All Forum Posts by: Ash Patel

One year ago, I purchased a property for $550k and signed a tenant to a 10 year lease.  The proprietor was a coffee shop/bookstore that was operating down the street.  They wanted to expand as well as offer food and alcohol.  In addition to the $550k purchase, I paid $62k in TI, offered six months of no rent then six months of half rent.  Just as we start full rent, I am finding out that the business is bleeding cash.  The husband and wife both have assets and they both signed a personal guarantee for the full 10 year lease.  These two individuals went from selling coffee and books in a small footprint to now operating a bar/restaurant/bookstore in a large space.  They are not experienced restaurateurs but are mature and intelligent individuals.  The wife runs the business and the husband helps out but has kept his job as a high level analyst for a large multi-national bank.

They have called a meeting to discuss their situation. I will not offer any more concessions and my advice will be to get an experience consultant to help them.  Does anyone have experience in enforcing a personal guarantee on a commercial lease default?  My goal would be if they default, to come up with a settlement and release them from the lease, but if we cannot agree on terms, I am concerned with what the outcome of legal proceedings would be.  Another scenario would be that they sublease the building but retain the guarantee.  Not asking for legal advice, but would like to hear if you have experienced this.  THANK YOU!!

Great advice @Joel Owens  Thank you!

I am looking at purchasing a funeral home and re-purposing it to an event space.  Does anyone know if there are any environmental concerns with this type of property?  I believe they embalmed and cremated bodies onsite.   

Mixed use building are difficult to finance.  Vacant mixed use buildings are very difficult without a track record.  Many banks just won’t touch them.  My advice is find a small local bank and get in bed with them.  Get creative.  Your job is to convince them that you will succeed with this project.  Good Luck.

@John D.  Great Points!  This is a private gated community and has numerous shared amenities.   The Hoa tried to ban short term rentals and were told they would be inviting a lawsuit if they did that.   The thought is if they ban this in the future, they will grandfather in those who have previously rented.  Total square footage would be around 4000.  From the inside it will look like a normal house just with small bedrooms and larger common areas.   We are going to pole barn route to save on cost and expedite the build.  In this area they are becoming more common.   Hope this answers your questions.  

Makes sense @Paul Sandhu, thanks for clarifying.

@Paul Sandhu - Thanks for the reply.  Why is your minimum 4?  Do you have a per person charge?  My thought is, if a family of 3 wants to rent it, have at it.

@John Underwood - My thought is with the season being so short, we should be able to attract large family gatherings.

@Michael Greenberg - Love all of your ideas.  No on the Theater, great idea on sound.  We wills stock up on outdoor games and definitely get a fire table!  Thank you again.

Hello Everyone! We have a waterfront lot on a small private lake 45 min from Cincinnati. Our plan is to build a pole barn house that will be used 100% for STR. Our thought is to have six small (10' x 12') bedrooms 2.5 - 3.5 baths and an outdoor seating area. The community has an indoor/outdoor pool and rec center. Any thoughts on including a theater room? Would love advice on resilient cabinets/counter tops? We are thinking of shower inserts instead of tile due to cost and ease of cleaning. There is no basement, would you include a game room? Thank you!

@Mitch Allen - no sir.  I mostly do non-residential commercial which I self manage, so not actively looking for PM.  Let us know if you find anyone good.  My advice is to try to put systems in place and self manage if you can.

I have been an Ashcroft investor since 2016.  My cousin and I have invested in many of their subsequent deals to the tune of seven figures.  Both of us being from Jersey are quite skeptical.  Last year, we decided to visit all of our properties in the DFW area.  Joe arranged the logistics and we were able to meet with and interview all of the onsite managers and property managers.  We were also able to see renovations before, during and after.  In my opinion, the renovations are where they shine.  For roughly $5k/unit, they completely transform these apartments.  The PM company uses in house people for most of the renovations to control timelines and cost.  We even saw one property where they purchased granite slabs in bulk and fabricated them onsite to save money.  Ashcroft has PM and renovations down to a science.  We wrote a followup report for Joe with a few suggestions.  As a testament to his character, he followed up and implemented several of our suggestions.  

As far as returns, they have always hit or exceeded their pro-forma numbers. They recently sold my first investment which was slated to do 18-20% IRR. The annualized return ended up being 27%. Their projections are based on cash flow and do not take into account appreciation. Over the years, I have gotten to know Joe and his wife Colleen and they are both remarkable people. The opposite of Grant Cardone who is constantly posting pictures of his 10x jet. Joe drives a corolla. Happy to answer questions, just tag me.