it is an 8M property defaulting 4M why would the lenders and owners allow it to be sold that short?? That is a huge loss of money and people dont give away 4m
IMO there is a lot more to this story and the info provided tells us not much.
Commercial lending is very different than residential. The big boys want real money, real experience etc.
You have not said anything about the financials which is how it is valued.
Anyway, suggest you find a good commercial agent to help you as there is a lot to lose and also a lot to win.
Rental Property Investor · Toronto, Canada · Member since 2012 · 102 posts · 95 votes
6y
Originally posted by @Account Closed:
I found a 57 unit $4mil property in default, as a newbie should I. I have read all the particulars, analyzed and analyzed. I figure I can get investors to hold the $4mil for 4 years and I sweeten the pot somehow. All of the buildings are very nice and in a good upscale area. Rent is not cheap. It seems the owner tried doing things he should not have and got in a little trouble. The property is more than $4mil it's only in default for the $4mil. it's more of a $8mil property. I have been studying and learning since December 28th, my daughter says I should start small. Am I shooting to big or not? I have a couple of people in mind to bring aboard to help my Dream Team. At 55, an army vet I don't have fear of the unknown, at the same time I want to know what others think. I am sure I am not the only one who had a very large first deal. I do have another smaller one, but for some reason that seems like it is harder to get anyone to invest in. Ahh haa, the higher the risk the greater the reward. Please give me your thoughts. Thank you.
Real Estate Broker · Kansas City, MO · Member since 2015 · 33 posts · 13 votes
6y
@Sharon A Burns
Well I feel you’re not totally ready based on what you’re saying. I’m conveying a particular energy and it sounds like maybe you’re not sure yourself. And that can be a bad thing or maybe you’re own intuition. So my vote is NO! People love to blame someone for “any “lost of money , even if it’s $1.00 lol.
However if u do go for it and go against the grain
-Partnership will be key
-Definitely 1000% due diligence and then another 10000 % due diligence
- use all logic and get a commercial agent now for the competence
Full disclosures
I’m not too friendly towards unlicensed people as I feel these groups of folks mess a lot of things up and it gives everyone a bad name.
If unlicensed , you can perhaps pitch a finders fee or a consultant fee to a commercial agent 😉 because in the end , there’s a duty (IMO) to make sure you’re competent enough to handle this (or that or whatever u do !)
New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
6y
@Alan Van Gorder Amen. I have met some investors up and down the east coast and on the west coast who can handle it because that's what they do. Even if I gave it to them, I still would get a finders fee. Thanks
New to Real Estate · NC · Member since 2020 · 30 posts · 2 votes
6y
@Mary M. so it was my error it was to purchase the non performing note, the loan. That's the good thing about having others go back and check your steps. But one monkey doesn't stop a show. 30 units showed up this morning. The excitement is the fire.Keep smiling and let the phones keep ringing.