School wants to buy my property! (Need Advice)

School wants to buy my property! (Need Advice)

Investor · Chicago, IL · Member since 2015 · 87 posts · 42 votes

How's it going everyone? I am hoping to get some advice on an offer that I was approached with. I own a two unit property on the south side of Milwaukee. It is right by the St. Augustine High school. I was recently approached by the school to purchase this property from me. Personally I was not looking to sell nor was the prospect of selling in the near team even on my radar. The school is looking to expand their campus and build more facilities. They have been buying a significant number of homes on the street and my property is next on their list. I was approached with multiple offers from the school starting at 88k and now at 100k. I originally purchased the building for 60k using conventional financing and put an additional 15k of work into the building. I have great tenants who pay on time, been there going on 3 years, and this is a strong cash-flowing building. The neighborhood is also improving leaps and bounds since I picked up the property. My question is would I be leaving money on the table considering or accepting their offer? While I like the idea of an all cash deal with a quick close. I don't have any reason to sell other than that, and I don't want to be selling for pennies on the dollar when the neighborhood has had strong appreciation YOY. Any advice is greatly appreciated!

Cheers,

Josh

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    6y

    I would sell it in a heart beat...but not yet.  Here's why:

    1 - The neighborhood you say is getting better, won't be the same after the school buys up the properties and expands the school...so forget that part of it.

    2 - If they started with 88 then raised it to 100, I would hold out until they reached 200...and they will if you are one of the last third of the properties left.  After 2/3 mark, the leverage the owners have starts to go down because the area is starting to become less desirable if it's surrounded by the new development.  Sometimes it doesn't, but I would grab it at the 2/3 mark and not look back.

    3 - You have tenants in place.  Wait until their lease has run out.  While that is going on, and if they are great tenants, and they like you as a landlord...find them a different place locally to live.  When you make your deal with the school, make sure you have time to find that property for your tenants before they have to leave so you don't lose them.  You can do month to month leases.

  • Investor · Chicago, IL · Member since 2015 · 87 posts · 42 votes
    6y

    @Joe Villeneuve that is very good advice thank you very much for the insight!

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