Industrial Warehouse Purchase with fingers crossed

[Shuff Mauldin]

Investment Info:

Industrial commercial investment investment.

Purchase price: $150,000
Cash invested: $150,000
Sale price: $300,000

did a lot of things I normally never would because of potential upside

What made you interested in investing in this type of deal?

I had gotten comfortable with triple net (NNN) properties and wanted to expand. After knocking on doors for about a year, I got one of those calls you don't forget: a seller wanted out of a 10,000 ft² commercial warehouse immediately. He was going to sell to the first person who brought him $150k. The property sat on airport-leased land, which at first seemed like a negative since I didn't own the dirt, but it also meant no property taxes — a huge positive.

How did you find this deal and how did you negotiate it?

I had been knocking on doors and making calls for nearly a year. When the seller called, there wasn’t much negotiation. He wanted $150k, I knew it was worth that and so did he.

How did you finance this deal?

I paid cash. I know all the reasons not to but, I needed to act quick and I didnt want the added pressure of interest.

How did you add value to the deal?

My strategy was: 1. Buy at $150k and put in sweat equity cleaning it up. 2. Market the property for lease with a broker and include a purchase option.
I didn’t want to spend money on updates (like offices) not knowing what an end user might need/want

What was the outcome?

I owned the property vacant for about 7 months before a local business called. They needed it for parking and agreed to a $3,000/month triple net lease. Even better, they were interested in the purchase option at just over $300k. They leased after me owning it for almost a year, and then executed the purchase option.
The three months rent payments took care of my holding costs and I ended up doubling my money on the deal.

Lessons learned? Challenges?

I hated driving by it. The roof was past its useful life and a replacement would have been a $100k hit. Owning a vacant warehouse is not fun. I felt as if my money was eating chips on the couch when I looked at the building. I also didn't like owning an old tired building I couldnt justify putting money into until I knew the end user. #prideofownership
Next time, I’d (1) bring in partners to share risk and share in the worry (2) push harder to market it myself before hiring a broker.

[Shuff Mauldin]

@Jaycee Greene ill email you